The Death of the Chevron Doctrine
Ever since it was established in 1984 in the case Chevron v. Natural Resources Defense Council, the “Chevron Doctrine” has been a cornerstone of federal administrative law. Under the Chevron Doctrine if Congress has not directly addressed an issue, courts were required to defer to federal agencies’ reasonable interpretations of ambiguous statutes. In other words, agencies had significant latitude in interpreting and implementing laws they administer.
This 40 year precedent was overturned when on June 28, 2024, the U.S. Supreme Court ruled 6-3 in Relentless, Inc. v. Department of Commerce and Loper Bright Enterprises v. Raimondo, to cut back sharply on federal agencies’ interpretive power. The Court held that courts should rely on their own interpretation of ambiguous laws rather than automatically deferring to agency views.

Implications
This decision will have far-reaching effects for many aspects of administrative law, but how it will directly affect our tax clients is still to be determined. We do not believe it will be necessary to make changes to already filed tax returns based on this ruling, and the Supreme Court specifically left all prior rulings relying on the Chevron doctrine in place. Rather we expect that going forward there may be opportunities to assess whether regulations appear to be inconsistent with the Internal Revenue Code. If so, our clients may be able to take tax return positions consistent with the text of the Code and see if the courts agree that the regulations issued by the Department of the Treasury are incorrect interpretations of the law.

Conclusion
The demise of Chevron deference signals a new era in administrative law. As legal scholars and practitioners grapple with its implications, one thing is clear: the landscape of federal agency authority has changed. Because of this the legal system will have to adapt and we will be here to help guide our clients in this new environment.