OPINION
Tannenwald, Judge:1
This case is before us on petitioner’s motion and respondent’s cross-motion for summary judgment. Rule 121.2 The sole issue is whether section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., is valid to the extent that it requires petitioner, in using the “percentage of taxable income method” to calculate additions to its bad debt reserve under section 593(b)(2)(A), to reflect the carryback of petitioner’s net operating loss (nol) from 1980 and later years in the computation of taxable income for the years at issue. The issue is not new to this Court. See infra pp. 386-389.
Summary judgment is appropriate in this case because there is no genuine issue of material fact and the decision can be made as a matter of law. Rule 121(b); Northern Indiana Public Service Co. v. Commissioner, 101 T.C. 294, 295 (1993). For the purposes of this motion, the relevant facts, set forth in an affidavit of petitioner’s executive vice president and chief financial officer, are not in dispute and are so found.
Petitioner is a chartered mutual savings and loan association with its principal place of business in Shamokin, Pennsylvania. During the years at issue, petitioner was an institution described in section 593(a)(1), and filed Federal income tax returns on a calendar year basis with the Internal Revenue Service, Philadelphia, Pennsylvania.
For its 1980 tax year, petitioner claimed an NOL under section 172(c), which it carried back to certain tax years from 1970 through 1979 pursuant to section 172(b). Petitioner also claimed NOL’s in subsequent years that affect certain of the years at issue herein.3 The carryback of the 1980 NOL resulted in the carryback of investment tax credits to petitioner’s 1968 and 1969 tax years. Petitioner timely filed Corporation Applications for Tentative Refund (Form 1139) for all tax years affected by the NOL carrybacks and related investment tax credit carryovers and carrybacks.
During certain tax years from 1968 to 1982, petitioner calculated the annual addition to its reserve for bad debts under the percentage of taxable income method provided in section 593(b)(2)(A) and deducted such addition in each such tax year on its Federal income tax returns in accordance with section 166(c). In conjunction with petitioner’s filing of its tentative refund applications stemming from its carryback of the 1980 NOL, petitioner recomputed its allowable bad debt deductions under the percentage of taxable income method for such affected years in accordance with the then-existing section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs. The recomputation resulted in a smaller loan loss reserve deduction.
Subsequent to the filing of the tentative refund applications, respondent conducted an examination of petitioner’s tax returns for the 1968 to 1982 tax years. Following the examination, respondent mailed petitioner a notice of deficiency disallowing petitioner’s treatment of two items not now at issue herein and determining the following deficiencies in petitioner’s Federal income taxes:
Year Deficiency
1969 . $24
1970 . 61,365
1973 . 51,543
1974 . 125,107
1976 . 83,786
1977 . 174,393
1978 . 167,275
1979 . 157,909
1980 . 31,309
Thereafter, in 1990, this Court held section 1.593-6A (b)(5)(vi) and (vii), Income Tax Regs., invalid to the extent that it required that taxable income reflect any NOL carryback in calculating the addition to the bad debt reserve under the percentage of taxable income method, in a case involving a similarly situated taxpayer and essentially the same set of circumstances. Pacific First Federal Savings Bank v. Commissioner, 94 T.C. 101 (1990), revd. 961 F.2d 800 (9th Cir. 1992) (Pacific First).
Petitioner thereafter, without objection by respondent, amended its petition herein to raise the issue of the application of section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., claiming that, if the regulation is invalid, it is entitled to a refund for overpayments of income tax.
The issues which were the subject of respondent’s notice of deficiency having been settled, the sole remaining issue for our decision is the issue raised by the amended petition,4 the validity of section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs.
In Pacific First Federal Savings Bank v. Commissioner, supra, a Court-reviewed decision, we held section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., to be invalid insofar as it requires the application of NOL carrybacks before the computation of bad debt reserves under the percentage of taxable income method provided for by section 593(b)(2)(A). Thereafter, we continued to hold the regulation invalid. Bell Federal Savings & Loan Association v. Commissioner, T.C. Memo. 1991-368, revd. 40 F.3d 224 (7th Cir. 1994) (Bell Federal), Leader Federal Savings & Loan Association v. Commissioner, T.C. Memo. 1991-334 (.Leader Federal)', Peoples Federal Savings & Loan Association v. Commissioner, T.C. Memo. 1990-129, revd. 948 F.2d 289 (6th Cir. 1991) (Peoples Federal).
