Thursday, October 14, 2004
The ABA Tax Section Task Force on Judicial Deference (comprised of 6 tax practitioners (including Irving Salem (Latham & Watkins LLP), Chair) and two tax professors (Ellen Aprill (Loyola-L.A.) & Linda Galler (Hofstra)) has published its 61-page report. Here are its two conclusions:
• The Task Force believes that this set of recommendations reasonably accommodates both the traditional approach to judicial deference to tax interpretations and recent Supreme Court developments. It establishes a hierarchy based upon the authority of an administrative pronouncement and the degree of deliberation the IRS gives the pronouncement. These recommendations not only honor the case law, but also present a sufficiently clear cut, and thus workable, set of rules for courts to apply.
• The case law, from both the Supreme Court and the lower federal courts, reflects many uncertainties and inconsistencies — whether Chevron or National Muffler supplies the standard for tax law; whether or when Chevron or Skidmore applies; the extent to which legislative and interpretive tax regulations should be judged differently; whether Seminole Rock has continuing viability; and how informal IRS guidance and litigating positions should be treated. While this confusion is unfortunate, it offers the challenge and opportunity to set a course that is most likely to lead to the best possible administration of the tax laws.