Nontaxpayer Litigation of Income Tax Disputes

Abstract

Outside the tax area, the law of standing reflects the general proposition that a citizen not directly subject to regulation may under some circumstances go to court to challenge government action or inaction. Although a lack of clarity in the Supreme Court's decisions makes it impossible to say exactly when standing exists, the unregulated citizen clearly has some opportunities to sue to obtain the benefits of government intervention in someone else's affairs. By contrast, when a dispute involves the federal income tax, standing doctrine has served to bar most third-party suits. Generally a citizen can neither challenge a tax levied on someone else, even if the citizen would end up bearing some of its burden, nor sue to compel the government to collect more tax, even if nontaxation injures him by benefiting his competitors. The contrast with other areas of public law is striking and invites inquiry. What is it about federal income tax disputes that justifies such different rules governing their judicial review?