Sources of Tax Authority and Research

Question 1

Three main sources of authority:

Answer 1

PRIMARY AUTHORITY:

• Legislative Authority (Congress)
  IRC (Internal Revenue Code)
  Constitution of the United States
  Committee Reports
• Administrative authority (Sec. of Treasury/President)
• Judicial Authority
• Everything needs to be backed up with primary authority

SECONDARY AUTHORITY:
- Journals

Question 2

What are administrative sources:

Answer 2

• Treasury Regulations:
• Treasury department has the responsibility to interpret the regulations.
• Procedural regulations- administrative procedures on when/how they are filed
• Legislative regulations- higher authority than interpreting and procedural authority

Question 3

What are proposed, temporary, and final regulations:

Answer 3

Temporary- 3 years until they expire

Proposed- Do not have any effect of law, put out for comment and receive comments by the public

Final- They are permanent.

Question 4

What are revenue rulings:

Answer 4

Revenue rulings- deal with specific scenario and let you know what the IRS opinion is on that issue

Private Letter Ruling- Request rulings for transactions that have not yet occurred. Significant fee for this request by the taxpayer. Only binding on the taxpayer that requested it. These rulings are published.

Question 5

What are the three courts of original jurisdiction?

Answer 5

1) Tax Court- only hears tax cases, can petition the tax altogether and not pay
2) District Court- Jury trial possible, may pay deficiency first, and then may refund from the IRS
3) Claims Court- May pay deficiency first

Question 6

What is a precedent?

Answer 6

Once a court has made a decision, for future cases, the same controlling set of facts. Tax court will follow those rulings from the past.

Question 7

Weighting of Authority:

Answer 7

1) Highest source is the constitution and the IRC
2) Legislative Decisions
3) Revenue Rulings

Weighting of a Judicial Decision- what is the level of court? Supreme court is going to have more weight than a district court. The date of the decision depending on how old it is.

Question 8

Research Process on issues for a client:

Answer 8

1) identify all relevant facts- make sure the client signs off on the facts you will be looking up
2) Clearly state the problem
3) Locate the applicable tax authority
4) Evaluate the relevance of authority
5) Communicate the results