hat the SSA’s regulation “was not explicit” that a certificate of coverage was the “exclusive means of proof,” both SSA and IRS interpretative guidance made clear a certificate of coverage was required. The court concluded its analysis by applying rules of interpretation:We view the word “must” as limiting proof to an officially generated certificate. Although this interpretive guidance is not legally binding on the court, it reflects the understanding of both United States agencies with enforcement responsibility. As defendant points out, this construction is shared by the corresponding Australian agency and such a shared understanding can be used by the court as an interpretive aid. See Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 185 (1982). And defendant is also correct that the exemption from what would otherwise be the obligation to pay FICA taxes in the United States should, like all exemptions, be narrowly construed. Mayo Found. for Med. Educ. & Rsch. v. United States, 562 U.S. 44, 59-60 (2011).This case is an important reminder to employers sending employees to work aboard – whether U.S. employers sending employees outside the United States or non-U.S. employers sending employees to work in the United States – that obtaining a certificate of coverage is necessary to claim the exemption from dual social taxes. For U.S. employers, a certificate of coverage can be obtained online at the SSA’s website, or by mail or fax. All totalization agreements are also available on the SSA’s website. If an employer declines or fails to obtain a certificate of coverage, the individual worker can obtain one by following the process set out in Revenue Procedure 80-54. Employers should make obtaining a certificate of coverage a standard step in any expatriate process.Footnotes1Italy, Germany, Switzerland, Belgium, Norway, Canada, United Kingdom, Sweden, Spain, France, Portugal, Netherlands, Austria, Finland, Ireland, Luxembourg, Greece, South Korea, Chile, Australia, Japan, Denmark, Czech Repu
Practice Point: It will be interesting to see how the Supreme Court’s recent decision will impact future challenges to tax regulations. In the not too distant past, Administrative Procedure Act challenges to tax regulations and other published guidance were rare, but the Court’s 2011 decision in Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44 (2011) changed the landscape. Some tax regulations are invariably based on policy decisions, and in appropriate cases, taxpayers may seek to challenge such regulations under the major questions doctrine.
The government noted that promulgation of more than 30 similar notices – without legislative protest – was further proof that Congress intended for the APA not to apply.The court agreed with the IRS. Notably, however, neither the parties nor the court made reference to Mayo Foundation for Medical Educ. and Research v. U.S., 562 U.S. 44 (2011), which stands for the proposition that the APA applies to tax guidance. See alsoNational Cable & Telecommunications Ass'n v. Brand X Internet Services et al., 545 U.S. 967 (2005).
t the lower courts must now address while also providing meaningful clues about how the Court may approach future disputes over IRS enforcement strategies. Such questions include: (1) does the reportable transaction regime as the IRS currently administers it violate the APA (See:Mann Construction, Inc. v. United States, No. 1:20-cv-11307 (E.D. Mich. May 13, 2021) (holding that IRS Notice requiring disclosure of listed transactions was not subject to APA’s notice-and-comment requirement); (2) would the AIA bar a suit to enjoin enforcement of a reporting obligation brought by a taxpayer, as opposed to an advisor; (3) how onerous must the challenged requirement be; (4) how disconnected from the tax penalty must the challenged requirement be and (5) is the existence of criminal penalties sufficient and/or necessary to exempt a challenge from the AIA?Practice Point: APA challenges in tax cases have steadily increased since the Supreme Court’s rejection of tax exceptionalism 10 years ago in Mayo Foundation for Medical Education & Research v. United States, 562 U.S. 44 (2011). As tax law continues to get more complicated and the IRS issues additional guidance, we can expect this trend to continue.
30, 2011) (emphasis added).Treasury's labeling a rule as "interpretative" does not avoid the APA's requirement to explain its reasons for its rulemaking choices if the rule has the force of law. Mayo Foundation for Medical Educ. and Research v. United States, 562 U.S. 44, 56–57 (2011) ("Our inquiry … [of deference to administrative rulemaking] does not turn on whether Congress's delegation of authority was general or specific.") Treasury's direction to regulation drafters to omit justifications for administrative choices was contrary to Mayo, and eventually the Internal Revenue Manual was amended to delete the erroneous direction. Nonetheless, the regulation at issue in Tangel was drafted and finalized when Treasury thought that it did not have to explain or justify its administrative regulatory choices.During the comment period on the regulation as proposed, Donald Lubick, a former assistant secretary for tax policy, submitted a letter criticizing the requirement in the regulation that a researcher retain substantial rights in the research to be eligible for the tax credits.
§ 1.170A-9(c)(1).Mayo Found. v. United States, 562 U.S. 44, 57 (2011). 926 F.3d 1061 (9th Cir. 2019).
See 5 U.S.C. § 553(b)(B) (providing for “good cause” finding and “a brief statement of reasons therefor” when an agency issues regulations after finding that “notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest”).Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44, 55 (2011).See Marie Sapirie, “ABA Section of Taxation Meeting: DOJ Won’t Push Chevron Deference for Revenue Rulings,” Tax Notes Today (May 16, 2011) (quoting Acting Deputy Assistant Attorney General (Review and Appellate) Gil Rothenberg).
 Id. at 42 (citing Mayo Found. for Med. Ed. & Res. v. United States, 562 U.S. 44, 53 (2011)).  Id.
Although the decision was rendered by a district court, and thus is not binding precedent in other courts, it is another example of courts no longer accepting the concept of “tax exceptionalism,” where tax agencies received different treatment from other administrative agencies with respect to the application of certain principles of administrative law. Tax exceptionalism was previously rejected by the Supreme Court in Mayo Found. for Med. Educ. & Research v. United States, 562 US 44 (2011), where the Supreme Court held that general administrative law standards govern the judicial review of Treasury regulations and it was not inclined to “carve out an approach to administrative review good for tax law only.”For a more detailed discussion of tax exceptionalism and the APA, see Starkey & Cullinan, Is The IRS Always Right?
After finding that Mercy's residency program was subject to Title IX, the court next reviewed whether the resident had the right to file a private action under Title IX and whether her failure to exhaust the administrative remedies of Title VII of the Civil Rights Act was fatal to her suit. The court first determined that the resident most likely was an employee of the hospital (see, e.g., Mayo Found. for Med. Educ. & Research v. U.S., 562 U.S. 44 (2011) (finding residents employees for purposes of FICA taxation)), and thus theoretically could have filed claims under Title VII. Nonetheless, despite her employment status, the court held that Title VII's "concurrent applicability" did not bar the resident from pursuing a private cause of action under Title IX.