{"id":147,"date":"2024-09-24T20:36:36","date_gmt":"2024-09-24T20:36:36","guid":{"rendered":"https:\/\/www.bourbonnaistax.com\/blog\/?p=147"},"modified":"2024-09-24T20:36:37","modified_gmt":"2024-09-24T20:36:37","slug":"boring-is-as-boring-does","status":"publish","type":"post","link":"https:\/\/www.bourbonnaistax.com\/blog\/boring-is-as-boring-does\/","title":{"rendered":"Boring Is as Boring Does"},"content":{"rendered":"
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The U.S. Constitution begins with some of the most ambitious words in the history of governance: \u201cWe the People of the United States of America, in Order to form a more perfect Union…”<\/em><\/strong> For over 200 years now, the Supreme Court of the United States has helped shape that effort like a river\u2019s banks shape its flow. The Court has weighed in on some of the thorniest, most contentious issues in American life. Is \u201cseparate but equal\u201d really equal? Does the Constitution protect a right to privacy? Where do the limits of free speech apply?<\/p>\n\n\n\n

These days, the Court typically issues fewer than 100 signed opinions per year (along with a busy \u201cshadow docket\u201d of lower profile activity). Naturally, the justices focus most of their scrutiny on fundamental constitutional questions. Tax opinions are rare, simply because the technical nature of most tax disputes rarely involves fundamental constitutional questions. Every so often, though, the Court does address specific tax disputes. Earlier this year, for example, in Connelly v. United States<\/em>, the Court ruled that a company\u2019s obligation to buy out a deceased owner\u2019s interest doesn\u2019t reduce the company\u2019s value for purposes of taxing the deceased owner\u2019s estate. (That sounds really<\/em> boring right? It is, although if you have an insurance-funded entity-purchase buy-sell agreement, you might want to rethink it.)<\/p>\n\n\n\n

Sometimes, though, the Court issues opinions that indirectly affect how Uncle Sam actually collects the taxes Congress decides we should owe. That happened on June 28 when the justices released their opinion in\u00a0Loper Bright v. Raimondo<\/a><\/em>.<\/p>\n\n\n\n

First, some background. Our Constitution establishes a legislative branch, Congress, to write the laws, and an executive branch, headed by the President, to enforce them. However, as life and legislation have gotten more complicated, Congress has had to get more ambitious. Technical challenges like protecting the environment mean that in practice, Congress writes statutes expressing their general intent, then executive branch agencies flesh out those statutes with more detailed regulations.<\/p>\n\n\n\n

Here’s the problem. At what point does writing regulations cross the line into writing laws<\/em>? In 1984, the Court held in Chevron v. Natural Resources Defense Council<\/em> decision that courts should defer to an executive branch agency\u2019s reasonable interpretation of any legislative ambiguity. However, the Court in Loper Bright<\/em> ruled that the Chevron<\/em> decision violated the 1946 Administrative Procedures Act (APA), which gives courts the job of deciding whether the law means what an agency says it does. It all sounds boring and technical, which it is. The winning plaintiffs characterize their case as \u201cconstitutional housekeeping.\u201d But it could also encourage new challenges to various regulations throughout the government.<\/p>\n\n\n\n

And that, of course, includes tax regulations. Congress writes the tax laws, then delegates the job of enforcing them to the Treasury department and the IRS. So most observers think the Loper Bright<\/em> ruling will encourage taxpayers to challenge IRS regulations. That\u2019s already happening, of course. In 2020, the Court ruled in CIC Services v. IRS<\/em> that the IRS violated the APA when it issued a notice identifying certain captive insurance arrangements as \u201ctransactions of interest.\u201d (Boring? Yes. Important? Also, yes.) We\u2019ll see over the next few years how frontline Tax Court judges incorporate Loper Bright<\/em> into their opinions.<\/p>\n\n\n\n

Loper Bright<\/em>\u00a0won\u2019t bring immediate change the way Congress could if they had simply changed a law raising a rate or limiting a deduction. But over time, the decision may limit IRS power to enforce the regulations it writes. That, in turn, may weaken the Service\u2019s power to reach into your pocket. And there\u2019s nothing boring about that! Naturally, we\u2019ll be keeping an eye out for any opportunities to help you pay less.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

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