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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 reasonable meaning of various Code provisions in light of the Congressional purpose in enacting them; and to perform this work in a fair and impartial 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 interpreting 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 meaning of the statute.
The Service also has the responsibility of applying 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 procedures 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 promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively 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, identifying details and confidential information are deleted to comply with statutory requirements.
weekly Bulletins 1977-1 through 1977-26 for the period of January 1 through June 30, 1977. It includes a cumulative list of announcements relating to decisions of the Tax Court published in the Internal Revenue Bulletins. The Internal Revenue Cumulative Bulletin is prepared in three parts as follows: Part 1.—1954 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1954. Arrangement is sequential according to Code and regulations sections. The Code section is shown at the top of each page. Part 11.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and related Treasury Decisions and Revenue Rulings; Subpart B, Legislation and related Committee Reports. Part III.-Administrative, Procedural and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Included in this part is a list of persons disbarred or suspended from practice before the Internal Revenue Service. The Bulletin Index-Digest System, a research and reference service supplementing the Bulletin, may be obtained from the Superintendent of Documents on a subscription basis. It consists of four Services: Service No. 1, Income Tax, Service No. 2, Estate and Gift Taxes; Service No. 3, Employment Taxes; Service No. 4, Excise Taxes. Each Service consists of a basic volume and a cumulative supplement that provide (1) finding lists of items published in the Bulletin, (2) digests of Revenue Rulings, Revenue Procedures, and other published items, and (3) topical indexes of Public Laws, Treasury Decisions, and Tax Conventions.
Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same.
Cumulative Bulletin 1977-1 is a consolidation of all items of a permanent nature published in the
The synopses preceding Revenue Rulings, Revenue Procedures, and Court Decisions are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. The contents of this publication are not copyrighted and may be reprinted freely; a citation of the Cumulative Bulletin as the source would be appropriate.
Revenue Rulings and Revenue Proce- the prior ruling is modified because it rate rulings. If the new ruling does dures (hereinafter referred to as "rul- corrects a published position. (Com- more than restate the substance of a ings") that have an effect on previous pare with amplified and clarified, prior ruling, a combination of terms rulings use the following defined terms above).
is used. For example, modified and to describe the effect:
Obsoleted describes a previously superseded describes a situation where Amplified describes a situation published ruling that is not considered the substance of a previously pubwhere no change is being made in a determinative with respect to future lished ruling is being changed in part prior published position, but the prior transactions. This term is most comtransactions. This term is most com
and is continued without change in
and is continued wit position is being extended to apply monly used in a ruling that lists pre- part and it is desired to restate the to a variation of the fact situation set viously published rulings that are ob- valid portion of the previously pubforth therein. Thus, if an earlier ruling soleted because of changes in law or lished ruling in a new ruling that is held that a principle applied to A, and regulations. A ruling may also be ob- self contained. In this case the prethe new ruling holds that the same soleted because the substance has been viously published ruling is first modiprinciple also applies to B, the earlier included in regulations subsequently fied and then, as modified, is superruling is amplified. (Compare with adopted.
seded. modified, below).
Revoked describes situations where Supplemented is used in situations Clarified is used in those instances
the position in the previously pub- in which a list, such as a list of the where the language in a prior ruling
lished ruling is not correct and the names of countries, is published in a is being made clear because the lan
correct position is being stated in the ruling and that list is expanded by guage has caused, or may cause, some new ruling
adding further names in subsequent confusion. It is not used where a posi
Superseded describes a situation rulings. After the original ruling ha: tion in a prior ruling is being changed.
where the new ruling does nothing been supplemented several times, a
more than restate the substance and new ruling may be published that inDistinguished describes a situation
situation of a previously published cludes the list in the original ruling where a ruling mentions a previously
ruling (or rulings). Thus, the term is and the additions, and supersedes all ished ruling and points out an used to republish under the 1954 prior rulings in the series. essential difference between them.
Code and regulations the same posi- Suspended is used in rare situations Modified is used where the sub- tion published under the 1939 Code to show that the previous published stance of a previously published posi- and regulations. The term is also used rulings will not be applied pendin, tion is being changed. Thus, if a prior when it is desired to republish in a some future action such as the issu ruling held that a principle applied to single ruling a series of situations, ance of new or amended regulations A but not to B, and the new ruling names, etc., that were previously pub- the outcome of cases in litigation, o holds that it applies to both A and B, lished over a period of time in sepa- the outcome of a Service study. Abbreviations The following abbreviations in cur- F.A.A.A.-Federal Alcohol Adminis- Pub.L. — Public Law. rent use and formerly used will appear tration Act.
Ps—Pension, profit-sharing, stock in material published in the Bulletin. FICA-Federal Insurance Contribu bonus or annuity plan ruling.
R.E.I.T.-Real Estate Investment A, B, C, etc.—Names of individuals. F.R.–Federal Register.
FUTA–Federal Unemployment Tax Rev. Proc.—Revenue Procedure. A.R.R.—Committee on Appeals and Act.
Rev. Rul.–Revenue Ruling. Review recommendation.
