Chapter
1
Tax Research
(Day 2)
Dr. Richard Ott
ACCTG 833, Fall 2007
Slide D2-2
Sources of Tax Law
Statutory authorities
Administrative authorities
Judicial authorities
Slide D2-3
Administrative Authorities
Treasury Regulations
Revenue Rulings
Revenue Procedures
Private Letter Rulings
Technical Advice Memorandum
Other IRS pronouncements
Administrative Authorities
Treasury Regulations
Slide D2-5
Treasury Regulations
Official interpretations of the IRC by the IRS
and 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)
Slide D2-6
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”
Slide D2-7
Treasury Regulations
Regulations often contain helpful examples
of the application of the law
Regulations are filed in IRC section order
Code sections correspond but paragraphs and
other subdivisions do not correspond
Slide D2-8
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
Slide D2-9
Treasury Regulations
Types of Regulations
Proposed
Final
Temporary
Slide D2-10
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)
Slide D2-11
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
Slide D2-12
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)
Slide D2-13
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
Slide D2-14
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.
Slide D2-15
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)
Administrative Authorities
Revenue Rulings, Revenue
Procedures, Private Letter Rulings
and Technical Advice Memoranda
Slide D2-17
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
Slide D2-18
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
Slide D2-19
Private Letter Rulings
Issued by the National Office of the IRS
Response to a taxpayer’s request for the
IRS’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)
Slide D2-20
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
Slide D2-21
Technical Advice Memorandum
Issued by the National Office of the IRS
Response to an IRS agent’s request for
IRS’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. 8548005
T.A.M. 85-48-005
Slide D2-22
Other Pronouncements
Information Releases
Announcements
Notices
Tax Return Forms and Instructions