Tax Research Sites Utilized
Tax Research Sites – Free
In my opinion, this is one of the best “free” on-line research sites for case law. Google Scholar (GS) provides an excellent database of court opinions (Supreme Court, Court of Appeals, District court, tax court, etc.). With its full text search engine your likely to get good results to start your tax research project. The advantage of GS is the Google search engine which allows you to search by text rather than using a legal citation or docket number. GS includes law journals, in-addition to State supreme court and intermediate appellate opinions for all 50 states from 1950 to the present. GS will find, rank and link relevant cases better than most other free tax research sites. Its main drawback is it does not yet provide the ability to determine if your tax case is still good law (such as Shepard’s or KeyCite) which is crucial any tax research. GS also lacks any federal or state statutes though Google continues to update this site.
This tax research site contains a database offering tax cases (1990 to present) though even then not all the tax cases are available for these years. You can find tax regulations (1981 to present), and published and non-published IRS material. Documents published in the Internal Revenue Bulletin (IRB) are included in this database. These documents consist of Revenue Rulings (1954 to present), Revenue Procedures (1955 to present), Announcements (1990 to present), Notices (1980 to present), Treasury Decisions (both temporary and final regulations) (1954 to present), Proposed Regulations (1981 to present), Delegation Orders (1955 to present) and Executive Orders (1954 to present). Other non-published IRS Materials included in this database (i.e., documents that are not published in the IRB) include Technical Memoranda and News Releases, Private Letter Rulings, General Counsel Memoranda and Actions on Decisions.
This tax research site allows you to obtain federal court dockets (i.e., all materials filed by the court or by any party (including amicus curiae) in a court proceeding). Currently this site provides access to all federal district civil, criminal, and bankruptcy courts, as well as the U.S. Supreme Court, Federal Court of Claims, and the Court of International Trade. In general, courts assign each newly filed action with a docket number, which often refers to the year in which the case was commenced followed by a sequential reference number, and sometimes includes letters or numbers indicating the type (civil, criminal, etc.) or location of filing and/or the initials of the judge to whom the case is assigned.
This site provides Congressional bills, Congressional Record, committee reports and more. Users may track bills as they move through the House and Senate, read and download the text of pending bills and see how their representatives and senators vote. The search feature allows users to look for bills by name, number, subject, sponsor and other criteria. The site contains bill summaries from 1973 to the present; bill text from 1989 to the present; public laws from 1973 forward; the Congressional Record from 1989 to the present; committee reports from the 104th Congress to the current Congress; and historical documents and presidential nomination information. The site was originally a beta site to transform the Library of Congress’s existing congressional information system into a modern, durable and user-friendly resource. Now it incorporates all of the information available from THOMAS.gov. Since its release in 1995, THOMAS.gov has undergone multiple updates. In its present form, the foundation of the system can no longer support the technological expectations of today’s users. The goal of Congress.gov is to provide a user- friendly site with a strong technical infrastructure.
The Government Printing Office website (GPO), is a free source for many types of tax legal data. It recently added a new feature which allows access to court opinions for federal appellate, district and bankruptcy court opinions. This project provides free online access to federal court opinions in 64 courts and provides access to more than 750,000 opinions, many dating back to 2004. Collections on FDsys are divided into appellate, district or bankruptcy court opinions and are text-searchable across courts. The only problem with this site is it is not user friendly. Many of its documents, unlike GS, are in a pdf type format. You should carefully review the instructions before attempting to use GPO for tax research. GPO primary law information is also an excellent source for your tax research. This includes the Code of Federal Regulations, the Federal Register, the U.S. Tax Code, and legislative history documents such as the Congressional Record, committee reports and hearings. GPO recently added the U.S. Statutes at Large (SL) from 1951-2011. The SL is the official source for federal laws and concurrent resolutions passed by Congress. They are compilations of “slip laws,” bills enacted by both chambers of Congress and signed by the President. Though many people look to the US Code to find the law, many sections of the Code are not the “official” law. An office within the House of Representatives reorganizes the contents of the slip laws into the 50 titles that make up the US Code, but unless the reorganized document (the US Code) is itself passed by Congress and signed into law by the President, it remains an unofficial source of US law. At this time, only half of the titles of the US Code (not including title 26 – Internal Revenue Code) have been enacted by Congress, and thus are law themselves. GPO has also developed a system for authenticating many of these digital documents, which are then considered official and can be cited in legal documents. As an example, FDsys provides access to the full text of the Code of Federal Regulations, from 2000 through the current version. This version of the CFR is in pdf format and has been designated “official” by the GPO and the courts, and as such it can be cited in court documents.
TheFreeDictionary’s legal dictionary from West’s Encyclopedia of American Law, Edition 2, contains more than 4,000 entries detailing terms, concepts, events, movements, cases, and individuals significant to United States law. This dictionary also incorporates The People’s Law Dictionary, which is regarded by many legal professionals as one of the most practical works of its kind. This dictionary is a comprehensive source of meanings and use for thousands of today’s most common legal terms.
This is the U.S. government’s official web portal with links to the three branches of the U.S. government (i.e., the legislative, judicial, and executive branches) which can help you with your tax research. This site was legislatively mandated through Section 204 of the E-Government Act of 2002. Since this time, the site has received an annual appropriation from the U.S. Congress.
Tax Research Sites – Government-Legislative Law
This site provide searchable versions of the United States Code. Codes can be searched by keyword, title, or section number. The Internal Revenue Code (IRC), formally the IRC of 1986, is the domestic portion of federal statutory tax law in the U.S., published in various volumes of the US Statutes at Large, and separately as Title 26 of the US Code (USC). It is organized topically, into subtitles and sections, covering income tax, payroll taxes, estate taxes, gift taxes, and excise taxes; as well as procedure and administration. The IRC includes most but not all federal tax statutes. Some tax statutes are found in other provisions of the US Code including Title 11 (related to bankruptcy), Title 28 (related to the judiciary), Title 30 (related to practice before the Dept. of Treasury), etc. Further, some tax statutes are not codified at all (as an example, the provisions of tax statutes that list the effective dates of IRC amendments).
Article 1, Section 7 of the U.S. Constitution states all bills for raising revenue shall originate in the House of Representatives. Tax bills are generally introduced in the House where the bill is assigned an H.R. number. The bill is then forwarded to the House Ways and Means Committee, where the committee will usually hold public hearings, and then the committee will either act, or fail to act, on the bill.
