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abuse of discretion standard we adopted for section 6015(f)
cases, see Jonson v. Commissioner, supra at 125) have
consistently signified a review limited to the administrative
record. United States v. Carlo Bianchi & Co., supra at 715.
Thus, regardless of the applicability of the APA in this case,
the record rule seemingly would apply unless “abuse of
discretion” means something different in tax law than it does
elsewhere.
4. Administrative Procedure Act
Chapter 7 of the APA, 5 U.S.C. secs. 701-706 (2000),
provides rules for judicial review of agency action. The
relevant provision for our purposes is APA section 706(2), which
lists various circumstances in which a reviewing court must set
aside agency action. Two paragraphs of APA section 706(2) are
important here: paragraph (A), requiring a reviewing court to
reverse agency action that it finds is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law”;
and paragraph (F), requiring a reviewing court to reverse agency
action that it finds is “unwarranted by the facts to the extent
that the facts are subject to trial de novo by the reviewing
court.”5 The Supreme Court has confirmed the applicability of
5 Pars. (B) through (D) of APA sec. 706(2) relate to agency
action that is unconstitutional, outside the agency’s scope of
authority, or procedurally defective. Par. (E) relates to
“formal” agency action (i.e., action that is statutorily required
(continued...)
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