Judicial Deference To Revenue Rulings: Reconciling Divergent Standards

This Article argues that revenue rulings should be treated consistently in all judicial fora. The diversity of approaches among the circuit courts suggests that Supreme Court review is warranted. Without judicial resolution, legislative intervention is appropriate; Congress should statutorily prohibit the citation of revenue rulings as authority for substantive arguments, in the same way as it has with IRS letter rulings. This Article begins by examining the attributes of revenue rulings that contribute to their distinctive status. Revenue rulings are not on a par with regulations, which are entitled to judicial deference, but rulings deserve more weight than other IRS statements of position. Thus, the issues treated in this Article present themselves only with respect to such rulings. Part In analyzes the disparate approaches adopted by the courts, and Part IV explains the circuit courts\u27 apparent eagerness to break with precedent and the Tax Court\u27s firm adherence to tradition. The generalist judges of the federal bench seem to be actively searching for ways to defer, while the specialized Tax Court judges show no interest in letting others decide tax questions. Part V considers the consequences of the movement toward deference and the division among the courts. On a practical level, the existence of a revenue ruling (on point) largely controls the choice of forum. Judicial deference encourages the IRS to issue revenue rulings simply as a means of ensuring success in court. Finally, the courts\u27 increasing tendency to defer to revenue rulings defeats the purposes underlying allocation of jurisdiction over tax controversies, wherein generalist federal judges were meant to contribute something more than a rubber stamp