The Supreme Court's 2023-2024 Term has come to an end. Resulting in two big cases that will impact federal taxes. In Moore v. The United States the United States Supreme Court upheld a one-time capital gains tax on unrealized foreign gains.
The Second Case, which is more complicated, involves judicial deference given to government regulations. In Loper Bright v. Raimondo, the Court overruled the Chevron doctrine. The 40 year old doctrine derived from a high court case states, “When a federal statute is ambiguous, a reasonable interpretation by the agency writing the regs will be upheld.” This decision intends to strip federal agencies of their power to write regulations that are inconsistent with statutes. What does this mean? It means that looking forward, judges will be required to conduct an independent analysis of a statute and exercise independent judgement about the application of the statute giving no deference to agency regulations inconsistent with their statutory interpretation..
What does this mean for the IRS and the Department of Treasury with relation to tax regulations and how will it impact federal taxes? All IRS interpretations that attempt to limit tax statutes by tax regulations will become subject to judicial scrutiny. All agency interpretations will be subject to greater scrutiny and may be declared invalid if courts find them to be inconsistent with the statutes they regulate.
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