Chapter
1
Dr. Richard Ott
ACCTG 833, Fall 2007

 Statutory authorities
 Administrative authorities
 Judicial authorities
Slide D3-2

 Lower Courts
 U.S. Tax Court
(formerly Board of Tax Appeals)
 U.S. District Courts
 U.S. Court of Federal Claims
(formerly U.S. Claims Court)
 Appellate Courts
 U.S. Courts of Appeal
 U.S. Supreme Court
Slide D3-4

Slide D3-5
 See examples of proper citations for court cases in the Prentice Hall textbook
 Check for appeals (possibly reversals)
 Check changes in underlying IRC sections
 Check for an IRS acquiescence or nonacquiescence for the case

Lower Courts

Slide D3-7
 Court hears only federal tax cases
 Judges are tax specialists
 Generally, best court for technical tax issues
 No jury trials allowed
 Jurisdiction is not limited to residents of any specific geographical region
 Taxpayer does not have to pay the disputed amount before going to court

Slide D3-8
 Precedents the Court follows:
 Supreme Court decisions
 Court of Appeals decisions (Golsen Rule)
 U.S. Tax Court decisions
 Golsen Rule
 Follows the decisions of the Court of Appeals having jurisdiction over the taxpayer
 May reach opposite conclusions for taxpayers with identical facts from different jurisdictions

Slide D3-9
 Courts hear all types of federal cases
 Judges are generalists, not tax specialists
 Taxpayer can request a jury trial
 Many decisions are poorly structured or poorly conceived from a technical standpoint
 Jurisdiction is geographically limited
 Taxpayer must pay the disputed amount and then sue the government for a refund
(taxpayer is petitioner, IRS is respondent)

 Precedents the Court follows:
 Supreme Court
 Court of Appeals for that District
 Own District Court
Slide D3-10

Slide D3-11
 Court hears all cases involving monetary claims against the federal government
 Judges are generalists (not tax specialists)
 No jury trials allowed
 Jurisdiction is not limited to residents of a any specific geographical region
 Taxpayer must pay the disputed amount and then sue the government for a refund
(taxpayer is petitioner, IRS is respondent)

Slide D3-12
 Precedents Court must follow:
 Supreme Court
 Court of Appeals for the Federal Circuit
 U.S. Court of Federal Claims
 Taxpayers usually pursue cases in this court when applicable District Court and/or
Tax Court decisions are adverse

Appellate Courts

Slide D3-14
 First level
 U.S. Court of Appeals
 Final level
 U.S. Supreme Court

 13 Courts of Appeal
 11 geographic courts assigned to states
(Kansas is 10 th and Missouri is 8 th )
 1 court assigned to Washington, D.C.
 1 court assigned to cases coming from the
U.S. Court of Federal Claims
 Precedents the Court follows:
 Supreme Court
 U.S. Court of Appeal for that circuit
Slide D3-15

Slide D3-16
 Final level of appeal and sovereign legal authority for all federal cases
 Permission to present case must be requested by writ of certiorari (may or may not be granted)
 Only hear about a dozen tax cases annually
 Tax cases generally involve an issue at conflict among the U.S. Circuit Courts of Appeal or an issue of major importance

Slide D3-18
 The Internal Revenue Code is the law as enacted by Congress and signed by the
President, therefore, carries the highest weight of authority

Slide D3-19
 Treasury Regulations carry the second highest weight of authority
 Supreme Court has held that regulations issued under general authority of IRC § 7805(a) have full force and effect of law unless they conflict with the current statute
 Supreme Court has held that regulations issued under specific legislative authority have the full force and effect of law (unless in conflict with
Congressional intent)

Slide D3-20
 In general, these provide good indications of the IRS’s position but they are frequently revised and/or superceded and can be overturned by court decisions
 If there is a supporting court case with a high weight of authority, taxpayer can take a position contrary to an administrative pronouncement
 PLRs and TAMs carry a lower weight of authority than Revenue Rulings or Procedures

Slide D3-21
 Supreme Court cases carry the highest weight next to the Internal Revenue Code, their decisions can only be changed if:
 Congress amends the underlying statutes or
 The Court decides to reverse itself

Slide D3-22
 Court of Appeals cases carry a high weight of authority but less than Supreme Court
 If court decisions are in conflict across circuits, decisions in taxpayer’s own circuit have higher value as precedent than those of other circuits
 2 nd , 9 th and D.C. circuit decisions are important due to numerous innovative, unusual and/or controversial judicial interpretations of law

Slide D3-23
 Tax Court cases also carry a high weight of authority (but less than the Supreme Court), particularly when the issue has not been addressed by a Court of Appeals
 U.S. Federal Court of Claims cases carry a significant weight of authority
 U.S. District Court decisions carry a very low weight of authority (especially if the taxpayer is not in that district)

Slide D3-24
 A taxpayer need not pay the disputed tax in advance when the suit is initiated in which lower court?
 a. U.S. Court of Federal Claims
 b. U.S. Tax Court
 c. U.S. District Court

 A jury trial is permitted in which court?
 a. U.S. District Court
 b. U.S. Tax Court
 c. U.S. Court of Federal Claims
Slide D3-25

Slide D3-26
 The Tax Court departs from its general policy of ruling uniformly for all taxpayers in what situation?
 a. a U.S. District Court in the taxpayer’s jurisdiction has ruled differently on the issue
 b. the IRS has issued a nonacquiescence to a previous court decision on the issue in the taxpayer’s jurisdiction
 c. the Court of Appeals for the circuit to which the decision may be appealed has ruled differently on the issue

Slide D3-27
 When the Tax Court follows the opinion of the Circuit Court of Appeals to which the taxpayer may appeal, the court is following what rule?
 a. Goldberg Rule
 b. Greenspan Rule
 c. Golsen Rule

Slide D3-28
 The IRS may issue an acquiescence or nonacquiescence to which of the following court decisions?
 a. U.S. Tax Court
 b. U.S. Courts of Appeal
 c. U.S. Supreme Court
 d. All of the above
 e. a. and b. only

Slide D3-29
 In researching a tax position to be taken by taxpayer: a Kansas taxpayer, you find the following
9 th Circuit Court of
Appeals decision sources for and against the position:
Tax Court decision
(California taxpayer)
 Do you take the position?
For the Against the taxpayer:
8 th Circuit Court of Appeals decision
Tax Court decision
(Missouri taxpayer)
Private letter ruling Revenue Ruling