1. Chapter 2
Tax Research, Practice,
and Procedure
©2012 CCH. All Rights Reserved.
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2. Chapter 2 Exhibits
1. Classification of Materials
2. Judicial Authority
3. Five-Step Research Method
4. Research Sources for Legislative Authority
5. Research Sources for Administrative Authority
6. Research Sources for Judicial Authority
7. Commercial Publishers of Comprehensive Services
8. Commercial Publishers of Judicial Decisions
9. Commercial Publishers of Current Developments
Chapter 2, Exhibit Contents A CCH Federal Taxation Basic Principles 2 of 32

3. Chapter 2 Exhibits
10. Organization of the IRS
11. IRS Communications
12. Examination of Returns
13. Appeals Administrative Process
14. Taxpayer Bill of Rights
15. Choice of Tax Forum
16. Penalties
Chapter 2, Exhibit Contents B CCH Federal Taxation Basic Principles 3 of 32

4. Classification of Materials
 Primary or “authoritative”
 Internal Revenue Code (statutory authority)
 Treasury Regulations (administrative authority)
 Internal Revenue Service Rulings (administrative authority)
 Judicial Authority
 Secondary or “reference”
 Looseleaf tax reference services
 Periodicals
 Textbooks
 Treatises
 Published papers from tax institutes
 Symposia
 Newsletters
Chapter 2, Exhibit 1 CCH Federal Taxation Basic Principles 4 of 32

5. Judicial Authority
The three courts of original jurisdiction are:
 U.S. Tax Court
 U.S. District Court
 U.S. Court of Federal Claims
Chapter 2, Exhibit 2a CCH Federal Taxation Basic Principles 5 of 32

6. Judicial Authority
The appellate courts are:
 U.S. Circuit Courts of Appeals
 U.S. Court of Appeals for the Federal Circuit
 U.S. Supreme Court
Chapter 2, Exhibit 2b CCH Federal Taxation Basic Principles 6 of 32

7. Five-Step Research Method
1. Gather the facts and identify the tax issues.
2. Locate and study the primary and secondary
authorities relevant to the enumerated tax issues.
3. Update and evaluate the weight of the various
authorities.
4. Re-examine various facets of the research.
5. Arrive at conclusions; communicate these
conclusions to the client.
Chapter 2, Exhibit 3 CCH Federal Taxation Basic Principles 7 of 32

8. Research Sources for Legislative Authority
Authoritative Research Authorship Binding Persuasive
Documents Source
16th Amendment Constitution Congress √
Internal Revenue CCH, RIA, Congress √
Code and West tax
services
Chapter 2, Exhibit 4a CCH Federal Taxation Basic Principles 8 of 32

9. Research Sources for Legislative Authority
Authoritative Research Source Authorship Binding Persuasive
Documents
Tax Treaties • Tax Treaties (CCH) Congress √
(to render mutual • Worldwide Tax (overrides
assistance between the Code if
U.S. and foreign Treaty Library (Tax more
countries in tax Analysts) recent)
enforcement and to
avoid double
• International Tax
taxation.) Treaties of All
Nations (Oceana
Publications)
Chapter 2, Exhibit 4b CCH Federal Taxation Basic Principles 9 of 32

10. Research Sources for Legislative Authority
Authoritative Research Source Authorship Binding Persuasive
Documents
Committee Reports  Cumulative  House Ways √
(useful for determining Bulletins [CB] (U.S. and Means (no legal effect;
Congressional intent when only guidance)
Code and Regs. are unclear)
Government.). Committee
 Internal Revenue  Senate
Bulletin [IRB] if Finance
written within 6 Committee
months  Joint
Conference
Committee
Bluebook Bluebook Joint Committee √
(interprets new legislation) (a government-issued, blue- on Taxation (no legal effect;
covered book) only guidance)
Chapter 2, Exhibit 4c CCH Federal Taxation Basic Principles 10 of 32

