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Tax Research (Day 2) Dr. Richard Ott ACCTG 833, Fall 2007

1. Chapter. Tax Research (Day 2) Dr. Richard Ott ACCTG 833, Fall 2007. Sources of Tax Law. Statutory authorities Administrative authorities Judicial authorities. Administrative Authorities. Treasury Regulations Revenue Rulings Revenue Procedures Private Letter Rulings

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Tax Research (Day 2) Dr. Richard Ott ACCTG 833, Fall 2007

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  1. 1 Chapter Tax Research(Day 2)Dr.Richard OttACCTG 833, Fall 2007

  2. Sources of Tax Law • Statutory authorities • Administrative authorities • Judicial authorities

  3. Administrative Authorities • Treasury Regulations • Revenue Rulings • Revenue Procedures • Private Letter Rulings • Technical Advice Memorandum • Other IRS pronouncements

  4. Administrative Authorities Treasury Regulations

  5. Treasury Regulations • Official interpretations of the IRC by the IRSand the Treasury Department • Authority to issue: • General - Issued under the general authority granted under IRC §7805(a) • Legislative - Issued under authority granted in a specific Code section to fulfill law-making function and specify substantive requirements of a tax provision (Example: IRC §385)

  6. Treasury Regulations • Supreme Court has held that these regulations have the full force and effect of law unless they conflict with the statute • Taxpayers challenging a regulation must show an improper exercise of power or an overly broad application of a rule • Under IRC §6662, a 20% penalty can be assessed for “negligence or disregard of rules or regulations”

  7. Treasury Regulations • Regulations often contain helpful examplesof the application of the law • Regulations are filed in IRC section order • Code sections correspond but paragraphs and other subdivisions do not correspond

  8. Treasury Regulations • For IRC changes enacted after July 29, 1996, Treasury is precluded from issuing regulations with retroactive effect unless issued within 18 months of the date of the change in the statute

  9. Treasury Regulations • Types of Regulations • Proposed • Final • Temporary

  10. Treasury Regulations • Acceptable citations for final regulations: Reg. §1.164-1(a)(4) Reg. Sec. 1.164-1(a)(4) Treas. Reg. §1.164-1(a)(4) Treas. Reg. Sec. 1.164-1(a)(4) 26 CFR §1.164-1(a)(4)

  11. Treasury Regulations • Acceptable citations for proposed regulations: Prop. Reg. §1.1362-8(b)(1) Prop. Reg. Sec. 1.1362-8(b)(1) Prop. Treas. Reg. §1.1362-8(b)(1) Prop. Treas. Reg. Sec. 1.1362-8(b)(1) T.D. 8869

  12. Treasury Regulations • Acceptable citations for temporary regulations: Reg. §1.274-5T(c)(1) Reg. Sec. 1.274-5T(c)(1) Temp. Reg. §1.274-5(c)(1) Temp. Reg. Sec. 1.274-5(c)(1) 26 CFR § 1.274-5T(c)(1)

  13. Treasury Regulations • Number to left of the period indicates the category of issues addressed by the regulation 1. Income Tax 20. Estate Tax 25. Gift Tax 301. Administrative and Procedural 601. Procedural Rules

  14. Treasury Regulations • Number to the right of the period indicates the IRC section regulation relates to • Number to the right of the dash indicates the regulation number • Capital T to the right of the dash indicates it is a temporary regulation • Letters and numbers to the right of the regulation number indicate paragraphs, subparagraphs, etc.

  15. Caution About Regulations • The Treasury Department / IRS is very slow about issuing regulations • Many regulations are obsolete and/or not consistent with the current IRC (still have effect of law to the extent not inconsistent with the current IRC) • Example: IRC §542 and Reg. §1.542-2(60% versus 80% test)

  16. Administrative Authorities Revenue Rulings, Revenue Procedures, Private Letter Rulings and Technical Advice Memoranda

  17. Revenue Rulings • Issued by the National Office of the IRS • Deals with the application of the IRC and Regulations to a specific factual situation • Always check for subsequent legislation, regulations, rulings or court decisions • Permanent Revenue Ruling citation: Rev. Rul. 96-58, 1996-2 C.B. 6 or Rev. Rul. 2000-10, 2000-1 C.B. 643

  18. Revenue Procedures • Issued by the National Office of the IRS • Deals with the IRS’s internal practice and procedures in administering the tax laws • Do not deal with substantive issues of law • Permanent Revenue Procedure citation: Rev. Proc. 95-3, 1995-1 C.B. 10 or Rev. Proc. 2000-15, 2000-1 C.B. 447

  19. Private Letter Rulings • Issued by the National Office of the IRS • Response to a taxpayer’s request for theIRS’s position on a specified tax issue(usually a proposed transaction) • PLR apply only to the taxpayer to whom it is issued (but can be helpful in determining IRS’s potential position)

  20. Private Letter Rulings • Citations pre-2000: P.L.R. 8652012 P.L.R. 86-52-012 Ltr. Rul. 8652012 Ltr. Rul. 86-52-012 • Citations post-1999: P.L.R. 200130019 P.L.R. 2001-20-019 Ltr. Rul. 200130019 Ltr. Rul. 2001-30-019

  21. Technical Advice Memorandum • Issued by the National Office of the IRS • Response to an IRS agent’s request forIRS’s position on a completed transaction • Applies strictly to the taxpayer for whose audit it was requested and cannot be relied on by other taxpayers (but useful for gaining insight into IRS’s thinking about a particular transaction) • Citation similar to PLRs:T.A.M. 8548005T.A.M. 85-48-005

  22. Other Pronouncements • Information Releases • Announcements • Notices • Tax Return Forms and Instructions

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