Northrop Corporation Employee Insurance Benefit Plans Master Trust v. United States

(1) Whether 26 U.S.C. § 512(a)(3)(E)(i), which provides that investment income of a voluntary employees" beneficiary association ("VEBA") is tax exempt only if a set-aside of the income for a purpose specified in Section 512(a)(3)(B)(ii) "does not result in an amount of assets set aside for such purpose in excess of the account limit determined under section 419A" " which, along with Section 419, limits an employer"s deduction for contributions to a VEBA " must be interpreted consistently with Sections 419 and 419A to mean that a set-aside of income results in set-aside assets only if the income is considered, under Section 419(c), not to have been spent for a specified purpose in the year the income is earned, but instead to have been accumulated for use in a later year; (2) whether a regulation adopting the Federal Circuit"s interpretation outstanding in "temporary" form since 1986 should be given deference despite having been issued without the explanation required by 5 U.S.C. § 706(2)(A) and without the prior notice and comment required by 5 U.S.C. § 553; and (3) whether the variance rule in Treasury Regulation " 301.6402-2(b)(1) is jurisdictional, barring the deference argument and precluding application of judicial exceptions to such administrative exhaustion requirements.