Challenging Regulations After Mayo And Home Concrete

In the wake of the Supreme Court of the United States' recent tax opinions in Mayo Foundation for Medical Education & Research v. United States, 131 S.Ct. 1836 (2011),  and United States v. Home Concrete & Supply, LLC, 132 S.Ct. 1836 (2012) taxpayers have additional arguments at their disposal to challenge U.S. Department of the Treasury regulations.  Those arguments are front and center in several pending U.S. Tax Court cases involving challenges to transfer pricing regulations.

Setting the Stage

In Mayo, the Supreme Court ended a decades-long debate over whether the standard of review for regulations issued pursuant to the Internal Revenue Service's (IRS's) general grant of authority under § 7805(a) was different from the standard of review for regulations issued pursuant to a specific directive in the pertinent statute.  In reaching this holding, the Supreme Court rejected the idea that it should "carve out an approach to administrative review good for tax law