Chapter 1: Tax Research Chapter 1: Tax Research
TAX RESEARCH (1 of 2) Types of tax research Tax research process How facts affect tax consequences Sources of tax law and authoritative value Tax services
TAX RESEARCH (2 of 2) Citators Tax practice guidelines for CPAs Computerized tax research Work papers and client communications
Types of Tax Research (1 of 2) Close-fact or tax compliance Facts already occurred Discovery of tax consequences Proper disclosure
Types 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
Steps in Tax Research Process (1 of 2) Determine the facts Identify the issues (questions) Locate applicable authorities Assess and evaluate authorities Choose which to follow when authorities conflict
Steps in Tax Research Process (2 of 2) Analyze facts in terms of applicable authorities Communicate conclusions and recommendations to client
How Facts Affect 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
Sources of Tax Law and Authoritative Value (1 of 2) Legislative authority The legislative process Internal Revenue Code Tax treaties Administrative authority Treasury Regulations Administrative interpretations
Sources of Tax Law and Authoritative Value (2 of 2) Judicial decisions Overview of courts Trial courts Courts of appeals Supreme Court Precedential value of decisions Forum shopping Tax periodicals
Legislative Authority: 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
Legislative Authority: Internal Revenue Code (IRC) Title 26 of the United States Code enacted by Congress Organization Title Subtitle Chapter Subchapter - Part - Subpart - Section
Administrative Authority: Treasury 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
Administrative Authority: Treasury Regulations (2 of 2) Interpretative regulations Interpret related Code section Less authority than IRC Legislative regulations Same authority as IRC Legislative Reenactment Doctrine
Administrative Authority: Admin. Interpretations (1 of 2) Revenue Rulings More specific than Regs. Less authority than Regs. Revenue Procedures IRS guidance on procedural matters
Administrative Authority: Admin. Interpretations (2 of 2) Letter Rulings Reply to specific taxpayer question Only authority for specific taxpayer Other interpretations Technical Advice Memoranda Information releases Announcements and notices
Judicial Decisions: Overview of Courts
Judicial Decisions: Trial Courts (1 of 2) Tax Court Taxpayer does not pay deficiency first No jury trial available Regular and Memorandum decisions Small Cases Procedure Acquiescense policy
Judicial Decisions: Trial Courts (2 of 2) Federal District Courts May request a jury trial Must pay deficiency first U.S. Court of Federal Claims No jury trial
Judicial Decisions: 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
Judicial Decisions: Supreme Court Very few tax cases are heard Hears cases when Circuit courts are divided or Issue of great importance Same authority as IRC
Judicial Decisions: Precedential Value of Decisions
Tax Services (1 of 2) Annotated services Organized by IRC section United States Tax Reporter by RIA Standard Federal Tax Reporter by CCH
Tax Services (2 of 2) Topical services organized by topic Federal Tax Coordinator 2d by RIA Law of Federal Income Taxation by Clark Boardman & Callaghan (Mertens) Tax Management Portfolios by BNA CCH Federal Tax Service by CCH
Citators History of the case List of other authorities that have cited the case in question Figure C1-5 summarizes how to use a citator as part of the research process CCH Citator RIA Citator 2nd Series
Computerized Research Web based services integrate several research services and databases CCH Internet Tax Research Network RIA CHECKPOINT Other useful websites http://www.irs.ustreas.gov http://www.prenhall.com/phtax
CPA Guidelines AICPA Statements on Standards for Tax Services Not legally enforceable May be cited in a negligence lawsuit as “standard of care” for tax practitioners Professionally enforceable by AICPA Violations could result in suspension or loss of license IRS Circular 230
End of Chapter 1 Comments or questions about PowerPoint Slides? Contact Dr. Richard Newmark at University of Northern Colorado’s Kenneth W. Monfort College of Business richard.newmark@PhDuh.com