The notice and comment process is often touted as a mechanism for establishing political accountability, and providing a check on agency decision-making. Based on a survey of three years of recently proposed tax regulations, this Article shows that many notice-and-comment processes for tax regulations have been ineffective for these purposes. Fully one-third of the time, no one participated. The few participants there are have been heavily weighted towards private interests, which commented on approximately two-thirds of all proposed regulations from 2013 through 2015. In contrast, public interest groups commented on less than 24% of proposed regulations. If the notice and comment process almost always fails to meet the ideal of robust and diverse participation, who is accountable for tax regulations?
I argue that Congress can and often does fill the void. Congress has special institutional capacity—in the form of the Joint Committee on Taxation (JCT)—to enact tax legislation that consists of detailed statutory directives that can leave few issues to be resolved by Treasury. These detailed tax statutes are often accompanied by legislative history that explicitly directs the substance of tax regulations. I make the case that these products of the tax legislative process often limit Treasury’s policymaking discretion, and I detail instances of this sort of limited delegation. As a result, this “congressional control” model of tax rulemaking promotes political accountability and reliance on expertise, as well as taxpayer certainty.
I propose that Treasury, the IRS, and courts should give greater attention to the intricacies of the tax legislative process, and I suggest a presumption in the interpretation of tax statutes to accomplish this, the “JCT Canon.” In short, when confronted with a statutory provision that does not fully determine necessary policy details, regulation-writers and the courts should follow the construction adopted by the JCT for its revenue estimates and in its explanations of statutory provisions. Indeed, this is most often already the accepted practice within Treasury, which frequently coordinates with the JCT staff. Explicit use of the JCT Canon by courts would create consistency across administrative and judicial interpretation and bolster the taxpayer-certainty benefits of congressional control, which is especially important in a system of self-assessment.
Clint Wallace, Congressional Control of Tax Rulemaking, 71 Tax L. Rev. 179 (2017).