When it comes time to make an appeal, a taxpayer may notice that there are many types of legal information in regard to their specific problem. This can make it difficult to determine which legal sources hold the most weight. These sources include Internal Revenue Code, regulations, revenue procedures, case law and so on.
IRS Hierarchy of Authority
Below we will list in order from highest to lowest authority when it comes to legal authority in regard to IRS appeals:
1. Internal Revenue Code, Regulations and Supreme Court Decisions – These hold the most weight and are considered to be the highest tax law authority that are released by the three branches of the federal government.
2. Revenue Procedures, Revenue Rulings, and Other IRS Pronouncements – These will be given a large amount of weight by the Appeals Officer and are considered having great authority in the eyes of the IRS. It is important to keep in mind that a pronouncement is not binding on the officer if the Court of Appeals has invalidated it.
3. Court of Appeals Cases – These are important but what is even more important is where a Court of Appeals has rendered a decision and will depend on whether the present case is appealable to that circuit court. The appeal of a Tax Court decision is made to the Court of Appeals for the circuit in which the individual taxpayer resides. This is important because different cases have been ruled on in different areas.
4. Tax Court Decisions – A tax court decision will dispose of the matter unless the IRS has appealed the decision or has no desire to litigate the issue further. If there is a favorable Tax Court decision in a non-docketed case, that position will control because the Appeals Officer knows that the taxpayer will have the option to proceed to Tax Court and have a good shot at winning.
5. Court of Federal Claims and U.S. District Court Decisions – These decisions are generally given less weight by Appeals Officers and should not be relied upon to a great degree unless the decision comes out of the court where the taxpayer intends to litigate the matter.
6. Treatises, Articles, and Publications – These are generally opinions given by auditors and provide little weight when dealing with an Appeals Officer. They can be used though to provide logic to a case where it is generally lacking a consistent argument.
This list can provide a taxpayer with useful knowledge in their investigation for information regarding their specific appeal. The taxpayer will generally want to start from the top and work their way down when trying to find evidence that supports their position.