On this episode of Adam Talks, tax attorney and IRA Financial’s founder, Adam Bergman, Esq., discusses a Supreme Court case ruling that overturned the doctrine of Chevron and that courts should rely on their own interpretation of ambiguous laws.
Did the IRS just Lose Its Power?
In an emergency episode of “Adam Talks,” tax attorney and IRA Financial founder Adam Bergman discusses a significant Supreme Court ruling that could impact the IRS’s operations. The court case, Loper Bright Enterprises v. Raimondo, alongside Relentless Inc. vs. Department of Commerce, overturns the longstanding Chevron doctrine. Chevron, a crucial precedent cited over 18,000 times, mandated that courts defer to administrative agencies like the IRS when interpreting ambiguous laws. This deference allowed agencies to fill in the gaps and create rules, given their specialized expertise.
Chief Justice John Roberts, in a 6-3 majority ruling, emphasized that Chevron’s approach contradicts the Administrative Procedures Act, asserting that courts, not agencies, should resolve statutory ambiguities. This shift means that courts will no longer automatically defer to administrative bodies’ interpretations, ensuring elected officials, rather than lifelong bureaucrats, are the ones making and interpreting laws. Justice Kagan, in her dissent, warned of the wide-reaching implications, arguing that this change gives courts excessive power over complex, expertise-driven regulatory issues.
The ruling creates potential disruptions for the IRS, as courts will now scrutinize IRS interpretations of tax laws more closely, leading to more litigation. Taxpayers could feel empowered to challenge IRS decisions, knowing that courts are less likely to defer to the IRS’s expertise. This change is expected to make the IRS more cautious in its regulatory actions, potentially slowing down the issuance of new tax rules and bringing more uncertainty for taxpayers.
Bergman views the ruling positively, arguing that it prevents administrative agencies from accumulating unchecked power. He believes that courts should be more active in interpreting laws rather than deferring to agencies. This change could lead to a more balanced approach where courts critically evaluate administrative positions rather than accepting them at face value, fostering a fairer legal environment for taxpayers.
The IRS, which has relied heavily on Chevron deference since a pivotal 2011 case, will now face a more challenging landscape. The Treasury Department and the IRS had expanded their administrative powers post-2011, but the new ruling curtails this expansion, requiring courts to engage more deeply with tax regulations. Bergman suggests this could lead to greater oversight and accountability for administrative agencies, ensuring they don’t wield excessive power without proper checks.
Overall, the Supreme Court’s decision marks a historic shift in how administrative law is interpreted, significantly diminishing the IRS’s authority. It invites more judicial scrutiny and litigation, potentially leading to a more transparent and accountable administrative process. Bergman encourages listeners to review the ruling and its implications, highlighting its importance for taxpayers and the legal landscape. Stay tuned to our YouTube channel for further discussions about the case.
