Weisbach: An APA For Tax

David A. Weisbach (Chicago; Google Scholar), An APA For Tax: 

Recent Supreme Court cases threaten to upend the administrative law applicable to the tax system. Loper Bright eliminates Chevron deference. Ohio v. EPA heightens the scrutiny given to regulatory preambles. And Corner Post effectively eliminates the statute of limitations for challenging the validity regulations. A number of lower court decisions move in the same direction, aggressively using administrative law to invalidate guidance. Combined, these decisions threaten to make issuing guidance much more difficult and to slow the guidance process.

These decisions are based on the Administrative Procedure Act or related statutes rather than constitutional principles. Therefore, to the extent that they are bad policy or are inappropriate readings of the applicable statutes, they can be changed. To this end, tis paper explores what an Administrative Procedure Act for the tax system might look like. It considers six issues that have been at the forefront of the application of administrative law and closely related areas of law to tax: (1) arbitrary and capricious review, mostly focusing on its application to regulatory preambles; (2) the statute of limitations for challenging the validity of a regulation; (3) the standard of deference to Treasury regulations; (4) the method of interpreting tax statutes; (5) the requirement to use notice and comment; and (6) the use of temporary regulations. In each case, the paper considers the relevant policy issues and recommends an administrative procedure tailored to the needs of the tax system (without asking whether similar changes are needed elsewhere)

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