Tax Tip
IRS Tax Publications Are Not Binding Precedent
If you are a taxpayer who thinks the answers you receive
when calling the IRS help line are always accurate and binding upon the IRS in
a subsequent challenge, think again. The IRS will be the first to tell you that
the information provided by its help line is not binding on the agency. In
other words, even if you follow the advice provided by the IRS, you will not be
protected from subsequently being challenged by the IRS and hit with additional
taxes, penalties, and interest. The IRS does not stand behind the advice
provided by their employees.
The same holds true for IRS publications. In a recent
tax court case (Bobrow, TC Memo 2014-21) involving a prominent tax attorney,
the court reiterated and emphasized its long-standing position that IRS
published guidance is not binding precedent and that taxpayers "rely on IRS
guidance at their own peril."
In the Bobrow case, the tax court ruled against the
taxpayer, and even imposed a substantial accuracy-related understatement
penalty against the taxpayer in spite of an IRS publication that supported his
position.
The IRS does not make tax laws; Congress does through
the Internal Revenue Code (IRC). The IRS only interprets how the IRC applies in
various situations. The advice provided in IRS publications is far more
reliable than the opinion provided by a single IRS employee on the phone.
However, neither provides binding precedent that can be cited in audit, appeal,
or tax court.
The moral of this story is to be cautious in
interpreting how the tax laws apply to your particular situation and to seek
professional assistance when needed. The IRC is huge and complicated. Please
contact this office for assistance.
Joseph C Becker, CPB, MBA, CQP
Ten Forty plus Quality Tax Preparation & Financial Services
www.tenfortyplus.com
281-397-7777, Fax 281-397-7443
joeb@tenfortyplus.com
Ten Forty plus Quality Tax Preparation & Financial Services
www.tenfortyplus.com
281-397-7777, Fax 281-397-7443
joeb@tenfortyplus.com
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