Because I Said So: How Much Deference Is Due?
For many years, duly promulgated administrative regulations — both tax and nontax — have been given a high level of deference by courts. This has been true at both the federal and state levels, and the courts’ deference analysis has often been guided by the U.S. Supreme Court’s decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. “Chevron deference,” as it is often called, is one of the strongest tools the government has in any controversy that calls an agency’s regulation into question. The standard is highly deferential to the agency, and it is difficult for taxpayers to convince courts to overturn an agency’s considered policy. In recent years, however, both federal and state tax practitioners have called the wisdom of Chevron deference into question, and courts (and some state legislatures) have begun to agree.
Read our newsletter to learn more about judicial deference to administrative agencies.