Loper Bright v Raimondo – Introduction
A landmark ruling by the US Supreme Court has significantly curtailed the authority of federal agencies, including the Internal Revenue Service (IRS), to interpret the laws they enforce.
Why landmark?
The decision in the case of Loper Bright v Raimondo overturns the Chevron doctrine, a 40-year-old principle that required courts to defer to federal agencies on the interpretation of ambiguous laws passed by Congress.
What are you going Chevron about?
For decades, the IRS relied on the Chevron doctrine to defend its tax regulations in litigation.
This doctrine compelled federal courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute.
This effectively limited the opportunities for taxpayers and tax practitioners to contest some of the muddier aspects of Internal Revenue Code.
Doctrine dumped?
The Supreme Court declared that Chevron is incompatible with the Administrative Procedure Act’s mandate for courts to resolve legal questions using their judgment.
Going forward, the Courts will rely on their discretion in cases involving ambiguous statutes rather than deferring to agency interpretations. That said, they may still consider an agency’s interpretation if it is long-standing or well-reasoned.
Implications
The implications of the Loper ruling are still unfolding, but experts anticipate an increase in litigation.
Additionally, the IRS will likely face constraints in issuing tax guidance and rules, as the process to establish these as settled law becomes more protracted.
The ruling may also invigorate pending legal challenges to potentially overreaching federal agency actions.
However, the Supreme Court’s decision in Loper does not retroactively invalidate cases decided under the Chevron deference doctrine over the past 40 years. Statutory precedent will still apply to those cases. “We do not call into question prior cases that relied on the Chevron framework,” the Court stated. “The holdings of those cases that specific agency actions are lawful remain subject to statutory stare decisis despite our change in interpretive methodology.”
Loper Bright v Raimondo – Conclusion
This ruling marks a significant shift in the balance of power between federal agencies and the courts, with potentially far-reaching consequences for regulatory practices and the enforcement of federal laws.
Final thoughts
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