Is Loper Bright Dimming? by Steve Mather and James Mather
We previously blogged about our case involving the effect of Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), on an issue of deference to Treasury Regulations. In the prior blog, we had only seen the IRS’s arguments to limit the scope of the apparent sea-change from Loper Bright. We now have the Tax Court’s opinion in our case and some other precedent applying to Loper Bright in the tax area. These cases raise the question of whether the effect of Loper Bright is dimming.
As we all now know, the Supreme Court’s Loper Bright conceptually did away with “Chevron deference” by holding that courts, not agencies, must independently interpret ambiguous statutes. However, the practical effects of Loper Bright have been less straightforward.
Our recent case Hamel v. Commissioner, T.C. Memo. 2025-19, hinged on the interpretation of when information was “furnished” to IRS for the purposes of identifying an unidentified partner per IRC § 6229(e). In the original opinion, the Tax Court relied on the interpretation of “furnished” in Temporary Treasury Regulation § 301.6223(c)-1T and Gaughf Properties, L.P. v. Commissioner, 139 T.C. 219, which found the Temporary Treasury Regulation to be a “permissible” interpretation. The “permissible” standard was derived directly from Chevron. However, shortly after the Opinion was issued, the intervening Loper Bright changed the Chevron landscape, so we filed for reconsideration.
The Tax Court heard the motion for reconsideration in T.C. Memo. 2025-19, but ultimately declined to adopt any real changes. The Tax Court focused heavily on the general statutory grant of authority found in IRC § 7805(a) as well as general TEFRA authority granted in IRC § 6230. The Tax Court found that these statutes constituted a congressional grant of authority for the IRS to promulgate regulations and found that the IRS engaged in “reasoned decisionmaking” within those regulations, including Temporary Treasury Regulation § 301.6223(c)-1T.
Also of interest was that the Tax Court declined to overturn Gaughf despite Gaughf’s interpretation of IRC § 6229(e) being decided on a much more deferential standard. As mentioned, Gaughf quoted Chevron in holding that agency interpretations of IRC § 6229(e) need only be “based on a permissible construction of the statute.” The Tax Court in our case did concede that “deferential and permissible interpretation of the statute no longer prevails simply because the Department of the Treasury (Treasury) offers it.” However, the Tax Court ultimately believed that Gaughf contained sufficient independent reasoning to be upheld.
The Tax Court further relied on the deference found in Skidmore, to an agency’s “body of experience and informed judgement” to issue regulations. Skidmore itself has been subject to much debate post Loper Bright and is deserving of an article on its own. The 8th Circuit comprehensively denied the IRS’s request for Skidmore deference in 3M Co. v. Commissioner, 154 F.4th 574 (8th Cir. 2025). The Court in 3M found that Skidmore was not applicable to recent IRS interpretations, especially where “the statute has another better reading.”
3M also featured a substantial discussion on statutory grants of authority. While the statute in 3Mdelegated some authority to IRS, the Court found that “it is still our job to fix the boundaries of that delegated authority based on the statute's text.” Such an interpretation is a much more skeptical look at statutory grants of authority than the Tax Court took in our case.
Based on the experience in our case, the Tax Court seems unlikely to materially overrule or reinterpret Treasury Regulations. Does 3M indicate appeals courts are more likely to do so? Not necessarily. Another case of ours before the 9th Circuit, Brown v. Commissioner, 116 F.4th 861 (9th Cir. 2024), again deciding an ambiguous statute, shows otherwise. The 9th Circuit admitted that Loper Bright must have some effect but could not agree on what that effect was. This lack of agreement resulted in three opinions which addressed Loper Bright differently. The lead opinion did not cite Loper Bright at all. The dissenting opinion cited Loper Bright as authority to overturn an IRS interpretation in the Internal Revenue Manual. The concurring opinion felt Loper Bright authorized the Court to adopt an interpretation that neither party had even argued.
So, do these recent cases give us much-needed clarity on the impact of Loper Bright on IRS interpretations? Did Loper Bright apply the death blow to Chevron deference that we hoped? The answer to both questions, unfortunately, seems to remain no.