1
Chapter 1,
Tax Research
2
TAX RESEARCH
(1 of 2)
?Types of tax research
?Tax research process
?How facts affect tax consequences
?Sources of tax law and value
?Tax services
3
TAX RESEARCH
(2 of 2)
?Citators
?Tax practice guidelines for CPAs
?Computerized tax research
?Work papers and client
communications
?Computerized tax research
4
Types of Tax Research
(1 of 2)
?Close-fact or tax compliance
–Facts already occurred
–Discovery of tax consequences
–Proper disclosure
5
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
6
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
7
Steps in Tax Research
Process (2 of 2)
?Analyze facts in terms of applicable
authorities
?Communicate conclusions and
recommendations to client
8
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
9
Sources of Tax Law and
Authoritative Value (1 of 2)
?Legislative authority
–Internal Revenue Code
–Tax treaties
?Administrative authority
–Treasury Regulations
–Administrative interpretations
10
Sources of Tax Law and
Authoritative Value (2 of 2)
?Judicial decisions
–Trial courts
–Courts of Appeals
–Supreme Court
?Tax periodicals
11
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
12
Legislative Authority,
Internal Revenue Code (IRC)
?Title 26 of the United States Code
enacted by Congress
?Organization
–Title
?Subtitle
? Chapter
–Subchapter
- Part
- Subpart
- Section
13
Legislative 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
14
Legislative Authority,
Treasury Regulations (2 of 2)
?Interpretative regulations
–Interpret related Code section
–Less authority than IRC
?Legislative regulations
–Same authority as IRC
?Legislative Reinactment Doctrine
15
Legislative Authority,
Admin,Interpretations (1 of 2)
?Revenue Rulings
–More specific than Regs,
–Less authority than Regs,
?Revenue Procedures
–IRS guidance on procedural matters
16
Legislative 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
17
Judicial Decisions
?Overview of courts
?Trial courts
?Courts of appeals
?Supreme Court
?Precedential value of decisions
?Forum shopping
18
Judicial Decisions,
Overview of Courts
S m a l l C a s e s D i v i s i o n
U, S, T a x
C o u rt
U, S, D i s t ri c t
C o u rt
U, S, C o u rt
o f A p p e a l s
U, S, C o u rt
o f F e d e ra l
C l a i m s
U, S, C o u rt
o f A p p e a l s f o r
t h e C o u rt o f
F e d e ra l C l a i m s
S u p re m e C o u rt
19
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
20
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
–Must pay deficiency first
21
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
22
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
23
Judicial Decisions,
Precedential Value of Decisions
Sa m e
C o u r t
T p a y er’ s
C i r cu i t
Su p r em e
C o u r t
Go l se n
R u l e
DC X X X
TC X X X X
CFC X X X
CA X X
SC X
24
Tax Services (1 of 2)
?Annotated services
–Organized by IRC section
–United States Tax Reporter by RIA
–Standard Federal Tax Reporter by CCH
25
Tax Services (2 of 2)
?Topical services organized by topic
–Federal Tax Coordinator by RIA
–Law of Federal Income Taxation by Clark
Boardman & Callaghan (Mertens)
–Tax Management Portfolios by BNA
–CCH Federal Tax Service by CCH
26
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
?CCH citator
?RIA Citator 2nd Series
27
Computerized Research
?Web based services integrate several
research services and databases
–Internet Tax Research Network - CCH
–CHECKPOINT - RIA
?Other useful websites
–http:\\www.irs.ustreas.gov
–http:\\www.prenhall.com/phtax
28
CPA Guidelines
?AICPA Standards for Tax Services
–Not legally enforceable
–Professionally enforceable by AICPA
?Violations could result in suspension or
loss of license
?IRS Circular 230
29
Comments or questions about PowerPoint Slides?
Email Richard Newmark at Dr.Newmark@PhDuh.com
Chapter 1,
Tax Research
2
TAX RESEARCH
(1 of 2)
?Types of tax research
?Tax research process
?How facts affect tax consequences
?Sources of tax law and value
?Tax services
3
TAX RESEARCH
(2 of 2)
?Citators
?Tax practice guidelines for CPAs
?Computerized tax research
?Work papers and client
communications
?Computerized tax research
4
Types of Tax Research
(1 of 2)
?Close-fact or tax compliance
–Facts already occurred
–Discovery of tax consequences
–Proper disclosure
5
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
6
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
7
Steps in Tax Research
Process (2 of 2)
?Analyze facts in terms of applicable
authorities
?Communicate conclusions and
recommendations to client
8
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
9
Sources of Tax Law and
Authoritative Value (1 of 2)
?Legislative authority
–Internal Revenue Code
–Tax treaties
?Administrative authority
–Treasury Regulations
–Administrative interpretations
10
Sources of Tax Law and
Authoritative Value (2 of 2)
?Judicial decisions
–Trial courts
–Courts of Appeals
–Supreme Court
?Tax periodicals
11
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
12
Legislative Authority,
Internal Revenue Code (IRC)
?Title 26 of the United States Code
enacted by Congress
?Organization
–Title
?Subtitle
? Chapter
–Subchapter
- Part
- Subpart
- Section
13
Legislative 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
14
Legislative Authority,
Treasury Regulations (2 of 2)
?Interpretative regulations
–Interpret related Code section
–Less authority than IRC
?Legislative regulations
–Same authority as IRC
?Legislative Reinactment Doctrine
15
Legislative Authority,
Admin,Interpretations (1 of 2)
?Revenue Rulings
–More specific than Regs,
–Less authority than Regs,
?Revenue Procedures
–IRS guidance on procedural matters
16
Legislative 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
17
Judicial Decisions
?Overview of courts
?Trial courts
?Courts of appeals
?Supreme Court
?Precedential value of decisions
?Forum shopping
18
Judicial Decisions,
Overview of Courts
S m a l l C a s e s D i v i s i o n
U, S, T a x
C o u rt
U, S, D i s t ri c t
C o u rt
U, S, C o u rt
o f A p p e a l s
U, S, C o u rt
o f F e d e ra l
C l a i m s
U, S, C o u rt
o f A p p e a l s f o r
t h e C o u rt o f
F e d e ra l C l a i m s
S u p re m e C o u rt
19
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
20
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
–Must pay deficiency first
21
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
22
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
23
Judicial Decisions,
Precedential Value of Decisions
Sa m e
C o u r t
T p a y er’ s
C i r cu i t
Su p r em e
C o u r t
Go l se n
R u l e
DC X X X
TC X X X X
CFC X X X
CA X X
SC X
24
Tax Services (1 of 2)
?Annotated services
–Organized by IRC section
–United States Tax Reporter by RIA
–Standard Federal Tax Reporter by CCH
25
Tax Services (2 of 2)
?Topical services organized by topic
–Federal Tax Coordinator by RIA
–Law of Federal Income Taxation by Clark
Boardman & Callaghan (Mertens)
–Tax Management Portfolios by BNA
–CCH Federal Tax Service by CCH
26
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
?CCH citator
?RIA Citator 2nd Series
27
Computerized Research
?Web based services integrate several
research services and databases
–Internet Tax Research Network - CCH
–CHECKPOINT - RIA
?Other useful websites
–http:\\www.irs.ustreas.gov
–http:\\www.prenhall.com/phtax
28
CPA Guidelines
?AICPA Standards for Tax Services
–Not legally enforceable
–Professionally enforceable by AICPA
?Violations could result in suspension or
loss of license
?IRS Circular 230
29
Comments or questions about PowerPoint Slides?
Email Richard Newmark at Dr.Newmark@PhDuh.com
