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Tax Regulations in a Loper Bright Light

Year: 2025
Type: article
Abstract: The Supreme Court's decision in Loper Bright overturned Chevron deference, creating uncertainty in administrative law including tax regulation. While the majority opinion ended Chevron, it left ambiguous what standard of review courts should now apply—whether purely de novo or incorporating Skidmore weight. In tax law, this chaos may be more limited than expected. For statutory sections lacking specific grants of authority, the general grant of regulatory authority in I.R.C. § 7805(a), combined with Loper Bright's favorable treatment of contemporaneous and long-standing regulations, suggests a revival of the National Muffler test with Skidmore overlay. Express specific statutory grants of authority should receive even greater deference, though courts will need to determine the boundaries of such grants and whether implied delegations qualify. While this framework provides some stability, practical challenges remain, including parsing specific grant authority, strategic forum choices between specialized and generalist courts, and the need for more detailed regulatory preambles. Using transfer pricing as an example, the paper demonstrates that while technical regulatory details may survive challenge, fundamental changes would likely fail under the new regime. The arm's length standard, consistently maintained since 1935 and reinforced through successive statutory amendments including the 1986 Tax Reform Act, exemplifies how Loper Bright effectively freezes agencies from making radical departures—such as shifting to formulary apportionment—from well-established regulatory frameworks. Overall, the decision introduces short-term chaos but may not dramatically increase the rate of tax regulation invalidation, though the path to stability will be turbulent.
DOI: 10.5744/ftr.2025.2006
Language: English
Open Access status: green
OpenAlex ID: W4414458372
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