The first case to reach an appellate court was Peoples Federal Savings & Loan Association v. Commissioner, supra, where the Court of Appeals for the Sixth Circuit reversed the decision of this Court and held the regulation in question valid.
Thereafter, we were again asked to decide the validity of section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs. In another Court-reviewed decision, we adhered to our original holding in Pacific First and, because the decision was not appealable to the Court of Appeals for the Sixth Circuit, we again held the regulation invalid.5 Georgia Federal Bank v. Commissioner, 98 T.C. 105 (1992), vacated and remanded (11th Cir., July 12, 1994) (Georgia Federal). Respondent appealed our decision to the Court of Appeals for the Eleventh Circuit, but before that court decided the merits of our decision, it was vacated and remanded for entry of a decision in accordance with a settlement reached by the parties.
Shortly after our decision in Georgia Federal, the Court of Appeals for the Ninth Circuit reversed our decision in Pacific First Federal Savings Bank v. Commissioner, 961 F.2d 800 (9th Cir. 1992), revg. 94 T.C. 101 (1990). More recently, the Court of Appeals for the Seventh Circuit reversed our decision in Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d 224 (7th Cir. 1994), revg. T.C. Memo. 1991-368. In the only other case involving the validity of section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., the District Court for the Eastern District of Washington upheld the regulation. First Federal Savings Bank of Washington v. United States, 766 F. Supp. 897 (E.D. Wash. 1991), affd. without published opinion 995 F.2d 947 (9th Cir. 1993).
Petitioner argues that, based on the established principles of stare decisis and the absence of a controlling decision in the Court of Appeals for the Third Circuit, to which an appeal in this case could lie, see Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir. 1971), we should adhere to our prior position and hold the regulation invalid. Respondent, on the other hand, argues that we should reconsider our position in light of the reversals and uphold the regulation.
Statutory and Regulatory Background
Section 593(b) limits the deduction of an addition to petitioner’s bad debt reserve to “the applicable percentage of the taxable income” for the year.6
From 1956 to 1978, the regulation reflected the interpretation of section 593(b)(2)(A) urged by petitioner whereby, for purposes of that section, taxable income is computed without regard to NOL carrybacks. The first regulation interpreting section 593(b)(2)(A) provided that taxable income was to be computed “without regard to any section providing for a deduction the amount of which is dependent upon the amount of taxable income”. Sec. 1.593-l(b)(l), Income Tax Regs., T.D. 6188, 1956-2 C.B. 310, 321. In Rev. Rui. 58-10, 1958-1 C.B. 246, the preceding statement was relied upon to provide that, for purposes of calculating the bad debt reserve addition under the percentage of taxable income method, taxable income was to be determined before application of NOL carrybacks. The revenue ruling was incorporated into a modified regulation in 1964. Sec. 1.593-6(b)(2)(iv), Income Tax Regs., T.D. 6728, 1964-1 C.B. 195, 202 (hereinafter the old regulation).
In 1971, respondent issued a proposed regulation whereby bad debt reserves under the percentage of income method would be determined after the application of NOL carrybacks, a reversal of the old regulation. Sec. 1.593-6A(b)(5), Proposed Income Tax Regs., 36 Fed. Reg. 15050, 15052-15053 (Aug. 12, 1971). In 1978, the substantive change in the proposed regulation was adopted in a final regulation. Sec. 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., T.D. 7549, 1978-1 C.B. 185, 189-190 (hereinafter the new regulation); see also Pacific First Federal Savings Bank v. Commissioner, 94 T.C. at 103-105.
Standard of Review
Section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., is an interpretive regulation promulgated pursuant to the general authority granted to the Secretary of the Treasury by section 7805(a). Pacific First Federal Savings Bank v. Commissioner, 94 T.C. at 106; T.D. 7549, 1978-1 C.B. 185, 191. An interpretive regulation is owed “‘less deference than a regulation issued under a specific grant of authority to define a statutory term or prescribe a method of executing a statutory provision’”. United States v. Vogel Fertilizer Co., 455 U.S. 16, 24 (1982) (quoting Rowan Cos. v. United States, 452 U.S. 247, 253 (1981)). The traditional standard of review is to determine whether the interpretive regulation was found to “implement the congressional mandate in some reasonable manner”, United States v. Vogel Fertilizer Co., supra (quoting United States v. Correll, 389 U.S. 299, 307 (1967)); i.e., to determine “whether the regulation harmonizes with the plain language of the statute, its origin, and its purpose.” National Muffler Dealers Association v. United States, 440 U.S. 472, 477 (1979) CNational Muffler). In implementing the traditional standard of review, the courts have recognized that the agency administering the statute has flexibility to change a regulation, in the light of administrative experience. Rust v. Sullivan, 500 U.S. 173, 186 (1991); Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 863-864 (1984) (Chevron); National Muffler Dealers Association v. United States, 440 U.S. at 485; Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d at 229; Pacific First Federal Savings Bank v. Commissioner, 961 F.2d at 804; Peoples Federal Savings & Loan Association of Sidney v. Commissioner, 948 F.2d at 303.
