Tuesday, March 4, 2008
Andy Grewal (Skadden, Washington, D.C.) notes an interesting aspect of the Supreme Court's unanimous return of capital opinion yesterday in Boulware v. United States, 06-1509 (3/3/08) (Souter, J.), rev'g 470 F.3d 931 (9th Cir. 2006) (blogged here):
For tax nerds, the most interesting part of the Boulware opinion may be the Court’s resurrection of the so-called “right” to avoid taxes. See Boulware, n.7: "We have also recognized that ‘[t]he legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted.’” (citing Gregory v. Helvering, 293 U. S. 465).
Justices Thomas and Scalia sometimes repeat taxpayer-favorable quotes in dissents/concurrences, but seeing the “legal right” quote in 9-0 opinion is somewhat surprising.
The statement from Gregory — which until today was last quoted by the Court 48 years ago in Knetsch v. United States, 364 U.S. 361 (1960) — has been slammed by many elite tax scholars over the years, and the court’s recitation of that famous (infamous?) quote from Gregory is sure to ruffle some feathers.
Also, although I’m not inclined to read too much into a judicial footnote, the Gregory quote and the various other statements in Boulware n.7 will surely offer encouragement for taxpayers embroiled in tax controversies with the IRS. It also tends to confirm the Solicitor General’s fears regarding letting a high-profile tax issues get to the supreme court, notwithstanding the severe circuit splits — the SG will probably lose badly.
For more, see
- Assaf Likhovski (Tel Aviv), The Story of Gregory: How are Tax Avoidance Cases Decided?, in Business Tax Stories (Foundation Press, 2005) (Steven A. Bank (UCLA) & Kirk J. Stark (UCLA), eds.)
- Daniel N. Shaviro (NYU), The Story of Knetsch: Judicial Doctrines Combating Tax Avoidance, in Tax Stories (Foundation Press, 2003) (Paul L. Caron (Cincinnati), ed.)