CCA 201005035: Prior cases support the validity of the check-the-box regulations

Plain-English summary

This internal IRS Chief Counsel advice responds to a request for help with a taxpayer's position paper. The advice says the taxpayer appears to be challenging the validity of the check-the-box regulations. It points to cases including Litriello and McNamee, which it says uniformly upheld the regulations as a valid exercise of the Service's authority to classify entities where congressional intent is ambiguous. It describes the taxpayer's Social Security Administration argument as new but likely a red herring, stating that the Code and regulations determine who the employer is. It adds that properly completed Forms W-2 would show covered employment in the situation described.

Ruling snapshot

• Question: How should the Service respond to a challenge to the check-the-box regulations and a related Social Security Administration argument?
• Outcome: Advice given.
• Key authorities: IRC § 7701; the check-the-box regulations; Litriello and McNamee.

Full text (IRS public release)

ID: CCA_2010010513143632 Number: 201005035
Release Date: 2/5/2010
Office: -------------
UILC: 7701.00-00

From: --------------------
Sent: Tuesday, January 05, 2010 1:14:42 PM
To: --------------------
Cc: --------------------------------------
Subject: RE: Counsel assistance Requestl

Hi -------- -

Please do go ahead and scan the taxpayer's position paper and send it in to us. I will have ------------------ take a look at it and try to provide some assistance. It seems to me that the taxpayer is really trying to challenge the validity of the check-the-box regulations. This has been tried before (although not in this specific context) and the courts (in cases like Litriello and McNamee, among others) have uniformly upheld the validity of the check-the-box regs as a valid exercise of the Service's authority to promulgate rules classifying entities where Congressional intent is ambiguous. Those cases, and others like them, will have a lot of good ammunition to combat the taxpayer's Chevron arguments. The SSA argument is something new that I don't think we have considered before. I think it's a red herring, though. The Internal Revenue Code and regulations determine who the employer is. Also, SSA relies on information on Forms W-2 to compile earnings records which are used to determine eligibility for benefits. In cases like the one you are describing, the Forms W-2 (if properly completed and filed according to our rules) would show that the individuals worked in covered employment.

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