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A “Hardening Look” Review for the IRS

December 10, 2019 in Economics

By William Yeatman

William Yeatman

Welcome back to Ninth Circuit Review-Reviewed, your monthly recap of administrative law before arguably “the second most important court in the land.” Let’s get straight to last month’s cases.

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Altera Part I: IRS Becoming Less Exceptional in Admin Law

“IRS exceptionalism” continues its slow bleed.

For reasons that escape me, the White House and federal courts historically have treated the IRS differently than other executive branch agencies when it comes to administrative law and regulatory process. But that’s changing.

For example, the IRS no longer escapes OIRA review, as it had since the 1980s. Last year, the OMB won a power struggle with the Treasury Department; now, IRS rules are subject to the same White House regulatory review process that other executive branch agencies must undergo.

Judicial review, too, is becoming more “normal” for the IRS, as the agency increasingly becomes beholden to the same administrative law doctrines that courts long have employed in reviewing other agencies. Let’s call it “hardening look review.”

The latest sign is the Ninth Circuit’s denial last month of an en banc rehearing in Altera v. Commissioner.

Altera is a big deal for tax administration” writes Professor Kristin Hickman, because “even as individual judges in the Altera litigation have disagreed over how administrative law doctrines apply in the case, no judge has questioned whether those doctrines apply in the tax context.” According to Prof. Hickman, “[t]hat would not have been true ten years ago.”

It’s a fascinating case, with big implications for both the economy and, of course, administrative law. For more, I highly recommend Prof. Hickman’s blog, and also coverage at TaxProf Blog.

Altera Part II: Judge Milan Smith Rings Death Knell for Auer

Administrative law doctrines develop in lower courts within the “markers” set from above by the Supreme Court. Accordingly, this blog has been paying close attention to the fate of the Court’s schizoid opinion in Kisor v. Wilkie.

On the one hand, Justice Kagan’s plurality opinion upheld the Auer doctrine, which requires courts to give binding judicial respect to an agency’s reasonable interpretations of regulatory ambiguities. On the other, her opinion “reinforced” and “expanded on” the doctrine’s limits, so much so that Justice Gorsuch claimed that Auer deference emerges “enfeebled” and “maimed.”

So, which is it? Did Kisor affirm or enfeeble Auer deference? Some scholars claim that the doctrine lives. Others, including me, argue that Kisor effectively killed Auer deference by imposing so …read more

Source: OP-EDS

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