G.C.M.-Chief Counsel's memoran R.S.-Revised Statute. A.T.-Alcohol and tobacco tax rul dum (formerly General Counsel's S.M.-Solicitor's Memorandum. ing. memorandum).
Sol. Op. Solicitor's Opinion. B.T.A.—Board of Tax Appeals. I.R.B.Internal Revenue Bulletin. S.P.R.-Statement of Procedural C.B.-Cumulative Bulletin.
IR-Mim. – Published IR-Mimeo- Rules. CFR-Code of Federal Regulations. graph.
S.R.-Solicitor's Recommendation. 1.1-Income tax ruling. .
S.S.T.-Social Security Tax. C.T.-Carriers Taxing Act of 1937.
M, N, X, Y, Z, etc.-Names of cor- S.T.-Sales tax ruling. Ct.D.-Court Decision.
porations, places or businesses, ac- Stat.—Statutes at Large. Del. Order—Delegation Order.
cording to context.
Mim.—Published mimeograph. T.I.R.—Technical Information Re-
lease. E.0.-Executive Order. 0.D.-Office Decision.
U.S.C.—United States Code. E.T.-Estate and gift tax ruling. P.T.E.—Prohibited Transactions Ex- x and y represent numbers and sums Em. T.-Employment tax ruling. emption.
Committee Reports Senate: 95-66 (P.L. 95-30), 469 95-67 (P.L. 95-19), 441 Conference: 95-158 (P.L. 95-19), 448 95-263 (P.L. 95-30), 519 House: 95-27 (Part 1) (P.L. 95-30), 501 Court Decisions: 1983, 389 1984, 109 1985, 178 Delegation Orders: 42 (Rev. 7), 527 67 (Rev. 12), 527 67 (Rev. 13). 527 112 (Rev. 4), 527 162, 528 163, 528 Notice- International Boycotts:
529 529 Proclamation: 533 Prohibited Transactions Exemptions: 77-1, 358 77-2. 360 77-3, 360 77-4, 362 77-5, 365 Public Laws: 95-19, 437 95-30, 451 Railroad Retirement Quarterly Rates:
Revenue Rulings—Cont. 77-5, 146 77-6, 350 77-7, 354 77-8, 3 77-9, 59 17-10, 62 77-11. 93 77-12, 161 77-13, 162 77-14, 18 77-15, 26 77-16, 77-17, 17-18, 77-19, 83 77-20, 77-21, 251 77-22, 91 77-23, 197 77-24, 122 77-25, 301 77-26, 370 77-27, 23 77-28. 27 77-29, 44 77-30, 291 77-31, 409 77-32, 38 77-33, 165 77-34, 276 77-35, 337 77-36, 347 77-37, 85 77-38, 129 77-39, 191 77-40, 248 77-41. 226 77-42, 142 77-43, 151 77-44. 355 77-45, 413 77-46, 77-47, 157 77-48, 292 77-49, 341 77-50, 137 77-51, 346 77-52, 348 77-53, 368 77-54, 400 77-55, 18 77-56. 135 77-57, 166 77-58, 175 77-59, 196 77-60, 282 77-61, 388 77-62, 414 77-63. 60 77-64, 136 77-65, 29 77-66, 338 77-67, 33 77-68, 142 77-69, 143 77-70, 150 77-71, 156 77-72, 157 77-73, 175
Revenue Rulings-Cont. 77-74, 352 77-75, 344 77-76, 4 77-77, 11 77-78, 12 77-79, 34 77-80, 36 77-81, 97 77-82. 121 77-83, 139 77-84, 173 77-85, 12 77-86, 241 77-87, 266 77-88, 266 77-89, 300 77-90, 334 77-91, 335 77-92, 41 77-93, 80 77-94, 265 77-95, 274 77-96, 277 77-97, 285 77-98, 288 77-99, 295 77-100, 309 77-101, 315 77-102, 299 77-103, 329 77-104, 336 77-105, 374 77-106, 5 77-107. 6 77-108, 86 77-109, 87 77-110, 58 77-111, 144 77-112, 149 77-113. 152 77-114, 152 77-115, 154 77-116, 155 77-117, 316 77-118, 328 77-119, 177 77-120, 16 77-121, 17 77-122, 23 77-123, 77-124. 39 77-125, 130 77-126, 47 77-127, 158 77-128, 159 77-129, 189 77-130. 289 77-131, 295 77-132, 297 77-133, 96 77-134, 132 77-135, 133 77-136, 167 77-137, 178 77-138, 195 77-139, 278 77-140, 301 77-141, 317 77-142, 337
Revenue Procedures: 77-1, 534 77-2, 534 77-3, 535
77-5, 536 77-6, 539 77-7, 540 77-8, 541 77-9, 542 77-10, 548 77-11, 568 77-12, 569 77-13, 570 77-14, 571 77-15, 572 77-16, 573 77-17, 577 77-18, 577 77-19, 584 77-20, 585 77-21, 586 Revenue Rulings: 77-1, 161 77-2, 120 77-3, 140 77-4, 141