Paul L. Caron

Thursday, October 3, 2019

Hickman Reviews Choi's Substantive Canons Of Tax Law

Jotwell (Tax) (2016)Kristin Hickman (Minnesota), Refashioning Anti-Abuse Doctrines As Substantive Canons  (JOTWELL) (reviewing Jonathan H. Choi (NYU), The Substantive Canons of Tax Law, 72 Stan. L. Rev. ___ (2020)):

Jurists and legal scholars who think about methods and approaches for resolving questions of statutory meaning like to talk about traditional tools of statutory interpretation and the metaphorical toolbox in which those tools are kept. Textualism versus purposivism; the relative merits of text, history, and purpose; and the meaning and utility of both semantic and substantive canons are all common fodder for discussion and debate. Adding to the literature at the intersection of statutory interpretation and tax, Jonathan Choi offers an interesting and thorough treatment of why we ought to think of tax anti-abuse doctrines like the economic substance doctrine, the step transaction doctrine, and the assignment-of-income doctrine as substantive canons of statutory interpretation. (Helpfully, Choi provides a nice appendix, including footnotes, in which he catalogues substantive tax canons, including a couple of “not a canon” entries.) ...

Choi’s article contributes to the academic literature simply by engaging seriously and deeply in the tax context with the more general scholarship and jurisprudence regard substantive canons, though he is by no means the first scholar to do so. His treatment of tax anti-avoidance doctrines as substantive canons is not, however, purely theoretical. This fall, the Supreme Court will decide whether to grant a petition for certiorari filed in Tucker v. Comm’r, with former Solicitor General Gregory Garre as lead counsel, asking the Court to decide whether the economic substance doctrine is “properly invoked only as a tool for interpreting the meaning of tax laws,” or whether it may “be invoked to supplant any tax results that…stem from the application of clear, unambiguous, and mechanical provisions of tax law.” According to the Tucker cert petition, irrespective of Internal Revenue Code § 7701(o), the circuits are divided over exactly when to apply the economic substance doctrine, with some circuits relying on the doctrine more like an ambiguity tie-breaker, and others invoking the doctrine even where the Code’s text is unambiguous.

Neither the cert petition in Tucker nor the circuit court opinions it cites rely upon or address Choi’s substantive canon framework. For that matter, the taxpayer’s position in Tucker clearly would relegate the economic substance doctrine to the role of ambiguity tie-breaker, rather than the rebuttable presumption that Choi prefers. Nevertheless, the Tucker cert petition’s framing of the economic substance doctrine in traditional statutory interpretation terms is consistent with Choi’s suggestion that we think of tax anti-avoidance doctrines in such a way. And, whether or not the courts adopt Choi’s substantive canon framework, perhaps recharacterizing tax anti-avoidance doctrines as tools of statutory interpretation will, in one way or another, help resolve the confusion and inconsistency that Choi identifies.

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