11. Research Sources for Administrative Authority
Authoritative Documents Research Sources Authorship Binding Persuasive
Final Regulations  Federal register U.S. Treasury √
(Treasury Decisions) (U.S. Government.) Department
 Tax services
(CCH, RIA and West).
Temporary Regulations  Federal Register U.S. Treasury √ √
(U.S. Government) Department (binding (nonbinding if
(issued without  Cumulative Bulletin if < 3 over 3 years
opportunity for public (U.S. Government) years old) old)
comment because  Tax services
timing is critical) (CCH, RIA, and West).
Proposed Regulations  Federal Register U.S. Treasury √
(U.S. Government) Department (nonbinding
 Cumulative Bulletin preview of
(U.S. Government) final Regs.)
 Tax services
(CCH, RIA, and West).
Chapter 2, Exhibit 5a CCH Federal Taxation Basic Principles 11 of 32

12. Research Sources for Administrative Authority
Authoritative Research Sources Authorship Binding Persuasive
Documents
Revenue Rulings Cumulative Bulletins National office √
(interprets tax laws) (U.S. Government) of IRS (not approved
by the Treasury)
Revenue Procedures Cumulative Bulletins National office √
(addresses internal (U.S. Government) of IRS (not approved
procedures of IRS) by the Treasury)
Letter Rulings (explains  IRS Letters Rulings Reports National office √
how IRS will treat a (CCH) of IRS (only precedent
proposed transaction for  Private Letter Rulings value is for the
tax purposes; issued to taxpayer
taxpayers) (RIA)
addressed in
 Daily Tax Reports (BNA) letter)
Tax Analysts & Advocates,
TAX NOTES
Chapter 2, Exhibit 5b CCH Federal Taxation Basic Principles 12 of 32

13. Research Sources for Administrative Authority
Authoritative Research Sources Authorship Binding Persuasive
Documents
Technical Advice  IRS Position Reporter National office √
Memoranda [TAMs] (CCH) of IRS (only precedent
(addresses how IRS will  Tax Notes (Tax Analysts) value is for the
treat a completed taxpayer
transaction for tax  Internal Memoranda of the
addressed in
purposes; issued to District IRS (RIA) memo)
Office, hence
“memorandum”)
Determination Letters Not published, but available by District Director √
(mainly deal with IRS for public inspection of IRS (only precedent
pension plans and tax- value is for the
exempt organizations) taxpayer
addressed in
letter)
Chapter 2, Exhibit 5c CCH Federal Taxation Basic Principles 13 of 32

14. Research Sources for Judicial Authority
Authority Research Source Binding Persuasive
U.S. Supreme Court  USTC (CCH) √
(4 of 9 justices needed to  AFTR (RIA) (highest
grant certiorari – often judicial
 S.Ct. Series (West)
granted only when there is
conflict among the appellate  L.Ed.
body)
courts or where the tax issue (Lawyer’s Co-op)
is extremely important)
 U.S. Series
(U.S. Government)
Chapter 2, Exhibit 6a CCH Federal Taxation Basic Principles 14 of 32

15. Research Sources for Judicial Authority
Authority Research Source Binding Persuasive
U.S. Court of Appeal  USTC (CCH) √
decisions  AFTR (RIA) (binding to
(hears appeals from any of the lower courts
 Federal 3d (West) in same
three lower courts; the Federal
Circuit Appellate Court hears all circuit)
appeals from the Court of Federal
Claims)
U.S. Tax Court decisions –  CCH services √
regular  RIA services (binding to
other tax
(deals with novel issues not  U.S. Government courts in same
previously resolved by TC;
Printing Office circuit)
advance payment of tax not
allowed)
Chapter 2, Exhibit 6b CCH Federal Taxation Basic Principles 15 of 32

16. Research Sources for Judicial Authority
Authority Research Source Binding Persuasive
U.S. Tax Court decisions  TCM (CCH) √
—  T.C. Memo (RIA) (binding to
other tax
Memorandum
courts in same
(deals with factual issues
circuit)
necessitating application of
established principles of tax law;
advance payment of tax not
allowed)
Small Cases Division of Tax Not published No precedent
Court authority
(informal hearing for disputes of
$50,000 or less; appeals process
not available)
Chapter 2, Exhibit 6c CCH Federal Taxation Basic Principles 16 of 32

