Thursday, February 9, 2023
Susie Morse (Texas; Google Scholar) presents Old Regs at Boston College as part of its Tax Policy Workshop hosted by Jim Repetti:
Old regs should not be subject indefinitely to administrative procedure challenge. Instead, we should leave them alone. The consensus case law view that applies the six-year limitations period under 28 U.S.C. § 2401(a) with accrual at the time of promulgation, strikes the right balance between accuracy and repose. It correctly reflects that all of the elements of the administrative procedure claim are in place at the time of the alleged error, when the regulation was promulgated. When -- as in tax -- claims can be delayed through no fault of any plaintiff, the solution is to make appropriate administrative and equitable adjustments.
The puzzle presented by administrative procedure challenges to old regs amounts to a classic tension in law: the tradeoff between accuracy and repose. The puzzle is solved by the default six-year limitations period of 28 U.S.C. § 2401(a), which, under a case law consensus, begins to run when the final agency rulemaking action is taken for administrative procedure claims. Tax provides a good text case for this argument because it is a somewhat more difficulty case, due to the fact that most opportunities to raise administrative procedure claims arise not as facial challenges, bur rather in enforcement cases – whether deficiency or refund -- where the pre-litigation tax procedure can be lengthy.
However, refund cases, although they require the prepayment of taxes to raise a claim, feature timing that is largely within the control of the taxpayer.
The law should not hold the limitations period open indefinitely. To do so would ignore the fact that all of the elements of the administrative procedure claim exist at the time of the alleged administrative procedure error, for instance when a regulation is promulgated. The plaintiff for whom the claim “first accrues” should be incentivized to raise the claim. The right solution is to accrue the six-year limitations period when a regulation is promulgated and temper it with appropriate adjustments, for instance through administrative restraint and under the doctrines of equitable tolling and equitable estoppel.