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About the citations.

Many sources are cited as authority for statements in this book. Knowing something about some of these sources helps one evaluate the significance of a statement. The Internal Revenue Code and valid uncodified tax legislation are law. Final Treasury regulations state the interpretation the IRS will use in enforcing the law and have the effect of law if they are not inconsistent with the statutes. Temporary regulations are strong authority. Proposed regulations are generally considered to be the partisan opinions of the IRS and not to bind the IRS or anyone else. Revenue Rulings state the interpretation the IRS will use in applying the law to a particular set of facts. They can be revoked without prior notice but generally revocation is not retroactive. The weight given to Revenue Rulings by courts varies. While it is not clear, it seems that Notices and Announcements bind the IRS to the same extent Revenue Rulings do. Letter Rulings (including TAMs) and Special Rulings are only uncertain indications of one line of reasoning at IRS. IRS is not bound to follow them with respect to third parties or future events in a continuing transaction. Letter Rulings are not precedent, but courts have considered them in reaching decisions. The IRS believes that GCMs cannot be used as precedent. IRs and TIRs are intended to state an official IRS position. All courts and the IRS follow Supreme Court decisions. District courts within a circuit must follow a decision of a court of appeals if the Tax Court's decision in a particular case would be appealable to that circuit. Neither the IRS nor any court other than the issuing court is bound to follow a district court, Tax Court, or Court of Federal Claims decision, although federal courts are strongly influenced by decisions of other federal courts. Tax Court Summary Opinions are issued in matters involving $50,000 or less and have no precedential value, but may indicate the line of reasoning the Tax Court would follow in a particular situation.

As with any generalized treatment, this discussion omits a variety of nuances. Keep in mind that whether and to what extent one may rely on a particular source as "authority" depends in part on the purpose for which the source is to be used. For example, a source may not be authoritative enough to require a favorable determination of tax liability but it may be sufficiently authoritative to avoid application of the penalty for substantial understatement of income.

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Publication:Tax Facts on Insurance and Employee Benefits
Date:Jan 1, 2010
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