Matthew H. Friedman*
The topic of judicial deference arises each time a court reviews the legitimacy of an opinion or regulation by an administrative agency to which Congress has delegated some rulemaking authority. Determining the appropriate deference standard is important because it sets limits on an agency’s quasi-legislative power and informs taxpayers and practitioners on the likelihood of challenging seemingly invalid administrative rulings. Noting the importance of the deference issue, Professor Kristin E. Hickman, one of the foremost authorities on administrative law in the federal income tax context, wrote that "[d]rawing fine distinctions among deference standards may seem a purely academic exercise . . . [but] deference standards matter."
For thirty-five years, the 1944 case of Skidmore v. Swift & Co. presented the primary method for judicial review of administrative guidance created under Congress's general grant of rulemaking authority. In 1979, a new standard was created in what became known as the tax-specific deference standard of National Muffler Dealers Association v. United States. Five years later, the Supreme Court held in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. that a separate and much more deferential standard should apply to final regulations drafted pursuant to a general grant of authority. The Chevron decision cast doubt upon the viability of both Skidmore and National Muffler since it was unclear whether the decision applied to all regulations promulgated pursuant to general grants of authority and whether it applied to tax-related guidance. This confusion persisted until the Court decided two cases in 2000 and 2001 that distinguished between Skidmore and Chevron deference. Unfortunately, the Court's distinction did not provide specific or uniform direction for the treatment of all general authority guidance and to this day the Court has failed to give clearer instruction.