Chevron Is Gone: What Loper Bright Means for Challenging Treasury Regulations

What the Court decided

On June 28, 2024, in *Loper Bright Enterprises v. Raimondo*, the Supreme Court overruled *Chevron U.S.A. Inc. v. Natural Resources Defense Council* (1984). Chief Justice Roberts wrote for the Court. Justice Kagan dissented, joined by Justice Sotomayor; Justice Jackson joined the dissent in the consolidated companion case, *Relentless, Inc. v. Department of Commerce*, in which she had not been recused.

Under *Chevron*, when a statute was ambiguous, a court was generally required to accept any reasonable agency interpretation. *Loper Bright* ends that. The Administrative Procedure Act, the Court held, requires courts to exercise independent judgment in deciding whether an agency has acted within its statutory authority. A court may not defer to an agency's reading of the law simply because the statute is ambiguous.

What replaces deference

The new standard is independent judicial interpretation. Courts decide what a statute means, using the ordinary tools of construction, and reach the best reading — not merely a permissible one.

Agency views do not vanish from the analysis. Under the older *Skidmore* standard, which survives, a court may still find an agency's interpretation persuasive, particularly where it is well-reasoned, contemporaneous with the statute, and consistent over time. But persuasion is the operative word. The agency's reading informs the court; it no longer binds the court.

The Court was also careful about disruption. It held that prior decisions that upheld specific agency actions in reliance on *Chevron* are not automatically overturned — those holdings retain statutory stare decisis. The mere fact that an old case relied on *Chevron* is not, by itself, a sufficient reason to revisit it.

Why this matters specifically for tax

Few agencies write as many interpretive rules as Treasury. The Internal Revenue Code is dense with ambiguity, broad grants of regulatory authority, and provisions that have been fleshed out almost entirely through regulations. For decades, when a taxpayer challenged a regulation as inconsistent with the statute, *Chevron*-style deference was a powerful tailwind for the government.

That tailwind is gone. After *Loper Bright*:

• a regulation that rests on a debatable reading of an ambiguous Code section is more vulnerable than it was a month ago
• courts will independently ask whether the regulation reflects the best interpretation of the statute, not merely a reasonable one
• the practical bar for mounting a credible challenge to a Treasury rule has come down

This does not mean regulations are now easy to overturn, or that every aggressive position suddenly holds. Many Treasury regulations reflect the best reading of the Code and will be sustained on the merits. And regulations previously upheld under *Chevron* do not collapse on their own. But the strategic calculus around contested regulations — when to litigate, how to frame a challenge, how much weight a regulation deserves in a planning opinion — has shifted.

What it changes in practice

The implications run in both directions, for taxpayers and for the IRS.

For taxpayers and their counsel, a regulation is no longer the end of the analysis on a genuinely ambiguous statute. Where a regulation strains the statutory text, the question of whether it is the best reading is now a live one. That affects audit posture, the strength of reliance opinions, and the decision whether to take a dispute to court.

For the IRS, the change raises the premium on regulations that are well-grounded in the statute and on guidance that can persuade rather than merely command. Sub-regulatory guidance — revenue rulings, notices, and the like — never carried *Chevron* deference in the same way and now competes on its persuasive force.

The honest assessment, as of this summer, is that *Loper Bright* opens a period of recalibration. How courts apply independent judgment to the thicket of tax regulation, and how much *Skidmore* respect specific Treasury interpretations earn, will be worked out case by case.

Key takeaways

• *Loper Bright Enterprises v. Raimondo* (June 28, 2024) overruled *Chevron*; courts must now interpret statutes independently.
• Agency interpretations no longer receive mandatory deference, though they may still persuade under *Skidmore*.
• Treasury regulations resting on debatable readings of ambiguous Code provisions are more open to challenge.
• Regulations previously upheld under *Chevron* are not automatically void; reliance on *Chevron* alone is not grounds to reopen them.

What to do now

1. Revisit positions that turned on deference, not on the statute.

Where a contested position lost only because a regulation got *Chevron* deference, reassess it under the new standard.

2. Recalibrate reliance opinions.

The weight a regulation carries in a planning opinion has changed where the underlying statute is genuinely ambiguous.

3. Expect the landscape to develop.

The doctrine is new. Track how courts apply independent judgment to tax regulations before treating any single result as settled.

Bottom line

*Loper Bright* does not hand taxpayers a victory. It hands them a different — and in many cases better — set of odds. Treasury regulations now have to be the best reading of the Code, not merely a reasonable one, and that reshapes how contested tax positions should be evaluated, audited, and, where appropriate, litigated.