<i>United States v. Woods</i> and the Future of the Tax Blue Book as a Means of Penalty Avoidance and Statutory Interpretation

The Blue Book is a “General Explanation” of tax law prepared by the Joint Committee on Taxation, and is commonly relied upon by both taxpayers and the Internal Revenue Service (IRS). In United States v. Woods, the U.S. Supreme Court broadly disapproved of judicial deference to the Blue Book when courts are faced with such reliance. Yet, the Court left no guidance on when the Blue Book should or should not prove persuasive. The Court’s decision to summarily undermine Blue Book deference—without further elaboration, sophistication, or nuance—will give taxpayers pause when considering whether to rely on the Blue Book.

However, the need for pause is unfortunate; the Treasury Department lists the Blue Book as a substantial authority on which taxpayers may rely to avoid certain tax penalties. Moreover, Blue Book reliance is appropriate in various other contexts as a means of statutory interpretation. Nonetheless, the Court has, with a broad stroke, come down against the Blue Book without considering that a given case’s facts and circumstances determine the Blue Book’s interpretive weight.