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Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International

Document Type


Publication Date

Spring 2007




University of Virginia School of Law




Tax shelters raise difficult problems of statutory interpretation. In her interesting article, Of Lenity, Chevron, and KPMG, Kristin Hickman explores one of them: the recent tendency of courts to apply the rule of lenity in civil cases, potentially leading to a narrow interpretation of the Code that would undermine efforts to collect the taxes that Congress intended to impose. In that article and in earlier work, she also discusses the importance of courts deferring to the IRS under the Chevron doctrine as a tool in collecting taxes. We agree both with Hickman's articulation and analysis of this problem. Here, we situate more broadly the status of tax shelters in the jurisprudence of statutory interpretation.

Tax shelters typically involve carefully crafting transactions to make them fit within gaps or ambiguities in legislation. The goal is to thwart the intent of the legislature without violating the plain language of the statute. We show how tax shelters are a challenge to ordinary principles of statutory interpretation, whether or not lenity is expanded to make it even more difficult to combat them, and whether or not the judges interpreting the Code regard themselves as textualists in the tradition of Justice Scalia. We make a few suggestions as to how courts can use current doctrines of statutory interpretation, such as the ordinary meaning rule, to improve enforcement efforts.

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