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of Internal Revenue
Tax Administration

The function of the Internal Revenue Service is to
administer the Internal Revenue Code. Tax policy
for raising revenue is determined by Congress.
With this in mind, it is the duty of the Service to
carry out that policy by correctly applying the
laws enacted by Congress; to determine the rea-
sonable meaning of various Code provisions in
light of the Congressional purpose in enacting
them; and to perform this work in a fair and im-
partial manner, with neither a government nor
a taxpayer point of view.

At the heart of administration is interpretation of
the Code. It is the responsibility of each person
in the Service, charged with the duty of interpret-
ing the law, to try to find the true meaning of the
statutory provision and not to adopt a strained
construction in the belief that he is "protecting
the revenue." The revenue is properly protected
only when we ascertain and apply the true mean-
ing of the statute.

The Service also has the responsibility of apply-
ing and administering the law in a reasonable,
practical manner. Issues should only be raised by
examining officers when they have merit, never
arbitrarily or for trading purposes. At the same
time, the examining officer should never hesitate
to raise a meritorious issue. It is also important
that care be exercised not to raise an issue or to
ask a court to adopt a position inconsistent with
an established Service position.

Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great courtesy and
considerateness. It should never try to overreach,
and should be reasonable within the bounds of
law and sound administration. It should, however,
be vigorous in requiring compliance with law and
it should be relentless in its attack on unreal tax
devices and fraud.

These principles of tax administration were previously published
in the Internal Revenue Bulletin as Revenue Procedure 64-22,
1964-1 (Part I) C.B. 689. They are restated here to emphasize
their importance to all employees of the Internal Revenue Service.

The Internal Revenue Bulletin is the authoritative

instrument of the Commissioner of Internal Rev-

enue for announcing official rulings and proce-

dures of the Internal Revenue Service and for

publishing Treasury Decisions, Executive Orders,

Tax Conventions, legislation, court decisions, and

other items of general interest.

It is the policy of the Service to publish in the

Bulletin all substantive rulings necessary to pro-

mote a uniform application of the tax laws, in-

cluding all rulings that supersede, revoke, mod-

ify, or amend any of those previously published in

the Bulletin. All published rulings apply retro-

actively unless otherwise indicated. Procedures

relating solely to matters of internal management

are not published; however, statements of internal

practices and procedures that affect the rights

and duties of taxpayers are published.

Revenue Rulings represent the conclusions of

the Service on the application of the law to the

entire state of facts involved. In those that are

based on positions taken in rulings to taxpayers

or technical advice to Service field offices, iden-

tifying details and confidential information are

deleted to comply with statutory requirements.

Rulings and procedures reported in the Bulletin

do not have the force and effect of Treasury De-

partment Regulations, but they may be used as

precedents. Unpublished rulings will not be relied

on, used, or cited as precedents by Service per-

sonnel in the disposition of other cases. In ap-

plying published rulings and procedures, the ef-

fect of subsequent legislation, regulations, court

decisions, rulings, and procedures must be con-

sidered, and Service personnel and others con-

cerned are cautioned against reaching the same
conclusions in other cases unless the facts and
circumstances are substantially the same.

Cumulative Bulletin 1978-2 is a consolidation of
all items of a permanent nature published in the

Revenue Rulings and Review Procedures (hereinafter referred to as "rulings") that have an effect on previous rulings use the following defined terms to describe the effect:


Amplified describes situation where no change is being made in a prior published position, but the prior position is being extended to apply

to a variation of the fact situation set

forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below).

Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed.

Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them.

Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, Abbreviations

The following abbreviations in current use and formerly used will appear in material published in the Bulletin. A, B, C, etc.-Names of individuals.


A.R.R.-Committee on Appeals and
Review recommendation.
A.T.-Alcohol and tobacco tax rul-

B.T.A.-Board of Tax Appeals.
C.B.-Cumulative Bulletin.

CFR-Code of Federal Regulations.
C.T.-Carriers Taxing Act of 1937.
Ct.D.-Court Decision.
Del. Order-Delegation Order.
D.C.-Treasury Department circular.
DISC-Domestic International Sales

E.O.-Executive Order.

the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in law or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.

Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in the new ruling.

Superseded describes a situation a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1954 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in sepa

F.A.A.A.-Federal Alcohol Administration Act.

FICA-Federal Insurance Contributions Act.

F.R.-Federal Register.

FUTA Federal Unemployment Tax Act.

G.C.M.-Chief Counsel's memorandum (formerly General Counsel's memorandum).

I.R.B.-Internal Revenue Bulletin.
IR-Mim. Published IR-Mimeo-


I.T.-Income tax ruling.

M, N, X, Y, Z, etc.-Names of corporations, places or businesses, according to context.

M.T.-Miscellaneous tax ruling.
Mim.-Published mimeograph.

ERISA-Employee Retirement In- Nonacq.-Nonacquiescence.

come Security Act.

E.T.-Estate and gift tax ruling.

Em. T.-Employment tax ruling.

O.D.-Office Decision.

P.T.E.-Prohibited Transactions Exemption.

rate rulings. If the new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case the previously published ruling is first modified and then, as modified, is superseded.

Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study.

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