17. Research Sources for Judicial Authority
Authority Research Source Binding Persuasive
U.S. District Court  USTC (CCH) √
(jury trial available for factual  AFTR (RIA) (binding to
issues but not for legal issues) courts in same
 F. Supp. Series district)
(West)
U.S. Court of Federal  USTC (CCH) √
Claims (hears any claims  AFTR (RIA) (binding to
against U.S. that is based on same court)
the Constitution,  Federal Claims
an Act of Congress, or a Reporter (West)
Regulation of any
executive department)
Chapter 2, Exhibit 6d CCH Federal Taxation Basic Principles 17 of 32

18. Commercial Publishers of Comprehensive Services
Service Description
Standard Federal Comprehensive, self-contained reference service. 25 coordinated and cross-
Tax Reporter referenced loose-leaf volumes that provide comprehensive coverage of the
(“Standard”), CCH income tax law. Compiles legislative, administrative, and judicial aspects of the
income tax law, arranged in Code section order. Also contains weekly
supplements concerning current legislative, administrative, or judicial changes
in tax law.
United States Tax Comprehensive, self-contained reference service. 18 coordinated loose-leaf
Reporter, volumes organized by Code sections and updated weekly. Similar to CCH.
RIA RIA is known for its willingness to take a stand on controversial issues not
covered by legislation or tax law.
Federal Tax Contains several volumes of compilation material organized by topic. The
Service, Code, Regulations, and Committee Reports are contained in separate volumes.
CCH The chapters are prepared by over 250 practitioners.
Chapter 2, Exhibit 7a CCH Federal Taxation Basic Principles 18 of 32

19. Commercial Publishers of Comprehensive Services
Service Description
Federal Tax 26-volume service organized by topic, rather than Code sections. Popular
Coordinator, features include editorial explanations, illustrations, planning ideas, and
RIA warnings of potential tax traps.
Merten’s, Law of Useful complement to traditional reference services. In-depth discussions of
Federal Income general concepts of tax law. Often quoted in judicial decisions. Sometimes
Taxation, difficult reading due to its legalistic style. Also, updating is less frequent than
Thomson West most other services and not as accessible.
Tax Management Useful complement to traditional reference services. Each booklet ranges in
Portfolios, length from 50 to 200 pages and deals exclusively with a special tax topic
BNA covering Code, Regulations, reference to primary authorities, and extensive
editorial discussion, including numerous tax planning ideas. Problems of
inconvenience may develop when there is no one portfolio squarely on point
and the research effort requires reference to many portfolios. Updates are
convenient though not extensive.
Chapter 2, Exhibit 7b CCH Federal Taxation Basic Principles 19 of 32

20. Commercial Publishers of Comprehensive Services
Service Description
CCH ONLINE An electronic research service. Incorporates practitioner-oriented access
methods to successfully located the desired tax information and to retrieve
documents of special interest. Available in many different “libraries” addressing
tax and nontax topics.
LEXIS/NEXIS, An electronic research service. LEXIS accesses federal statutes, regulations,
Reed Elsevier, Inc. IRS rulings, and judicial decisions. NEXIS contains the full text of over 500
publications.
WESTLAW, West An electronic research service. Provides much of the same data as Lexis.
Publishing Co. Available online or CD-ROM.
Chapter 2, Exhibit 7c CCH Federal Taxation Basic Principles 20 of 32

21. Commercial Publishers of Judicial Decisions
Service Description
CCH Citator, CCH Two-volume, loose-leaf reference service. Contains alphabetical
listing of Tax Court (formerly Board of Tax Appeals, “BTA”) and
federal court decisions since 1913. Indicates a paragraph reference
where each case is digested in the Compilation Volumes of the
Standard Federal Tax Reporter. Each listing outlines the judicial
history of a selected case beginning with the highest court to have
ruled on that issue.
Chapter 2, Exhibit 8a CCH Federal Taxation Basic Principles 21 of 32

22. Commercial Publishers of Judicial Decisions
Service Description
Federal Tax Seven-volume citator service organized in a manner consistent with
Citator, CCH Citator. Provides an alphabetical list of court cases followed
RIA by a descriptive legislative history of each case.
U.S. Tax Cases Series of volumes that cover Supreme Court, Courts of Appeals,
(USTC), District Courts, and Court of Federal Claims cases since 1913.
CCH
Chapter 2, Exhibit 8b CCH Federal Taxation Basic Principles 22 of 32

