Insights

On October 1, 2025, the Eighth Circuit decided 3M Co. v. Commissioner in the taxpayer’s favor, based on its application of Loper Bright. The question presented in the case was whether the IRS had the authority to reallocate royalty income to a U.S. parent company that its foreign subsidiary was prohibited from paying under foreign law. The court held that the best interpretation of the governing statute did not permit the IRS’s reallocation.

On July 23, 2025, the Internal Revenue Service (“IRS”) issued interim guidance for Large Business & International Division (“LB&I”) audit procedure. The IRS announced three major changes: (1) the Acknowledgement of Facts Information Document Request (“AOF IDR”) will be eliminated; (2) Accelerated Issue Resolution (“AIR”) applies to Large Corporate Compliance (“LCC”) cases; and (3) the IRS must conduct additional review before denying a taxpayer’s request to participate in the Fast Track Settlement (“FTS”). These changes reflect the IRS’s continued push to make its examinations “more efficient and current.”

Last week, we wrote that concerns about excessive, unchecked executive branch power resulting from the Supreme Court’s decision in Trump v. CASA—which declared universal/nationwide injunctions likely exceeded district courts’ equitable authority under FRCP 65—felt premature, because there were a number of other levers district courts could pull to deliver the equivalent of nationwide injunctive relief. We discussed how Section 705 of the Administrative Procedure Act (APA) is one such lever. That section authorizes courts to “postpone the effective date” of a challenged agency action pending judicial review utilizing the same four-factor test applicable to requests for injunctive relief.