Question

Answer following questions in depth. At least one half page per question

1. Describe revenue rulings and letter rulings.

Answer 1

Revenue rulings and letter rulings:

The revenue ruling refers to an official interpretation by the Internal Revenue Service (IRS) of the Internal Revenue Code, related statutes, tax regulations and treaties. These rules are public administrative rulings by the IRS in the United States Department of the Treasury of the United States federal government which are applicable to the law to specific factual circumstances. It is the conclusion of the IRS on how the law will be applicable to a specific set of facts. These rulings are published in the Internal Revenue Bulletin for the guidance and information to taxpayers, tax professionals and IRS personnel. For example, a revenue ruling may hold that taxpayer is allowed to deduct few automobile expenses. By all taxpayers a revenue ruling can be relied upon as precedent.

In the United States, letter rulings (LRs) are written decisions by the Internal Revenue Service (IRS) in response to the request of taxpayer for guidance on unusual situations or complex queries about their specific tax circumstances. The main motive is to guide the taxpayer regarding the tax treatment they can expect from the IRS in the situations specified by the ruling and provide the rationale for that decision. These can also help a taxpayer confirm whether or not a potential action will lead in a violation of tax. However these may not be relied on as precedent by IRS personnel or other taxpayers, and in no way binds the IRS to take a same position while dealing with other taxpayers