The use of the traditional method of review in this case has been subjected to analysis by the three Courts of Appeals in light of the opinion of the Supreme Court in Chevron, which failed to cite National Muffler and appeared to establish a different formulation of the standard of review7 as follows:
When a court reviews an agency’s construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.9 If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
Chevron has had a checkered career in the tax arena. Thus, the Court of Appeals for the Ninth Circuit, in deciding Pacific First Federal Savings Bank v. Commissioner, 961 F.2d at 803, found it unnecessary to choose between Chevron and National Muffler, and relied on the National Muffler traditional standard of review. In Bell Federal, the Court of Appeals for the Seventh Circuit approved the Court of Appeals for the Ninth Circuit’s reliance on National Muffler, and described the difference between the Chevron standard and the National Muffler standard as “negligible at best —any regulation which is ‘based upon a permissible construction’ of an ambiguous statute will almost always ‘implement the congressional mandate in some reasonable manner’ and vice versa”. See Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d at 227. Beyond these differences, the Supreme Court, as well as other courts, has been inconsistent in applying Chevron and National Muffler, often ignoring one case and relying on the other.8 Indeed, there has even been a question as to whether Chevron applies to interpretive regulations. See E.I. duPont de Nemours & Co. v. Commissioner, 41 F.3d 130 (3d Cir. 1994), affg. 102 T.C. 1 (1994).
Because of our rationale for disposing of the substantive issue before us; i.e., the validity of the regulation, see infra p. 394, we find it unnecessary to dissect the differences, if any, between Chevron and National Muffler, although we are inclined to the view that the impact of the traditional, i.e., National Muffler standard, has not been changed by Chevron, but has merely been restated in a practical two-part test with possibly subtle distinctions as to the role of legislative history and the degree of deference to be accorded to a regulation. See, e.g., Sekula v. FDIC, 39 F.3d 448 (3d Cir. 1994) (combining language); Armstrong World Industries, Inc. v. Commissioner, 974 F.2d 422, 430 (3d Cir. 1992), affg. T.C. Memo. 1991-326; Georgia Federal Bank v. Commissioner, 98 T.C. at 108-109.
Substantive Issues
Neither we nor any of the three Courts of Appeals believes that Congress has “spoken directly”, either by statute (which is concededly ambiguous) or in legislative history, as to the impact of nol’s on the calculation of the addition to bad debt under the percentage of taxable income method of section 593(b)(2)(A).
In Pacific First, we discussed that when amending section 593, Congress implicitly relied on the definition of taxable income compelled, in part, by the old regulation. In amending section 593, Congress sought to allow a deduction under the percentage of taxable income method that would encourage mutual institutions to maintain bad debt reserves, yet ensure that such institutions would be taxed at an appro-
priate rate. Pacific First Federal Savings Bank v. Commissioner, 94 T.C. at 109 (citing H. Rept. 1447, 87th Cong., 2d Sess. (1962), 1962-3 C.B. 405, 436-437). Ultimately, in the Tax Reform Act of 1969, Pub. L. 91-172, sec. 432, 83 Stat. 487, 620, Congress amended the percentage of taxable income method by reducing the allowable deduction from 60 to 40 percent of taxable income over a 10-year period. The legislative history shows the House and Senate carefully reviewed the effective rate of tax for mutual institutions and the change in the effective rate that the amendment would cause, in striking a compromise. Thus, this Court stated: “the House was cognizant of the effective rate of tax paid by mutual institutions and intended to raise, but only to a specific and limited extent, that effective rate by reducing the deduction for addition to bad debt reserve.” Pacific First Federal Savings Bank v. Commissioner, 94 T.C. at 111. Further, we quoted a Senate report which stated: “The committee believes that the reduction to 50 percent represents a sufficient increase in taxes for these mutual institutions at this time.” S. Rept. 91-552 (1969), 1969-3 C.B. 423, 526. Id. at 112. Finally, “In order to determine the effect of proposed changes and, if necessary, to modify the changes, Congress must have examined the then-effective regulations and concluded that those regulations correctly reflected Congress’ intent as to how NOL carrybacks were to affect deductions for additions to bad debt reserve.” Pacific First Federal Savings Bank v. Commissioner, 94 T.C. at 113. This Court determined, therefore, that the new regulations, because they had the effect of raising the effective rate of tax compared to the effect of the old regulations, were inconsistent with congressional intent and thus invalid. Id. at 112.