Generally a bill first originates in the House. This committee, if it acts on a tax bill, may amend some of the tax provisions that were contained in the original bill. It will than issue a report, detailing any changes, with an explanation of each provision, and the effective date of these provisions.
The Senate forwards the tax bill from the House Ways & Means Committee to the Senate Finance Committee. This committee, similar to the House committee, will usually hold public hearings before taking any action. If it acts on the bill it will than issue a report, explaining any changes to the House bill, with an explanation of each provision, and the effective date of these provisions.
Rules for debate on the Senate floor are much looser than the House, with Senators being allowed to talk as much about each bill as they like. There are no restrictions on amendments in the Senate.
The JCT is formed from five members from the Ways and Means and Finance Committees and operates with an experienced professional staff of Ph.D economists, attorneys, and accountants, who assist Members of the majority and minority parties in both houses of Congress on tax legislation. If a bill is approved by the Senate with no changes to the House approved bill, it is sent directly to the president. The more common situation is the bill is approved with changes to the House “approved” bill. In this case, both approved bills are sent to the JCT. This committee crafts a compromise bill that is than sent back to the House and Senate for a vote. Unlike the pre-conference bills, a bill that emerges from the Conference Committee cannot be further amended during the floor debate. If approved by both the House and the Senate, the bill is than sent to the President for signature. This committee will issue a detailed report called a Conference Report, which explains the resolution of the House-Senate differences and may contain the present law, the House bill, Senate amendment, and the Conference agreement on each provision.
This committee is formed from staff of the Joint Conference Committee. Generally, in the case of major tax legislation this committee will issue a separate report explaining the tax provisions in the bill. This report is different from the Conference Committee reports and is generally referred to as the Blue Book. The explanation follows the chronological order of the tax legislation as signed into law. For each provision, the document includes a description of present law, explanation of the provision, and effective date. Present law describes the law in effect immediately prior to enactment. It does not reflect changes to the law made by the provision or subsequent to the enactment of the provision. For many provisions, the reasons for change are also included. This report is not considered primary authority as it is written by the staff of the Committee and not the Committee members themselves. Though the Joint Conference Committee members may not have reviewed the report; the Blue Book is still more highly regarded than any secondary tax authority and may be used as authority if a taxpayer is disputing the substantial understatement penalty.
Tax Research Sites – Government-Administrative Law
Congress may delegate to the Treasury the responsibility and authority to issue “statutory” regulations. Statutory regulations are not easily challenged by taxpayers as Congress has given the Treasury “direct” authority to write these regulations and therefore they have “the effect and force of law” as if they were written by Congress itself. In 2011, the Supreme Court appeared to many legal experts to have struck down the National Muffler test, arguing that the substantive validity of legislative and now “interpretation” regulations should be tested under the Chevron doctrine. Therefore as long as the regulation is procedurally valid, the Chevron framework dictates whether the regulations have the force and effect of law and bind the courts. Under this new standard it appears that “interpretative” regulations are also not easily challenged by taxpayers as Congress has given the Treasury the authority to write these regulations and therefore they have “the effect and force of law” as if they were written by Congress itself. If Congress has an issue with any regulation, whether statutory or interpretative, it can pass legislation to effectively revoke the regulation. When researching a Treasury Regulation you should also review the date on which the regulation was adopted as the IRC may have been revised subsequent to that date. If that is the case, the regulation may not interpret the current version of the Code which happens more frequently these days.
Temporary regulations, similar to final regulations, are official pronouncements by the Treasury about the law and how it applies, without regard to its application to any specific set of facts. But in contrast to proposed regulations that are later final regulations, they do not go through the notice-and-comment rule making process (i.e., Proposed regulations are first published in proposed form in a Notice of Proposed Rulemaking, and are then made final following a period of receiving and considering public input through structured procedures set forth in the Administrative Procedure Act (APA)). These Regulations therefore are somewhat unique in that they may be required to meet certain other Administrative Law or APA legal requirements before they obtain “the effect and force of law” mandate. In fact, there is debate on whether issuing proposed regulations contemporaneous with any temporary regulations, which is the case for regulations issued since 1988, will cure the procedural defects in temporary regulations if these other legal requirements are not met.
As stated by the 5th Circuit court, “the notice-and-comment rule making process set forth in the Administrative Procedure Act was designed to ensure that affected parties have an opportunity to participate in and influence agency decision making at an early stage, when the agency is more likely to give real consideration to alternative ideas. Other courts have recognized this difference and rejected arguments similar to that asserted here: Permitting the submission of views after the effective date is no substitute for the right of interested persons to make their views known to the agency in time to influence the rule making process in a meaningful way. ‘We doubt that persons would bother to submit their views or that the Secretary would seriously consider their suggestions after the regulations are a fait accompli.”(See Burks v. United States, 633 F.3d 347, 360 n.9 (5th Cir. 2011); Levesque v. Block, 723 F.2d 175 (1983) ).
In Intermountain Insurance Services v. Commissioner, 134 TC 211, the court stated, “Giving the public a chance to comment only after making the regulations effective does not comply with the APA. See, e.g., Chrysler Corp. v. Brown, 441 U.S. at 315; Paulsen v. Daniels, 413 F.3d 999, 1005 (9th Cir. 2005) (“It is antithetical to the structure and purpose of the APA for an agency to implement a rule first, and then seek comment later.”). And courts invalidate even final regulations when an agency does this. See, e.g., U.S. Steel Corp. v. U.S. EPA, 595 F.2d 207, 214-215 (5th Cir. 1979). The Supreme Court vacated the “Intermountain Insurance Services v. Commissioner” Circuit Court decision and remanded for further consideration in light of “Home Concrete, U.S. Lexis 3401 (April 30, 2012)”. In Cohen v. United States, 650 F.3d 717 (D.C. Cir. 2011), the U.S. Court of Appeals for the District of Columbia Circuit stated: “The IRS is not special in this regard; no exception exists shielding it—unlike the rest of the Federal Government—from suit under the APA.” In Dominion Resources, Inc., v. United States, 681 F.3d 1313 (Fed. Cir. 2012), the U.S. Court of Appeals for the Federal Circuit invalidated regulations under § 263A as violating the APA because Treasury did not provide a reasoned explanation for deciding upon a regulation. After Mayo this lack of compliance with the APA rulemaking requirements will leave certain Temporary regulations open to future legal challenge.
