Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

TAX RESEARCH Overview of tax research Steps in the research process Importance of facts to tax consequences Tax services The Internet as a tax research tool Citators Professional guidelines for tax service Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Overview of Tax Research (1 of 2) Close-fact or tax compliance Facts already occurred Discovery of tax consequences Proper disclosure Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Overview of Tax Research (2 of 2) Open-fact or tax-planning Before structuring or concluding a transaction Minimization of taxes Careful compliance permits legal avoidance of taxation Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Steps in the Tax Research Process (1 of 3) Determine the facts Identify the issues (questions) Locate applicable authorities Evaluate authorities Choose which to follow when authorities conflict Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Steps in the Tax Research Process (2 of 3) Analyze facts in terms of applicable authorities Communicate conclusions and recommendations to client Treas. Dept. Circular 230 covers all written advice communicated to clients Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Steps in the Tax Research Process (3 of 3) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Importance of the Facts to the Tax Consequences Ambiguous situations (gray areas) Facts are clear but the law is not Law is clear but the facts are not Advance planning permits facts to develop that produce favorable tax consequences Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Sources of Tax Law Legislative process Internal Revenue Code Treasury Regulations Administrative pronouncements Judicial decisions Tax treaties Tax periodicals Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Legislative Process House Ways and Means Committee Voted on by full House Senate Finance Committee Voted on by full Senate Conference Committee Voted by both full House and Senate Signed or vetoed by President Override veto by 2/3 vote by both houses Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Internal Revenue Code (IRC) (1 of 2) Title 26 of the United States Code enacted by Congress Organization Title Subtitle Chapter Subchapter - Part - Subpart - Section Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Internal Revenue Code (IRC) (2 of 2) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Treasury Regulations Types of Regulations (1 of 2) Treasury Dept. delegates authority to IRS to promulgate Treas. Regs. Types of Treasury Regulations Proposed: no authoritative weight Temporary Provide immediate guidance Same authority as Final Regs. Final Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Treasury Regulations Types of Regulations (2 of 2) Interpretative Regulations Interpret related Code section Same weight as legislative regulations Courts can overturn in limited circumstances Legislative Regulations Legislative re-enactment doctrine Check date of Regs. Law may have changed after written Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Treasury Regulations Citation Format 1.165-5 1 – Income tax 165 – IRC citation 5 – 5th regulation Subject matter 20 – Estate tax 25 – Gift tax 301 – Admin/procedural matters 601 – Procedural rules Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Administrative Pronouncements Revenue Rulings & Procedures (1 of 2) More specific than Regs. Less authority than Regs. Revenue Procedures IRS guidance on procedural matters Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Administrative Pronouncements Revenue Rulings & Procedures (2 of 2) Citation format Rev. Rul. (or Proc.) 97-4, 1997-1 C.B. 5 4th 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Administrative Pronouncements Letter Rulings Reply to specific taxpayer question Only authority for specific taxpayer Ltr. Rul. 200130006 (August 6, 2001) 2001 – year 30 – week 006 – 6th letter ruling of the 30th week Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Administrative Pronouncements Other Interpretations (1 of 2) Technical Advice Memoranda IRS advice to an IRS agent on technical matters Issued to public in form of letter rulings Information releases Like press releases Written in lay terms Sent to newspapers Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Administrative Pronouncements Other Interpretations (2 of 2) Announcements and notices More technical than information releases Address current tax developments IRS bound by law to follow Just like Revenue Rulings and Procedures Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Judicial Decisions Overview of court system U.S. Tax Court U.S. District Courts U.S. Court of Federal Claims Circuit courts of appeals U.S. Supreme court Precedential value of various decisions Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Overview of Court System (1 of 2) Appellate Courts Courts Trial Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Overview of Court System (2 of 2) Circuit States Included in Circuit 1st ME, MA, NH, RI, PR 2nd CT, NY, VT 3rd DE, NJ, PA, VI 4th MD, NC, SC, VA, WV 5th LA, MS, TX 6th KY, MI, OH, TN 7th IL, IN, WI 8th AR, IA, MN, MO, NE, ND, SD 9th AK, AZ, CA, HI, ID, MT, NV, OR, WA, GU, MP 10th CO, KS, NM, OK, UT, WY 11th AL, FL, GA D.C. District of Columbia Federal All jurisdictions (appeals from U.S. Ct. of Fed. Claims Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

U.S. Tax Court (1 of 3) Taxpayer does not pay deficiency before litigating case No jury trial available Regular and Memorandum decisions Small Cases Procedure Acquiescence policy Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

U.S. Tax Court (2 of 3) Regular decisions Memo decisions First time court hears case Memo decisions Factual variations of previous cases Small cases procedure Cases of <$50,000 eligible Less formal than regular tax court Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

U.S. Tax Court (3 of 3) Acquiescence policy IRS announces whether or not it agrees with Tax Court decisions Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

U.S. District Courts May request a jury trial Must pay deficiency first Unreported decisions Decisions not officially reported Published by RIA and CCH Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

U.S. Court of Federal Claims No jury trial Must pay deficiency first Decisions appealable to Circuit Court of Appeals for the Federal Circuit Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Circuit Courts of Appeals Losing party at trial level may appeal decision to appellate court Circuit Courts of Appeals Appeals from Tax Court & district courts Based upon geography Court of Appeals for the Federal Circuit Appeals from U.S. Court of Federal Claims Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Supreme Court Very few tax cases are heard Hears cases when Circuit courts are divided or Issue of great importance Same authority as IRC Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Precedential Value of Decisions Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Tax Services (1 of 2) Annotated services Organized by IRC section United States Tax Reporter by RIA Standard Federal Tax Reporter by CCH Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Tax Services (2 of 2) Topical services organized by topic Federal Tax Coordinator 2d by RIA Tax Management Portfolios by BNA CCH Federal Tax Service by CCH Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Internet as a Research Tool CHECKPOINT & INTELLICONECT Libraries Information CHECKPOINT INTELLICONNECT Recent developments Newsstand Tax News, Journals, Newsletters Primary & secondary sources Federal Federal Tax State and local reporters State & Local State Tax All int’l references International International Tax Estate tax Estate Planning Financial & Estate Planning Pension taxation Pension & Benefits Pension/Benefits Payroll taxation Payroll Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Internet as a Research Tool Search Methods Searching methods for CHECKPOINT and INTELLICONNECT Keyword Index Citation Content Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Internet as a Research Tool Search Connectors Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Citators (1 of 2) History of the case List of other authorities that have cited the case in question INTELLICONNECT Citator CHECKPOINT Citator Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Citators (2 of 2) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Professional Guidelines for Tax Services Treas. Circular 230 Pertains to all tax practitioners Rules to practice before IRS Guidance on written advice to taxpayers Gives gov’t authority to impose fines for violations of rules Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Professional Guidelines for Tax Services AICPA SSTSs Ethical framework for taxpayer/client relationship High standards of care No duty to verify client information if not suspicious Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall