CCH Federal Taxation
Comprehensive Topics
Chapter 2
Tax Research, Practice,
and Procedure
©2004, CCH INCORPORATED
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Chicago, IL 60646-6085
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http://tax.cchgroup.com
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
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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
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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
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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
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Research Sources for Legislative Authority
Authoritative
Documents
Research
Source
Authorship
Binding
16th Amendment
Constitution
Congress

Internal Revenue
Code
CCH, RIA,
and West tax
services
Congress

Chapter 2, Exhibit 4a
CCH Federal Taxation Basic Principles
Persuasive
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Research Sources for Legislative Authority
Authoritative
Documents
Research Source
Tax Treaties
•
(to render mutual
assistance between
the U.S. and
foreign countries in
tax enforcement
and to avoid double
taxation.)
•
Chapter 2, Exhibit 4b
•
Tax Treaties (CCH)
Worldwide Tax
Treaty Library (Tax
Analysts)
International Tax
Treaties of All
Nations (Oceana
Publications)
Authorship Binding Persuasive
Congress
CCH Federal Taxation Basic Principles

(overrides
Code if
more
recent)
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Research Sources for Legislative Authority
Authoritative
Documents
Research Source
Committee Reports

Cumulative
Bulletins [CB] (U.S.
(useful for determining
Congressional intent
when Code and Regs. are
unclear)

Bluebook
Bluebook
(interprets new
legislation)
(a government-issued,
blue-covered book)
Chapter 2, Exhibit 4c
Government.).
Internal Revenue
Bulletin [IRB] if
written within 6
months
Authorship
Binding
Persuasive
House Ways
and Means
Committee
 Senate
Finance
Committee
 Joint
Conference
Committee

Joint
Committee on
Taxation


CCH Federal Taxation Basic Principles
(no legal
effect; only
guidance)
(no legal
effect; only
guidance)
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Research Sources for Administrative Authority
Authoritative
Documents
Research Sources
Authorship
Binding
Final Regulations
(Treasury Decisions)

Federal register
(U.S. Government.)
 Tax services
(CCH, RIA and West).
U.S. Treasury
Department

Temporary
Regulations
(issued without
opportunity for
public comment
because timing is
critical)

Federal Register
(U.S. Government)
 Cumulative Bulletin
(U.S. Government)
 Tax services
(CCH, RIA, and West).
U.S. Treasury
Department

(binding
if < 3
years
old)
Proposed
Regulations

Federal Register
(U.S. Government)
 Cumulative Bulletin
(U.S. Government)
 Tax services
(CCH, RIA, and West).
U.S. Treasury
Department
Chapter 2, Exhibit 5a
CCH Federal Taxation Basic Principles
Persuasive

(nonbinding
if over 3
years old)

(nonbinding
preview or
final Regs.)
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Research Sources for Administrative Authority
Authoritative
Documents
Research Sources
Revenue Rulings
Cumulative Bulletins
(interprets tax laws)
(U.S. Government)
Revenue Procedures Cumulative Bulletins
(addresses internal
(U.S. Government)
Authorship
(explains how IRS
will treat a proposed
transaction for tax
purposes; issued to
taxpayers)
Chapter 2, Exhibit 5b
IRS Letters Rulings Reports
(CCH)
 Private Letter Rulings
(RIA)
 Daily Tax Reports (BNA)
Tax Analysts & Advocates,
TAX NOTES

Persuasive
National office
of IRS

National office
of IRS

National office
of IRS

procedures of IRS)
Letter Rulings
Binding
CCH Federal Taxation Basic Principles
(not approved
by the
Treasury)
(not approved
by the
Treasury)
(only
precedent
value is for
the taxpayer
addressed in
letter)
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Research Sources for Administrative Authority
Authoritative
Documents
Research Sources
Authorship
Technical Advice
Memoranda [TAMs]

IRS Position Reporter
(CCH)
 Tax Notes (Tax Analysts)
 Internal Memoranda of the
IRS (RIA)
National office
of IRS

