Bloomberg Law Quoted David Rosenbloom on Recent Court Decision Calling into Question Treasury’s Tax Rule Authority

A court’s decision to invalidate a Treasury regulation on the basis of the landmark Loper Bright ruling poses a threat to the department’s authority to write tax rules, tax attorneys say.

In a case involving Keysight Technologies, the Federal Court of Claims cited the 2024 Supreme Court ruling, finding that the Treasury Department exceeded its rulemaking authority because it didn’t have the explicit direction of Congress.

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David Rosenbloom, a Member of Caplin & Drysdale, said there’s a tension now between the authority delegated to Treasury in the tax code and the Loper Bright decision.

“The code is full of specific delegations of authority to write regulations,” and the delegation in existing law wasn’t thoroughly discussed in Tapp’s judgment, he said.

“I’m not sure 7805(a) can carry the freight that I’m suggesting and that the IRS is suggesting here,” Rosenbloom said, referring to the regulatory authority that code section gives to the Treasury. “But I think it takes more than this very, very brief discussion by the court to dismiss an important statute in a Loper Bright universe.”

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Rosenbloom said the Court of Claims decision may be the right one, but he still found the legal analysis lacking.

The missing question in Tapp’s opinion, he said, is what role does Section 7805 play in a Loper Bright world?

“And I think that’s an interesting question to explore. The court does not explore it and it leaps over it and just dismisses 7805(a).”

The analysis isn’t sufficient to dismiss the Treasury’s authority under that code section, he concluded.

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