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May 12, 2011
DOJ Won't Argue for Chevron Deference for Revenue Rulings and Procedures, Official Says

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by Marie Sapirie

The Department of Justice will no longer argue for Chevron deference for revenue rulings and revenue procedures, said Gilbert Rothenberg, appellate section chief in the DOJ's Tax Division.

Academics had speculated that guidance published in the Internal Revenue Bulletin or Cumulative Bulletin might be the next step following Ma

yo, but Rothenberg said that if the issue is important enough for Chevron deference, "I'm going to ask my client agency if they would just issue a regulation." (For the Supreme Court opinion in Mayo Foundation for Medical Education and Research v. United States, No. 09-837 (U.S. Sup. Ct. Jan. 11, 2011), see Doc 2011-609 or 2011 TNT 8-10.)

Speaking at the Low-Income Taxpayer session of the American Bar Association Section of Taxation meeting in Washington on May 7, Rothenberg said the DOJ was prepared to argue that temporary regulations are entitled to Chevron deference, but that it wouldn't argue that proposed regulations should also be accorded deference.

Explaining how the DOJ distinguishes between proposed and temporary regulations, Rothenberg said that "proposed regulations are simply 'this is what the IRS thinks may be a good idea,' but it wants to hear from everybody else. . . . Temporary regulations are 'we've got to get something out right now and we want people to pay attention to it.'"

He said the sunset provisions in temporary regulations must be issued in proposed form at the same time to allow for notice and comment as additional factors in favor of according them deference.

Prof. Kristin Hickman of the University of Minnesota Law School said that the announcement that the DOJ wouldn't pursue Chevron deference for revenue rulings and procedures wouldn't eliminate the problem because it "comes down to what kind of power has Congress delegated to the agency, and how does Congress perceive the legal force of agency action?"

In a session of the Bankruptcy Committee that also addressed Mayo, Tom Kane, counselor to the associate chief counsel (procedure and administration), differentiated between "big G" and "little g" guidance, calling chief counsel notices and the Internal Revenue Manual "lesser forms of guidance." The IRM contains directions and instructions to IRS personnel, he said. In internal discussions, Treasury and Justice make a distinction between guidance and what they consider instructions to personnel, the latter of which "is not guidance with a capital G," said Kane.

Tax Court Update

Changes at the Tax Court have increased opportunities for unrepresented taxpayers to have access to an attorney, said Chief Judge John O. Colvin.

Filing levels at the court remain at around 29,000 per year, Judge Colvin said, adding that case closings are also high.

Low-income taxpayer suits have been facilitated by the recent switch to mandatory e-filing, several rules changes, and the trend of holding motions hearings in the city that the taxpayer requests for trial, Judge Colvin said. He added that the court reviewed its public materials and forms and then added frequently asked questions to the website and revised the taxpayer petition form. "Now it looks like the court wants someone to fill it out," he joked.

Calendar calls represent a "very significant opportunity" for unrepresented people to get an attorney, Judge Colvin said, noting that there has been significant growth in the calendar call program recently. "I think it's going to affect the experience people have in the Tax Court," he said.

The court especially appreciates the work of student clinics, and a recent revision to the court's rules clarifies that students may participate in cases, Judge Colvin said, adding that supervising attorneys should inform the court that there is a student involved, because it can now recognize the student participants in published opinions.

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