Paul L. Caron

Monday, January 24, 2011

Lederman Presents Deference to Tax Regs and Rulings Issued During Litigation Today at Florida

Lederman Leandra Lederman (Indiana-Bloomington) presents Hold the Mayo: What Respect Should Courts Accord Tax Regulations and Rulings Issued During Litigation? at Florida today as part of its Faculty Colloquia Series. Here is the abstract:

The IRS has multiple roles in the tax system. It is perhaps best known as the tax collector for the federal government, but it has service roles, as well. The IRS facilitates compliance with the tax laws not only by promulgating forms and answering taxpayer questions, but also by providing interpretations of the law that help guide taxpayers. In its service capacities, the IRS is something of a neutral party. However, the IRS is also often a litigant in disputes with taxpayers about the meaning or application of federal tax laws. What happens when the IRS, or the Department of which it is a part, the Department of the Treasury, releases guidance that purports to apply to a case in litigation?

This question is not merely academic. In a number of cases, the IRS has issued Revenue Rulings, its most authoritative form of guidance, in apparent attempts to influence the outcome of court cases. And sometimes the Treasury Department has promulgated regulations—even ones that purport to apply retroactively—to try to alter case outcomes. The Article considers whether deference to tax guidance should be reduced if the guidance was issued during pending litigation to which it arguably applies, and what should be the level of deference in that circumstance. It argues that Chevron deference should apply to Treasury regulations that have gone through the notice-and-comment process, while Skidmore should apply to Revenue Rulings, and that the timing of the ruling and potential unfairness the timing engenders should be taken into account under the applicable deference standard.

Colloquia, Tax | Permalink

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Although the IRS issues Revenue Rulings and not Treas. Regs. (the Treasury Department promulgates regs.) in reality virtually all Treas. Regs are the work of the IRS and merely issued by Treasury. Ass such, the IRS, and not Treasury, is the "promulgator" of the Regs.

Ask any good (or any for that matter) IRS Chief Counsel employee what they'd like to be working on and I bet more than 50% would say "a Reg project" (i.e., drafting the Treas. Reg).

Also, I am uncertain whether Rev Ruls all get Skidmore deference (which I agree is the proper deference to give in virtually all Rev Rul situations). Take sec 6015(f) where Congress has specifically delegated authority to the IRS to implement procedures for innocent spouse "(f)" relief. The IRS has issued a serious of Rev Procs (essentially the equivalent level of authority as a Rev Rul) on addressing 6015(f)--albeit much of the Rev Procs address substantive maters rather than procedural ones (which was delegated by Congress). Wouldn't these Rev Procs seem to warrant Chevron deference, even pre-Mayo, given the specific delegation of authority by Congress and the IRS acting pursuant to that authority?

Posted by: tax guy | Jan 24, 2011 7:42:17 PM