On June 28, 2024, in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court overruled its decision from a 1984 case and eliminated the doctrine of “Chevron deference.” Under this doctrine, courts deferred to permissible agency interpretations of statutes, even if the courts disagreed with an agency’s interpretation of a statute. Following Loper, courts are no longer required to defer to an agency’s interpretation of a statute and instead courts have the ultimate authority to interpret statutes.

Treasury Regulations reflect the IRS’s interpretation of a federal statute, namely the Internal Revenue Code (“IRC”). For the past 40 years, Chevron deference has protected the validity of Treasury Regulations. Now, however, Treasury Regulations – especially those that are inconsistent with prior interpretations of the IRC or that seemingly expand provisions of the IRC – may be more exposed to successful challenges by taxpayers. How successful any such challenges are in a post-Chevron framework remains to be seen.

Going forward, another by-product of Loper may be that, since Treasury Regulations (which are issued following a time-consuming notice and comment period) enjoy less deference in the eyes of courts, the IRS may now issue more informal guidance (such as Revenue Rulings) in lieu of formal Regulations. This, too, remains to be seen.

A link to the Loper decision can be found here: 22-451 Loper Bright Enterprises v. Raimondo (06/28/2024) (supremecourt.gov).

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