Was it something we said? The government's defensive reply to TEI's amicus brief in Mead strikes a nerve.

• Author: McCormally, Timothy
• Position: Tax Executives Institute, United States v. Mead Corp.

We may not be the sharpest tools in the shed, but even we were able to sense that TEI struck a nerve with the brief amicus curiae it filed with the Supreme Court in the Mead Corporation case. (TEI's brief in Mead Corporation is reprinted in this issue, beginning on page 385.) Perhaps it was because TEI is a tax organization and we dared to get involved in a Customs case (one involving the deference to be given to administrative rulings). Perhaps it was because we quoted the Tax Court as disparaging revenue rulings as merely representing the Internal Revenue Service's litigating position. Then again, perhaps it was because we challenged the Solicitor General's summary of a seminal tax case that is discussed in most introductory level tax courses.

The case at issue is United States v. Correll, 389 U.S. 299 (1967), in which the Supreme Court held that a salesman whose travels did not involve a stop for sleep or rest was not entitled to a meals deduction because he was not "away from home" under section 162(a)(2) of the Internal Revenue Code. One of the things that professors try to get across in first-year tax courses is that Correll involves an interpretative Treasury regulation, which the Court found must be upheld if it represents a reasonable interpretation of the statute. Admittedly, the Court's reasoning is not the most articulate -- some people have suggested such a defect often plagues high court tax cases (witness INDOPCO) -- but in the more than three decades since the opinion was handed down the case has stood for the proposition that courts should defer to longstanding and reasonable Treasury regulations.

In its opening brief in United States v. Mead Corporation -- scheduled for argument on November 8 -- the government relies heavily on Correll to support its position that the appellate court erred in not recognizing the significant deference to be accorded revenue rulings. Demonstrating just how misleading it can be to selectively quote judicial opinions, the government artfully cites Correll in arguing that "an interpretive ruling adopted by the Treasury under the Internal Revenue Code must be upheld as long as it represents a `reasonable' interpretation of the statute." Nowhere in the brief does the government acknowledge that the "rule" discussed in Correll was a regulation, not a revenue ruling.

This oversight on the government's part is noteworthy because the document at issue in Mead lies far below regulations in the panoply...