Friends, we need to talk about a Supreme Court case that doesn’t have “tax” anywhere in its name but is quietly reshaping how the IRS and Treasury do business. I’m talking about Loper Bright Enterprises v. Raimondo — a fishing-rights case, of all things, that torpedoed a 40-year-old legal doctrine and, in the process, handed taxpayers a shiny new weapon against Treasury regulations they don’t like.
What Actually Happened in Loper Bright
Let’s start with the fish. Loper Bright involved a group of Atlantic herring fishermen challenging a National Marine Fisheries Service rule that made them pay for at-sea federal monitors. Nothing about tax. Everything about the Chevron doctrine — the 1984 rule from Chevron U.S.A. Inc. v. Natural Resources Defense Council that told federal courts: if a statute is ambiguous, defer to the agency’s “reasonable” interpretation of it.
In June 2024, in a 6-3 decision written by Chief Justice Roberts, the Court didn’t just tweak Chevron . It killed it. Outright. “Chevron is overruled,” the opinion states flatly. The Court held that the Administrative Procedure Act requires judges to exercise “independent judgment” when deciding whether an agency acted within its statutory authority and courts may no longer defer to an agency’s reading of an ambiguous statute simply because the statute is ambiguous. Statutes, the majority insisted, have “a single best meaning,” and it’s the judiciary’s job, not the bureaucracy’s, to find it.
Here’s the nuance worth knowing, because the devil (or should I say, il diavolo) is always in the details: the Court didn’t eliminate all deference. Courts can still give weight to an agency’s interpretation under the older, gentler Skidmore deference standard. Basically, if the agency’s reasoning has the “power to persuade”. And where Congress has expressly delegated discretionary authority to an agency, courts must still respect that delegation, while making sure the agency stays within its lane. So it’s not chaos with no guardrails. It’s chaos with fewer, blurrier guardrails. Which, frankly, might be worse.
Why This Is HUGE for Tax
Here’s the part that should make every one of my clients sit up straight. The Internal Revenue Code is riddled with delegations of authority to Treasury, both narrow, section-specific grants and the sweeping general grant in Section 7805(a), which lets Treasury “prescribe all needful rules and regulations for the enforcement of this title”. For four decades, when the IRS issued a regulation interpreting an ambiguous Code provision, courts largely deferred to it under Chevron . That deference gave Treasury enormous latitude to fill gaps, close perceived loopholes, and, let’s be honest, sometimes stretch statutory language further than Congress ever intended.
Loper Bright changes that calculus dramatically. Courts must now independently interpret the statute and ask whether the regulation is the best reading of the Code, not merely a reasonable one. If a Treasury regulation goes further than the statutory text actually supports, it’s now considerably more vulnerable to being struck down.
We already have the receipts. In October 2025, the Eighth Circuit sided with 3M in its long-running battle over Section 482 transfer pricing regulations, expressly invoking Loper Bright to bypass deference to the IRS and go straight to the statutory text. The court noted “the legal landscape has changed” since the Tax Court’s 2023 ruling against 3M, a ruling issued back when Chevron was still the law of the land. That’s nearly $24 million in royalty payments at stake, decided differently because the deference rulebook flipped. This is not academic. This is real money, real regulations, and real precedent falling.
Where the Battlegrounds Are Forming
Tax scholars and practitioners are converging on a few areas where Loper Bright is most likely to bite:
- Transfer pricing (Section 482): The 3M case is the tip of the iceberg — multinational taxpayers now have a credible new avenue to challenge IRS allocation authority when the statutory hook feels thin.
- Regulations built on general “needful rules” authority (Section 7805(a)): Broad, catch-all Treasury regulations not tied to a specific statutory delegation are the softest targets.
- Long-standing, contemporaneous regulations: Ironically, older regulations issued close in time to the statute’s enactment may actually fare better , since the Court signaled sympathy for interpretations that echo the “power to persuade” of Skidmore and the old National Muffler
- State tax administration: Many states modeled their own deference doctrines on Chevron . Expect state revenue departments to face copycat challenges as taxpayers borrow the Loper Bright
The “But Wait, There’s More” Twist
Here’s where it gets deliciously. Loper Bright didn’t arrive alone. It landed alongside Corner Post, Inc. v. Board of Governors of the Federal Reserve System , a companion ruling on the statute of limitations for challenging federal regulations. Together, these two cases don’t just make regulations easier to challenge on the merits, they also extend the window for bringing those challenges in the first place. That’s a one-two punch: more grounds to sue, and more time to do it.
Bottom line: nobody — not the IRS, not Treasury, not the courts themselves — knows exactly where the new lines will settle. As one commentator memorably put it, Loper Bright “loosed chaos into many areas of administrative law, including tax,” and it will take years of litigation for the contours of the new standard to firm up.
What You Need to Do
This isn’t a “wait and see” moment for high-net-worth business owners and growth companies. It’s a “know your exposure” moment. Here’s my action list:
- Audit regulatory reliance. If your tax position depends heavily on a Treasury regulation (rather than the Code itself), understand whether that regulation is grounded in an explicit statutory delegation or a broader, more general grant of authority. The latter is now shakier ground.
- Revisit closed transfer pricing positions. If you operate cross-border and have unresolved Section 482 issues, the 3M precedent is a live development worth discussing with counsel.
- Don’t assume every unfavorable regulation is now toast. Loper Bright is not a blanket taxpayer victory. It cuts both ways, and courts may also strike down regulations taxpayers currently rely on for favorable treatment.
- Watch pending litigation closely. Cases working through the Tax Court and circuit courts over the next 12-24 months will define the real-world contours of this decision far more than the opinion’s text alone.
- Build flexibility into structuring decisions. In an environment where regulatory certainty has diminished, entity structuring and transaction planning should account for a wider range of possible regulatory outcomes.
After 40 years of watching Congress and the courts play tug-of-war with the tax code, I can tell you this is one of the more consequential structural shifts I’ve seen since the 1986 Tax Reform Act rewired the entire system. It won’t show up on your 1040 next April, but it will absolutely shape how aggressively Treasury can write the rules you live under for decades to come.
Grazie mille, ciao and if you want to talk through how Loper Bright might affect a specific regulation you’re relying on (or fighting), reach out to us at [email protected].
