Things Done Changed: The Supreme Court Overturns the Chevron Ruling

🔥🔥🔥The Supreme Court is on Fire!

The USSC is knocking out decisions left and right, significantly effecting the world we live in.

This week, the US Supreme Court delivered a decision with far-reaching implications for federal agencies, including the IRS.

But what does this ruling actually mean for us as tax professionals and taxpayers?

Let's discuss the ruling first.

The decision overturns the Chevron doctrine.

For almost 40 years the Chevron doctrine dictated how federal agencies created and implemented administrative law including whether the laws were legal as well as whether those laws were implemented legally.

The Chevron decision ruled that courts had to give deference to federal agencies such as the IRS, allowing them to create rules and administer them as they saw fit so long as they were "reasonable." "Reasonable" is a seriously low standard.

The Supreme Court in Chevron decided that the IRS knows best when it comes to rules about taxes and how to administer them.

In the tax world, the court basically allowed the IRS to do what they wanted and how they wanted to do it.

So long of course that it was "reasonable."

But the recent Supreme Court ruling changes all that.

Previously, the IRS was allowed to police themselves when it came to tax laws. Under the new ruling, the judiciary, i.e. courts and judges will do the policing instead. The IRS can no longer decide whether the tax laws they create and how they are used are legal. The courts will do the deciding.

If you felt that the IRS had too much power to make up rules and regulations without being checked, you're probably feeling a great deal of satisfaction right now.

Current IRS laws and enforcement will remain the same, but they will likely face legal challenges. Moving forward, tax statutes will face much more scrutiny so the process for creating new tax rules will likely take much much longer.

The IRS has to think twice about the rules they create and how taxpayers feel the brunt of them because they know that judges will determine what's legal and what's not now.

For my clients, you probably remember all those times when I said to you, "The IRS requires you do it this way and it's not right, but there's nothing you can do about it."

It'll take a lengthy court battle, but now there IS.

TL;DR:

• The U.S. Supreme Court overruled the Chevron doctrine which determined how administrative law was created and administered by the IRS for the last forty years.

• The decision gives deference to the courts to determine the legality of statutes and how they're implemented instead of the federal agencies.

• It paves the way for more control over the IRS's ability to create and implement rules and regulations.

• This decision will change the tax experience for both tax professionals and taxpayers moving forward.

In other words, things could get weird.

Tax professionals and taxpayers, we are in the midst of a monumental shift in tax law.

This ruling will result in a changed tax landscape for both tax professionals and taxpayers moving forward.

It's crucial we stay informed and ready to adapt.

I'd LOVE to hear what you think about all of this!

How do you think this ruling will change things when it comes to the IRS?

Are you happy about the ruling and the potential consequences?

What questions do you have?

Let us know in the comments!