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retroactive effect. * * * Regulations, Treasury decisions,
and rulings which are merely interpretive of the statute,
will normally have a universal application, but in some
cases the application of regulations, Treasury decisions,
and rulings to past transactions which have been closed by
taxpayers in reliance upon existing practice, will work such
inequitable results that it is believed desirable to lodge
in the Treasury Department the power to avoid these results
by applying certain regulations, Treasury decisions, and
rulings with prospective effect only. [H. Rept. 704, 73d
Cong. 2d Sess. (1934), 1939-1 C.B. (Part 2) 554, 583;
emphasis added.]
This is not a case where petitioner alleges detrimental
reliance upon an existing practice that would be undone by
retroactive application of new regulations. Moreover,
petitioner's suggestion that section 7805(b) requires respondent
to apply regulations retroactively if they would be beneficial to
the taxpayer raises significant administrability problems of the
sort which section 7805(b) was intended to prevent.
Petitioner has cited, and we have discovered, no case
constraining the Secretary’s authority to issue prospective
regulations. In support of its position, petitioner cites
various cases, including Automobile Club of Mich. v.
Commissioner, 353 U.S. 180, 184 (1957), for the proposition that,
in enacting the predecessor to section 7805(b), Congress gave
respondent the authority "to limit retroactive application to the
extent necessary to avoid inequitable results". The Automobile
Club of Mich. case, however, like all the other cases cited by
petitioner, deals with respondent's obligation to limit
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