1-1 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-2 TAX RESEARCH (1 of 2)  Overview of tax research  Steps in the tax research process  Importance of facts to the tax consequences  Sources of tax law  Tax services ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-3 TAX RESEARCH (2 of 2)  Citators  Internet as a research tool  Professional guidelines for tax services ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-4 Overview of Tax Research (1 of 2)  Close-fact or tax compliance  Facts already occurred  Discovery of tax consequences  Proper disclosure ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-5 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-6 Steps in the Tax Research Process (1 of 2)  Determine the facts  Identify the issues (questions)  Locate applicable authorities  Evaluate authorities  Choose which to follow when authorities conflict ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-7 Steps in the Tax Research Process (2 of 2)  Analyze facts in terms of applicable authorities  Communicate conclusions and recommendations to client  Treas. Dept. Circular 230 covers all written advice communicated to clients ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-8 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-9 Sources of Tax Law (1 of 2)  Legislative process  Internal Revenue Code  Treasury Regulations  Administrative pronouncements  Judicial decisions  Tax treaties  Tax periodicals ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-10 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-11 Internal Revenue Code (IRC)  Title 26 of the United States Code enacted by Congress  Organization  Title  Subtitle  Chapter Subchapter - Part - Subpart - Section ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-12 Treasury Regulations (1 of 3)  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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-13 Treasury Regulations (2 of 3)  Interpretative Regulations  Interpret related Code section  Less authority than IRC  Legislative Regulations  Almost the same authority as IRC  Legislative reenactment doctrine  Check date of Regs.  Law may have changed after written ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-14 Treasury Regulations (3 of 3)   1 – Income tax  165 – IRC citation  5 – 5 th regulation  Subject matter  1 – Income tax  20 – Estate tax  25 – Gift tax  301 – Admin/procedural matters  601 – Procedural rules ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-15 Administrative Pronouncements (1 of 5)  Revenue Rulings  More specific than Regs.  Less authority than Regs.  Revenue Procedures  IRS guidance on procedural matters ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-16 Administrative Pronouncements (2 of 5)  Citation of Revenue Rulings and Procedures  Rev. Rul. (or Proc.) 97-4, C.B. 5  4 th Rev. Ruling of 1997  Beginning with 2000, all four digits of the year are used (e.g., Rev. Rul )  In Cumulative Bulletin on p. 5 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-17 Administrative Pronouncements (3 of 5)  Letter Rulings  Reply to specific taxpayer question  Only authority for specific taxpayer  Ltr. Rul (August 6, 2001)  2001 – year  30 – week  006 – 6 th letter ruling of the 30 th week ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-18 Administrative Pronouncements (4 of 5)  Other interpretations  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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-19 Administrative Pronouncements (5 of 5)  Other interpretations (continued)  Announcements and notices  More technical than information releases  Address current tax developments  IRS bound by to follow  Just like Revenue Rulings and Procedures ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-20 Judicial Decisions  Overview of court system  U.S. Tax Court  U.S. District Courts  U.S. Court of Federal Claims  U.S. Supreme court  Precedential value of various decisions ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-21 Overview of Court System (1 of 2) ©2010 Pearson Education, Inc. Publishing as Prentice Hall Appellate Courts

1-22 Overview of Court System (2 of 2) ©2010 Pearson Education, Inc. Publishing as Prentice Hall CircuitStates Included in Circuit 1 st ME, MA, NH, RI, PR 2 nd CT, NY, VT 3 rd DE, NJ, PA, VI 4 th MD, NC, SC, VA, WV 5 th LA, MS, TX 6 th KY, MI, OH, TN 7 th IL, IN, WI 8 th AR, IA, MN, MO, NE, ND, SD 9 th AK, AZ, CA, HI, ID, MT, NV, OR, WA, GU, MP 10 th CO, KS, NM, OK, UT, WY 11 th AL, FL, GA D.C.District of Columbia FederalAll Districts

1-23 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-24 U.S. Tax Court (2 of 3)  Regular 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-25 U.S. Tax Court (3 of 3)  Acquiescence policy  IRS announces whether or not it agrees with Tax Court decisions ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-26 U.S. District Courts  May request a jury trial  Must pay deficiency first  Unreported decisions  Decisions not officially reported  Published by RIA and CCH ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-27 U.S. Court of Federal Claims  No jury trial  Must pay deficiency first  Decisions appealable to Circuit Court of Appeals for the Federal Circuit ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-28 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-29 Supreme Court  Very few tax cases are heard  Hears cases when  Circuit courts are divided or  Issue of great importance  Same authority as IRC ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-30 Precedential Value of Decisions ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-31 Tax Services (1 of 2)  Annotated services  Organized by IRC section  United States Tax Reporter by RIA  Standard Federal Tax Reporter by CCH ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-32 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-33Citators  History of the case  List of other authorities that have cited the case in question  Refer to Table 4 in book for list of terms describing status change in IRS rulings  CCH Citator  RIA Citator 2nd Series ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-34 Internet as a Research Tool ©2010 Pearson Education, Inc. Publishing as Prentice Hall InformationCHECKPOINTCCH NETWORK Recent developmentsNewsstandMyCCH Primary & secondary sources Federal State and local reportersState & LocalState All int’l referencesInternational Estate taxEstate Planning Financial & Estate Planning Pension taxationPension & BenefitsPension & Payroll Payroll taxationPayrollPension & Payroll

1-35 Professional Guidelines for Tax Services (1 of 2)  Treas. Dept. 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 ©2010 Pearson Education, Inc. Publishing as Prentice Hall

1-36 Professional Guidelines for Tax Services (2 of 2)  AICPA SSTSs  Ethical framework for taxpayer/client relationship  High standards of care  No duty to verify client information if not suspicious ©2010 Pearson Education, Inc. Publishing as Prentice Hall

Comments or questions about PowerPoint Slides? Contact Dr. Richard Newmark at University of Northern Colorado’s Kenneth W. Monfort College of Business 1-37 ©2010 Pearson Education, Inc. Publishing as Prentice Hall