Sources of tax authority and research

Question 1

Where does Primary tax authority come from?

Answer 1

Legislative authority
Administrative authority
Judicial authority

Question 2

What are the sources of (legislative) statutory authority?

Answer 2

1. The Constitution
2. Internal Revenue Code Statutes
3. Treaties
4. Committee Reports of the House Ways and Means Committee, Senate Finance Committee, and the Joint Conference Committee

Question 3

While there are many types of pronouncements issued by the Internal Revenue Service, the most significant are as follows:

Answer 3

1. Treasury Regulations
2. Revenue Rulings—(Rev. Rul. 2009-12)
   - Do not have as much weight as regulations
3. Private Letter Rulings
   - Request by the taxpayer for the IRS to provide the tax consequences on a specific set of facts
4. Revenue Procedures (Rev. Proc. 2008-23)—These provide internal management practices of the IRS.
5. Revenue Procedures (Rev. Proc. 2008-23)—These provide internal management practices of the IRS.

Question 4

What are the 4 courts of original jurisdiction for tax cases?

Answer 4

1. U.S. Tax Court- Only court where Taxpayer does not have to pay deficiency before trial
2. U.S. District Courts-only court where jury trial is possible
3. U.S. Court of Federal Claims-only one court in Washington, D.C.
4. U.S. Tax Court-Small Cases Division a. $50,000 or less

Question 5

What is the process for making a tax law in congress?

Answer 5

1. originate in the House Ways and Means Committee.
2. passed by the House of Representatives.
3. moves to the Senate Finance Committee.
4. The Senate debates the bill and passes its own version
5. The House bill and Senate bill usually differ, so a Joint Conference Committee is created to craft a compromise bill.
6. Once the Joint Conference Committee passes its bill, this bill must return to the House and Senate for another vote
7. The President either signs or vetoes the bill.
8. If vetoed Congress can override a veto with a two-thirds vote.

Question 6

Regulations can be classified as:

Answer 6

Legislative—These regulations have almost as much weight as the statute (IRC), since Congress has authorized the Treasury to develop regulations dealing with a specific issue.
Interpretative—These regulations are written under the general mandate given to Treasury to develop regulations to interpret the laws legislated by Congress.
Procedural—These regulations apply to procedural issues such as the information required to be submitted, the process for submission, etc.