TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, November 14, 2017

Chorvat: Anti-Inversion Regulation Invalidated In Federal Court

Elizabeth Chorvat (Illinois), Anti-Inversion Regulation Invalidated in Federal Court, 157 Tax Notes 401 (Oct. 16, 2017):

Under the Supreme Court’s Mayo decision, legislative and interpretive regulations are accorded Chevron deference if they comply with the Administrative Procedure Act (APA) notice and comment requirements. In Chamber of Commerce v. IRS on September 29, the U.S. District Court for the Western District of Texas extended the rule to temporary regulations, invalidating reg. section 1.7874-8T, the so-called multiple acquisition rule, for failure to comply with the notice and comment procedures under the APA. Reg. section 1.7874-8T was issued as part of the 2016 temporary regulations designed to limit the U.S. tax benefits following an inversion.

Persuaded by the fact that section 7805(e) does not expressly exempt temporary regulations from the APA’s notice and comment requirement, the district court held that the temporary nature of the regulation did not excuse Treasury from the notice and comment procedures required by the APA.

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