Before issuing a final regulation, the Treasury department may publish a regulation in proposed form (in a Notice of Proposed Rulemaking) to first give the public an opportunity to consider them and comment on them. In general, proposed regulations are viewed by the courts as carrying no more weight than a position advanced in a brief. The Internal Revenue Manual confirms that taxpayers are not bound by proposed regulations. The manual states that proposed regulations provide guidance concerning Treasury’s interpretation of a Code section. That taxpayers may rely on a proposed regulation, although they are not required to do so. Examiners though are bound to follow proposed regulations, unless the proposed regulation is in conflict with an existing final or temporary regulation.
Revenue Rulings are pronouncements about particular factual situations which taxpayers have presented to the IRS, and which the Service determines to be of general interest. They provide analysis of a transaction and relevant Code provisions. Although they do not have the weight of regulations, they can be relied upon by a taxpayer in a similar fact situation. The IRS is bound by a Revenue Ruling unless officially revoked. In Mead, the Federal Circuit noted (185 F.3d at 1“307) that the both the Supreme Court and the Federal Circuit have held that IRS revenue rulings receive no Chevron deference and the Supreme Court cited that statement with approval. In United States v. Quality Stores, Inc., No. 10-1563 (6th Cir. Sept. 7, 2012), the Sixth Circuit held that IRS revenue rulings and private letter rulings do not have the force of law. The Treasury Regulations themselves state that “Revenue rulings . . . do not have the force and effect of Treasury Department Regulations.” Thus, revenue rulings, revenue procedures, notices and other pronouncements should not be accorded Chevron deference. Under National Muffler or Skidmore, however, such interpretations may be entitled to some lower level of deference. In United States v. Quality Stores, Inc., No. 10-1563 (6th Cir. Sept. 7, 2012), the Sixth Circuit held that IRS revenue rulings and private letter rulings do not have the force of law.
A “Revenue Procedure” is a statement of procedure that affects the rights or duties of taxpayers or other members of the public under the Code and related statutes, or information that, although not necessarily affecting the rights and duties of the public, the IRS determines should be a matter of public knowledge. They provide guidance on IRS practice and procedural matters. The IRS publishes these procedures in the Internal Revenue Bulletin. They do not undergo “notice and comment” and therefore fall below final and temporary regulations in the hierarchy order of authoritative weight. See Green Forest Manf. v. Comr., T.C. Memo 2003-75, where revenue procedures were evaluated under Skidmore principles; and Federal Nat’l Mortgage Assoc. v. U.S., 379 F.3d 1303 (Fed. Cir. 2004) where the court declined to defer to a revenue procedure that the government argued was entitled to Chevron-style deference.
Announcements are public pronouncements on matters of general interest, such as effective dates of temporary regulations, clarification of rulings and form instructions. They are issued when guidance of a substantive or procedural nature is needed quickly. The Internal Revenue Manual indicates that announcements can be relied on to the same extent as revenue rulings and revenue procedures when they include specific language to that effect. In Judicial proceedings, announcements carry authoritative weight similar to revenue rulings and revenue procedures. That is they do not have the force and effect of law and will not bind a court of record. However, notices may have some authoritative weight under the Mead analysis. In addition, if a taxpayer has relied on an announcement, the IRS may be estopped from taking a contrary position. Announcements are identified by a two digit number representing the year and a sequence number. Some examples include documents correcting temporary regulations or revenue procedures; recommendations for proposed e-signature standards; definition of terms used in the IRB; finding list of current actions on previously published items; direction for completing guidance tax forms or worksheets, etc.
Notices are provided by the Public Affairs Division of the IRS and are used for a range of information for general distribution. Examples include summaries of new laws, notices of procedural changes, summarizing a new law, changes to IRS Regulations, requesting public comments, scheduling public hearings on proposed changes to Regulations, Rulings, Procedures, etc. Notices are included in the IRB, and the CB. Notices are identified by a two digit number representing the year and a sequence number. The Internal Revenue Manual indicates that notices can be relied on to the same extent as revenue rulings and revenue procedures when they include specific language to that effect. In Judicial proceedings, notices carry authoritative weight similar to revenue rulings and revenue procedures. That is they do not have the force and effect of law and will not bind a court of record. However, notices may have some authoritative weight under the Mead analysis. In addition, if a taxpayer has relied on a notice, the IRS may be estopped from taking a contrary position.
It is IRS policy to announce at an early date whether it will follow the holdings in certain types of cases. Pursuant to this policy, the IRS publishes in the IRB a short explanation on whether it will follow a decision. This determination is taken from an internal IRS legal memorandum called an Action on Decision (AOD). AOD’s are legal memoranda prepared by a Chief Counsel, National Office Attorney, approved by a supervisor, and directed to the Chief Counsel. AOD’s are prepared, in general, whenever the government loses an issue in a tax case either in Tax Court including memorandum decisions, (prior to 1991, the IRS made such announcements only regarding selected regular Tax Court opinions), U.S. district courts, U.S. Court of Federal Claims, and the U.S. courts of appeals. They are prepared by the attorney responsible for review of the case at the same time he or she prepares a formal recommendation to the Department of Justice as to whether this particular case should be appealed. The AOD sets forth the issue which was decided against the government, a brief discussion of the facts and the reasoning of the attorney behind his or her recommendation that the Commissioner either acquiesce or nonacquiesce in a decision of the Tax Court or of the federal district court. The AOD is reviewed within the Tax Litigation Division and after approval it is sent to the Office of the Assistant Commissioner (Technical). If the Assistant Commissioner (Technical) is not in disagreement with the recommendation to acquiesce or nonacquiesce, the AOD is printed and distributed. The IRS does not release or publish for public dissemination any opinion behind its decision to acquiesce or nonacquiesce.
AOD’s are made available to IRS personnel and are cited and applied by IRS personnel in later AOD’s, and Technical Advice Memoradum’s to promote the consistent application of the tax laws. All notices of acquiescence are published in the Internal Revenue Bulletin. The IRM states that AODs may not be cited a precedent. Revenue agents evaluate cases consistent with notices of acquiescence, which is the recommendation stated in the AODs. There are three recommendations an IRS attorney drafting an AOD can choose. He can acquiesce, acquiesce in result only, or non-acquiesce. If the IRS acquiesces, the IRS accepts the holding of the case and will follow it in disposing of cases with the same controlling facts. It does not, however, specify either approval or disapproval of the reasons assigned by the court for its conclusions. “Acquiesce in result only,” indicates the IRS accepts the court’s conclusion and will apply it to cases with the same effective facts but that the IRS disagrees or has unease with some or all of the reasons. A “Non-acquiesce” means the IRS does not agree with the holding of the court and the IRS will not follow the decision in disposing of cases involving other taxpayers.
