As part of my tax practice in Lake Nona, a community within Orlando, FL "the City Beautiful", I help clients who are dealing with IRS problems. Many people think that the IRS has the final word, but that isn't exactly accurate. Whether you are here in Florida or anywhere else in the country, this information is the same.
In plain language - the IRS does NOT create nor have the final say in the interpretation of the law for which it was created to enforce (i.e., the US tax code).
In not so plain language: "The Internal Revenue Service is a tax collection agency and administers the Internal Revenue Code enacted by Congress. The IRS is organized to carry out the responsibilities of the secretary of the Treasury under section 7801 of the Internal Revenue Code. The secretary has full authority to administer and enforce the internal revenue laws and has the power to create an agency to enforce these laws. The IRS was created based on this legislative grant." (straight from IRS.gov)
Here is a brief summary of the hierarchy as it relates to your taxes and reliance on the source for your tax position and tax planning:
U.S. Constitution Gives congressional authority to enact tax laws
U.S. Internal Revenue Code The foundation of all federal tax authority
U.S. Treasury Regulations Varying stages: proposed, temporary, and final and varying types: procedural, interpretative, and legislative. Depending on the stage and type, these can have the same authority as the internal revenue code and/or be binding on the IRS.
Legislative History
Judicial Authority Authority is based on the rank of the court and the jurisdiction covered. Varying ranks from Court of Federal Claims, Tax Court, District Court, Circuit Court of Appeals, and the U.S. Supreme Court.
IRS Positions There are varying types of IRS positions from Forms, Publications, and FAQs, Private Letter Rulings, Determination Letters, Revenue Procedures, Revenue Rulings, and more.
Secondary Sources
There are many conclusions that can be made here, but I'll share just a few. First, notice where the IRS lands on that list. You can disagree with the IRS, take it tax court, and win. The IRS is interpreting the same information you and your tax professional are interpreting. They do not always get it right and there are gray areas. Second, the IRS form instructions and publications are the lowest in authority within the IRS's category. The IRS is not bound by their own instructions and publications. You need to understand the tax law behind the issues. Generally speaking, you'll be safe in following these resources, but it isn't a guarantee against tax problems.
I wouldn't say it's fun to pick a fight with the IRS. I also generally wouldn't call it 'picking a fight'. The point here is that you can disagree with the IRS and be the one who is right. And there are times when you want to take a stand against the IRS, appeal an IRS position to the next level within the IRS, or even go to tax court.
If you or someone you know has a tax problem and need help dealing with the IRS, please contact me at (407) 243-8678 or brad@wootencpa.com or schedule an appointment.
-Brad
I enjoy helping individuals with tax preparation and tax planning as well as offering tax help to individuals dealing with tax debt, IRS liens, IRS levies, Wage Garnishments, etc. I also service businesses (including nonprofits and churches) by providing tax preparation and tax planning as well as consulting for accounting, bookkeeping, and other finance related questions. I live in Orlando, FL, but I serve clients all across the country. Schedule an appointment if you need assistance and take a look at the resource page.
6900 Tavistock Lakes Blvd Ste 400
Orlando, FL 32827
(407) 243-8678
Serving clients in Orlando, Lake Nona, Altamonte Springs, Apopka, Azalea Park, Celebration, Hunters Creek, Lake Buena Vista, Lake Hart, St Cloud, Winter Garden, Winter Park and via the latest technology remotely around the country.
*The blog posts (as well as the YouTube channel) are my personal opinions and thoughts about a wide range of topics. They are not meant to apply to individuals specifically and should never be relied on as tax or investment advice. You should contact a professional for specific advice before taking action.