A New Era of Tax Exceptionalism

Spencer Brown*

Tax exceptionalism, the idea that tax law is a special area of law deserving special treatment, has a long history.¹ Specifically, the Supreme Court developed a unique standard of deference when reviewing the Treasury Department’s interpretations of the Internal Revenue Code (IRC), published as Treasury regulations. This standard was given a definitive expression as National Muffler deference. Tax exceptionalism persisted for decades but eventually came to an end when the Supreme Court held that Chevron applied equally to the Treasury regulations as to other agency interpretations.

However, Chevron deference itself was overturned when the Supreme Court decided Loper Bright. Although the Court rejected the practice of extending deference to agencies’ interpretations of law in Loper Bright, it did not foreclose courts from showing respect to the agencies, especially when their interpretation is grounded in experience or a congressional delegation of discretionary authority. Both of these factors apply with particular force to the Treasury regulations, making them especially deserving of respect from the courts. The resulting treatment will resemble the historical practice of tax exceptionalism, though it will be based on the factors laid out in Loper Bright rather than an explicit acknowledgement that tax law is special. Still, this natural outcome of an objective test will reaffirm the notion that special treatment is indeed warranted in an area as important and convoluted as tax law.

In this Note, I will discuss courts’ historical practice of giving special treatment to the Treasury regulations and the likely approach they will take after Loper Bright. I will argue that courts should show great respect, if not deference, to the Treasury regulations and that this uniquely powerful respect will resemble the previous practice of tax exceptionalism. I will focus my discussion on the Treasury regulations² and primarily use Tax Court cases as demonstrative and prognosticative examples at the trial level,³ as the Tax Court is a specialty court that has expertise in and deals solely with tax law.⁴

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*J.D., Notre Dame Law School, 2026; B.S., University of Notre Dame, 2021. I owe an immense debt of gratitude to Professor Michael Kirsch for his invaluable help throughout the writing process. My thanks also to the members of Volume 101 of the Notre Dame Law Review for their dedicated work.

1 See James M. Puckett, Structural Tax Exceptionalism, 49 GA. L. REV. 1067, 1069 (2015).

2 There are other forms of guidance issued by tax agencies. See MILAN N. BALL, CONG. RSCH. SERV., IF11604, RELIANCE ON TREASURY DEPARTMENT AND IRS TAX GUIDANCE 1–2 (2025). My argument here cannot necessarily be extended to these other sources, as there have historically been unique considerations leading courts to grant them differing treatment. See Leandra Lederman, The Fight over “Fighting Regs” and Judicial Deference in Tax Litigation, 92 B.U. L. REV. 643, 659–71 (2012).

3 Challenges to the IRS can also be brought in district court or the Court of Federal Claims, but these three courts have slightly different standing requirements. See Taxpayer Bill of Rights 5: The Right to Appeal an IRS Decision in an Independent Forum, IRS (Jan. 23, 2026), https://www.irs.gov/newsroom/taxpayer-bill-of-rights-5 [https://perma.cc/3E4KBXU8].

4 See Guidance for Petitioners: About the Court, U.S. TAX CT., https://www.ustaxcourt.gov/petitioners-about [https://perma.cc/6Y7F-PRML] (last visited Mar. 24, 2025).