Looking back at 2023, it is clear that the IRS has begun to increasingly assert anti-abuse doctrines, most notably the economic substance doctrine (ESD), in contentious tax controversies. Correspondingly, courts have had more opportunities to analyze and conceptualize the various anti-abuse doctrines. Courts in Liberty Global, GSS Holdings, and Chemoil have each offered unique and sometimes conflicting analyses in this regard. When reviewing these cases at a high level, a worrisome pattern emerges of courts conceiving of the traditional three anti-abuse doctrines as simply manifestations of a much broader substance over form tax principle. Further, despite the text of section 7701(o), courts are rejecting the idea that there exist certain transactions to which the ESD does not apply.

On 20 October 2023, the IRS issued a press release announcing a new initiative to send compliance alerts to roughly 150 US subsidiaries of large foreign corporations that distribute goods in the United States to challenge transfer pricing practices that it alleges resulted in improper losses and exceedingly low margins year after year. Further, in 2024 the IRS will expand the Large Corporate Compliance program to include audits of an additional 60 corporate taxpayers selected using artificial intelligence and input from subject matter experts.

On 26 September 2022, the US Court of Appeals for the Eleventh Circuit, issued an opinion in United States v. Meyer, 50 F.4th 23 (11th Cir. 2022), holding that the Anti-Injunction Act, codified in Code Section 7421, did not bar a defendant taxpayer from seeking a protective order in a closed suit to restrain the government from using his admissions when assessing a tax penalty in a separate administrative proceeding.