Further the Commissioner has complete power to modify, amend, or revoke his acquiescences and to make changes retroactive as to all taxpayers or, in the exercise of his discretion, certain classes of taxpayers (Dixon v United Sates, 381 U.S. 68). He may also exercise his discretion to make any modification prospective (I.R.C. Sec. 7805(b)). The Service’s acquiescence program is neither designed nor intended to be relied upon by taxpayers in planning transactions. Reliance in planning situations is the function of the regulation and ruling programs of the Service.
A Private Letter Rulings (PLR) is a written response by the IRS National Office, for a fee paid by the taxpayer, to questions from individual taxpayers seeking advice on interpreting and applying the tax law to their specific set of facts on proposed transactions. The purpose is to establish with certainty the federal tax consequences of a transaction before the transaction is completed or possibly before the tax return is filed. Thus this information provides guidance in planning and conducting their business affairs and, if the transaction is consummated, aids in preparation of their tax returns. If the taxpayers elects to follow the Internal Revenue Service’s recommendations such letter rulings are attached to returns containing information about the transactions referred to in the letter rulings. This attachment is to alert the District Director of the IRS that a letter ruling had been issued. The appropriate District Director is always sent a copy at the time a letter ruling is issued to any taxpayer required to file a return in his district. PLRs are not officially published and their authoritative weight is technically limited to the taxpayer making the request. Section 6110(k)(3) expressly provides “Unless the Secretary otherwise establishes by regulations, a written determination may not be used or cited as precedent” and are therefore without precedent authority to other taxpayers. It is also within the IRS’s discretion to on whether or not to issue a PLR. In fact, each year, the IRS provides guidance on the types of matters on which it will issue rulings and the types of matters on which it will not. With other taxpayers, on an administrative level, the IRS generally does not give much if any authoritative respect to private letter rulings, that is neither controlling weight nor even persuasive weight. Courts, with other taxpayers, also do not give much weight to PLRs, though some courts have on occasion given some weight to private letter rulings (47 F.3d 787 (6th Cir. 1995), 529 U.S. 576 (2000)).
TAMs are another type of private ruling prepared by the National Office of Chief Counsel in response to an inquiry by a District Director as to the treatment of a specific set of facts relating to a tax return filed by a taxpayer involving either an audit or in connection with the taxpayer’s claim for refund or credit of taxes. The regulations define Technical Advice Memorandum as “a written statement issued by the National Office to, and adopted by, a district director in connection with the examination of a taxpayer’s return or consideration of a taxpayer’s claim for refund or credit. A technical advice memorandum generally recites the relevant facts, sets forth the applicable law, and states a legal conclusion”. An IRS Revenue Procedure explains in more detail what the agency considers to be a Technical Advice Memorandum:
“Technical advice” means advice or guidance in the form of a memorandum furnished by the national office [of the Office of Chief Counsel] upon the request of a district director or a chief, appeals office, submitted in accordance with the provisions of this revenue procedure, in response to any technical or procedural question that develops during any proceeding on the interpretation and proper application of tax law, tax treaties, regulations, revenue rulings, notices, or other precedents published by the national office to a specific set of facts. Such proceedings include: (1) the examination of a taxpayer’s return; (2) the consideration of a taxpayer’s claim for refund or credit; (3) any matter under examination or in appeals pertaining to tax-exempt bonds or mortgage credit certificates; and (4) any other matter involving a specific taxpayer under the jurisdiction of the chief, examination division, or the chief, appeals office…. Technical advice helps Internal Revenue Service personnel close cases and also helps establish and maintain consistent holdings throughout the Service. Taxpayers are always permitted to participate in the TAM process and they are “final determinations” of the IRS’s position. They include a statement of issues, a statement of facts, a statement of law, a discussion of the rationale supporting the conclusions reached, and a statement of conclusions. Taxpayers are always permitted to participate in the TAM process. TAMs are “final determinations” of the IRS’s position. Field personnel are instructed that “[t]he choice of whether to request Field Service Advice or Technical Advice depends on whether the advice is intended to establish the position of the Service in a specific case with respect to the issue presented.” Technical Advice Memoranda concern the “interpretation and proper application of tax law, tax treaties, regulations, revenue rulings, notices, and other precedents.”
The authoritative weight of a TAM depends on whether it is favorable or unfavorable to the taxpayer. Essentially, favorable TAMs bind IRS personnel while unfavorable TAMs do not. They are not officially published and their authoritative weight is technically limited to the taxpayer making the request. Section 6110(k)(3) expressly provides “Unless the Secretary otherwise establishes by regulations, a written determination may not be used or cited as precedent” and are therefore without precedent authority to other taxpayers. Most authorities suggest that they would receive some minimal amount of authoritative weight appropriate with the persuasiveness of their reasoning.
A “determination letter” is a written statement issued by a director that applies the principles and precedents previously announced by the Associate office to a taxpayers specific set of facts. Determination letters are issued in response to a formal request, and only, if the question presented can be resolved based on clearly established rules in the Code, the regulations, or a tax treaty or based on a conclusion in a revenue ruling, opinion, or court decision published in the Internal Revenue Bulletin that specifically addresses the issue. The IRS will not issue a determination letter if the question presented is a novel one. In contrast to letter rulings which are issued by the Associate office, determination letters are issued by directors. IRS guidelines for requesting and issuing determination letters are set forth in the first revenue procedure issued each year. The procedures are very similar to those applicable to private letter rulings. Generally, a director will not issue a determination letter on a proposed transaction. Determination letters may be modified or revoked by a director and the modification or revocation generally has retroactive effect.
