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Monday, January 25, 2021

Federal Tax Guidance Considerations

To help figure out all of the COVID-19 tax law changes enacted since March 2020, we have seen a variety of
guidance from the IRS. This includes FAQs and some items just posted to an IRS website. These are non-binding items. Some guidance was published in the weekly Internal Revenue Bulletin (revenue rulings, revenue procedure, notices and announcements) so is binding on the IRS.

Since these changes mostly expired in less than one year, there wasn't time for public comment and binding guidance for everything. Taxpayers and practitioners wanted insights as quickly as possible.

But what about other tax rules that are here for longer? Why aren't regulations used mroe often particularly for unclear areas where public comments would be useful. For example, some of the information on taxation of virtual currency are FAQs or a revenue ruling where there was no public comments and there are issues as to whether the guidance is correct.

I've got a short article in the AICPA Tax Adviser that delves into types of guidance and some current issues. As this excerpt notes, the National Taxpayer Advocate has concerns too. "FAQs can be renumbered, removed, or modified with no archival remnant to help in finding the original. That is, the IRS has no responsibility to archive FAQs and other items only published on its website. In contrast, items published in the IRB are in a permanent depository. In a July 7, 2020, blog post, available at, National Taxpayer Advocate Erin M. Collins noted this FAQ problem and described it as a violation of the Taxpayer Bill of Rights, namely, the rights to be informed and to a fair and just tax system."

Please check it out as it explains various IRS pronouncements and their differences and issues, including a chart that I hope you find useful - here.

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