Charlene Luke (Florida) presents The Relevance Games: Congress’s Choices for Economic Substance Gamemakers, 65 Tax Law. ___ (2013), at Indiana today as part of its Tax Policy Colloquium hosted by Leandra Lederman:

The main textual hint as to the intended
scope of the codified economic substance doctrine is ambiguous. It
provides “The determination of whether the economic substance doctrine
is relevant to a transaction shall be made in the same manner as if this
subsection had never been enacted.” This Article argues that this
language should be read in light of the codification history, which
stretches back over ten years prior to enactment. This history suggests
that the relevance provision is primarily about maintaining the
pre-codification balance of decision-making between tax agencies and
courts. The history also indicates that the provision reflects
congressional concurrence in the pre-codification trajectory of the
doctrine, particularly in terms of the types of transactions that were
being litigated.

The movement from the common law to
codified statute brought with it the potential application of a complex
web of authority regarding interactions between tax agencies and courts
in their administration, enforcement, and interpretation of the Internal
Revenue Code. Included in this web is the general ability of the tax
agencies to obtain strong deference from the courts as to the agencies’
authoritative, reasonable interpretations of textual ambiguities. The
economic substance legislative history acknowledges the general
interpretive authority of the tax agencies but does not suggest a
specific path for reconciling that authority with the preference that
development of the doctrine continue “in the same manner” as under the
common law. This Article proposes that the various strands in the
legislative history can be reconciled by interpreting the relevance
provision as adding two directions to tax agencies and courts: (1) The
statute does not apply to transactions that are clearly consistent with
the form and purpose of claimed tax benefits and (2) the courts have
final discretion over whether a specific, litigated transaction
ultimately fails the requirements of the economic substance doctrine.