TM’s are memoranda from the Commissioner of the IRS to the Assistant Secretary of the Treasury (Tax Policy). They are prepared by attorneys in the Legislation and Regulations Division or the Employee Plans and Exempt Organizations Division of the Office of Chief Counsel in connection with the preparation of a proposed Treasury decision. TM’s are attached to a draft of a proposed Treasury decision. After consideration at several levels within the Office of Chief Counsel, a final draft of a notice of proposed rulemaking and the TM is forwarded to the Assistant Commissioner (Technical), the Chief Counsel, and the Commissioner for final approval. The approved notice of proposed rulemaking is then published in the Federal Register and written comments are solicited. After consideration of the written comments and testimony at a public hearing if one is requested, an attorney in the Legislation and Regulations Division prepares a preliminary draft of a Treasury decision and accompanying TM. The proposed Treasury decision and the TM are then approved in the same manner as to notice of proposed rulemaking and its accompanying TM. Generally, a TM summarizes or explains the proposed rules, provides background information, states the issues involved, identifies any controversial legal or policy questions, discusses the approach taken by the draftsperson, and gives the reasons for the approach. TM’s are indexed, digested, and made available to IRS personnel in order to assure consistent treatment of taxpayers. TM’s thus explain the reasons behind the adoption of the Treasury Decision. The IRS has ceased issuing TMs though they may be used, if available, to support your tax issue.
These documents are legal advice, signed by executives in the National Office of the Office of Chief Counsel and issued to Internal Revenue Service personnel who are national program executives and managers. They are issued to assist Service personnel in administering their programs by providing authoritative legal opinions on certain matters, such as industry-wide issues.
GCM’s are legal memoranda from the Office of Chief Counsel to the IRS prepared in response to a formal request for legal advice from the Assistant Commissioner (Technical). They are some of the best and most thoughtful legal analyses ever produced by the Chief Counsel. They are primarily prepared by attorneys in the Interpretative Division of the Office of Chief Counsel and usually addressed to the Office of the Assistant Commissioner (Technical) in connection with the review of proposed private letter rulings, proposed technical advice memoranda, and proposed revenue rulings of the IRS. GCM’s set forth the issues presented by whichever of these proposed determinations is under review, the conclusions reached and a brief factual summary. The body of the GCM’s, contains a lengthy legal analysis of the substantive issues, and the recommendations and opinions of the Office of Chief Counsel. GCM’s are often accompanied by a draft of the proposed determination that reflects the changes and modifications recommended in the GCM. They are maintained by the Office of Chief Counsel and frequently cited in subsequent GCM’s to insure consistency, avoid duplication of research, provide a reference source, and update earlier memoranda when a position on an issue is sustained, modified, or changed within the Office of Chief Counsel.
IRS personnel who confer or negotiate on tax liability matters with taxpayers or taxpayer representatives may refer to GCM’s for guidance as to the positions to take in such negotiations. The interpretation of law contained in prior GCM’s are knowingly applied, distinguished, or rejected of application, as the case may be, in subsequent GCM’s to insure consistency of position in the Office of Chief Counsel. Once a GCM is completed by the Office of the Chief Counsel, it is forwarded to the Office of Assistant Commissioner (Technical). The Office of Assistant Commissioner (Technical) will use the GCM as a guide as to what positions will be taken in the proposed revenue ruling, proposed private letter ruling, or proposed technical advice memorandum. Any differences that may arise between the positions of the Office of Assistant Commissioner (Technical) and the Interpretative Division of the Office of Chief Counsel are generally reconciled on an informal basis before the adoption of the revenue ruling, private letter ruling, or technical advice memorandum in question. A copy of the completed GCM is distributed and placed in the digest system to enable future reference. Thus, any differences between the GCM and ruling are resolved before the GCM is considered complete and before it becomes available for future reference.
Furthermore, GCM’s are indexed and may have important precedential value in determining future tax questions. Though Section 6110(k)(3) denies precedential status for written determinations as well as underlying Chief Counsel advice, which includes GCMs, courts at times have considered GCMs to some measure. It is also not clear, if “precedent” in § 6110(k)(3) indicates “controlling authority” only or actually encompasses “persuasive authority” as well. GCMs are not commonly used these days, though from 1940 to 1982 over 40,000 were authored and the IRS regularly used them for internal analysis. Many of the GCMs reflect a high level of legal analysis, addressing very difficult problems. They reflect a lot of introspection that the Chief Counsel would prefer not to reveal to the public today, and for this reason very few that are now produced. When a GCM exists, it serves as an excellent source of tax research.
FSAs (formerly Chief Counsel Advice), are issued by the Office of Chief Counsel (OCC) for the IRS. The OCC provides legal advice to the IRS, directs litigation in the Tax Court, and provides guidance and support for litigation in other courts. The OCC is not part of the IRS. For most purposes, the OCC is subject to the supervision of the General Counsel of the Treasury Department, not the Commissioner of IRS. Accordingly, the OCC is independent from the IRS. Since 1991, the OCC has issued FSAs to respond to requests for guidance from IRS field personnel. However, in about 2002 the IRS began to phase out FSAs. Before their phase-out, they were a prevalent form of legal advice from the National Office to the field.
Attorneys in the national office of the OCC prepare FSAs in response to requests from field personnel of either the OCC or the IRS, such as field attorneys, revenue agents, and appeals officers. Field personnel request an FSA for legal guidance, usually with reference to the situation of a specific taxpayer. Each FSA includes a statement of issues, a conclusions section, a statement of facts, and a legal analysis section. The FSA style of the analysis section is exploratory and descriptive so that the strengths and weaknesses of a case are presented and developed candidly, directing attention to the authorities against the conclusions arrived at as well as those which support them. They contain the answers of the national office of the OCC to legal questions submitted by IRS and Chief Counsel personnel in the field. The legal conclusions the OCC provides to field personnel constitute agency law, even if those conclusions are not formally binding. The field offices may make the initial decisions with respect to individual taxpayers, and those decisions may not necessarily agree with the conclusions contained in FSAs. But the structure and purposes of the FSA system reveal that the national office, in issuing these memoranda, is attempting to develop a body of coherent, consistent interpretations of the federal tax laws nationwide. The fact that FSAs are nominally non-binding is no reason for treating them as something other than considered statements of the agency’s legal position. FSAs are statements of an agency’s legal position. Although FSAs may precede the field office’s decision in a particular taxpayer’s case, they do not precede the decision regarding the agency’s legal position. FSAs evaluate the strengths and weaknesses of alternative views. Taxpayer participation in the FSA process is left to the discretion of field personnel.
The Chief Counsel’s Office issues Chief Counsel (CC) Notices which are directives that provide interim guidance, furnish temporary procedures, describe changes in litigating positions, or announce personnel matters or other types of administrative information. Notices providing interim guidance or instructions to staff are designed to be incorporated into the Chief Counsel Directives Manual (CCDM), but are issued as Notices to provide immediate notification of important policy or procedural changes.
