Question

1. Fully explain the following types of regulations and their legal effect:

a. Legislative

b. Interpretive

c. Procedural

Answer 1

There are three types of tax regulations—legislative, interpretive and procedural. Details on each type of regulation are discussed below.
Legislative Regulations
The Internal Revenue Code authorizes the IRS to provide operational rules for specific IRC provisions. Generally, legislative regulations carry the same weight of authority as the law itself. The regulation will typically refer to its statutory authority.

Interpretive Regulations
Interpretive regulations help to explain the IRS’s position on various IRC sections. Interpretive regulations are issued under the IRS’s general authority to interpret the language of the IRC, but they are not specifically authorized by the law. They are subject to challenge if they do not reflect Congressional intent. Nevertheless, interpretive regulations often carry substantial weight of authority.

Procedural Regulations
Procedural regulations address procedural rather than interpretative matters, such as how to go about filing returns and making elections. Generally, procedural regulations relating to particular IRC Sections are considered to be binding. However, the procedural regulations set forth in 26 CFR Part 601, known as the Statement of Procedural Rules, are considered to be directive and not mandatory. The Statement of Procedural Rules provides guidelines for conducting the internal affairs of the IRS. They are issued by the IRS Commissioner without the signature of the Treasury Secretary. Nevertheless, the procedural rules are published in the Federal Register and have the status of regulations. Therefore, such rules have higher weight of authority than other IRS pronouncements that are not published in the Federal Register.