The Surprising Significance of De Minimis Tax Rules

76 Pages Posted: 14 Oct 2020 Last revised: 23 Aug 2022

See all articles by Leigh Osofsky

Leigh Osofsky

University of North Carolina (UNC) at Chapel Hill

Kathleen DeLaney Thomas

University of North Carolina School of Law

Date Written: September 29, 2020


De minimis tax rules—rules that eliminate tax burdens for low-income taxpayers or low-dollar transactions—abound in the tax law. Despite the prevalence of such rules, legal scholarship has treated them as—well—de minimis, or as mere rounding errors that do not merit sustained attention. This perspective is understandable. If de minimis rules address insignificant taxpayers or tax liabilities, aren’t the rules themselves likely to be insignificant?

Recent tax law developments have revealed that this conception of de minimis tax rules is deeply misguided. Major allocations of tax law liability, as well as accompanying questions about the fairness, efficiency, and administrability of the tax system, turn on the existence and design of de minimis tax rules. In the wake of the recent Tax Cuts and Jobs Act, for example, astute industry players successfully lobbied the Treasury Department to create de minimis tax rules, thereby scoring significant monetary victories. De minimis tax rules like these not only serve as low-salience giveaways, but are also poorly designed in a way that undermines the integrity of the tax system.

The lack of scholarly attention to de minimis tax rules has left this lobbying largely unchecked. There is no scholarly framework evaluating existing de minimis tax rules. There is no policy framework to help lawmakers decide why, when, or how such rules should be made. And there is no separation-of-powers framework analyzing when the Treasury Department has the authority to create de minimis tax rules without express Congressional authorization. This Article seeks to fill this gap by analyzing de minimis tax rules along all of these dimensions. It provides a framework for considering when de minimis tax rules are preferable to other policy options and offers important design considerations. Scholars can apply this analysis to the de minimis tax rules that already pervade the Code and policymakers can use it to guide the many more they will consider in the future.

Keywords: tax, legal rules, legislation, regulation

JEL Classification: K00, K2, K23, K34

Suggested Citation

Osofsky, Leigh and Thomas, Kathleen DeLaney, The Surprising Significance of De Minimis Tax Rules (September 29, 2020). Washington and Lee Law Review, Vol. 78, No. 2, 2021, UNC Legal Studies Research Paper, Available at SSRN:

Leigh Osofsky (Contact Author)

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

Kathleen DeLaney Thomas

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-843-7630 (Phone)

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