Not published, but available
by IRS for public inspection
District
Director of
IRS

(addresses how IRS
will treat a completed
transaction for tax
purposes; issued to
District Office, hence
“memorandum”)
Determination
Letters
(mainly deal with
pension plans and
tax-exempt
organizations)
Chapter 2, Exhibit 5c
CCH Federal Taxation Basic Principles
Binding
Persuasive
(only
precedent
value is for
the taxpayer
addressed in
memo)
(only
precedent
value is for
the taxpayer
addressed in
letter)
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Research Sources for Judicial Authority
Authority
U.S. Supreme Court
Research Source
USTC (CCH)
(4 of 9 justices needed to
 AFTR (RIA)
grant certiorari – often
granted only when there is  S.Ct. Series (West)
 L.Ed.
conflict among the
appellate courts or where
(Lawyer’s Co-op)
the tax issue is extremely
 U.S. Series
important)
(U.S. Government)
Chapter 2, Exhibit 6a

Binding
Persuasive

(highest
judicial
body)
CCH Federal Taxation Basic Principles
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Research Sources for Judicial Authority
Authority
U.S. Court of Appeal
decisions
(hears appeals from any of the
three lower courts; the
Federal Circuit Appellate
Court hears all appeals from
the Court of Federal Claims)
U.S. Tax Court
decisions – regular
(deals with novel issues not
previously resolved by TC;
advance payment of tax not
allowed)
Chapter 2, Exhibit 6b
Research Source
Binding
USTC (CCH)
 AFTR (RIA)
 Federal 3d (West)


CCH services
 RIA services
 U.S. Government
Printing Office
Persuasive
(binding to
lower courts
in same
circuit)


(binding to
other tax
courts in
same
circuit)
CCH Federal Taxation Basic Principles
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Research Sources for Judicial Authority
Authority
U.S. Tax Court
decisions—
Memorandum
Research Source
Binding
TCM (CCH)
 T.C. Memo (RIA)


(deals with factual issues
necessitating application of
established principles of tax
law; advance payment of tax
not allowed)
Small Cases Division of
Tax Court
Persuasive
(binding to
other tax
courts in
same
circuit)
Not published
No precedent
authority
(informal hearing for disputes
of $50,000 or less; appeals
process not available)
Chapter 2, Exhibit 6c
CCH Federal Taxation Basic Principles
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Research Sources for Judicial Authority
Authority
Research Source
U.S. District Court
against U.S. that is based on
the Constitution,
an Act of Congress, or a
Regulation of any
executive department)
Chapter 2, Exhibit 6d
USTC (CCH)
 AFTR (RIA)
 Federal Claims
Reporter (West)
Persuasive


(jury trial available for factual
issues but not for legal issues)
U.S. Court of Federal
Claims (hears any claims
USTC (CCH)
 AFTR (RIA)
 F. Supp. Series
(West)
Binding
(binding to
courts in
same
district)


