A Massive Loss and a Huge Rebuke for the IRS from the Tax Court in Altera Decision

Procedurally Taxing, July 28, 2015

5 Pages Posted: 2 Aug 2015

Date Written: July 28, 2015

Abstract

The Tax Court's unanimous decision on July 27, 2015, in Altera Corp. v. Commissioner, 145 T.C. No. 3, was the first time the Tax Court has applied the arbitrary and capricious standard of the Administrative Procedure Act to invalidate a tax regulation issued by the IRS and Treasury. This case is only the second time any court has done this. The unanimity of the decision and the fact that the IRS lost on every point addressed by the court confirms that the standard IRS practices for issuing regulations are deeply flawed. This decision will undoubtedly prompt numerous other challenges to tax regulations based on claimed violations of the arbitrary and capricious standard.

Keywords: Administrative Procedure Act, tax law, IRS, State Farm

Suggested Citation

Smith, Patrick J., A Massive Loss and a Huge Rebuke for the IRS from the Tax Court in Altera Decision (July 28, 2015). Procedurally Taxing, July 28, 2015. Available at SSRN: https://ssrn.com/abstract=2638644

Patrick J. Smith (Contact Author)

Ivins, Phillips & Barker ( email )

1717 K Street, NW Suite 600
Washington, DC 20006
United States

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