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Sunday, December 27, 2015

Top Ten Items of Tax Policy Interest for 2015 - #6

Continuing with my list of ten news items and activities from 2015 that I think have particular tax policy relevance.  Today, for my sixth item is yet one more year with lots of informal, non-binding documents issued by the IRS in comparison to binding guidance.  Per my count aided by RIA Checkpoint, the IRS website and the US Tax Court website, is some data comparing 2015 and 1995 in terms of various administrative and judicial guidance issued.  It is missing cases by other federal courts, regulations and statutory (IRC) changes for these years. I may pursue all of this more later. Also, because I have not found a way to count them and it might not be possible, is how many new FAQs the IRS issued for 2015 and how many prior ones they modified. [For more on FAQs, see this paper by Robert Horwitz and me from 2012 which we presented to folks at IRS, Treasury, Nina Olson, and congressional tax staff in May 2012.]


Action on Decision (AOD)
General Counsel Memorandum (GCM)
Chief Counsel Advice (CCA)*
Field Service Advice (FSA)
Revenue Ruling
Revenue Procedure
Fact Sheet
Regular Tax Court decision
Tax Court Memorandum decision
TC Summary Opinion

  *Does not include 5 Legal Advice Issued by Associate Chief Counsel, 31 Legal Advice Issued by Field Attorneys, and 21 Legal Advice Issued to Program Managers. The number noted is of CCAs released to the public. Per this IRS report for 2014, if 2015 is similar, there might be over 3,000 more CCAs that were not released such as due to privilege and confidentiality reasons. The number is not too helpful because perhaps prior year CCAs were sent to agents if pertinent to their question.
  **In 1985, there were 200 revenue rulings and for 1975, there were 568!

While the number of revenue rulings has dropped since 1995, the informal guidance  (CCAs and FSAs) is about the same.  But too many, particularly when they address something not otherwise addressed in binding guidance.
My focus is on the IRS. I included the Tax Court for additional comparisons of differences between 2015 and 1995.  Why so many more Tax Court rulings in 1995?  Perhaps because there were more audits by the IRS in 1995?  Perhaps there were fewer tax cases in District Court and Court of Federal Claims that year?  More research is needed here.

Policy concerns: Many of the CCAs involve legal areas where there is no other binding guidance. Yet, CCAs are not binding and can't be relied upon to avoid a penalty. The law section of the CCAs typically uses the IRC, regulations and cases which are binding and that might be helpful.  But if many of the CCAs could instead be revenue rulings or regulations, that would be very helpful to taxpayers and practitioners.  Here are a few from 2015 where something more binding would be helpful:

  • §469(c)(7) Clarification – CCA 201504010 (1/23/15)
  • Marijuana Business and §280E – Cost of Sales versus Period Expenses – CCA 201504011 (1/23/15)  
  • Treatment of Excise Taxes Paid by Marijuana Business - CCA 201531016 (7/31/15)
  • ERP Software and §174 – In CCA 201549024 (12/4/15) 

What do you think?

My list so far of news and activities of 2015 with tax policy relevance (no ranking involved):

  1. Congress can alter our tax system via a lot of non-tax bills - here
  2. IRS funding challenges - here 
  3. Justice Kennedy called for a review of the 1992 Quill decision - here 
  4. IRS disagreeing with a court decision via a proposed regulation - here 
  5. Why not let the Internet Tax Freedom Act just expire - here


L. Carpenter said...

At a guess on the tax court rulings, they are issuing more bench opinions than in prior years so if you are counting based on a search of the types of opinions you have listed, you may not be getting the full picture.

Professor Nellen said...

Thanks for the comment. I researched whether I could get the data on bench opinions and found some helpful information at a blog post on "Procedurally Taxing" - (great post here on bench opinions - thanks!) It would take a lot longer to find the number of bench opinions unless the Tax Court publishes the data (I could not readily find such information). Here is an example of a bench opinion - It would be interesting to know the trend in recent years in the number of bench opinions.