On appeal, the Court of Appeals for the Sixth Circuit failed to accept that “Congress must have examined” the old regulation. Peoples Federal Savings & Loan Association v. Commissioner, 948 F.2d at 301 (“there is no evidence in the legislative history of the statutes in question that Congress ever had a specific or particular intent with respect to the ordering rule to be applied in this case”). Rather, the Court of Appeals, because it did not find a congressional intent in the statute or the legislative history, deferred to respondent under the second step of Chevron.
In Georgia Federal Bank v. Commissioner, 98 T.C. 105 (1992), vacated and remanded (11th Cir., July 12, 1994), we carefully reviewed the opinion of the Court of Appeals, but decided that our finding of congressional intent in Pacific First had been correct.
Soon following our opinion in Georgia Federal, the Court of Appeals for the Ninth Circuit reversed our opinion in Pacific First Federal Savings Bank v. Commissioner, 94 T.C. 101 (1990), revd. 961 F.2d 800 (1992). The court found “much of the Sixth Circuit’s reasoning is persuasive”, although it commented that “in the realm of national tax law, ‘it is more important that the applicable rule of law be settled than it be settled right.’” Id., 961 F.2d at 803 (citations omitted). Like the Court of Appeals for the Sixth Circuit, the Court of Appeals for the Ninth Circuit found no congressional direction in either the statute or legislative history. Further: “The prior regulations were complex and, as discussed above, resulted in differing levels of taxation depending upon the timing of income and losses.” Id. at 807. Thus, “Absent clearer evidence that Congress considered the effect of the prior regulations, * * * we cannot usurp the Treasury’s congressionally delegated authority to interpret this complex scheme.” Id.
Likewise, the Court of Appeals for the Seventh Circuit found: “The regulations and statutes involved in this area are too complex for us to venture to assume Congress’s intent through its silence”, Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d at 230, and reversed Bell Federal Savings & Loan Association v. Commissioner, T.C. Memo. 1991-368.
The critical difference between us and the Courts of Appeals turns on whether we were correct in our conclusion that the legislative history contained such a clear expression of legislative intent as to justify the conclusion that the regulation in question was unreasonable. In this connection, we think two criticisms by the Court of Appeals for the Sixth Circuit of our analysis in Pacific First Federal Savings Bank v. Commissioner, supra, deserve attention. The first relates to our “review of a lengthy legislative history in the hope of glimpsing congressional intent,” which the Court of Appeals suggested was inappropriate under Chevron. Peoples Federal Savings & Loan Association v. Commissioner, 948 F.2d 289, 299 (6th Cir. 1991), revg. T.C. Memo. 1990-129. Such criticism does not account for the rule that, according to both Chevron and its progeny, a search for congressional intent requires use of “traditional tools of statutory construction,” which includes a review of legislative history. Pension Benefit Guaranty Corp. v. LTV Corp., 496 U.S. 633, 648-649 (1990); Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. at 843 n.9. The Courts of Appeals for the Seventh and Ninth Circuits simply held that we had ventured too far in our reliance on legislative history, not that the use of legislative history was incorrect from the beginning. The second criticism was directed at our reliance, in Pacific First, on the legislative history of the 1969 Act, which the Court of Appeals for the Sixth Circuit described as a form of the reenactment doctrine and found misplaced because Congress had never expressly mentioned the old regulation. Peoples Federal Savings & Loan Association v. Commissioner, 948 F.2d at 302-303; see also Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d 224, 230 (7th Cir. 1994), revg. T.C. Memo. 1991 — 368. In Georgia Federal Bank v. Commissioner, 98 T.C. at 119-120, Judge Halpern, in a concurring opinion, explained that our decision in Pacific First had not been based on the reenactment doctrine, but on the view that the amendment to section 593 in 1969 and the accompanying legislative history necessarily reflected contemporaneous congressional intent that taxable income be computed for this purpose without taking NOL’s into account. See also United States v. Vogel Fertilizer Co., 455 U.S. 16, 35 (1982); Pacific First Federal Savings Bank v. Commissioner, 94 T.C. at 114 n.5.
