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TAX RESEARCH(1 of 2)

Overview of tax researchSteps in the tax research

processImportance of facts to the tax

consequencesSources of tax lawTax services

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TAX RESEARCH(2 of 2)

Professional guidelines for tax services

Citators

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Overview of Tax Research

(1 of 2)

Close-fact or tax complianceFacts already occurredDiscovery of tax consequencesProper disclosure

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Overview of Tax Research

(2 of 2)

Open-fact or tax-planningBefore structuring or concluding a

transactionMinimization of taxesCareful compliance permits legal

avoidance of taxation

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Steps in the Tax Research Process (1 of 2)

Determine the factsIdentify the issues (questions)Locate applicable authoritiesEvaluate authorities

Choose which to follow when authorities conflict

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Steps in the Tax Research Process (2 of 2)

Analyze facts in terms of applicable authorities

Communicate conclusions and recommendations to clientTreas. Dept. Circular 230 covers

all written advice communicated to clients

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Importance of the Facts to the Tax Consequences

Ambiguous situations (gray areas)Facts are clear but the law is notLaw is clear but the facts are not

Advance planning permits facts to develop that produce favorable tax consequences

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Sources of Tax Law(1 of 2)

Legislative processInternal Revenue CodeTreasury RegulationsAdministrative pronouncements Judicial decisionsTax treatiesTax periodicals

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Legislative ProcessHouse Ways and Means CommitteeVoted on by full HouseSenate Finance CommitteeVoted on by full SenateConference Committee

Voted by both full House and SenateSigned or vetoed by President

Override veto by 2/3 vote by both houses©2011 Pearson Education, Inc. Publishing as Prentice

Hall

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Internal Revenue Code (IRC)

Title 26 of the United States Code enacted by Congress

OrganizationTitle

SubtitleChapter

Subchapter - Part

- Subpart - Section

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Treasury Regulations(1 of 3)

Treasury Dept. delegates authority to IRS to promulgate Treas. Regs.

Types of Treasury Regulations Proposed: no authoritative weightTemporary

Provide immediate guidanceSame authority as Final Regs.

Final ©2011 Pearson Education, Inc. Publishing as Prentice Hall

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Treasury Regulations(2 of 3)

Interpretative RegulationsInterpret related Code sectionLess authority than IRC

Legislative RegulationsAlmost the same authority as IRC

Legislative reenactment doctrine

Check date of Regs.Law may have changed after

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Treasury Regulations(3 of 3)

1.165-51 – Income tax165 – IRC citation5 – 5th regulation

Subject matter1 – Income tax20 – Estate tax25 – Gift tax301 – Admin/procedural matters601 – Procedural rules

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Administrative Pronouncements (1 of 5)

Revenue RulingsMore specific than Regs.Less authority than Regs.

Revenue ProceduresIRS guidance on procedural

matters

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Administrative Pronouncements (2 of 5)

Citation of Revenue Rulings and ProceduresRev. Rul. (or Proc.) 97-4, 1997-1

C.B. 54th Rev. Ruling of 1997

Beginning with 2000, all four digits of the year are used (e.g., Rev. Rul. 2007-5)

In Cumulative Bulletin 1997-1 on p. 5©2011 Pearson Education, Inc. Publishing as Prentice

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Administrative Pronouncements (3 of 5)

Letter RulingsReply to specific taxpayer

questionOnly authority for specific

taxpayerLtr. Rul. 200130006 (August 6,

2001)2001 – year30 – week006 – 6th letter ruling of the 30th

week

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Administrative Pronouncements (4 of 5)

Other interpretationsTechnical Advice Memoranda

IRS advice to an IRS agent on technical matters

Issued to public in form of letter rulingsInformation releases

Like press releasesWritten in lay terms Sent to newspapers

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Administrative Pronouncements (5 of 5)

Other interpretations (continued)Announcements and notices

More technical than information releases

Address current tax developmentsIRS bound by to follow

Just like Revenue Rulings and Procedures

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Judicial DecisionsOverview of court systemU.S. Tax CourtU.S. District CourtsU.S. Court of Federal ClaimsU.S. Supreme courtPrecedential value of various

decisions©2011 Pearson Education, Inc. Publishing as Prentice

Hall

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Overview of Court System(1 of 2)

