Chapter_2 - CHAPTER 2 CHAPTER 2 Working With The Tax Law...

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Unformatted text preview: CHAPTER 2 CHAPTER 2 Working With The Tax Law Pages 2­20 Sources of Tax Law Sources of Tax Law Primary Sources of Tax Law Legislative (Congressional Legislation) Administrative (Dept. of Treasury or IRS) Judicial (Courts) Secondary Sources of Tax Law Tax Treaties Tax Periodicals, Publications, Databases Legislative Process Legislative Process Requires Legislative Process that usually begins in House of Rep. ­ Ways & Means Committee Next step is approval by Senate (via the Finance Committee) Bills Approved by Congress go to President President May Approve or Veto If Approved; Law is Integrated Into Internal Revenue Code (IRC) Department of Treasury Writes the IRC IRC Represents Codified Set of Laws (highest level of authority) but is very general in nature Legislative Sources Legislative Sources History of Taxes 1913 – 16th Amendment Ratified (giving congress authority to assess taxes on INCOME) 1913 – 1939: Various Revenue Acts Adopted 1939 – Internal Revenue Code (IRC) created and included in the Federal Statutes 1954 & 1986 – IRC was Rewritten (Major Revisions Adopted by Congress) Revisions Occur Annually Legislative Sources ­cont­ Legislative Sources Arrangement of IRC Chapter Sub­chapter Part Sub­Part Section (Most Tax Law is Referred to by Section No.) Sub­Section Paragraph Sub­Paragraph Administrative Sources Administrative Sources Department of Treasury Issues Treasury Regulations (Interpretations of the IRC) Internal Revenue Service Final & Temporary Regs. Have Force of Law May Be Used as a Precedent for a tax position Final ­ 1.xxx (format) Temporary – 1.xxxT (Issued with NO “Comment Period”) Proposed – Prop. Reg. 1.xxx (Issued with a “Comment Period”) Issues Revenue Rulings – Rev. Rul. Issues Revenue Procedures – Rev. Proc. Official pronouncements (From National IRS Office) Provide interpretation/guidance on a specific topic or for a specific purpose Does NOT have force or effect of law but T/P may follow the ruling. Deal with internal management practices of the IRS Do NOT have force or effect of law Administrative Sources ­cont­ Administrative Sources Letter Rulings Treasury Decisions – Describes details of new regulations Determination Letters Issued upon taxpayer request for a fee Tells how IRS will treat a proposed specific transaction Applies only to a specific taxpayer request Issued by national office of the IRS Format is: year/week/ruling#; i.e. 20101208 Technical Advice Memos (TAM) Issued by local IRS offices at taxpayer’s request Involves treatment of a completed transaction Issued by national IRS office to area IRS offices Deals with questions from IRS field offices (usually arising from questions generated from audits) Judicial Sources Judicial Sources Allows an avenue for Taxpayer to have their dispute settled by court Specific Process Trial Courts (court of original jurisdiction) 1. Federal District Court (Many) 2. U.S. Court of Federal Claims (Washington DC) (One) 3. U.S. Tax Court (One Court, but travels to cities) 4. U.S. Tax Court – Small Case Division (Less than $50,000 in dispute) (No appeal allowed) Judicial Sources ­cont­ Judicial Sources Appellate Courts U.S. Circuit Court of Appeals (from 1 & 3 on prev. slide) U.S. Federal Court of Appeals (from 2 on prev. slide) Supreme Court Rarely hears tax cases; but when it does, it is: 1. Usually to remedy conflicting decisions between appellate circuits 2. To “send a message” ...
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