(binding to
same court)
CCH Federal Taxation Basic Principles
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Commercial Publishers of Comprehensive Services
Service
Description
Standard Federal
Tax Reporter
(“Standard”),
CCH
Comprehensive, self-contained reference service. 25 coordinated and
cross-referenced loose-leaf volumes that provide comprehensive
coverage of the 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
Reporter,
RIA
Comprehensive, self-contained reference service. 18 coordinated
loose-leaf volumes organized by Code sections and updated weekly.
Similar to CCH. RIA is known for its willingness to take a stand on
controversial issues not covered by legislation or tax law.
Federal Tax
Service,
CCH
Contains several volumes of compilation material organized by topic.
The Code, Regulations, and Committee Reports are contained in
separate volumes. The chapters are prepared by over 250
practitioners.
Chapter 2, Exhibit 7a
CCH Federal Taxation Basic Principles
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Commercial Publishers of Comprehensive Services
Service
Description
Federal Tax
Coordinator,
RIA
26-volume service organized by topic, rather than Code sections.
Popular features include editorial explanations, illustrations, planning
ideas, and warnings of potential tax traps.
Merten’s, Law of
Useful complement to traditional reference services. In-depth
discussions of general concepts of tax law. Often quoted in judicial
decisions. Sometimes difficult reading due to its legalistic style. Also,
updating is less frequent than most other services and not as
accessible.
Federal Income
Taxation,
Clark, Boardman
Callaghan & Co.
Tax Management
Portfolios,
BNA
Chapter 2, Exhibit 7b
Useful complement to traditional reference services. Each booklet
ranges in length from 50 to 200 pages and deals exclusively with a
special tax topic 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.
CCH Federal Taxation Basic Principles
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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,
Reed Elsevier,
Inc.
An electronic research service. LEXIS accesses federal statutes,
regulations, IRS rulings, and judicial decisions. NEXIS contains the
full text of over 500 publications.
WESTLAW,
West Publishing
Co.
An electronic research service. Provides much of the same data as
Lexis. Available online or CD-ROM.
Chapter 2, Exhibit 7c
CCH Federal Taxation Basic Principles
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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
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Commercial Publishers of Judicial Decisions
Service
Description
Federal Tax
Citator,
RIA
Seven-volume citator service organized in a manner
consistent with CCH Citator. Provides an alphabetical list of
court cases followed by a descriptive legislative history of
each case.
U.S. Tax Cases
(USTC),
CCH
Series of volumes that cover Supreme Court, Courts of
Appeals, District Courts, and Court of Federal Claims cases
since 1913.
Chapter 2, Exhibit 8b
CCH Federal Taxation Basic Principles
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Commercial Publishers of Judicial Decisions
Service
Description
American
Federal Tax
Reports (AFTR),
RIA
Comparable to USTC above.
Tax Court
Memorandum
Decisions
(TCM), CCH
Publishes memorandum decisions of the Tax Court.
TC
Memorandum
Decisions
(TC Memo),
RIA
Similar to TCM above.
Chapter 2, Exhibit 8c
CCH Federal Taxation Basic Principles
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Commercial Publishers of Current Developments
Service
Description
Standard Federal Tax Reports,
CCH
Weekly highlights of latest tax developments
Weekly Alert,
RIA
Weekly highlights of latest tax developments
Tax Notes,
Tax Analysts
Weekly digests of new tax decisions.
Journal of Taxation
Monthly tax journal.
Tax Adviser
Monthly tax journal published by the AICPA.
Chapter 2, Exhibit 9
CCH Federal Taxation Basic Principles
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Organization of the IRS
The four Operating Divisions include:
 Wage and Investment Income Division
 Small Business and Self-Employed Division
 Large and Mid-Size Businesses Division
 Tax-Exempt Organizations and Governmental
Entities Division
Chapter 2, Exhibit 10a
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Organization of the IRS
Other units include:
 Criminal Investigation
 IRS Appeals Office
 National Taxpayer Advocate
 Office of Chief Counsel
Chapter 2, Exhibit 10b
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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
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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.
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CCH Federal Taxation Basic Principles
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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
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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
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Choice of Tax Forum
Factors to consider in deciding whether to litigate
a case and where to litigate:





Jurisdiction
Payment of tax
Jury trial
Rules of evidence
Expertise of judges
Chapter 2, Exhibit 15





Publicity
Legal precedent
Factual precedent
Statute of limitations
Discovery
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Penalties






Delinquency penalties
Accuracy-related and
fraud penalties
Negligence penalty
Substantial
understatement of tax
liability
Substantial valuation
misstatement penalty
Substantial overstatement
of pension liabilities
Chapter 2, Exhibit 16







Estate of gift tax valuation
understatements
Penalty for aiding
understatement of tax liability
Civil fraud penalty
Criminal fraud penalty
Estimated taxes and
underpayment penalties
Failure to make deposits of
taxes
Tax preparer penalties
CCH Federal Taxation Basic Principles
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