The Treasury Department recently announced that it won’t attempt to use a potential tool at its disposal when arguing cases in the U.S. Tax Court—a welcome development for taxpayers.

“That’s the upshot” because it could make it easier for taxpayers to challenge the IRS in certain situations, said Steve Dixon, a member in the Tax Department at Miller & Chevalier Chartered in Washington.

In a policy statement released March 5, Treasury said it won’t argue that subregulatory guidance—such...