January 16, 2014 The Tax Lawyer

(Not So) Concrete: How the Service Will Benefit from the Ambiguous Taxpayer Victory in United States v. Home Concrete & Supply, LLC

Volume 67, No. 1 - Fall 2013

Gabriel Kurcab

Abstract

    United States v. Home Concrete & Supply, LLC could have been an important decision for administrative law. It was the first time the Court was presented with the question of whether, pursuant to its 2005 decision in National Cable & Telecommunications Ass’n v. Brand X Internet Services, an agency is entitled to deference if it takes a statutory interpretation that failed during litigation, promulgates it as a regulation during the pendency of the suit, and then argues that pending appeals should be resolved in its favor on the basis of deference to the regulation.

    This is a significant administrative law question, and it arose somewhat by chance in the context of Treasury regulations. Since the early 2000s, the Service had been embroiled in extensive litigation with taxpayers who used “Son-of-BOSS” tax shelters. In many cases, the Service missed the usual three-year statute of limitations for collection and had to rely on the six-year statute of limitations provided for in Code section 6501. When it became doubtful whether the six-year statute of limitations applied, the Treasury promulgated a Regulation on point with the goal of resolving pending litigation in the Government’s favor.

    The Court in Home Concrete could have clarified whether the Treasury was entitled to seek deference for its Regulation. Instead, it left the validity of the Treasury’s Regulation uncertain, to the detriment of taxpayers. This Note argues that the Court should have resolved the question of Brand X’s reach in favor of the Service, bringing consistency to this area of law and increasing the likelihood of congressional intervention.

    Part II of this Note provides background on judicial deference to Treasury regulations and administrative rulemaking generally. Part III describes the facts of Home Concrete, the underlying issues, and the nature of the circuit split. Part IV describes the Court’s decision and provides an argument for why the Court should have resolved the question in favor of the Service. Part V offers a brief conclusion.

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