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FedEx, the Potential Demise of Chevron Deference, and the Future of Regulatory Challenges to Treasury Regulations

International Tax Journal

FedEx Corporation and its subsidiaries recently obtained a significant win in an $89 million refund case on denial of foreign tax credits. In this article, Robert Kovacev and Marissa Lee* examine the FedEx v. United States decision that invalidated a Treasury regulation based on its finding that the regulation conflicted with the unambiguous meaning the underlying statute, applying the two-step analysis that courts have followed since the U.S. Supreme Court decided Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc. The authors argue that FedEx's application of the Chevron doctrine comes at a time when courts and commentators are questioning whether that doctrine is too deferential to the government. They review the history of the Chevron doctrine – and discuss the implications of the Supreme Court directly reconsidering Chevron in Loper later this year. Kovacev and Lee conclude that the Court's decision in FedEx comes at a critical juncture when the analytical framework for adjudicating the validity of regulations is up for grabs. They recommend that taxpayers preserve challenges Treasury regulations in open years in anticipation that such challenges may prove stronger if Chevron is narrowed or overruled. 

*Former Miller & Chevalier attorney