Paul L. Caron

Tuesday, January 8, 2019

Hickman Reviews Wallace's Congressional Control Of Tax Rulemaking

Jotwell (Tax) (2016)Kristin Hickman (Minnesota), Bridging Exceptionalism and Anti-Esceptionalism With the JCT Canon (JOTWELL) (reviewing Clint Wallace (South Carolina), Congressional Control of Tax Rulemaking, 71 Tax L. Rev. 179 (2017)):

In its 2011 decision in Mayo Foundation for Medical Education and Research v. United States, the Supreme Court held that most if not all general authority Treasury regulations carry the force of law and, thus, are eligible for judicial review and deference under the Chevron standard. In reaching that conclusion, the Court reiterated its general presumption in favor of “maintaining a uniform approach to judicial review of administrative action” and, correspondingly, rejected “an approach to administrative review good for tax law only.” But the Court qualified that presumption at least a bit—noting the taxpayer’s failure to “advance[] any justification for applying a less deferential standard of review to Treasury Department regulations,” and thereby suggesting that good reasons for tax exceptionalism might exist on another occasion. With Congressional Control of Tax Rulemaking, Clint Wallace advocates at least some amount of tax exceptionalism in judicial review of Treasury/IRS regulatory interpretations of the Internal Revenue Code. Or does he? ...

Wallace proposes the courts adopt a “‘JCT Canon’ for construing congressional delegations to Treasury.” The proposed JCT Canon calls upon both Treasury and the courts to follow or give extra weight to JCT-produced legislative history as “a good indicator of how members of Congress resolved and understood various issues” and as evidence of “congressional directive” in interpreting the Internal Revenue Code. Wallace contends that reliance upon the JCT Canon would better provide the political accountability that administrative law seeks.

Wallace’s article is tremendously useful for its elaboration of the tax legislative process and its analysis of who participates in commenting on proposed Treasury regulations. And, as suggested above, despite Wallace’s exceptionalist tone, his conclusions may be less exceptionalist than they appear at first blush for several reasons. ...

Wallace is absolutely right to be concerned about the quality and scope of public participation in the rulemaking process. Administrative law scholars and specialists across the regulatory spectrum fret about underparticipation by members of the general public in the rulemaking process. They look for ways to facilitate and encourage broader participation. They also contemplate whether and how agency decisionmaking should be influenced by or take into account the breadth and caliber of public participation. Wallace’s empirical analysis adds meaningfully to that discussion.  Even in the context of State Farm analysis, courts have been less inclined to take these issues into account in evaluating agency reasonableness. Perhaps Wallace is correct that they should give such issues more weight in evaluating agency action. Again, however, as Wallace acknowledges, it is far from clear that tax is exceptional in this regard.

Exceptionalism versus anti-exceptionalism aside, Congressional Control of Tax Rulemaking is simply a wonderful addition to the tax administration literature and well worth reading for both tax and nontax scholars alike. Wallace’s article gives me hope that exceptionalists and anti-exceptionalists can find common ground as tax administration continues down the path of greater integration with general administrative law requirements, doctrines, and norms.

Scholarship, Tax | Permalink