Leila Carney Comments on Cases Determining Regulatory Power in 2025 in Financial Planning

This year may not bring as many consequential Supreme Court decisions as the last one for financial advisors, but there are several pending lawsuits with big potential industry implications.

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“What we've seen is, 2024 cases have chipped away at agency power, lending momentum to private litigants,” Leila Carney said in an interview last month shortly after the high court heard arguments in the case involving creditors’ ability to claw back tax payments prior to bankruptcy, U.S. v. Miller.

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However, another area of enforcement called the “economic substance doctrine” that restricts tax benefits for transactions that do not present any legitimate business or economic purpose bears close watching by advisors and tax professionals too, according to Carney. A district court’s decision siding with the IRS in a case brought by a company called Liberty Global put tax attorneys on alert about the impact to basic strategies deployed by clients for savings.

“The IRS has been making it a priority to enforce the economic substance doctrine recently,” she said. “The litigation climate may make that harder.”

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