Tax Court Applies Statutory Stare Decisis for Chevron Cases (7/3/25)

In Moxon Corporation v. Commissioner, 165 T.C. ___, No. 2 (2025), TC here dkt # 59 and GS [to come], the Court held that (from the headnote):

          Held: The I.R.C. § 6662(h) penalties at issue are not subject to deficiency procedures pursuant to I.R.C. § 6230(a)(2)(A)(i).

          Held, further, the fact that the relevant deficiencies were improperly assessed does not affect R’s assessments regarding, and ability to collect, the I.R.C. § 6662(h) penalties.

 (I use the headnote because I think it fairly summarizes the opinion and introduces the subject I want to discuss—statutory stare decisis.)

In respect to the second holding above, the Tax Court invoked statutory stare decisis to apply a prior precedent relying on Chevron deference, saying rather cryptically (see Slip Op. 12-13):

          In addition the Supreme Court cautioned that by overruling Chevron it did not “call into question prior cases that relied on the Chevron framework. The holdings of those cases . . . are still subject to statutory stare decisis despite [the Supreme Court’s] change in interpretive methodology.” Loper Bright, 144 S. Ct. at 2273. Regardless  of the extent to which the holding in Thompson [Thompson v. Commissioner, 137 T.C. 220, 239  (2011)] relies on the standard of review set forth in Chevron, that holding is entitled to stare decisis.

          We again hold that penalties determined in a partnership-level proceeding are not subject to deficiency procedures pursuant to section 6230(a)(2)(A)(i). Rather, such penalties are assessable by the Commissioner. Taxpayers may raise any partner-level defenses to the penalties in a refund action or in a CDP case. § 6230(c)(1)(C), (4); McNeill, 148 T.C. at 489.

           Moxon arrived after I had already made substantial changes to the statutory stare decisis discussion in working draft for the 2025 Federal Tax Procedure (Practitioner and Student Editions). I have further revised that discussion to include Moxon. For readers who may have an interest in the issue, I include below a copy and paste of the text of the revisions without footnotes as of today and link here the revisions (red-lined) with footnotes (note that the footnotes, page numbers and cross-references will change in the final, although as I note below the final will be significantly shortened).

Does Loper Bright Revive Pre-Chevron Standards of Review? (11/28/24)

The key Loper Bright holding is summarized near the end of the opinion addresses Chevron (Loper Bright Ent. v. Raimondo, ___ U.S. ___, 144 S. Ct. 2244, 2273 (2024)):

Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry. And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation, while ensuring that the agency acts within it. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.

As I understand the holding it is that agency interpretive authority for the states they administer cannot arise from the “fiction” Chevron created that statutory ambiguity is an implicit delegation of interpretive authority that justifies deference to the agency interpretation. Phrased this way, the Court may have left open whether any other form of pre-Chevron deference survives Loper Bright. After all, the Court is careful to base its rejection on deference from ambiguity alone, which is the key innovation of Chevron. Before Chevron, the Court had developed bases other than ambiguity to justify deference. For example, in National Muffler Dealers Ass’n v. United States, 440 U.S. 472 (1979), a tax case, the Court applied traditional features from cases going to the early period of the administrative state to justify deferring to agency interpretations. (Tax and administrative law fans will recall that, in Mayo Found. for Med. Educ. & Rsch. v. United States, 562 U.S. 44, 52 (2011), authored by Chief Justice Roberts (who apparently experienced a Eureka moment in Loper Bright), the Court held that, for consistency among agencies, appellate review of the deference accorded tax interpretations should be tested under Chevron based on statutory ambiguity rather than the traditional features applied in National Muffler.)

In a recent article (highly recommended), Professor Thomas W. Merrill asks under “Matters of Speculation” the following question: “Does Loper Bright Revive Pre-Chevron Standards of Review?” (At pp. 269-270.)  Thomas W. Merrill, The Demise of Deference — And the Rise of Delegation to Interpret?, 138 Harv. L. Rev. 227, 269-279 (2024), here. I don’t want to review the pre-Chevron law of deference, but the key is that is that pre-Chevron deference was not justified on implicit delegation of interpretive authority arising from statutory ambiguity alone. In that pre-Chevron law, such as National Muffler, features such as contemporaneity of the interpretation, long-standingness, and other features might add gravitas to the agency interpretation permitting deference. To be sure, pre-Chevron deference applied only where the statute was ambiguous and the interpretation was reasonable (key features of Chevron deference), but ambiguity alone did not justify deference.

Thus, because the Court in Loper Bright was careful to limit rejection of deference to deference arising from ambiguity, one could craft an argument that the Court’s pre-Chevron jurisprudence survives Loper Bright. Professor Merrill warns (p. 270): “So courts should probably exercise caution in resurrecting pre-Chevron standards of review like National Muffler, but some intrepid litigator will no doubt claim that this has happened.”

I think Loper Bright may be confusing as to its precise holding. Loper Bright might be read as two holdings:

1. The APA requires courts to interpret de novo the statutes the agency has interpreted and defer only where Congress explicitly or implicitly delegated interpretive authority to the agency.

2. Chevron, requiring ambiguity as implicit delegation of interpretive authority, is overruled.