Substantially Deferring to Revenue Rulings After Mead

Death and taxes-these, according to the modern quip, are the only two certainties in life. While the necessity of paying taxes will remain a constant in life, the amount, when, to whom, or for what period one pays is far from certain.1 The questions arising from the Internal Revenue Code and Internal Revenue Service (IRS) regulations may be almost as constant as the fact that the number of people who live will die. In an effort to clarify various uncertainties in the tax code and accompanying regulations for the benefit of the public and IRS personnel, the IRS began issuing revenue rulings, which interpret various complex and ambiguous issues of tax law.2 Traditionally, courts granted revenue rulings considerable deference. Two of the Supreme Court's recent decisions regarding deference to administrative interpretations of law, however, call into question the level of deference courts should accord revenue rulings. Charged with the important responsibility of overseeing the revenue of the United States,3 the IRS has employed various means to administer its exponentially growing duty.4 Revenue rulings are a primary means by which the IRS administers the tax laws of the United States,5 being an efficient way for the IRS to pronounce official interpretations of "the internal revenue laws and related statutes, treaties, and regulations."6 Because of the IRS's important duty and the official nature of revenue rulings, many courts historically gave these IRS legal interpretations considerable deference,7 especially after Chevron U.S.A., Inc. v. Natural Resources Defense Council.8 The Supreme Court's recent decisions in Christensen v. Harris County9 and United States v. Mead Corp.,10 however, potentially eliminate any actual deference previously accorded these IRS pronouncements.11 The language in these cases potentially indicates that courts should accord revenue rulings mere respect under Skidmore v. Swift Co.12 Skidmore's respect is not, however, actual deference. Courts have long given deference to administrative agency interpretations of law,13 including revenue rulings, because of the complexity of regulatory schemes, the expertise developed in administrative bodies, and the congressional desire to invest agencies with the authority and duty of administering the law.14 The standards by which to judge that deference and when that deference is warranted have changed over time.15 In Chevron U.S.A., Inc. v. Natural Resource Defense Council, however, the Supreme Court made this stance toward administrative interpretations of law uniform-courts must defer to administrative agencies' interpretations of law when the statute is ambiguous and the interpretation is reasonable.16 Under this approach, most courts granted revenue rulings substantial deference,17 even though revenue rulings are less formal than traditional Administrative Procedure Act (APA) procedures for rulemaking.18 The Supreme Court recently altered course, however, concerning when Chevron deference is due to administrative interpretations of law. In Christensen v. Harris County19 and United States v. Mead Corp.,20 the Court limited Chevron by requiring that the legal interpretation for which one seeks Chevron-level deference "carry the force of law."21 While the Court did not clearly explain what it meant by "carry the force of law," it did point to three ways in which an agency interpretation of law may receive substantial Chevron-level deference. The Supreme Court explained that delegation, and therefore authority, may arise "in a variety of ways, as by an agency's power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent."22 Thus, arguably more informal interpretations of law by an administrative agency-that is, those interpretations that do not follow from formal agency rulemaking-are no longer entitled to Chevron deference because they do not carry the force of law. …