Citation: Mayo Foundation for Med. Educ. & Research v. United States, 562 U.S. 44 (2011).
Why This Case Was a Turning Point
The Court held that tax regulations get the same Chevron deference as other agency rules. The student FICA exemption was interpreted through the Treasury regulation that limited it, and the Court deferred to Treasury’s rulemaking.
Key idea: Tax regs aren’t “special”—general administrative law standards apply, which strengthens well-justified IRS regulations.
How It Affected Everyday Citizens
- More stability in IRS rules: Well-reasoned regulations are more likely to be upheld, reducing sudden shifts from court challenges.
- Compliance clarity: Taxpayers and employers can rely on regulations as the primary guide unless Congress or Treasury changes them.
- Student workers/payroll: The specific dispute confirmed many medical residents are subject to FICA, aligning payroll and benefits expectations.
Lasting Impact
Mayo has shaped how lower courts review Treasury rules, influencing everything from ACA regulations to business deduction rules. While later cases (like Kisor) refined deference doctrines, Mayo’s message stands: tax is part of mainstream administrative law.
Practical Takeaways
- When planning, read the regulation and its preamble—courts give real weight to Treasury’s reasoning.
- For payroll and benefits, expect regulations to control unless clearly inconsistent with statute.
- Watch ongoing deference debates; future shifts could change litigation risk for complex positions.
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