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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
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3. TAX RESEARCH (2 of 2) Citators Computers as a research tool
Statements on standards for tax services
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4. Overview of Tax Research (1 of 2)
Close-fact or tax compliance
Facts already occurred
Discovery of tax consequences
Proper disclosure
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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
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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
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7. Steps in the Tax Research Process (2 of 2)
Analyze facts in terms of applicable authorities
Communicate conclusions and recommendations to client
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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
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9. Sources of Tax Law (1 of 2) Legislative process Internal Revenue Code
Treasury Regulations
Administrative pronouncements
Judicial decisions
Tax treaties
Tax periodicals
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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
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11. Internal Revenue Code (IRC)
Title 26 of the United States Code enacted by Congress
Organization
Title
Subtitle
Chapter
Subchapter
- Part
- Subpart
- Section
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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
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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
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14. Treasury Regulations (3 of 3)
1 – Income tax
165 – IRC citation
5 – 5th regulation
Subject matter
20 – Estate tax
25 – Gift tax
301 – Admin/procedural matters
601 – Procedural rules
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15. Administrative Pronouncements (1 of 3)
Revenue Rulings
More specific than Regs.
Less authority than Regs.
Revenue Procedures
IRS guidance on procedural matters
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16. Administrative Pronouncements (2 of 3)
Citation of Revenue Rulings and Procedures
Rev. Rul. (or Proc.) 97-4, C.B. 5
4th Rev. Ruling of 1997
In Cumulative Bulletin on p. 5
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17. Administrative Pronouncements (3 of 3)
Letter Rulings
Reply to specific taxpayer question
Only authority for specific taxpayer
Other interpretations
Technical Advice Memoranda
Information releases
Announcements and notices
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18. 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
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19. Overview of Courts
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20. 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
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21. 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
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22. Tax Court (3 of 3) Acquiescence policy
IRS announces whether or not it agrees with Tax Court decisions
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23. U.S. District Courts May request a jury trial
Must pay deficiency first
Unreported decisions
Decisions not officially reported
Published by RIA and CCH
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24. U.S. Court of Federal Claims
No jury trial
Must pay deficiency first
Decisions appealable to Circuit Court of Appeals for the Federal Circuit
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25. 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
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26. Supreme Court Very few tax cases are heard Hears cases when
Circuit courts are divided or
Issue of great importance
Same authority as IRC
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27. Precedential Value of Decisions
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28. Tax Services (1 of 2) Annotated services Organized by IRC section
United States Tax Reporter by RIA
Standard Federal Tax Reporter by CCH
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29. Tax Services (2 of 2) Topical services organized by topic
Federal Tax Coordinator 2d by RIA
Law of Federal Income Taxation (Mertens) by West Group
Tax Management Portfolios by BNA
CCH Federal Tax Service by CCH
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30. 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
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31. Computers as a Research Tool
Computerized sources
No findings list
Cross referencing facilitated by hyperlinks
No cumulative supplements
New developments integrated into main text
Primary sources accessible from explanatory paragraphs via hyperlinks
Citator symbols explicitly spelled out
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32. Statements on Standards for Tax Services (SSTSs)
Issued by AICPA
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
See Appendix E
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33. ©2008 Prentice Hall, Inc.