Copyright 2013 Pearson Education Inc publishing as Prentice
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -1
TAX RESEARCH ® Overview of tax research ® Steps in the research process ® Importance of facts to tax consequences ® Tax services ® The Internet as a tax research tool ® Citators ® Professional guidelines for tax service 15 -2 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Overview of Tax Research (1 of 2) ® Close-fact or tax compliance Facts already occurred Discovery of tax consequences Proper disclosure Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -3
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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -4
Steps in the Tax Research Process (1 of 3) ® Determine the facts ® Identify the issues (questions) ® Locate applicable authorities ® Evaluate authorities Choose which to follow when authorities conflict Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -5
Steps in the Tax Research Process (2 of 3) ® Analyze facts in terms of applicable authorities ® Communicate conclusions and recommendations to client Treas. Dept. Circular 230 covers all written advice communicated to clients Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -6
Steps in the Tax Research Process (3 of 3) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -7
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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -8
Sources of Tax Law ® Legislative process ® Internal Revenue Code ® Treasury Regulations ® Administrative pronouncements ® Judicial decisions ® Tax treaties ® Tax periodicals Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -9
Legislative Process ® House Ways and Means Committee ® Voted on by full House ® Senate Finance Committee ® Voted on by full Senate ® Conference Committee Voted ® Signed by both full House and Senate or vetoed by President Override veto by 2/3 vote by both houses Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -10
Internal Revenue Code (IRC) (1 of 2) ® Title 26 of the United States Code enacted by Congress ® Organization Title ¬Subtitle ªChapter ©Subchapter - Part - Subpart - Section Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -11
Internal Revenue Code (IRC) (2 of 2) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -12
Treasury Regulations Types of 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -13
Treasury Regulations Types of Regulations (2 of 2) ® Interpretative Regulations Interpret related Code section Same weight as legislative regulations ¬Courts can overturn in limited circumstances ® Legislative Regulations Legislative ® Check Law re-enactment doctrine date of Regs. may have changed after written Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -14
Treasury Regulations Citation Format ® 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -15
Administrative Pronouncements Revenue Rulings & Procedures (1 of 2) ® Revenue Rulings More specific than Regs. Less authority than Regs. ® Revenue IRS Procedures guidance on procedural matters Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -16
Administrative Pronouncements Revenue Rulings & Procedures (2 of 2) ® Citation Rev. format 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -17
Administrative Pronouncements 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -18
Administrative Pronouncements Other Interpretations (1 of 2) ® 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. Copyright to newspapers © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -19
Administrative Pronouncements Other Interpretations (2 of 2) ® Announcements and notices More technical than information releases Address current tax developments IRS bound by law to follow ¬Just like Revenue Rulings and Procedures Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -20
Judicial Decisions ® Overview of court system ® U. S. Tax Court ® U. S. District Courts ® U. S. Court of Federal Claims ® Circuit courts of appeals ® U. S. Supreme court ® Precedential value of various decisions Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -21
Overview of Court System (1 of 2) Appellate Courts T r i a l C o u r t s Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -22
Overview of Court System (2 of 2) Circuit 1 st 2 nd 3 rd 4 th 5 th 6 th 7 th 8 th 9 th 10 th 11 th D. C. Federal States Included in Circuit ME, MA, NH, RI, PR CT, NY, VT DE, NJ, PA, VI MD, NC, SC, VA, WV LA, MS, TX KY, MI, OH, TN IL, IN, WI AR, IA, MN, MO, NE, ND, SD AK, AZ, CA, HI, ID, MT, NV, OR, WA, GU, MP CO, KS, NM, OK, UT, WY AL, FL, GA District of Columbia All jurisdictions (appeals from U. S. Ct. of Fed. Claims Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -23
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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -24
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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -25
U. S. Tax Court (3 of 3) ® Acquiescence policy IRS announces whether or not it agrees with Tax Court decisions Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -26
U. S. District Courts ® May request a jury trial ® Must pay deficiency first ® Unreported decisions Decisions not officially reported ¬Published by RIA and CCH Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -27
U. S. Court of Federal Claims ® No jury trial ® Must pay deficiency first ® Decisions appealable to Circuit Court of Appeals for the Federal Circuit Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -28
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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -29
Supreme Court ® Very few tax cases are heard ® Hears cases when Circuit courts are divided or Issue of great importance ® Same authority as IRC Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -30
Precedential Value of Decisions Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -31
Tax Services (1 of 2) ® Annotated services Organized by IRC section United States Tax Reporter by RIA Standard Federal Tax Reporter by CCH Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -32
Tax Services (2 of 2) ® Topical services organized by topic Federal Tax Coordinator 2 d by RIA Tax Management Portfolios by BNA CCH Federal Tax Service by CCH Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -33
Internet as a Research Tool CHECKPOINT & INTELLICONECT Libraries Information CHECKPOINT Recent developments Primary & secondary sources State and local reporters All int’l references Newsstand Estate tax Pension taxation Payroll taxation Federal INTELLICONNECT Tax News, Journals, Newsletters Federal Tax State & Local International State Tax International Tax Financial & Estate Planning Pension & Benefits Pension/Benefits Payroll Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -34
Internet as a Research Tool Search Methods ® Searching methods for CHECKPOINT and INTELLICONNECT Keyword Index Citation Content Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -35
Internet as a Research Tool Search Connectors Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -36
Citators (1 of 2) ® History of the case ® List of other authorities that have cited the case in question ® INTELLICONNECT Citator ® CHECKPOINT Citator Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -37
Citators (2 of 2) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -38
Professional Guidelines for Tax Services Treas. Circular 230 ® Pertains to all tax practitioners ® Rules to practice before IRS ® Guidance on written advice to taxpayers ® Gives gov’t authority to impose fines for violations of rules Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -39
Professional Guidelines for Tax Services AICPA SSTSs ® Ethical framework for taxpayer/client relationship ® High standards of care ® No duty to verify client information if not suspicious Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -40
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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 15 -41
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