Monday, January 2, 2017

Tax Procedure Book Errata - Tax Common Law Doctrines and Statutory Interpretation (1/2/17)

Book Outline Section
Nature of Update
Location for current editions
Ch. 2 ¶ 1.B., Statutes and their Meanings
Introduce common law doctrines of statutory interpretation - business purpose, form over substance and economic substance
Student Ed. P. 37
Practitioner Ed. p. 42
(immediately before C. Committees and Committee Reports)

Finally, tax statutory interpretation includes applying the text in the light of certain precepts that inhere in the scheme of taxation that Congress adopted.  Students of tax law will already have heard concepts, often called tax common law doctrines, such as the business purpose doctrine, form over substance, and economic substance, which inform the application of the statute even when the statutory text says nothing about those concepts. n. 33a

n. 33a In Santander Holdings United States v. United States, ___ F.3d ___, 2016 U.S. App. LEXIS 22400 (1st Cir. 2016), the Court said:
               The federal income tax is, and always has been, based on statute. The economic substance doctrine, like other common law tax doctrines, can thus perhaps best be thought of as a tool of statutory interpretation, n8 as then-Judge Breyer characterized it in his opinion for this court in Dewees v. Commissioner, 870 F.2d 21, 35-36 (1st Cir. 1989).
   n8 As one commentator says:
               A related . . . claim is that the legislature assumes that long-standing common law doctrines such as economic substance will be used to interpret the statutes it enacts. Under this claim, the doctrines have been implicitly adopted as part of the statute -- at least where the statute does not indicate otherwise.
               Joseph Bankman, The Economic Substance Doctrine, 74 S. Cal. L. Rev. 5, 11 (2000).

Caveat, the footnote numbers above are based on  the footnote numbers in the current Practitioner Edition.  The footnote numbers will not be the same in the next Edition scheduled for publication in August 2017.

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