Tax Talk: Volume 10, Issue 3

CHAMBER OF COMMERCE: DISTRICT COURT HOLDS ANTI-INVERSION REGULATION INVALID ON PROCEDURAL GROUNDS

On October 16, 2017, a United States District Court in Texas invalidated temporary Treasury Regulations that target so-called "serial inverters" (i.e., foreign acquiring corporations that have acquired domestic corporations in the past) (the "Serial Inversion Rule"). The plaintiffs argued that the Serial Inversion Rule violated the Administrative Procedures Act (the "APA") because the Internal Revenue Service (the "IRS") lacked statutory authority to issue the Serial Inversion Rule, the Serial Inversion Rule was arbitrary and capricious, and the IRS failed to provide adequate notice and opportunity for comment. The court ultimately invalidated the Serial Inversion Rule on the basis that the IRS failed to provide adequate notice and opportunity for comment as required by the APA.