Andrew Pruitt (J.D. 2011, George Washington) has published Judicial Deference to Retroactive Interpretative Treasury Regulations, 79 Geo. Wash. L. Rev. 1558 (2011). Here is the Conclusion:

The standard for judicial deference to retroactive interpretative Treasury regulations is currently an unresolved question, but sooner or later the federal courts (or the Supreme Court) will have to provide an answer. Although the Commissioner’s arguments were unsuccessful in the Tax Court, the IRS’s recent successes in the federal courts of appeals and the Supreme Court’s recent endorsement of the Chevron doctrine could mean that all tax regulations, both prospective and retroactive, will be granted heightened deference.

The courts should not adopt the Mayo Foundation rule wholesale by applying the Chevron doctrine to I.R.C. § 7805(b) regulations. The complex issues raised by the Intermountain cases—including the interests and prerogatives of federal agencies, taxpayer-litigants, and the judiciary, as well as the appropriate balance of legislative and adjudicative decisionmaking authority in our system of separated powers— require a less deferential, more nuanced approach than that provided by Chevron and Brand X. National Muffler’s tax-specific, multifactor test circumvents the dangers of a highly deferential regime of controlling deference; provides a context-based, case-by-case analysis for evaluating proper versus improper exercises of rulemaking authority; and provides the optimal level of respect for the institutional prerogatives of both agencies and the judiciary. For these reasons, the National Muffler test is the best framework for reviewing I.R.C. § 7805(b) regulations.