The Internal Revenue Manual (IRM) provides the policies, procedures, instructions, guidelines, and delegations of authority which manage the operation and administration of the IRS. The topics it covers include administration, collection procedures for office branches, service center procedures, audit procedures, delinquent tax accounts and returns, taxpayer services, employee plan and exempt organizations, appeals procedures, criminal investigation procedures, inspections, etc. It provides the IRS position on certain issues, clarifies the meaning of the law language in the Code, amplifies regulations, revenue rulings and procedures, and states how the IRS is to deal with taxpayers in specific situations.
The Internal Revenue Bulletin (IRB) is the authoritative instrument of the Commissioner of Internal Revenue Service for the publication of official IRS rulings and procedures, including all rulings and statements of procedure which supersede, revoke, modify, amend, or affect any previously published ruling or procedure. The IRB also contain congressional committee reports, delegation orders, proposed regulations, public laws, the Commissioner’s acquiescences and nonacquiescences in judicial decisions, Treasury Decisions, relevant Executive Orders, tax conventions, legislation, court decisions, announcements, and other items considered to be of general interest. The IRB is published weekly. In order to provide a permanent reference source, the contents of the Bulletin are consolidated semiannually into an indexed Cumulative Bulletin. The Bulletin Index-Digest System provides a research and reference guide to matters appearing in the Cumulative Bulletins. The introduction to the Internal Revenue Bulletin states the general directive that rulings and procedures reported in the IRB may be used as precedent.
The Service publishes over 100 publications providing detailed information on key topics to assist taxpayers prepare their returns. “IRS Publications explain the law in plain language for taxpayers and their advisers. They typically highlight changes in the law, provide examples illustrating Service positions, and include worksheets. Publications are nonbinding on the Service and do not necessarily cover all positions for a given issue. While a good source of general information, publications should not be cited to sustain a position.” Internal Revenue Manual § 184.108.40.206.8.
These publications are not generally respected by courts when taxpayers rely on them for support in a court case as they do not and can not change the plain meaning of the tax law. Even when the tax law is not clear, statements in publications are, in almost all cases, regarded as a secondary source with little authoritative value. Many courts have cautioned that informal publications are only guides to taxpayers, and a taxpayer relies on them at his peril. The courts have warned: “authoritative sources of Federal tax law are in the statutes, regulations, and judicial decisions and not in … IRS publications (See 46 TCM 1236 (1983), Adler v. Commissioner, 330 F.2d 91, 93 (9th Cir. 1964), 495 F.2d 175, 184 (5th Cir. 1974), Zimmerman v. Commissioner [Dec. 35,572], 71 T.C. 367, 371 (1978), affd. without published opinion [79-2 USTC 9617] 614 F.2d 1294 (2d Cir. 1979); Green v. Commissioner [Dec. 31,640], 59 T.C. 456, 458 (1972). IRS publications, are merely guides published by the Service to aid taxpayers. Dixon v. United States [65-1 USTC 9386], 381 U.S. 68, 73 (1965). Taxpayers may not rely on such publications to the extent the information in them conflicts with the law (Hernandez v. Commissioner of Internal Revenue 490 U.S. 680 (1989)).
In rare occasions courts have cited informational publications in support of their conclusions, and thus placed some value on them. And, at times taxpayers have been successful in asserting reliance on an informational publication (see Gehl Co. v. Comr., LeCroy, 751 F.2d). Though as a general rule, informal Treasury publications do not bind the government. They are simply guides, and a taxpayer who relies on them generally does so at his own peril. In conclusion, taxpayers relying on a IRS publication will have difficulty in obtaining relief based on this reliance. This is yet another reason why a taxpayer should use the services of a tax professional to prepare any complicated tax return. Most taxpayers with limited tax knowledge will rely on IRS publications believing that they are protected if a IRS publication supports their tax position not realizing that this is not correct.
The IRS furnishes the public with forms and instructions developed for use in complying with the tax laws and regulations. Forms and instructions generally guide the taxpayer step-by-step to ensure the taxpayers will accurately report the information required by law. Regs. § 601.602. Though you are required to follow the instructions to a form, the IRS believes these instructions have no legal effect, that they cannot constitute applicable law (Zimmerman v. Commissioner, 71 T.C. 367, 371, 1978 WL 3419 (1978) (“authoritative sources of Federal tax law are in the statutes, regulations, and judicial decisions and not in … informal publications [of the IRS].”). Many courts have agreed with the IRS arguing “they help with tax reporting but do not determine tax consequences” (See U.S. v. Josephberg, 562 F.3d 478 (2d Cir. 2009); Cf. Caterpillar Tractor Co. v. U.S., 589 F.2d 1040, 1043 (Ct. Cl. 1978); Osborne v. Comr., 97-2 USTC 50,524 (6th Cir. 1997); Carpenter v. U.S., 495 F.2d 175, 184 (5th Cir. 1974); Adler v. Comr., 330 F.2d 91, 93 (9th Cir. 1964); Hames v. Comr., 46 T.C.M. 1236 (1983); Miller v. Comr., 114 T.C. 367 (2000)).
However, other cases dealing with instructions to IRS Forms, while not elevating them to the level of statutes, regulations, or judicial decisions, have given them substantially more weight than the IRS’s reading of Zimmerman. (See e.g., Estate of Merwin v. Commissioner, 95 T.C. 168, 169, 180-81, 1990 WL 120054 (1990) (distinguishing between “directions,” which are preprinted guidance and commands on face of a Form, and “instructions,” which are separate, supplemental guidance entitled “instructions to a Form”; holding that failure of taxpayer to comply with directions on Form or instructions specifically referred to on Form precluded relief from failure to make proper election under tax laws).
One could argue that general principles of equity dictate that the IRS should not be allowed to issue instructions for completing its forms and later disavow those instructions, that is a taxpayer who relies on forms and instructions should have a valid reliance argument. (See e.g., Wilkes v. U.S., 50 F.Supp. 2d, 1281, 1287 (M.D. Fla. 1999), aff’d 210 F.3d 394 (11th Cir. 2000). Other courts, though, have been unfriendly to these reliance arguments (See Carter v. Comr., 51 T.C. 932 (1969); Carpenter v. U.S., 495 F.2d 175 (5th Cir. 1974); Rezazadeh v. Comr., T.C. Memo 1996-245; cf. Hernandez v. Comr., 490 U.S. 680 (1989)).
