Former AAG Tax Justice Robert H. Jackson's Contribution in Dobson to the Deference Discussion Currently in the News and Before the Supreme Court (12/20/23)

I recently completed an article that features prominently Justice Robert H. Jackson who served on the Supreme Court in the 1940s. Jackson’s role in the article is based on the unanimous decision he authored in Dobson v. Commissioner, 320 U.S. 489 (1943), reh. den. 321 U.S. 231 (1944). Dobson was a tax case. The issue was whether the Tax Court’s statutory interpretation of tax law was entitled to deference in the appellate courts. While, as DOJ Tax Alumni certainly know, Congress legislatively did away with deference to Tax Court interpretations of law in 1948 in what is now § 7482(a) (requiring review the same as appellate review of district court opinions), Justice Jackson’s Dobson decision in 1943 was rock solid for two reasons: (i) agency interpretations of law were entitled to deference as Dobson amply laws out, and the Tax Court was statutorily an agency; and (ii) the statutory standard for review of agency decisions permitted review only if the Tax Court interpretation was “not in accordance with law” (1939 Code § 1141(c)), a standard which Dobson held required deference. Indeed, the form of deference Dobson lays out is basically what we call Chevron deference today.

Dobson ties into the subject of my article, titled The Tax Contribution to Deference and APA § 706 [linked at end of this blog). Many readers also probably know that the Supreme Court has accepted cert to decide whether Chevron deference to agency interpretations of law should be overruled or clarified. A major issue is whether § 706 precludes, permits, or requires deference to agency interpretations. In this regard, recall that Dobson emphasized that the Tax Court was statutorily an agency, making prior court precedents and the holding in Dobson to require deference to the Tax Court interpretations relevant to a discussion of deference to agency interpretations. More importantly, the statutorily prescribed standard for review of Tax Court  interpretations was “not in accordance with law” which Dobson held required deference. The APA incorporated that same standard in § 706: “(2)hold unlawful and set aside agency action, findings, and conclusions found to be (A)arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” My argument is that the use of the same standard for agency interpretations of law certainly permits (perhaps even requires) deference to agency interpretations.

Preparing the article required that I give renewed attention to Justice Jackson and his background in the tax law, some of which was with DOJ Tax. The Wikipedia discussion of Justice Jackson is here. I provide the following excerpt from the article surveying his tax litigation background (in which I think DOJ Tax Alumni may have interest):

2. Dobson Nuance.

a. Dobson’s author - Justice Robert Jackson

Dobson was authored by Justice Robert Jackson, who, although not a substantive tax expert, had been a trial lawyer in private practice and in the Government in the following capacities after coming to Washington in the New Deal revolution:

• Chief Counsel of the IRS where he advised on tax law and managed the IRS’s trial lawyers in the Board of Tax Appeals (“BTA” with the name changed to Tax Court in 1942; for the critical part of this article, in 1942, the BTA’s name had been changed to Tax Court). As Chief Counsel, Jackson tried at least one prominent tax case.43

 • Assistant Attorney General for the Tax Division, overseeing the Government’s tax trials in all courts except the Tax Court.