julho 07 2026
Mayer Brown secures significant victory for Keysight Technologies in US Court of Federal Claims
Mayer Brown achieved a major victory on behalf of its client, Keysight Technologies, Inc., in the US Court of Federal Claims, which held that the Department of the Treasury lacked the statutory authority to promulgate Treasury Regulation Section 1.951A-2(c)(5). The ruling is one of the first major applications of the Supreme Court's 2024 decision in Loper Bright Enterprises v. Raimondo, 603 US 369 (2024), which overturned the longstanding Chevron doctrine and reasserted the judiciary's authority to independently interpret federal statutes rather than deferring to agency interpretations.
When Congress enacted the Tax Cuts and Jobs Act of 2017 ("TCJA"), it created a new category of taxable income known as global intangible low-taxed income, or "GILTI," which required US companies to pay tax on certain foreign subsidiary earnings in the year they were earned. Due to the TCJA's effective date provisions, a timing gap arose between companies whose foreign subsidiaries filed taxes on a fiscal-year basis versus a calendar-year basis. The Treasury Department viewed this gap as an opportunity for abuse and, in 2019, issued Treasury Regulation Section 1.951A-2(c)(5) to close it. The regulation prevented affected companies from claiming certain deductions—including amortization deductions—when calculating GILTI.
The court held that the Treasury exceeded its authority in promulgating the regulation, finding that neither the general rulemaking power under I.R.C. § 7805(a) nor any specific statutory provision gave the Treasury the power to redefine which deductions are "properly allocable" to GILTI. The court reasoned that allowing Treasury to read ambiguity into the Tax Code and then resolve it without constraint would confer unfettered discretion to administrative agencies, which is “precisely the kind of agency overreach Loper Bright was designed to foreclose.” The ruling establishes that the Treasury's general authority to issue "needful rules and regulations" under I.R.C. § 7805(a) cannot, by itself, sustain substantive tax regulations that go beyond what Congress has specifically authorized.
The Mayer Brown team was led by partners Jenny Austin, Gary Wilcox, Nicole Saharsky, Anthony Pastore, Maria Critelli, and Minh Nguyen-Dang, along with counsel May Chow and Graham White, and associates Zachary Weit, Madison Zeeman, and Audrey Yang in the firm’s Chicago and Washington DC offices.
The case is Keysight Technologies, Inc. v. United States, No. 25-137 (Fed. Cl. July 2, 2026).
When Congress enacted the Tax Cuts and Jobs Act of 2017 ("TCJA"), it created a new category of taxable income known as global intangible low-taxed income, or "GILTI," which required US companies to pay tax on certain foreign subsidiary earnings in the year they were earned. Due to the TCJA's effective date provisions, a timing gap arose between companies whose foreign subsidiaries filed taxes on a fiscal-year basis versus a calendar-year basis. The Treasury Department viewed this gap as an opportunity for abuse and, in 2019, issued Treasury Regulation Section 1.951A-2(c)(5) to close it. The regulation prevented affected companies from claiming certain deductions—including amortization deductions—when calculating GILTI.
The court held that the Treasury exceeded its authority in promulgating the regulation, finding that neither the general rulemaking power under I.R.C. § 7805(a) nor any specific statutory provision gave the Treasury the power to redefine which deductions are "properly allocable" to GILTI. The court reasoned that allowing Treasury to read ambiguity into the Tax Code and then resolve it without constraint would confer unfettered discretion to administrative agencies, which is “precisely the kind of agency overreach Loper Bright was designed to foreclose.” The ruling establishes that the Treasury's general authority to issue "needful rules and regulations" under I.R.C. § 7805(a) cannot, by itself, sustain substantive tax regulations that go beyond what Congress has specifically authorized.
The Mayer Brown team was led by partners Jenny Austin, Gary Wilcox, Nicole Saharsky, Anthony Pastore, Maria Critelli, and Minh Nguyen-Dang, along with counsel May Chow and Graham White, and associates Zachary Weit, Madison Zeeman, and Audrey Yang in the firm’s Chicago and Washington DC offices.
The case is Keysight Technologies, Inc. v. United States, No. 25-137 (Fed. Cl. July 2, 2026).
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