U.S. TaxCourt

U.S. District Courtfor taxpayer's

district

Court of Appeals fortaxpayer's geographicaljurisdiction (1st - 11th &

D.C. Circuits)

U.S . Court ofFederal Claims

U.S. Court of Appealsfor Federal Circult

Suprem e Court

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AppellateCourts

TrialCourts

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Overview of Court System(2 of 2)

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Circuit States Included in Circuit1st ME, MA, NH, RI, PR2nd CT, NY, VT3rd DE, NJ, PA, VI4th MD, NC, SC, VA, WV5th LA, MS, TX6th KY, MI, OH, TN7th IL, IN, WI8th AR, IA, MN, MO, NE, ND, SD9th AK, AZ, CA, HI, ID, MT, NV, OR, WA, GU, MP10th CO, KS, NM, OK, UT, WY11th AL, FL, GAD.C. District of ColumbiaFederal All Districts

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U.S. Tax Court(1 of 3)

Taxpayer does not pay deficiency before litigating case

No jury trial availableRegular and Memorandum

decisionsSmall Cases ProcedureAcquiescence policy

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U.S. Tax Court(2 of 3)

Regular decisionsFirst time court hears case

Memo decisionsFactual variations of previous

casesSmall cases procedure

Cases of <$50,000 eligibleLess formal than regular tax court

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U.S. Tax Court(3 of 3)

Acquiescence policyIRS announces whether or not it

agrees with Tax Court decisions

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U.S. District CourtsMay request a jury trialMust pay deficiency firstUnreported decisions

Decisions not officially reportedPublished by RIA and CCH

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U.S. Court of Federal ClaimsNo jury trialMust pay deficiency firstDecisions appealable to Circuit

Court of Appeals for the Federal Circuit

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Circuit Courts of AppealsLosing party at trial level may

appeal decision to appellate courtCircuit Courts of Appeals

Appeals from Tax Court & district courts

Based upon geography Court of Appeals for the Federal

CircuitAppeals from U.S. Court of Federal

Claims ©2011 Pearson Education, Inc. Publishing as Prentice

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Supreme CourtVery few tax cases are heardHears cases when

Circuit courts are divided orIssue of great importance

Same authority as IRC

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Precedential Value of Decisions

Same Court

Tpayer’s Circuit

Supreme Court

Golsen Rule

DC X X X

TC X X X X

CFC X X X

CA X X

SC X

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Tax Services (1 of 2)

Annotated servicesOrganized by IRC sectionUnited States Tax Reporter by RIAStandard Federal Tax Reporter by

CCH

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Tax Services (2 of 2)

Topical services organized by topicFederal Tax Coordinator 2d by RIATax Management Portfolios by BNACCH Federal Tax Service by CCH

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Internet as a Research Tool(1 of 2)

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Information CHECKPOINT CCH INTELLICONNECT

Recent developments Newsstand Tax News, Journals, Newsletters

Primary & secondary sources Federal Federal Tax

State and local reporters State & Local State TaxAll int’l references International International Tax

Estate tax Estate Planning Financial & Estate Planning

Pension taxation Pension & Benefits PensionPayroll taxation Payroll Payroll

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Internet as a Research Tool(2 of 2)

Searching methods for CHECKPOINT and INTELLICONNECTKeywordIndexCitationContent

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CitatorsHistory of the caseList of other authorities that

have cited the case in question

Refer to Table 5 in book for list of terms describing status change in IRS rulings

INTELLICONNECT CitatorCHECKPOINT Citator©2011 Pearson Education, Inc. Publishing as Prentice

Hall

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Professional Guidelines for Tax

Services (1 of 2)

Treas. Dept. Circular 230Pertains to all tax practitionersRules to practice before IRSGuidance on written advice to

taxpayersGives gov’t authority to impose

fines for violations of rules

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Professional Guidelines for Tax

Services (2 of 2)

AICPA SSTSsEthical framework for

taxpayer/client relationshipHigh standards of careNo duty to verify client

information if not suspicious

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