Setting Rules and Regulations at the IRS
By: Richard Chapo | Posted: 03rd January 2007
Next to the CIA, there seems to be no more mysterious governmental agency than the IRS. The method used by the agency to set rules and regulations is actually open to the public.
Setting Rules and Regulations at the IRS
Many people are a bit confused about the role of the IRS. The Internal Revenue Service is part of the U.S. Department of the Treasury. Its role is to interpret and implement revenue laws passed by the government. A big part of this duty is to indicate how the laws will be interpreted since nobody else seems to be able to make heads or tails regarding what Congress is doing. Here are a couple of ways the IRS fulfills this task.
The first step the IRS takes is typically to issue Regulations related to new laws. The regulations are designed to tell taxpayers and tax professionals how a new law passed by Congress will be interpreted. Regulations are also used to address conflicts in laws, an event that occurs a lot given the fact Congress often passes two laws that overlap. Before issuing the regulations, the IRS will ask for comments from taxpayers and professionals on its interpretation.
Regulations are a nice start, but often are not helpful in specific situations. When this situation arises, taxpayers can ask the IRS to issue a Revenue Ruling on how the tax regulations apply to a specific set of facts. The IRS is not required to undertake such requests, but often does in an attempt to clear up any confusion on a particular regulation or subject matter.
Since tax forms are incredibly confusing, the IRS also issues Revenue Procedure Rulings. In laymen terms, these rulings tell taxpayers how deductions, revenues and so on should be dealt with on tax forms. In unique situations, the IRS will actually create a new tax form for a specific situation or new law. While not the most exciting documents, these rulings are a necessity for filing purposes.
Private Letter Rulings are an interesting quirk at the IRS. They are like a Revenue Ruling, but there is one big exception. They apply only to a specific taxpayer situation. Instead of saying this is how we will always interpret this rule, the agency says this is how we will interpret for your situation. No other taxpayer can rely on the ruling.
There are a couple of other ways the IRS will dictate the rules and regulations related to tax issues, but they all deal with highly technical issues that the common taxpayer is simply not interested in. In short, the above represents the bulk of how the IRS gets from there to here with new tax laws.
Richard A. Chapo is with BusinessTaxRecovery.com - providing tax articles.
About the Author
Occupation: Attorney and Traveler
Rick Chapo is with Nomad Journals - makers of
writing journals. He is also with BusinessTaxRecovery.com - information on
taxes.
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Tags: confusion, subject matter, irs, quirk, new laws, conflicts, u s department, tax forms, congress, internal revenue service, taxpayers, department of the treasury, tax form, governmental agency, tax professionals