Treasury and IRS Issue Joint Policy Statement on the Tax Regulatory Process
March 7, 2019
Earlier this week, the Treasury Department issued a policy statement on the tax regulatory process. A significant section of the statement describes the approach that will be taken in Tax Court litigation to arguments based on judicial deference to regulations. Treasury states that it will not claim Auer deference in such litigation to interpretations set forth in subregulatory guidance, such as revenue rulings, nor will it claim Chevron deference to such interpretations. That apparent abandonment of Auer deference arguments goes beyond the position the Justice Department has taken in the Supreme Court in the Kisor case, where the government has argued for a significant narrowing of Auer but stops short of stating that it should be overruled. See our reports on Kisor here. Note that the Treasury Department statement by its terms applies only to Tax Court litigation, which is handled by the IRS, not to refund suits where the Justice Department handles the litigation.
The Treasury Department statement also addresses topics other than judicial deference, including: when to issue subregulatory guidance; legislative vs. interpretative regulations; and temporary regulations. For a fuller analysis of the Treasury Department statement, please read this Miller & Chevalier Tax Alert.
