The Promise and the Reality of U.S. Tax Administration

Abstract

This Essay was written for a symposium entitled The Delicate Balance: Revenue Authority Discretions and the Rule of Law, held in Prato, Italy on September 23-24, 2010. The purpose of the symposium was to consider how different countries approach and think about delegations of decision-making authority to tax administrators, and the implications of such delegations. The Essay addresses the U.S. experience with delegating administrative discretion to Treasury and the IRS. In the Essay, I relate U.S. tax administration to administrative law doctrine and practice more generally. I link the courts’ willingness to accept congressional delegations as constitutionally permissible to the Administrative Procedure Act and the courts’ interpretation thereof. I identify three key ways in which U.S. tax administration deviates from general administrative law doctrine. Finally, I offer preliminary thoughts regarding the broader implications of those deviations. Essays from the symposium were published as a collection by IBFD in THE DELICATE BALANCE: TAX DISCRETIONS AND THE RULE OF LAW (Chris Evans, Judith Freedman, & Richard Krever eds., 2011).

Keywords: delegation, tax, administrative law, rulemaking, Administrative Procedure Act, Treasury regulations, guidance documents

JEL Classification: K19, K2, K20, K29, K34, K30, K40