The power and reach of administrative agencies — often led by unelected officials — has long been a source of controversy. Nearly 40 years ago, in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., the U.S. Supreme Court held that an administrative agency’s interpretation of a statute administered by that agency should be given deference if (1) the statutory provision is ambiguous and (2) the agency’s interpretation is merely reasonable. Since then, the case “has become ‘the most cited case in modern public law.’” For state tax practitioners, this is nothing new — deference to a tax collector’s interpretation of the tax law was taken for granted well before Chevron was decided, and its application extended beyond formally promulgated regulations.
Wide variation between and within states’ administrative deference doctrines are problematic for obvious reasons. Taxpayers and businesses are harmed when there is uncertainty whether the law will be applied the same way in factually (and substantively) similar circumstances. But the rise of state tax tribunals, recent judicial opinions, and legislative and voter actions call into question the continued existence and viability of Chevron and related doctrines: How much deference should tax administrators be entitled to (if any)?
In this installment of A Pinch of SALT in Tax Notes State, Eversheds Sutherland attorneys Jonathan Feldman, Cyavash Ahmadi and Cat Baron explore the deference afforded to state administrative agencies and suggest that, perhaps, the high-water mark is behind us.
Read the full article here.