Module 8: Tax Law Compliance and Procedures

Question 1

Hierarchy of Authoritative Sources Published by the IRS:

Answer 1

• Regulations
• Revenue Rulings
• Revenue Procedures
• Private Letter Rulings
• Technical Advice Memorandums
• Notices
• Announcements

Question 2

Types of Regulations

Answer 2

• Legislative Regulations
• Interpretive Regulations
• Procedural Regulations
• Citations for Regulations

Question 3

What is the primary purpose of regulations?

Answer 3

To explain and interpret particular Code sections.

Question 4

Legislative Regulations

Answer 4

This is when congress gives specific authorization to the Security of Treasury on a particular code section. This regulation has the force and effect of the law, with the result that a court reviewing the regulation usually will not substitute its judgment for that of the treasury department.

Question 5

Interpretive Regulations

Answer 5

Explain the meaning of the Code section and commit the Treasury and Internal Revenue Service to a particular position relative to the Code section in question. Its a binding regulation that is not controlling on a court.

Question 6

Procedural Regulations

Answer 6

Cover areas such as the information a taxpayer must supply to the IRS and the internal management and conduct of the IRS in certain matters.

Question 7

Citations for Regulations

Answer 7

Regulations are prefixed by a number designating the type of tax or administrative, definitional, or procedural matter to which they regulate.

Question 8

Revenue Rulings

Answer 8

Official interpretations of the federal tax laws. They are like official pronouncements of the National Office or the IRS. They do not have quite the authority of regulations.

• Issued only after public hearings and must be approved by the Secretary of the Treasury.

Question 9

Difference between Revenue Rulings and Regulations

Answer 9

Unlike regulations, revenue rulings are limited to a given set of facts. Taxpayers may rely on revenue rulings in determining the tax consequences of their transactions; however, the taxpayer must determine for themselves if the facts of their cases are substantially the same as those set forth in the revenue ruling.

Question 10

Revenue Procedures

Answer 10

Statements reflecting the internal management practices of the IRS that affect the rights and duties of taxpayers.

Question 11

Private Letter Rulings (PLRs)

Answer 11

Taxpayers who are in doubt about the particular tax consequences of a contemplated transaction may ask the National office of the IRS for a ruling on the tax questions involved. They apply to a particular taxpayer asking for the ruling and are not applicable to all taxpayers.

Question 12

Technical Advice Memoranda (TAMs)

Answer 12

Either a taxpayer or an IRS district’s appeals division may request advice from the National Office of the IRS as the Code, regulations, and statutes and their impact upon a specific set of facts. Take place during an audit or an appeals process of the audit, and they give both the taxpayer and the revenue agent an opportunity to resolve a dispute over a technical question

Question 13

Notice

Answer 13

A notice is a public pronouncement that contains official guidance about regulations or interpretations of the Code.

Question 14

Announcement

Answer 14

Announcements are issued on a regular basis. They have only immediate, short-term value. They often summarize code sections in layman’s terms.

Question 15

Judicial Interpretations

Answer 15

This is a court decision on a specific tax law, to see if the executive branch interpreted the tax law correctly.

Question 16

Three Judicial Interpretation Trial Courts

Answer 16

1. Tax Court
2. US District Court
3. US Claims court