What Do Courts Have to Do With It?: The Judiciary's Role in Making Federal Tax Law

The Impact of Agency Procedures and Judicial Review on Tax Reform

“…In general, three courts -the United States District Courts, the United States Court of Claims, and the United States Tax Court -hear claims at the trial level in connection with federal taxes, as discussed by Lederman (2012). 6 In any of these courts, the taxpayer can challenge a regulation or ruling that is a basis for the IRS's position.…”

“…These three courts follow two distinct litigation paths, as explained further by Lederman (2012). Under the Tucker Act of 1976, taxpayers can bring suit in the District Court and Court of Federal Claims only for refund actions.…”

“…That is, reliance by taxpayers complicates the consequences of judicial invalidation and may affect judicial willingness to invalidate tax rules, although courts do invalidate tax regulations, as described by Lederman (2012). For taxpayers who do not challenge an IRS ruling, even a decision that would be favorable to them can impose burdens.…”

“…13 See National Muffl er Dealers Ass'n v. U.S., 440 U.S. 472 (1979). 14 See Chevron U.S.A, Inc. v. NRDC, Inc., 467 U.S. 837 (1984).15 For further discussion of doctrines of judicial deference, seeLederman (2012).16 See Mayo Foundation for Medical Education and Research v. United States, 131 S.Ct. 704 (2011).17 As discussed further below, § 7805(a) of the Internal Revenue Code grants the Secretary authority to develop "all needful rules and regulations for the enforcement of" the Internal Revenue Code.…”