We continue to have reservations with respect to the acceptance of the 1978 memorandum of the Acting Assistant Secretary for Tax Policy that the old regulation was “patently wrong”, see Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d at 229; Pacific First Federal Savings Bank v. Commissioner, 961 F.2d at 804; Peoples Federal Savings & Loan Association v. Commissioner, 948 F.2d at 303, a position which we rejected in Georgia Federal Bank v. Commissioner, 98 T.C. at 117. Where a reversal of a regulation takes place, the Supreme Court has indicated that the later regulation is entitled to less deference than a consistently held agency view. INS v. Cardoza-Fonseca, 480 U.S. 421, 446 n.30 (1987); Georgia Federal Bank v. Commissioner, 98 T.C. at 109. But see Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d at 229 (“The fact the 26 C.F.R. §1.593-6A(b)[(5)](vi)-(vii) directly contradicts the regulation which it replaces does not necessarily entitle it to less deference in our analysis”) (citing National Muffler Dealers Association v. United States, 440 U.S. 472 (1979)). This point of view would take on added significance where the earlier regulation has been in effect for over 20 years, as is the case herein.
We have similar reservations with respect to the adoption by the three Courts of Appeals, see Bell Federal Savings & Loan Association v. Commissioner, 40 F.3d at 228; Pacific First Federal Savings Bank v. Commissioner, 961 F.2d at 806; Peoples Federal Savings & Loan Association v. Commissioner, 948 F.2d at 304, of respondent’s argument that, because the legislative trend of section 593 was to decrease the benefit of the bad debt reserve deduction, it was a reasonable purpose, by the change in the regulation, to decrease said benefit even further. First, respondent may not add to the restrictions imposed by Congress. See Iglesias v. United States, 848 F.2d 362, 366-367 (2d Cir. 1988); Estate of Boeshore v. Commissioner, 78 T.C. 523, 527 (1982). Second, because the Courts of Appeals considered the scheme surrounding section 593 too complex to find a reliance by Congress on the old regulation, we find it difficult to understand why the legislative history should support the new regulation, which implemented the same complex statutory scheme.
Despite our reservations, we feel compelled to recognize that the holdings of three Courts of Appeals, that the new regulation is reasonable, make highly suspect our contrary position based on the implied, as contrasted with the express, intent of Congress. Such being the case, we are persuaded that, in this area, we should no longer rely on implied intent to deprive respondent of her ability to sustain the new regulation as reasonable because it reflects a choice between permissible statutory interpretations. Cf. Perkin-Elmer Corp. v. Commissioner, 103 T.C. 464 (1994). We emphasize, however, that the legislative history of a statutory provision may he- so clear that a finding of implied intent on the part of Congress would be in order in a future case involving statutory interpretation. Similarly, divergence in views between this Court and one or more Courts of Appeals may have a different impact, depending on the circumstances. In sum, we conclude that we should accede to the decision of the three Courts of Appeals and should no longer adhere to the view that the new regulation is invalid. Cf. Fazi v. Commissioner, 102 T.C. 695, 713-714 (1994); Kueneman v. Commissioner, 68 T.C. 609, 620 (1977) (Tannenwald, J., concurring), affd. 628 F.2d 1196 (9th Cir. 1980).
Retroactive Application
In 1979, the new regulation was amended so that NOL’s occurring after December 31, 1978, would be included in the computation of taxable income for taxable years beginning before January 1, 1978. T.D. 7626, 1979-2 C.B. 239. Petitioner argues that this is a retroactive application which exceeds the permissible period of retroactivity normally approved by the courts. Furthermore, petitioner argues, giving the new regulation retroactive effect 1 year after stating the regulation would have only prospective effect was an abuse of discretion.
Petitioner, however, ignores the fact that we have previously held the revision of the effective date of section 1.593-6A(b)(5)(vi) and (vii), Income Tax Regs., was a permissible exercise of the discretion conferred on respondent by section 7805(b). Pacific First Federal Savings Bank v. Commissioner, 101 T.C. 117 (1993). For the reasons enunciated therein, we decline to hold that the 1979 amendment was improper or an abuse of discretion.
Petitioner’s motion for summary judgment will be denied, and respondent’s cross-motion for summary judgment will be granted.
An appropriate order will be issued and decision will be entered under Rule 155.
Reviewed by the Court.
Hamblen, Chabot, Cohen, Whalen, Colvin, Beghe, and Chiechi, JJ., agree with this majority opinion.