U.S. Court of Federal Claims Strikes Down Treasury GILTI Regulation, Citing Loper Bright Precedent

In one of the first major applications of the Supreme Court's Loper Bright Enterprises v. Raimondo decision, the U.S. Court of Federal Claims ruled on August 5, 2026, that the Department of the Treasury lacked statutory authority to issue Treasury Regulation Section 1.951A-2(c)(5). This regulation implemented the global intangible low-taxed income (GILTI) provisions of the Tax Cuts and Jobs Act of 2017. The court's decision, relying on Loper Bright's rejection of Chevron deference, signifies a shift in how courts review agency interpretations of law.

Context

The GILTI provisions were introduced as part of the Tax Cuts and Jobs Act of 2017 to impose taxes on foreign income of U.S. companies. The Supreme Court's decision in Loper Bright Enterprises v. Raimondo questioned the longstanding Chevron deference, which allowed courts to defer to agency interpretations of ambiguous statutes. The Court of Federal Claims' ruling marks one of the first applications of this new judicial approach.

Why it matters

The ruling impacts the enforcement of tax regulations related to global intangible low-taxed income, which affects multinational corporations and their tax liabilities. It signals a potential shift in judicial attitudes towards agency authority, particularly in tax law. This case could set a precedent for future legal challenges against federal regulations.

Implications

Multinational corporations may face changes in their tax obligations if the Treasury adjusts its regulations. The ruling could embolden other entities to challenge agency regulations in court, potentially leading to a wave of litigation. If this trend continues, it may reshape the landscape of federal regulatory authority across various sectors.

What to watch

Legal experts will monitor how this ruling influences other pending cases involving agency regulations. The Treasury Department may seek to revise its GILTI regulations in response to the decision. Future Supreme Court cases could further clarify the implications of the Loper Bright precedent on agency authority.