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The Tax Lawyer

Administrative Law Meets Section 501(c)(3) Charitable Purpose

Ellen P. Aprill

Abstract

In the past several years taxpayers have won a number of challenges to tax guidance based on violations of administrative law. Federal courts are blithely invalidating IRS and Treasury guidance, ranging from regulations to notices, because of failure to follow various administrative law doctrines. These administrative law challenges have been substantive, procedural, or both. Courts engage substantive challenges under the Chevron doctrine by determining whether guidance is inconsistent with, or an unreasonable interpretation of, the statutory language. Procedural challenges involve failure to satisfy requirements of the Administrative Procedures Act (APA), in particular the need for and adequacy of notice-and-comment rulemaking. The guidance nullified in recent cases includes some finalized decades ago.