Ch. 4 Administrative Regulations and Rulings

What is the IRS a division of?

US Treasury Department

administers (interprets and enforces) tax laws and the IRC

US Treasury Department

5 types of pronouncements the IRS issues

regulations
revenue rulings
revenue procedures
letter rulings
aggregation of documents known as 'other IRS notices'

issued by the IRS and are the official interpretation of the IRC
provide guidance on legislative tax or law
address issues arising and related to existing code

regulations

3 types of regulations

proposed
final
temporary

useful for understanding IRS's current position, but do not have effect of law
solicit public input as Advance Note of Proposed Rulemaking then is drafter as Notice of Proposed Rulemaking

proposed regulation

published as Treasury Decision

final regulations

carry same weight as final regulations and expire 3 years from issuance - issued to provide immediate guidance concerning new provision of law

temporary regulations

2 categories of regulations

general and legislative

also known as interpretive regulations

general

congress may delegate the IRS authority to prescribe regulations necessary to carry out the IRC

legislative

do general and legislative regulations carry equal weight?

yes

when is a regulation effective?

on date in which it is filed with the Federal Register

what kind of citing system do regulations use?

uniform common system - treasury assigns each regulation a unique number, broadly based on code section being interpreted

Reg. Sec. 1.162-2(a)(1)

1. - type of regulation
162 - IRC section to which regulation relates
-2 - regulation number for that IRC section
(a) - regulation paragraph
(1) - regulation subparagraph

What doe a "T" in a citation for a regulation denote?

temporary

when regulations are final (Treasury Decisions) where are they published?

weekly newsletter called Internal Revenue Bulletin

indicate how the IRS will treat a given taxpayer transaction
second to regulations as administrative source of federal law

revenue rulings

where is the temporary citing for a revenue ruling published?

in internal revenue bulletin

where is a permanent citation for revenue ruling published?

in cumulative bulletin

instructs taxpayers on how to comply with IRS internal practices and procedures
citations for this are similar to revenue rulings

revenue procedures

3 types of letter rulings

private letter ruling
tax advice memoranda
determination letter

issued by National Office of the IRS in response to a taxpayer's request on a specific tax issue in a proposed transaction
not published in IRS and only apply to taxpayer soliciting ruling
considered "substantial authority" upon which a taxpayer may rely

private letter ruling

requested by IRS agent during an audit regarding a completed transaction

tax advice memoranda

issued on a taxpayer's request on a specific tax issue (usually non-controversial) related to a completed transaction

determination letter

do letter rulings have precedential value?

no

4 rulings used to avoid certain understatement of tax penalties

private letter rulings
technical advice memoranda
actions on decisions
general counsel memoranda

are letter rulings published by the government?

no

how are letter rulings cited?

with a nine-digit document number

indicates IRS may or may no agree with the decision but will follow the decision in similar situations

Acquiescence

indicates IRS disagreement and will follow the decision only in the specific case

nonaquiescences

issued by the IRS's Office of Chief Counsel - prepared primarily for internal IRS use

chief council memoranda

public pronouncements that have immediate or short-term value, such as approaching deadline for making an election

announcements

contain guidance involving substantive interpretations of the code - sometimes issued in advance of regulations

notices

other documents generated to assist taxpayers
cannot be relied upon, but are helpful in understanding parts of tax law and executing compliance

IRS publication