As tax attorneys we are often asked, where does all of this tax law come from? How can there be so much tax law and what weight is given to certain treasury regulations? When looking at the tax law, you have the tax code known as the Internal Revenue Code, the treasury regulations and case law. Case law would come from the United States Tax Court as the trial court or on appeal to a federal court of appeals or the United States Supreme Court. The article below has been drafted by a Denver tax attorney at The McGuire Law Firm regarding sources of tax law authority and the deference given to treasury regulations.
In regards to sources of tax law and authority, the law may come from constitutional cases and other case law, the Internal Revenue Code (IRC) and treasury regulations (proposed, temporary and final regulations). Treasury regulations may come about through legislation when Congress specifically requests a regulation to complete or “fill out” a statute, or due to interpretive need because the treasury does have the authority to prescribe all needful rules and regulations for enforcement of the Internal Revenue Code. In general, the treasury regulations can help to explain the IRC and provide guidance regarding the interpretation of the IRC.
One question or issue analyzed by a tax lawyer is: How much deference should the courts give to the treasury regulations? The Chevron case answered this question whereby the court established a 2 part test to determine the validity of a federal agency regulation. First, you look to see if Congress has directly addressed the specific and precise question that is at issue. If a statute is not ambiguous, then a regulation cannot impose a rule contrary to the language of a statute and such is the end of the matter. Second, if the statute is in fact ambiguous, the courts may not disturb an agency regulation unless the regulation is arbitrary and capricious, or manifestly contrary to the statute. The regulation must only be a reasonable interpretation, but need not be the best interpretation.
A Denver tax lawyer at The McGuire Law Firm can assist you with your tax matters and in analyzing the tax implications of certain situations and transactions. A tax lawyer can read the IRC and federal treasury regulations, understand the implications of the law and apply this law to your circumstances and questions.
You can contact The McGuire Law Firm via phone or email John@jmtaxlaw.com to schedule your free consultation with a Denver tax attorney.