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Statement of Principles
of Internal Revenue
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 1974-2 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.
weekly Bulletins 1974-26 through 1974-52 for
the period of July 1 through December 31, 1974.
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 pre-
pared in three parts as follows:
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 II.-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, Legis-
lation and related Committee Reports.
Part III.-Administrative, Procedural and Miscel-
To the extent practicable, pertinent cross refer-
ences 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 Proce-
dures, and other published items, and (3) topical
indexes of Public Laws, Treasury Decisions, and