We have extensive experience in Tax Research. We examine the primary and secondary sources of income tax law, the IRC, and the administrative and judicial interpretations. We carefully explain the tax issues with our clients to ensure they fully understand their tax situation.
We review the Internal Revenue Code, Treasury Department regulations, and any interpretations, rulings, and procedures issued by the Treasury department and/or the Internal Revenue Service (IRS). We analyze Court interpretations and provide citation update services for your case to confirm the law is still current with respect to your issue. We discuss with the client our recommendation on the handling a particular tax matter; and examine the relationship of tax law, IRS interpretations, and relevant case law with you. We discuss the types of tax planning transactions such as:
Open-Fact Tax Planning – In an open-fact transaction, the transaction has not been completed as the facts have not yet been fully established. The transaction is in the early formative or projected stage. There is still an opportunity to plan anticipated facts to get a better tax result. As an example, if an agreement for the sale has not yet been signed, the taxpayer can still structure the agreement (modify the facts) so that the tax consequences of the transaction are more favorable. That is, with this type of transaction, modifications can be made before the transaction is closed to obtain a more favorable tax treatment.
Closed-Fact Tax Planning – In a closed transaction, all of the facts have been completed as the transaction has occurred; therefore tax planning may be limited to the presentation of the facts to the IRS in a more favorable, legally acceptable manner. The confusion with this type of tax planning transaction is the unfound belief that the consequences to the taxpayer are fully determined without any tax research and no additional tax planning is possible. That may not be the case. At times additional through research will uncover support for a legislative, administrative or judicial tax law position that provides an opportunity to legally lower the taxpayers tax liability. At TCS, we fully research the transaction and only then do we focus on how to present the information in a taxpayer positive legally acceptable manner to the IRS.
It is very important to understand that a significant part of tax research for both open and closed transactions is not only to fully gather and understand the facts but the thoroughness of the tax research. Without excellent tax research skills, tax planning, whether open or closed can cause considerable problems for a client.
Many clients are unaware of how important their tax professional’s tax research skills are to their financial tax health. As part of our tax research we use the following three step process:
Legislative Law – We review legislative law. This includes review of tax statutes passed by Congress, its legislative history which may include committee and conference reports, predecessor statutes, statements made in floor debates, earlier versions of the bill and the fact of their change, comments bill sponsors make upon introduction of the bill, etc. We carefully select the extent and depth of legislative law research based on your facts and the tax issue under review.
Administrative Law – We review administrative law, the IRS position on tax law to fully understand the IRS position on your tax issue. The IRS has provided in the past years anywhere from 10-20 different types and forms of guidance. Examples of the different types and forms of guidance we may review include Treas. Reg., Rev. Rulings, Rev. Procedures, Notices and Announcements, Private letter rulings, Technical Advice Memorandums, General Counsel Memoranda, Chief Counsel Advice, Determination Letters, etc.
Judicial Law – We then carefully examine judicial law where a taxpayer has challenged the IRS. We review the usefulness of tax holdings from other tax cases by applying, if possible, the holding to your facts. This is known as analogical legal reasoning. We review Tax Court, District Court, Court of Federal Claims, and Supreme Court rulings to determine the applicable rules and doctrines under judicial tax law.
Let Tax Client Services help you with any tax research needs!