Income Tax Law Fundamentals - Primary Authority
New Federal Tax Legislation (order of origination & approval):
- House Ways and Means Committee
- House of Representatives
- Senate Finance Committee
- Interprets the Code and Issues Regulations
- Second highest authority next to the IRC
- Regulations have the full force and effect of the law
National Office of the IRS
- Issues Revenue Rulings
- They do not have the full force of the law
- Can be cited as precedent
Secondary Authority & Research Sources
- Private Letter Rulings -– used to describe a position on a particular proposed tax issue to a taxpayer. They are considered the substantial authority for the purpose of avoiding accuracy-related penalties. It is only precedent for the taxpayer for which it was specifically addressed.
- Technical Advice Memorandums (TAMs) - ruling from an IRS office in response to a particular question raised by an audit agent, when a need for clarification arises.
- Determination Letters - similar to private letter rulings, but issued by district directors for complicated issues involving completed transactions.