Question

Discuss whether statutory sources of tax law or administrative sources of tax law are more authoritative. Give examples of each.

Answer 1

There are three primary sources of tax law, statutory, administrative and judicial.

1. Statutory Sources of Tax Law - This tax law is prepared under the legislative branch under both house of the representatives; US House of Congress and US Senate. It includes Internal Revenue Code (IRC). There're three versions of IRC over lifetime; released in 1939, 1954 & 1986. This law has the force of statute to drive and compel the user to abide by it's rules or face penal consequences.
2. Administrative Sources of Tax Law - These are prepared, drafted and published by the Treasury Department to provide clarifications and rulings in line with the rules set in Internal Revenue Code.There are three key types of administrative sources of tax law;
   • Treasury Regulations
   • Revenue Rulings and
   • Revenue Procedures
3. Judicial Sources of Tax Law - This includes various courts including Appeal courts, District Courts & Supreme Court.

From the above, it's quite evident that the statutory sources of tax law are more authoritative since they're the guiding force for the Internal Revenue Code with the approval of both houses as well as the President. The administrative sources are only meant for providing interpretations and clarifications based on Internal Revenue Code.