23. Commercial Publishers of Judicial Decisions
Service Description
American Federal Comparable to USTC above.
Tax Reports
(AFTR), RIA
Tax Court Publishes memorandum decisions of the Tax Court.
Memorandum
Decisions (TCM),
CCH
TC Memorandum Similar to TCM above.
Decisions
(TC Memo),
RIA
Chapter 2, Exhibit 8c CCH Federal Taxation Basic Principles 23 of 32

24. Commercial Publishers of Current
Developments
Service Description
Standard Federal Tax Reports, CCH Weekly highlights of latest tax developments
Weekly Alert, Weekly highlights of latest tax developments
RIA
Tax Notes, Weekly digests of new tax decisions.
Tax Analysts
Journal of Taxation Monthly tax journal.
Tax Adviser Monthly tax journal published by the AICPA.
Chapter 2, Exhibit 9 CCH Federal Taxation Basic Principles 24 of 32

25. Organization of the IRS
The four Operating Divisions include:
 Wage and Investment Income Division
 Small Business and Self-Employed Division
 Large Business and International Division
 Tax-Exempt Organizations and Governmental Entities
Division
Chapter 2, Exhibit 10a CCH Federal Taxation Basic Principles 25 of 32

26. Organization of the IRS
Other units include:
 Criminal Investigation
 IRS Appeals Office
 National Taxpayer Advocate
 Office of Chief Counsel
 Office of Professional Responsibility
 Whistleblower Office
 Communications and Liaison
 Office of Privacy, Governmental Liaison and
Disclosure
Chapter 2, Exhibit 10b CCH Federal Taxation Basic Principles 26 of 32

27. IRS Communications
The IRS issues communications to individual
taxpayers and IRS personnel in three primary ways:
 Letter rulings
 Determination letters
 Technical advice memoranda
IRS Publications also address a variety of general
and special topics of concern to taxpayers.
Chapter 2, Exhibit 11 CCH Federal Taxation Basic Principles 27 of 32

28. Examination of Returns
 Correspondence Examinations—These involve
relatively simple problems that can generally be
resolved by mail.
 District Office Examinations—These are
conducted by a tax auditor either by
correspondence or by interview.
 Field Examinations—These are conducted by
revenue agents and involve more complex issues.
Chapter 2, Exhibit 12 CCH Federal Taxation Basic Principles 28 of 32

29. Appeals Administrative Process
If the taxpayer and the agent do not agree, the
taxpayer has several options:
 Request a conference in the IRS Appeals Office
 File a petition in the Tax Court
 Wait for the 90-day period to expire, pay the
assessment, and start a refund suit in the
District Court or the Court of Federal Claims
Chapter 2, Exhibit 13 CCH Federal Taxation Basic Principles 29 of 32

30. Taxpayer Bill of Rights
The Taxpayer Bill of Rights is divided into
four major categories:
 Taxpayer rights and IRS obligations
 Levy and lien provisions
 Proceedings by taxpayers
 Authority of the Tax Court
Chapter 2, Exhibit 14 CCH Federal Taxation Basic Principles 30 of 32

31. Choice of Tax Forum
Factors to consider in deciding whether to
litigate a case and where to litigate:
 Jurisdiction  Publicity
 Payment of tax  Legal precedent
 Jury trial  Factual precedent
 Rules of evidence  Statute of limitations
 Expertise of judges  Discovery
Chapter 2, Exhibit 15 CCH Federal Taxation Basic Principles 31 of 32

32. Penalties
 Delinquency penalties  Estate of gift tax valuation
 Accuracy-related and understatements
fraud penalties  Penalty for aiding
 Negligence penalty understatement of tax
 Substantial liability
understatement of tax  Civil fraud penalty
liability  Criminal fraud penalty
 Substantial valuation  Estimated taxes and
misstatement penalty underpayment penalties
 Substantial overstatement  Failure to make deposits of
of pension liabilities taxes
 Tax preparer penalties
Chapter 2, Exhibit 16 CCH Federal Taxation Basic Principles 32 of 32