Several recent tax decisions exhibit the Tax Court’s strict enforcement of procedural deadlines. This firm enforcement by the Tax Court, highlights the critical role of diligence, timeliness, and adherence to procedural rules in maintaining the integrity of the judicial process. In both cases discussed below, the Court applied a strict statutory interpretation of the Bipartisan Budget Act partnership audit framework, ultimately ruling in favor of the taxpayer. These rulings also shed light on how the implications of the Loper Bright Enterprises v. Raimondo, 144 S.Ct. 2244 (June 28, 2024), decision are beginning to take shape within tax law.
JM Assets (July 2025)
In JM Assets, LP v. Commissioner of Internal Revenue, 165 T.C. 1 (July 2, 2025), JM Assets sent the IRS a complete request for modification of a proposed tax adjustment. Under 26 U.S.C. 6235(a)(2), once the IRS receives a complete request like this, it has 270 days to issue a Final Partnership Adjustment (“FPA”). In JM Assets, the IRS did not meet this deadline. Instead of responding within 270 days, it issued the FPA 289 days later, which JM Assets challenged.
The IRS argued that Treasury Regulation § 301.6235-1(b)(2) allowed it to use the full 270-day period no matter when the complete request was submitted. But on July 2, 2025, the Tax Court disagreed. The Court ruled that the law clearly requires the IRS to meet the 270-day deadline, and the IRS cannot extend that timeframe unless Congress says so. The Court also used a new legal standard from the Supreme Court’s Loper-Bright decision to decide whether the IRS’s interpretation of its own regulation was reasonable, and found a clear conflict between the law and the IRS regulation, ultimately ruling that the law takes priority. Thus, the Tax Court did not defer to the IRS’s interpretation, holding that the IRS’s notice “was untimely” and granted JM Assets’ Motion for Summary Judgment.
Bayou Serpent (November 2025)
A few months later, the Tax Court reached the same conclusion in favor of the taxpayer in Bayou Serpent Property LLC et al. v. Commissioner, No. 4659-25, ___ T.C. ___ (Nov. 5, 2025). Bayou Serpent submitted its modification request on February 8, 2024. The IRS did not issue its FPA until January 13, 2025, more than 270 days later. On November 5, 2025, the Tax Court ruled that the IRS’s adjustment was invalid because it missed the deadline. The Court explained that the 270-day countdown starts when the taxpayer submits a complete request, and if the IRS responds late and untimely, the FPA cannot stand. This decision, like JM Assets, makes clear that the IRS must strictly follow the deadlines set by Congress. Taxpayers can rely on these deadlines, and the IRS cannot extend them past the date set by statute.
Role of Loper-Bright
Another particularly interesting point of note is the impact of the Loper-Bright Enterprises v. Raimondo decision on this issue, which was discussed in JM Assets. Loper-Bright was not a tax case, but its reach will have significant impacts and implications in tax law. The Internal Revenue Code is carried out through extensive administrative guidance such as Treasury regulations, which may now face heightened judicial scrutiny.
Loper-Bright overruled and ended the Chevron doctrine’s tradition of agency deference. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Under Chevron, courts would defer to the agency interpretation of a statute upon review if Congress had not addressed the issue. Loper-Bright made it so this is no longer the law. The Supreme Court in Loper-Bright found that the Chevron doctrine conflicted with the requirement that courts exercise independent judgment when determining whether an agency has acted within the bounds of its statutory authority. Although the decision did note that agency interpretations may still carry persuasive weight and courts may consider an agency’s reasoning, thoroughness, and consistency when assessing its guidance, such interpretations are not entitled to deference.
In Loper-Bright, the Court explained that when Congress expressly grants authority to an agency through statute, the reviewing court’s role is to fix the boundaries of delegated authority and ensure the agency has engaged in reasoned decision–making within those boundaries. So, in many challenges, the question will turn on whether Treasury and the IRS acted within its delegated authority.
Since IRS and Treasury regulations likely will face a higher level of constitutional scrutiny, taxpayers may be in a better position to successfully mount challenges. This signals a shift away from an era of administrative law where the IRS and its regulations held dominant authority, toward one where taxpayers will have increasing opportunities for argument against IRS actions and stand a stronger chance of success.
Attorneys at Gensburg Calandriello & Kanter, P.C. are well-equipped to assist you and your business with any tax law related matters, as well as any other business-related legal needs. For comprehensive support and guidance, please do not hesitate to contact us for expert guidance and support.
Sandra Mertens, Esq. and Grace Symington
smertens@gcklegal.com
gsymington@gcklegal.com