Paul L. Caron
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Thursday, October 17, 2024

Avi-Yonah & Wang: Tax Delegation Post-Loper Bright

Reuven S. Avi-Yonah (Michigan; Google Scholar) & JJ Wang (J.D. 2025, Michigan), Tax Delegation Post-Loper Bright

In its recent decision in Loper Bright, the Supreme Court has fundamentally shifted the contours of judicial deference to administrative interpretations by repealing the Chevron doctrine. However, while the Court has curtailed deference, it simultaneously underscored the legitimacy of statutory delegation to agencies. The Internal Revenue Code (Code) is the most intricate legislative text within the U.S. legal framework, necessitating significant technical expertise for its application. It is, therefore, unsurprising that Congress often delegates authority to the IRS for the execution of the statute. In light of the Court's decision in Loper Bright, it becomes imperative to clarify the parameters of permissible tax delegation.

Loper Bright introduces the concept of "constitutional limits" in delegation, referring to the nondelegation doctrine, which posits that Congress cannot cede its core legislative powers to an executive agency. Current jurisprudence renders this standard relatively lenient. In a recent case, a plurality endorsed delegation but left open the possibility for future reevaluation. Notably, three Justices in dissent expressed a willingness to reconsider the longstanding leniency toward delegation, emphasizing the need for standards that are "sufficiently definite and precise." 

This paper discusses which types of delegation in the Code meet this standard. In addition, given the potential for challenges to IRS regulations, it is particularly urgent to identify those not founded on any delegation. To navigate this landscape effectively, Congress should reassert its intent by adding delegations as needed and by explicitly outlining the parameters of the delegation. This would not only fortify the IRS's regulatory framework but also provide a clearer basis for judicial review, enabling courts to exercise their interpretive roles more flexibly and judiciously.

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https://taxprof.typepad.com/taxprof_blog/2024/10/avi-yonah-wang-tax-delegation-post-loper-bright.html

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