Muffled Chevron: Judicial Review of Tax Regulations

Abstract

Taxpayers and their lawyers frequently express displeasure with tax regulations. Some go further and litigate the regulations' validity. The result of such challenges often depends on the degree of deference that reviewing courts give to the regulations. The degree of judicial deference to administrative decision-making in turn raises questions about the division of labor between courts and agencies. It "implicates constitutional concerns about the role of the courts in a government of separated powers," perhaps most importantly, about the ability of courts to serve "as a balance for the peoples' protection against abuse of power by other branches of government."
In recent years, courts facing questions of judicial deference to agency decisions have had to struggle with Chevron U.S.A., Inc. v. National Resources Defense Council, a 1984 Supreme Court decision that has been described as creating a "revolution in administrative law" by giving controlling effect to administrative decisions. This article examines the extent to which Chevron has influenced judicial review of tax regulations. It concludes that, if Chevron has had any effect in this context, it may have been to decrease marginally, rather than increase, deference to Treasury regulations. The article also argues that judicial review of tax regulations provides a model for a revised Chevron.