Court of Claims Decision Threatens Treasury's Tax Rule Authority

Tax attorney Joshua Odintz was cited in a Bloomberg Tax article exploring what a federal court decision invalidating a U.S. Department of the Treasury regulation means for the agency's rulemaking authority. The case involved a regulation issued to address a glitch in the effective date of the global intangible low-taxed income regime (GILTI); the U.S. Court of Federal Claims sided with the taxpayer in finding that the Treasury Department exceeded its statutory authority in promulgating the rule, citing the U.S. Supreme Court's 2024 Loper Bright decision overturning Chevron deference. Tax professionals interviewed by Bloomberg Tax commented the outcome could limit the government's use of Section 7805(a), a tax code provision allowing it to "prescribe all needful rules" to enforce tax law. Mr. Odintz commented specifically on what the Court of Federal Claims' conclusions here could mean for future litigation challenging Treasury Department and IRS regulations.

"For controversial regulations, Treasury and the IRS frequently rely on Section 7805(a) for a broad grant of authority to address perceived abuse," he explained. "The decision addresses the scope of that authority. Absent a specific grant of authority, the court held that 7805(a) is not a cure-all."

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