As taxpayers are required to report their tax events on specific forms created and provided by the IRS, and the IRS issues instructions so that the taxpayers complete the forms as they deem correct, a taxpayer who completes a form consistent with the form and instructions that accompany it has a strong case for “good cause,” even if the position turns out to be incorrect. Carter v. Comr., 51 T.C. 932 (1969). That is no penalty for following instructions should be assessed upon audit.
Previously private letter rulings, determination letters, and technical advice memorandum were unavailable to the public. The Freedom of Information Act (FOIA) changed this by forcing the IRS to provide this information (see Tax Analysts and Advocates v. IRS, 505 F.2d 350 (D.C. Cir. 1974)). Congress passed IRC Section 6110 to require and define the orderly release of these rulings to the public. The IRS still does not “publish” letter rulings and other written determinations; but it makes them available to the public on the IRS website.
Tax Research Sites – Government-Judicial Law
If a taxpayer decides to litigate, they should be made aware that they can pursue the matter through Tax Court, District Court or Court of Federal Claims. The choice of forum should be carefully reviewed as the outcome of tax litigation could be determined by the court used. Consequently, the choice of tax forum is likely to be the single most important decision in planning for litigation. Some basic information about these courts (with links) are discussed below to better assist taxpayers in deciding which litigation route to select. Attorneys may represent taxpayers in any of the courts. Non-attorneys are excluded from practicing in the District Court or Court of Federal Claims, though non-attorneys may represent taxpayers in Tax Court if they are licensed to do so. Licensure requires the successful completion of a very difficult exam.
Over 90% of all tax litigation is tried in Tax Court. The reason for this is money. The Tax Court does not require prepayment of your contested tax liability unlike the District Court or Court of Federal Claims where you are required to make full payment before filing any legal action. A notice of deficiency is a pre-requisite to filing suit in Tax Court. A trial by jury is not available in this tax forum. The Tax Court is a federal court of record established by Congress under Article I of the Constitution of the United States. Many of the Tax Court judges were IRS or Treasury officials before their appointment to the bench. The Tax Court is where IRS Counsel attorneys fight hard to win every battle. They are familiar with the judges and their clerks, the applicable time frames, and the specific courtroom culture. It is therefore hard to win in this court and generally less than 10% of taxpayers win unless represented by an attorney and even then the percentage is still low. This court issues four types of opinions: reviewed opinions, division opinions (also known as unreviewed regular opinions), memorandum opinions, and summary opinions, each of which have different authoritative weight. In litigation, none of the Tax Court opinions are binding authority on any court other than the Tax Court and not all opinions are binding even on the Tax Court itself. On the administrative level, decisions of the Tax Court are binding on IRS employees if the IRS acquiesces in the decision. If the IRS non-acquiesces in a case, then revenue agents are not obligated to follow the decision. But often a Tax Court decision, even if non-acquiesced, will be recognized for its persuasive effect.
The Court of Federal Claims consists of 16 judges nominated by the President and confirmed by the Senate for a term of 15 years. About one-forth of the cases before this court involve tax refund suits, an area in which the court exercises concurrent jurisdiction with U.S. district courts. There are only bench trials, no jury trials. Decisions are issued by individual judges, as in the district courts. By statute, the judicial power of the Court of Federal Claims with respect to any tax suit shall be exercised by a single judge, who may preside alone and hold a regular or special session of court at the same time other sessions are held by other judges. Decisions of the Court of Federal Claims may be appealed only to the U.S. Court of Appeals for the Federal Circuit. It is an Article I “legislative” court. Claims Court judges also have less tax expertise than Tax Court judges, but are generally viewed as having more tax expertise than District Court Judges. Some practitioners believe that the Claims Court tends to be relatively liberal in admitting evidence and is more likely to take a broad approach to technical restrictive rules in its effort to reach an equitable result. Before hearing arguments, there is a fact-finding hearing before a trial judge in a city near where you live. The trial judge will file the findings and the recommended decision. See Rules for the U.S. Federal Court of Claims. If either you, or the IRS, disagrees, the case will come up for arguments before the court in Washington, D.C.
The U.S. District Courts are the trial courts of the federal court system. Within limits set by Congress and the Constitution, the district courts have jurisdiction to hear nearly all categories of federal cases. There are 94 federal judicial districts, including at least one district in each state, the District of Columbia and Puerto Rico. Three territories of the United States — the Virgin Islands, Guam, and the Northern Mariana Islands — have district courts that hear federal cases, including bankruptcy cases. These courts are the only courts in which a taxpayer may obtain a jury trial as well as a non-jury trial. The District Court is strictly a tax refund tribunal and therefore failure to pay the assessed deficiency precludes litigation in this tax forum.
Congress created 11 regional circuits, each with a court of appeals, plus the Court of Appeals for the District of Columbia and the Court of Appeals for the Federal Circuit.
These courts hear cases on review from the district courts located within their respective circuits, as well as appeals from the U.S. Tax Court.
In litigation, a decision by a U.S. court of Appeals binds district and bankruptcy courts within its geographical circuit.
The U.S. Tax Court follows the decisions of the U.S. court of appeals to which the particular case before it is appealable. This principle is known as the “Golsen doctrine,” named after the case, Golsen v. Comr., 551 in which the Tax Court first adopted this principle.
The Tax Court may but need not follow appellate court decisions issued by courts of appeals to which a particular case is not appealable.
A decision by any U.S. court of appeals binds not only inferior courts within its geographical circuit; it also is binding on judges of that court of appeals, regardless of whether they sat on the panel that decided the case.
On the administrative level, the IRS considers itself bound, in individual cases, by decisions from U.S. courts of appeals in which the taxpayer has an option to litigate.
In the absence of otherwise controlling authority in the circuit, the IRS will generally follow on a nationwide basis a decision of a U.S. court of appeals. The IRS issues AODs (Actions on Decision) and notices of acquiescence in connection with many cases, indicating whether the IRS accepts the court’s conclusion. To the extent the IRS announces its acceptance of the appellate court’s conclusion and reasoning (in the case of acquiescence) or the conclusion only (in the case of acquiescence in result only), the IRS considers itself bound, and its employees must follow this decision. Thus, the IRS recognizes the vitality of stare decisis and will dispose of cases on the administrative level consistent with how the doctrine of stare decisis would apply to the case if litigated.
