Sources for Tax Information

A reader writes in asking:

“I read in one of your books that publications from the IRS don’t have any legal authority. What exactly do you mean by that? And why do people then reference publications all the time?”

Like most articles on the IRS website, IRS publications can be excellent for the purpose of gaining a general understanding of a given topic. They’re written in relatively plain English and, as you would expect, the information contained in them is usually an accurate representation of the applicable law(s).

However, because IRS publications do not carry any legal authority, if they say something that’s contrary to the actual law, it’s the actual law that matters, not what’s in the IRS publication or article. Said yet another way, IRS publications can be wrong. So if you ever want to be really, really sure about something when it comes to taxes, you’ll want to look for a more authoritative source.

More Authoritative Sources of Tax Information

The Internal Revenue Code is the actual body of law that contains the rules that make up the federal income tax, payroll taxes, estate and gift taxes, and so on. The language it uses is not exactly intended for a general audience, but when you want an authoritative source on a federal tax topic, the IRC is the first place to look. My favorite place to reference the Internal Revenue Code is Cornell University Law School’s website.

Treasury regulations are the Treasury Department’s interpretation of the Internal Revenue Code. They are necessary because the IRC often provides a rather bare-bones framework that leaves many questions unanswered with regard to how the law should actually be applied. There are multiple types of Treasury regulations, and the distinctions are important.

• Final regulations are binding on the IRS — meaning you can rely on them.
• Temporary regulations are also binding until superseded by another regulation.
• Proposed regulations are not binding, but they can still be useful for getting an idea of the IRS’s viewpoint on a given topic.

Treasury regulations are available via the GPO website.

Revenue rulings are an official form of guidance issued by the IRS explaining how the law would be applied to a specific set of facts. You can find revenue rulings from the last several years on the IRS website.

Private letter rulings are akin to revenue rulings in that they show how the IRS would apply the law to a specific set of facts. But there’s one big difference: Private letter rulings are only binding on the IRS with respect to the taxpayer who requested the ruling, so other taxpayers cannot rely on them as legal precedent. That said, like proposed regulations, private letter rulings can still be useful for getting an idea of the IRS’s view on a particular matter. Past private letter rulings are also available on the IRS website.

Finally, federal courts’ rulings about tax matters (e.g, opinions issued by the U.S. Tax Court) are a source of legal precedent. Personally, however, I’ve found that the majority of everyday tax questions can be answered without having to look outside of the Internal Revenue Code and the types of IRS-issued guidance discussed above.