Tax Research and Practice

Question 1

Courts with original jurisdiction:

Answer 1

US Tax Court
US District Court
US Court of Federal Claims

It is what hears the original case and not appeals from other courts.

Court must follow previous decisions for future cases with same controlling facts.

Question 2

What are primary sources of authority

Answer 2

Legislative Authority

• Constitution
• IRC
• Committee Reports

Administrative Authority

• Treasure Regulations (Legislative, Interpretative, Procedural, Proposed, Temporary, Final)
• Revenue Rulings
• Private Letter Rulings
• Revenue Procedures
• Technical Advice Memoranda

Judicial Authority
Courts (Tax, District, Claims) -> Appeals except for small cases - > Supreme Court

Interpretations (journals and publications) of primary sources are secondary sources of tax law.

Question 3

Statutory Law Developent

Answer 3

1. House Ways and Means Committee
2. House of Representatives
3. Senate Finance committee
4. Senate
5. Joint Conference Committee
6. Back to House/Senate
7. President - Sign or Veto

Question 4

Research Process

Answer 4

1. Identify all relevant facts
2. Clearly state problem
3. Locate applicable tax authority
4. Evaluate relevance
5. Determine alternative solutions
6. Determine most appropriate solution
7. Communicate Results
   - Document all relevant facts
   - Clearly describe issue investigated
   - Report conclusions
   - Summarize support of conclusions
   - Summarize key authorities used

Question 5

Order of legislative authority:

Answer 5

1. Constitution
   2A. IRC
   2B. Legislative regulations

Question 6

Order of administrative authority:

Answer 6

1. Revenue Rulings

2. Private Letter Rulings (apply only to taxpayer who requested)

Question 7

Order of judicial authority:

Answer 7

Depends on:

Level of court
Residence of taxpayer
Whether IRS has acquiesced to the decision
Date of decision
What later decisions say

Question 8

What regulations can support a tax position?

Answer 8

Legislative, Interpretive, Procedural

Not procedural.

Question 9

Statute of Limitations for assessing additional tax:

Answer 9

3 years from later of:

• Date return was filed
• Due Date except

1. 6 years if gross income omissions is >25% of gross income stated on return.
2. None for taxpayer who willfully evaded tax in a fraudulent manner

Tax year can be reopened regardless if there is a determination for an open year that an earlier treatment was erroneous.

IRS can request an extension on statute of limitations.

Question 10

What is the role of the Revenue Agent’s Report in the process?

Answer 10

If taxpayer agrees with the report, he can’t pursue tax relief through appeals or Tax Court.

Signed item binds IRS and taxpayer but only those terms. Once deficiency is paid the taxpayer can later pursue a claim for refund through US District Court or Claims Course.

Question 11

What is a 30-Day Letter? What about a 90-day Letter?

Answer 11

If there is no agreement reached through the process, they will receive this letter and a 30-day letter. Taxpayer can agree with report or request appellate conference but need not respond, which results in the issuance of 90-day letter and that includes statutory notice of a deficiency.

That is the time the taxpayer has to file a petition with the Tax Court. The other option is District and Claims course and require deficiency to be paid first.

Question 12

How does a taxpayer file an appeal?

Answer 12

A written protest must be filed with the request for an appellate conference.

Protest requires taxpayer’s position for each issue and support by law. IRS isn’t required to grant the appeal. New issues cannot be raised during appeal. Once a case is closed, it can open only for math error of fraud.