Article by John F. Coverdale
Courts frequently interpret the Internal Revenue Code in ways that fall outside the plausible range of meanings of its language taken in context. They usually adopt such antitextual interpretations of the Code in an effort to close loopholes and achieve results in keeping with their perceptions of how the Code is intended to work.
The first part of this Article argues that courts should not adopt antitextual interpretations of the Code. It demonstrates that the text of the Code is sufficiently determinate that certain interpretations are incompatible with the statutory provisions. It then contends that the constitutional allocation of roles to the Legislative, Executive and Judicial branches and the constitutional system for enacting legislation require courts to eschew interpretations that the enacted text will not bear. These principles apply with special force in tax due to the need for certainty in tax planning and Congress' decision to attempt to meet that need by enacting formal rules rather than flexible standards. Arguments that courts should adopt antitextual interpretations in order to adapt the law to changing circumstances are especially unconvincing in tax because Congress amends the Code so frequently.
The second part of the Article examines three landmark tax cases in which courts have adopted antitextual readings of the Code: Gregory v. Helvering, Philadelphia Park Amusement Co., and Commissioner v. Tufts. It criticizes each case in light of the principles developed in the first part. In addition, it demonstrates that the arguments from congressional purpose and statutory structure that the courts relied on were in fact far weaker than the courts pretended. This suggests that when courts adopt antitextual interpretations they are likely to be implementing their own preferences rather than furthering a congressional mandate which Congress failed to express in the statutory language.
About the Author
John F. Coverdale. Professor, Seton Hall University School of Law.
Citation
71 Tul. L. Rev. 1501 (1997)