Thursday, March 1, 2012
The American Tax Policy Institute hosts Tax Law and Administrative Law: The Implications of Mayo Foundation v. United States today in Washington, D.C. at Skadden (1440 New York Ave., N.W.):
In Mayo Foundation, in the course of upholding a regulation under which medical residents are classified as employees for purposes of FICA, the Supreme Court ... stated unambiguously that Chevron, not National Muffler, applies to judicial review of Treasury regulations, including regulations promulgated under the general authority given the Secretary under § 7805(a) to “prescribe all needful rules and regulations,” at least when such regulations are promulgated pursuant to notice-and-comment. The opinion explained that "the principles underlying our decision in Chevron apply with full force in the tax context” and, consistent with Chevron, that Treasury regulations will be invalidated only if "arbitrary or capricious in substance or manifestly contrary to the statute.” The Court reached its decision upholding the Treasury regulation at issue without any examination of the legislative history of the applicable Internal Revenue Code provisions.
Mayo Foundation nonetheless leaves unanswered a host of issues. Is there a role for legislative history in determining the reasonableness of regulations? What standard of deference applies to guidance released without notice-and-comment, whether temporary regulations, revenue rulings, or any of the other myriad forms of guidance? Are regulations now more susceptible to challenge for failure to comply with the Administrative Procedure Act? What about retroactive regulations? How should the IRS and Treasury implement Mayo, whatever power this decision gives them? A number of these issues arise in United States v. Home Concrete & Supply, LLC, which concerns an IRS regulation that defines omissions from gross income as including basis overstatements and which the Supreme Court will hear in January.
The Mayo Foundation case and its implications are of great significance to all tax professionals and government officials who administer the tax law. It can be expected to affect how the IRS and Treasury issue guidance, how taxpayers and their advisors react to such guidance, and how courts evaluate tax positions that deviate from such guidance.
Panel #1: Understanding Mayo: What the Law Has Been, What It Is Now, and What It Should Be
Panel #2: Implementing Mayo: What the Government (and Practitioners) Can and Should Do
- Kenneth Gideon (Skadden, Washington, D.C.)
- Mark Holmes (U.S. Tax Court Judge)
- Nina Olson (Taxpayer Advocate, IRS)