tax regulation, treasury regulation, deference, Skidmore, Chevron, Mayo

Document Type



In 1996, Congress banned the Treasury Department from enacting retroactive regulations but provided an important exception, allowing tax regulations to apply retroactively “to prevent abuse.” Congress did not, however, explicitly define abuse; nor did it designate to any specific actor the power to do so. This Article provides the first comprehensive look at the level of deference owed a Treasury regulation’s interpretation of the Internal Revenue Code’s abuse exception. Generally, a reviewing court owes some level of deference to an agency’s interpretation of the statute it is entrusted to administer. Some statutory interpretations are entitled to receive the strong standard of deference articulated in Chevron v. Natural Resource Defense Council, while other interpretations are entitled to a lesser degree of deference under Skidmore v. Swift & Co. To date, the courts reviewing retroactive tax regulations enacted to prevent abuse have relied on administrative law principles recently rejected by the Supreme Court in Mayo Foundation v. United States. This Article is the first to apply the post-Mayo deference framework to Treasury regulations that interpret the Code’s abuse exception. This Article concludes that these regulations should receive strong Chevron deference. The Article’s contributions are significant. Through the issuance of retroactive regulations, Treasury promotes the efficient enforcement of the tax laws and deters egregious abuse. But case law suggests that the courts and Treasury Department have very different interpretations of the Code’s abuse exception. Therefore, the ability of Treasury to respond to and prevent aggressive tax behavior through retroactive tax regulation may turn largely on which actor possesses primary authority to define tax abuse.



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