Tax Trends: FAQs on Supreme Court overturning of Chevron decision

On June 28, 2024, the Supreme Court overturned the 40-year-old Chevron decision, issuing a seismic ruling that could alter the power of federal agencies. 

Q: The disputes in Loper Bright Enterprises v. Raimondo and Relentless v. Chamber of Commerce are related to fisherman. What does this have to do with tax policy? 

A: The linked disputes were brought by fisherman who disagreed with a federal regulation that mandated vessel owners cover the cost of federal monitors required to ride while the vessel is at sea. The plaintiffs argued Chevron v. Natural Resources (Chevron), a ruling that gave federal agencies broad regulatory power, should be overturned. 

Q: What is the Chevron decision? 

A: Chevron v. Natural Resources Defense Council was a Supreme Court case, decided in 1984, that created a precedent that required courts to defer to federal agency interpretations when a law lacked specificity. The Chevron doctrine effectively allowed government agencies to compel compliance with their interpretations of federal law. The Chevron doctrine has guided judicial decisions for the last four decades. 

Q: How will a reversal of the Chevron decision impact tax policy? 

A: When Congress passes a tax law it often provides a framework but does not include all the details required for implementation. Taxpayers rely on the Treasury Department and IRS to interpret the law and provide more comprehensive guidance, filling in gaps, in order to facilitate compliance.   

The rationale behind the Chevron