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Income Tax Law Fundamentals - Primary Authority

Primary
The primary tax authority is the Internal Revenue Code (IRC), which is enforced by the Internal Revenue Service (IRS). Statutory laws related to taxes are issued by legislature.


New Federal Tax Legislation (order of origination & approval):
  1. House Ways and Means Committee
  2. House of Representatives
  3. Senate Finance Committee
  4. Senate
  5. President

U.S. Treasury Department

  • 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

Letter Rulings:

  1. 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.
  2. 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.
  3. Determination Letters - similar to private letter rulings, but issued by district directors for complicated issues involving completed transactions.
Secondary Authority & Research Sources
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