Obviously, the most basic reason for someone in our profession to do in-depth research is to complete the tax return. But that isn’t the only thing we need to do with our material. If you are taking a position from one of the lower standards in Part 2 of our series you may need to cite your research material on an IRS Form 8275, Disclosure Statement. This is the IRS form to use when you need to explain why you did something on a return that may not make sense to someone without the details. You need to lay out you case for the deviation and then include your citations for the authority to do so.
That isn’t your only use for the research you have done. If you are assisting a client with an IRS letter or audit you may need to quote your citations. Make sure you use IRS titles for the citations. Instead of putting IRC XXX.XX(x) put Cod. Sec. XXX.XX(x). When using citations you should drill down to the most relevant paragraph in your correspondence as well. Instead of putting Cod. Sec. 162, which is approximately 14 pages long, use Cod. Sec. 162(g)(1).
Some of the things you will use as citations frequently should be identified as follows:IRC (Internal Revenue Code) = Cod. Sec. IRM (Internal Revenue Manuel) = IRM Section Revenue Rulings = Rev. Rul. Treasury Regulations = Treas. Rul. Revenue Procedures = Rev. Proc. Tax Court Decision = TC No. Tax Court Memorandum = TC Memo.
When you are using citation in correspondence with the IRS or other taxing authority make sure you use the correct abbreviations or it could be a long process. I once put “IRC” 1341 on a tax return in a note and the IRS employee who input the information interpreted it as “Investment Regulated Credit” instead of Internal Revenue Code. And that led to a two year battle to get the client his refund back.
Next Up: How to build your client base through good research techniques and usage.
Subscribe to TaxConnections Blog
Enter your email address to subscribe to this blog and receive notifications of new posts by email.