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For My Student Followers – an Explanation of IRS Guidance Sent Out Into The Cosmos

Are you looking for some information that will explain all the available IRS guidance sent out into the cosmos?

The following is a list of explanations/definitions should you be interested, need some reading material, or want something to put you to sleep at night.

 

For anyone not familiar with the inner workings of tax administration, the array of IRS guidance may seem, well, a little puzzling at first glance. To take a little of the mystery away, here’s a brief look at seven of the most common forms of guidance.

In its role in administering the tax laws enacted by the Congress, the IRS must take the specifics of these laws and translate them into detailed regulations, rules and procedures. The Office of Chief Counsel fills this crucial role by producing several different kinds of documents and publications that provide guidance to taxpayers, firms and charitable groups.

Regulation

A regulation is issued by the Internal Revenue Service and Treasury Department to provide guidance for new legislation or to address issues that arise with respect to existing Internal Revenue Code sections. Regulations interpret and give directions on complying with the law. Regulations are published in the Federal Register. Generally, regulations are first published in proposed form in a Notice of Proposed Rulemaking (NPRM). After public input is fully considered through written comments and even a public hearing, a final regulation or a temporary regulation is published as a Treasury Decision (TD), again, in the Federal Register.

Revenue Ruling

A revenue ruling is an official interpretation by the IRS of the Internal Revenue Code, related statutes, tax treaties and regulations. It is the conclusion of the IRS on how the law is applied to a specific set of facts. Revenue rulings are published in the Internal Revenue Bulletin for the information of and guidance to taxpayers, IRS personnel and tax professionals. For example, a revenue ruling may hold that taxpayers can deduct certain automobile expenses.

Revenue Procedure

A revenue procedure is an official statement of a procedure that affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties and regulations and that should be a matter of public knowledge. It is also published in the Internal Revenue Bulletin. While a revenue ruling generally states an IRS position, a revenue procedure provides return filing or other instructions concerning an IRS position. For example, a revenue procedure might specify how those entitled to deduct certain automobile expenses should compute them by applying a certain mileage rate in lieu of calculating actual operating expenses.

Private Letter Ruling

A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer’s specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of a particular transaction before the transaction is consummated or before the taxpayer’s return is filed. A PLR is issued in response to a written request submitted by a taxpayer and is binding on the IRS if the taxpayer fully and accurately described the proposed transaction in the request and carries out the transaction as described. A PLR may not be relied on as precedent by other taxpayers or IRS personnel. PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued.

Technical Advice Memorandum

A technical advice memorandum, or TAM, is guidance furnished by the Office of Chief Counsel upon the request of an IRS director or an area director, appeals, in response to technical or procedural questions that develop during a proceeding. A request for a TAM generally stems from an examination of a taxpayer’s return, a consideration of a taxpayer’s claim for a refund or credit, or any other matter involving a specific taxpayer under the jurisdiction of the territory manager or the area director, appeals. Technical Advice Memoranda are issued only on closed transactions and provide the interpretation of proper application of tax laws, tax treaties, regulations, revenue rulings or other precedents. The advice rendered represents a final determination of the position of the IRS, but only with respect to the specific issue in the specific case in which the advice is issued. Technical Advice Memoranda are generally made public after all information has been removed that could identify the taxpayer whose circumstances triggered a specific memorandum.

Notice

A notice is a public pronouncement that may contain guidance that involves substantive interpretations of the Internal Revenue Code or other provisions of the law. For example, notices can be used to relate what regulations will say in situations where the regulations may not be published in the immediate future.

Announcement

An announcement is a public pronouncement that has only immediate or short-term value. For example, announcements can be used to summarize the law or regulations without making any substantive interpretation; to state what regulations will say when they are certain to be published in the immediate future; or to notify taxpayers of the existence of an approaching deadline.