As discussed above, Court of appeals precedents are binding on lower courts that are within their geographic or statutory jurisdictions. In Hart v. Massanari, 266 F.3d 1155 (9th Cir. 2001), the Ninth Court stated, “A district [or bankruptcy] judge may not respectfully (or disrespectfully) disagree with his learned colleagues on his [or her] own court of appeals who have ruled on a controlling legal issue.”
In 1929, the Tenth Circuit was carved out of the Eighth Circuit. It has not indicated if it will follow pre-1929 Fifth Circuit precedent. See Estate of McMorris v. Comr., 243 F.3d 1254, 1258 (10th Cir. 2001), “We have never held that the decisions of our predecessor circuit [the former Eighth Circuit] are controlling in this court.”
A number of circuits that were spun off from other circuits follow the precedent of the circuit from which they were carved. The Eleventh Circuit was carved out of the Fifth Circuit in 1981 and has announced that it will follow pre-1981 Fifth Circuit precedent.
Washington, D.C., has two U.S. Courts of Appeals: the District of Columbia Circuit Court of Appeals, established in 1970, which hears appeals arising out of decisions of the Federal District Court for the District of Columbia, and the U.S. Court of Appeals for the Federal Circuit, established in 1982.
Most of the Courts cover a defined geographic region; however, the Federal Circuit, which Congress added in 1982, has nationwide jurisdiction but a more limited subject matter jurisdiction than other courts of appeals. It has exclusive and nationwide jurisdiction in appeals from U.S. District Court decisions in patent, Copyright, trademark, and other specialized areas. In litigation, a decision by a U.S. court of appeals for the Federal Circuit binds decisions of the U.S. Court of Federal Claims.
Supreme Court Cases – the federal judicial system is a three-tiered hierarchy with the Supreme Court, established under Article III of the Constitution, at the apex, the U.S. courts of appeals under it, and the several types of trial-level courts at the bottom. Under this three-tiered structure, courts generally are bound by precedents of courts to which an appeal would lie. either intermediately or ultimately. Ultimately, all federal court cases are reviewable by the Supreme Court and thus Supreme Court precedents are binding on all lower courts This court also has the final say on whether legislative or executive actions are consistent with the Constitution.
Tax Research Sites – Training
This a low cost legal training site to test and better refine your legal/tax research skills. The annual fee is minimal. This site conducts applied research and development in the area of computer-mediated legal education. The organization is well known in law schools for its interesting and valuable CALI Lessons. These lessons are web-based tutorials on a variety of legal subjects. Currently there are over 950 lessons in over 35 law school subjects in its library of lessons. This organization was formed in 1982 by the University of Minnesota and Harvard Law Schools.
Tax Research Sites – Fee Based
Highest rated comprehensive full text research system for legal materials, including cases, statutes, regulations, news, treatises, articles, etc. Very similar case law, statue, code, regulation, and secondary source ability and search results to LexisNexis. Used by most lawyers nationwide for their legal research.
Second highest rated comprehensive full text research system for legal materials, including cases, statutes, regulations, news, treatises, articles, etc. Very similar case law, statue, code, regulation, and secondary source ability and search results to Westlaw. Used by most lawyers nationwide for their legal research.
Blomberg Law – Unlike WestlawNext or Lexis Advance, this premium legal research service has no natural/plain language search ability and instead uses the Boolean searching technique instead. In addition, only some cases have headnotes and topic classifications. One advantage though is its extensive federal and state docket search ability compared to the other premium legal research services. Also its citation (Bcite) does not include references to statutes or secondary sources. Its statute, codes and regulations are text only not un-annotated code and provides no historical versions of state codes. Some other differences noted include its secondary source coverage which provides little law review coverage, its extensive BNA material which is an excellent secondary source only available with this service, its excellent law firm “articles” research feature, its lack of legal encyclopedias and ALRs, etc. The quality of this service is improving and should be reviewed annually for added advancements and enhancements.
Pacer is a low cost legal research tool providing public access to court electronic records. It is a service that allows users to obtain case and docket information from federal appellate, district and bankruptcy courts, and the PACER Case Locator. It is provided by the federal Judiciary in keeping with its commitment to providing public access to court information via a centralized service. Access includes access to U.S. District, Bankruptcy, and Appellate court records. PACER currently charges $0.10 per page retrieved. This applies to both the pages of search results and the pages of documents you retrieve.
Casemaker is a low cost legal research tool with a powerful search engine providing access to a combination of state and federal materials including historic to current cases, statutes, and regulations. The site provides unlimited access to the members of bar associations that join the Casemaker Consortium. Most state bar associations are members.
Fastcase is a low cost legal research tool with a powerful search engine providing access to a combination of state and federal materials including historic to current cases, statutes, and regulations. It offers access to its appellate case law library, as well as state and federal codes and regulations. The premium plan also includes U.S. district court opinions, while the national plan does not. Subscriptions for attorneys are free through many state bar associations. It currently provides iPhone/iPad and Android apps with free access to all case law and statutes.
Loislaw is a low cost legal tax research tool with coverage of all types of primary legal materials from all 50 states and federal jurisdictions. It also provides access to treatises organized by subject or jurisdiction. Several different subscription plans are offered, with very reasonable prices.
VersusLaw is a low cost legal tax research tool which offers three pricing plans – standard, premium, and professional – which range in price per month. Coverage of materials varies widely by jurisdiction, but the library directory LibCatProfessional provides detailed coverage.
ProQuest is a low cost legal tax research tool for comprehensive legislative history information. Formerly LexisNexis Congressional; this service indexes key federal legislative history materials, including the U.S. Serial Set and the CIS Index. Selected full text includes committee reports from 1995-present and committee hearings from 1824-present. It indexes more than 2 million dissertations (1637-present) on all subject areas, including law; full text in PDF provided where available. It provides compiled legislative history materials for federal laws, mostly from 1929 to the present but with selected additional documents dating back to the 1890s. It also provides index and full-text of statistical reports from federal and state governments, as well as private organizations. The fee for this site is reasonable if you require legislative history tax research.
HeinOnline is a low cost legal tax research tool with coverage of over a hundred million pages of legal history available in an online, fully-searchable, image-based format. What makes it unique aside from its image-based PDF content is its historical value and the availability of titles back to their inception. It is the world’s largest image-based legal research collection and contains more than nine centuries of legal history.