July 2016

”Trends in Tax Exceptionalism and Tax Litigation” Workshop

On 14 July 2016, the Journal of Tax Administration and the Centre for Tax Law, University of Cambridge hosted a workshop titled “Trends in Tax Exceptionalism and Tax Litigation” at Broadway House, Tothill Street, London, SW1H 9NQ. It was attended by more than 40 academics, tax practitioners, and tax administrators. 

The Aims of the Workshop

In the United States, the Supreme Court's 2011 decision in the Mayo Foundation case has fundamentally changed tax litigation and tax administration. Previously, tax administration functioned with a mindset of “tax exceptionalism” from the administrative statutory requirements, legal doctrines, and norms that applied to other federal government agencies. The legal veracity of tax exceptionalism had not been tested; it was an unchallenged assumption, but one that persisted for some decades. In Mayo Foundation, the Supreme Court expressly rejected tax exceptionalism from general administrative law requirements, doctrines, and norms absent "good reason" - which is generally thought to mean unless the Internal Revenue Code provides an express exception.

Since the Supreme Court decided Mayo Foundation, cases have slowly emerged in which lower courts have applied other administrative law requirements in the tax context. The US Department of Justice fights these cases hard, and the IRS is very slowly starting to adjust its practices, but there is now a backlog of IRS actions that are susceptible to legal challenge on administrative law grounds. Tax litigators now have a whole new range of arguments they can and ought to be making that are based on administrative law procedural and process requirements. 

In the UK meanwhile a type of tax exceptionalism for many years persisted in relation to statutory interpretation. The “cardinal principle” that there is “no equity about a tax...Nothing is to be read in, nothing is to be implied”, however, came to be irrevocably modified by the case of Ramsay and subsequent developments. The development of administrative law doctrines, on the other hand, has been highly influenced by tax law cases, yet in recent times HMRC appears to be given more benevolent treatment than other public authorities before the courts in the application of these doctrines.

The aim of the workshop was to investigate these matters.

The Speakers

We are grateful to the experts who generously gave their time to speak at the event. The workshop opened with an introduction by Lynne Oats (JOTA and the University of Exeter). 

The first presentation of the day was made by Donald Korb (Of Counsel at Sullivan & Cromwell, a former IRS Chief Counsel) and Kristin Hickman (Distinguished McKnight University Professor, University of Minnesota Law School), who spoke about “Trends in Tax Exceptionalism and Tax Litigation: The U.S. Perspective”. 

Stephen Daly (Postdoctoral Researcher, Kings College London) then presented a paper on “Response and Trends in Tax Exceptionalism and Tax Litigation: The U.K. Perspective”. This was followed by an open discussion session.

The Impact of the Workshop

Two papers arising from the workshop were included in Volume 3, No 1 of the Journal of Tax Administration: