THE FIGHT OVER "FIGHTING REGS" AND JUDICIAL DEFERENCE IN TAX LITIGATION

Courts typically accord some level of deference to agency interpretations of statutes. Should that change for a "fighting" regulation that an agency has issued during the course of related litigation? The Treasury Department has done that many times, as highlighted by the 2011 U.S. Supreme Court decision in Mayo Foundation for Medical Education and Research v. United States and a series of recent courts of appeals cases that led to a grant of certiorari in Home Concrete & Supply, LLC v. United States. To answer the question of how "fighting regs" and other litigation-oriented tax guidance should be treated, this Article first analyzes the law on judicial deference to tax authorities generally, making sense of the confused tax-specific historical approach. It then considers the context of rulings issued during pending litigation. The Article explains that, following the 2011 decision in Mayo, deference under the famous Chevron case applies to all Treasury regulations issued in accordance with the requirements of the Administrative Procedure Act. It further argues that Revenue Rulings - formal guidance issued by the Internal Revenue Service - should receive deference under Skidmore v. Swift & Co., in accordance with United States v. Mead Corp. and Mayo. The Article proposes that regulations and rulings issued during related litigation receive the applicable level of deference (Chevron or Skidmore) but that the deference inquiry take into account the retroactivity and surprise issues raised by the timing of the guidance.