2009 Pearson Education Inc Publishing as Prentice Hall
© 2009 Pearson Education, Inc. Publishing as Prentice Hall 15 -1
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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -2
TAX RESEARCH (2 of 2) ® Citators ® Computers as a research tool ® Statements on standards for tax services © 2009 Pearson Education, Inc. Publishing as Prentice 15 -3
Overview of Tax Research (1 of 2) ® Close-fact or tax compliance Facts already occurred Discovery of tax consequences Proper disclosure © 2009 Pearson Education, Inc. Publishing as Prentice 15 -4
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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -5
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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -6
Steps in the Tax Research Process (2 of 2) ® Analyze facts in terms of applicable authorities ® Communicate conclusions and recommendations to client © 2009 Pearson Education, Inc. Publishing as Prentice 15 -7
Importance of the Facts to 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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -8
Sources of Tax Law ® Legislative process ® Internal Revenue Code ® Treasury Regulations ® Administrative pronouncements ® Judicial decisions ® Tax treaties ® Tax periodicals © 2009 Pearson Education, Inc. Publishing as Prentice 15 -9
Legislative Process ® House Ways and Means Committee Voted ® Senate Voted on by full House Finance Committee on by full Senate ® Conference Voted ® Signed Committee by both full House and Senate or vetoed by President Override veto by 2/3 vote by both houses © 2009 Pearson Education, Inc. Publishing as Prentice 15 -10
Internal Revenue Code (IRC) ® Title 26 of the United States Code enacted by Congress ® Organization Title ¬Subtitle ªChapter ©Subchapter - Part - Subpart - Section © 2009 Pearson Education, Inc. Publishing as Prentice 15 -11
Treasury Regulations (1 of 3) ® Treasury Dept. delegates authority to IRS to promulgate Treas. Regs. ® Types of Treasury Regs. Proposed: no authoritative weight Temporary ¬Provide immediate guidance ¬Same authority as Final Regs. Final © 2009 Pearson Education, Inc. Publishing as Prentice 15 -12
Treasury Regulations (2 of 3) ® Interpretative regulations Interpret related Code section Less authority than IRC ® Legislative Almost regulations the same authority as IRC ® Legislative reenactment doctrine © 2009 Pearson Education, Inc. Publishing as Prentice 15 -13
Treasury Regulations (3 of 3) ® 1. 165 -5 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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -14
Administrative Pronouncements (1 of 5) ® Revenue Rulings More specific than Regs. Less authority than Regs. ® Revenue IRS Procedures guidance on procedural matters © 2009 Pearson Education, Inc. Publishing as Prentice 15 -15
Administrative Pronouncements (2 of 5) ® Citation of Revenue Rulings and Procedures Rev. Rul. (or Proc. ) 97 -4, 1997 -1 C. B. 5 ¬ 4 th Rev. Ruling of 1997 ªBeginning with 2000, all four digits of the year are used (e. g. , Rev. Rul. 2007 -5) ¬In Cumulative Bulletin 1997 -1 on p. 5 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -16
Administrative Pronouncements (3 of 5) ® Letter Rulings Reply to specific taxpayer question Only authority for specific taxpayer Ltr. Rul. 200130006 (August 6, 2001) ¬ 2001 – year ¬ 30 – week ¬ 006 – 6 th letter ruling of the 30 th week © 2009 Pearson Education, Inc. Publishing as Prentice 15 -17
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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -18
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 ªJust like Revenue Rulings and Procedures © 2009 Pearson Education, Inc. Publishing as Prentice 15 -19
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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -20
Overview of Court System © 2009 Pearson Education, Inc. Publishing as Prentice 15 -21
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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -22
U. S. Tax Court (2 of 3) ® Regular First decisions time court hears case ® Memo decisions Factual ® Small variations of previous cases procedure Cases of < $50, 000 eligible Less formal than regular tax court © 2009 Pearson Education, Inc. Publishing as Prentice 15 -23
U. S. Tax Court (3 of 3) ® Acquiescence policy IRS announces whether or not it agrees with Tax Court decisions © 2009 Pearson Education, Inc. Publishing as Prentice 15 -24
U. S. District Courts ® May request a jury trial ® Must pay deficiency first ® Unreported decisions Decisions not officially reported ¬Published by RIA and CCH © 2009 Pearson Education, Inc. Publishing as Prentice 15 -25
U. S. Court of Federal Claims ® No jury trial ® Must pay deficiency first ® Decisions appealable to Circuit Court of Appeals for the Federal Circuit © 2009 Pearson Education, Inc. Publishing as Prentice 15 -26
Circuit Courts of Appeals ® Losing party at trial level may appeal decision to appellate court ® Circuit Courts of Appeals from Tax Court & district courts Based upon geography ® Court of Appeals for the Federal Circuit Appeals from U. S. Court of Federal Claims © 2009 Pearson Education, Inc. Publishing as Prentice 15 -27
Supreme Court ® Very few tax cases are heard ® Hears cases when Circuit courts are divided or Issue of great importance ® Same authority as IRC © 2009 Pearson Education, Inc. Publishing as Prentice 15 -28
Precedential Value of Decisions © 2009 Pearson Education, Inc. Publishing as Prentice 15 -29
Tax Services (1 of 2) ® Annotated services Organized by IRC section United States Tax Reporter by RIA Standard Federal Tax Reporter by CCH © 2009 Pearson Education, Inc. Publishing as Prentice 15 -30
Tax Services (2 of 2) ® Topical services organized by topic Federal Tax Coordinator 2 d by RIA Law of Federal Income Taxation (Mertens) by West Group Tax Management Portfolios by BNA CCH Federal Tax Service by CCH © 2009 Pearson Education, Inc. Publishing as Prentice 15 -31
Citators ® History of the case ® List of other authorities that have cited the case in question ® Figure C 1 -5 summarizes how to use a citator as part of the research process ® CCH Citator ® RIA Citator 2 nd Series © 2009 Pearson Education, Inc. Publishing as Prentice 15 -32
Computers as a Research Tool ® Computerized No sources 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 15 -33 © 2009 Pearson Education, Inc. Publishing as Prentice
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 © 2009 Pearson Education, Inc. Publishing as Prentice 15 -34
Comments or questions about Power. Point Slides? Contact Dr. Richard Newmark at University of Northern Colorado’s Kenneth W. Monfort College of Business richard. newmark@Ph. Duh. com © 2009 Pearson Education, Inc. Publishing as Prentice Hall 15 -35
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