In Loper Bright, the U.S. Supreme Court recently overturned a long-standing case, Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), which created the “Chevron doctrine.” The Chevron doctrine provided that courts were sometimes required to defer to permissible administrative agency (examples include the Department of the Treasury/IRS, FDA, EEOC, FCC, DOL, FAA, etc.) interpretations of statutes even when the court had a different interpretation. The Loper decision has far-reaching implications limiting federal agencies’ rulemaking authority.

Often in tax law, Congress delegates rulemaking authority in a statute to Treasury who then provides guidance in various forms interpreting the law and offering explanations and rules beyond the plain language of a statute. Additionally, some statutes are not written in a way to anticipate all potential technical questions that may arise or may be ambiguously written, so an agency will offer guidance and procedures.

In its Loper ruling, the Court held that Chevron is inconsistent with the Administrative Procedure Act (APA). The Court stated the APA “requires courts to exercise their independent judgement in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because the statute is ambiguous.” The APA was enacted in 1946 as a check upon agency administrators, including the Internal Revenue Service and Treasury.

Going forward, courts may continue to look to agency interpretations, such as regulations, when reviewing statutes but now courts must independently conclude congressional intent. The ruling may open the door to significant legal challenges involving Treasury, and other agency, guidance.

Published: 08/08/2024

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