2011 Auto Depreciation Deduction Limitations – (and a classic video from The Cars)

By Stacie Clifford Kitts, CPA

Well, I’m a bit late in the posting of this Revenue Procedure released March 1 by the Internal Revenue Service.  But in my defense, we are a tiny bit busy this time of year.

Revenue Procedure 2011-21 provides the depreciation deduction limitations for owners of passenger automobiles (including trucks and vans) first placed in service during calendar year 2011 and the amount to be included in income by lessees of passenger automobiles first leased during calendar year 2011.  These depreciation deduction limitations and income inclusion amounts are updated annually pursuant to section 280F to reflect the automobile price inflation adjustments.  Rev. Proc. 2011-21 also modifies Rev. Proc. 2010-18, to increase the depreciation limitations and lessee inclusion amounts for passenger automobiles first placed in service or leased in 2010 by taxpayers claiming the section 168(k) additional first year depreciation deduction pursuant to the Small Business Jobs Act of 2010.

Revenue Procedure 2011-21 will appear in IRB 2011-12 dated March 21, 2010.

Here is a recap of the depreciation schedules included in the Revenue Procedure.

Depreciation table for passenger automobiles (that are not trucks or vans) placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation deduction applies:

1st tax year                           $11,060

2nd tax year                         $4,900

3rd tax year                         $2,950

Each succeeding year      $1,775

Depreciation table for trucks and vans placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation applies:

1s tax year                           $11,260

2nd tax year                       $5,200

3rd tax year                        $3,150

Each succeeding year     $1,875

Depreciation table for passenger automobiles (that are not trucks or vans) placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation deduction does not apply:

1s tax year                           $3,060

2nd tax year                       $4,900

3rd tax year                        $2,950

Each succeeding year     $1,775

Depreciation table for trucks and vans placed in service in calendar year 2011 for which the Sec 168(k) additional first year depreciation does not apply:

1s tax year                           $3,260

2nd tax year                       $5,200

3rd tax year                        $3,150

Each succeeding year     $1,875

IRS Patrol:IRS Seeks New Issues for the Industry Issue Resolution Program

Seal of the Internal Revenue Service

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WASHINGTON — The Internal Revenue Service is encouraging business taxpayers, associations and other interested parties to submit to the Industry Issue Resolution (IIR) program tax issues for resolution involving a controversy, a dispute or an unnecessary burden on business taxpayers.

The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance. In past years, issues have been submitted by associations and others representing both small and large business taxpayers, resulting in tax guidance that helps thousands of taxpayers.

Recent submissions accepted into the IIR program include:

  • Network assets in the telecommunications industry (unit of property)
  • Asset class determination under Revenue Procedure 87-56 for wireless telecommunication assets
  • Vendor mark down allowances in calculation of inventory under the retail inventory method
  • Network assets in the utilities industry (unit of property)

Guidance issued as a result of the IIR program includes:

  • Technical terminations of publicly traded partnerships – procedures for requesting relief, delegation of authority for granting relief, and a sample closing agreement documenting the conditions under which relief is granted. (Industry Director Communication LMSB-04-0210-006)
  • Auto Last In First Out – for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, LIFO inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars. (Revenue Procedure 2008-33)

For each issue selected, an IIR team of IRS and Treasury personnel gather relevant facts from taxpayers or other interested parties affected by the issue.  The goal is to recommend guidance to resolve the issue.  This benefits both taxpayers and the IRS by saving time and expense that would otherwise be expended on resolving the issue through audits.

IIR project selections are based on the criteria set forth in Revenue Procedure 2003-36. For each issue selected, a multi-functional team of IRS, Chief Counsel, and Treasury personnel will be assembled. The teams will gather and analyze the relevant facts from industry groups and taxpayers for each issue and recommend guidance.

Requests for guidance on tax issues under the IIR program can be submitted at any time to IIR@irs.gov.  Submissions received are reviewed semi-annually with selections next being made from issues submitted by September 30, 2010.

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