Steve Dixon and Kevin Kenworthy Discuss the Supreme Court's Decision in Kisor on Tax Notes Talk
Tax Notes Talk
Kevin Kenworthy and Steve Dixon* appeared on the Tax Notes Talk podcast with the editor-in-chief of Tax Notes Today International, David Stewart, to discuss the impact of the Supreme Court's decision in Kisor on the Auer doctrine and other possible effects it might have for Treasury regulations. In broad strokes, that decision scaled back the extent to which courts will defer to agency interpretations of their own ambiguous regulations.
Dixon explained the difference between Auer and Chevron deference and why the constraints that the Court put on Auer deference might not affect Chevron deference because "Chevron is implicated only when, as the Supreme Court's decision in Mead lays out, only when an agency acts with the force of law" and so if "the Administrative Procedure Act functions as it's intended to, which is to make agency rulemaking more like lawmaking by providing for notice and comment and providing for a period before the regulations become effective," then "there's a reason to defer to an agency interpretation that's articulated in a regulation that has the force of law, and possibly not to defer to an agency interpretation under Auer, where the agency is interpreting its own regulation." Kenworthy explained the more prominent role that the APA now plays in tax regulation, remarking that in the wake of the Mayo decision, "tax is no longer insular or unique" and Treasury must promulgate regulations in a world in which "the Administrative Procedure Act applies fully to tax regulations and other forms of guidance."
And they discussed the Kisor decision itself. Kenworthy explained that the majority was unpersuaded by policy arguments for rejecting Auer altogether because "it sets up a perverse incentive for an agency to draft ambiguous or sloppy regulations and then come back later, when there's an a live dispute perhaps, and to take a position that suits their interest at that time." Dixon expressed doubt about the majority's inference "that there is a kind of implicit blanket delegation to agencies to enact and interpret their own regulations." They concluded with some observations on what, if anything, the decision means for tax lawyers, with Kenworthy observing that "you need to be aware of administrative law principles and recognize that the administrative law landscape is changing as we speak."
*Former Miller & Chevalier attorney