The Death of Tax Court Exceptionalism

76 Pages Posted: 11 Feb 2014 Last revised: 19 Dec 2014

Stephanie R. Hoffer

Ohio State University (OSU) - Michael E. Moritz College of Law

Christopher J. Walker

Ohio State University (OSU) - Michael E. Moritz College of Law

Date Written: November 6, 2014

Abstract

Tax exceptionalism — the view that tax law does not have to play by the administrative law rules that govern the rest of the regulatory state — has come under attack in recent years. In 2011, the Supreme Court rejected such exceptionalism by holding that judicial review of the Treasury Department’s interpretations of the tax code is subject to the same Chevron deference regime that applies throughout the administrative state. The D.C. Circuit followed suit by rejecting the IRS’s position that its notices are not subject to judicial review under the Administrative Procedure Act (APA). This Article calls for the demise of another instance of tax exceptionalism: the United States Tax Court’s longstanding view that it is not governed by the APA.

In addition to presenting the legal case against Tax Court exceptionalism, the Article explores administrative law and tax policy considerations that favor the Tax Court following traditional administrative law, including consistent application of the law, efficient allocation of resources, horizontal and vertical equity, comparative agency expertise, and a proper separation of powers. Moreover, by following administrative law principles that may be more deferential to the IRS in a particular case, the Tax Court can establish a richer dialogue with the IRS to improve agency procedures and decision-making — thus advancing tax policy’s interest in protecting less sophisticated taxpayers while increasing economic efficiency. With a growing circuit conflict as to whether the Tax Court is bound by the APA, the Tax Court should reverse course now before the Supreme Court intervenes to declare the death of tax exceptionalism in yet another area of tax law.

Keywords: tax, administrative law, tax exceptionalism, Tax Court, Administrative Procedure Act, judicial review, agency expertise, efficiency, equity, consistency, separation of powers

JEL Classification: K2, K20, K29, K34

Suggested Citation

Hoffer, Stephanie R. and Walker, Christopher J., The Death of Tax Court Exceptionalism (November 6, 2014). Minnesota Law Review, Vol. 99, pp. 221-296, 2014; Ohio State Public Law Working Paper No. 232. Available at SSRN: https://ssrn.com/abstract=2393412 or http://dx.doi.org/10.2139/ssrn.2393412

Stephanie R. Hoffer

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Christopher Jay Walker (Contact Author)

Ohio State University (OSU) - Michael E. Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States
614-247-1898 (Phone)

HOME PAGE: http://www.chrisjwalker.com

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