Question

Locate a revenue ruling or other regulation. Explain what the ruling/regulation covers and how you might use that is support in your tax research. Also, identify any areas that you feel might be considered vague and open to interpretation.   

Answer 1

Ruling :

Upon written request, the department issues private letter rulings to taxpayers based upon specific factual information provided in writing by a taxpayer. They are not formally published, but copies with confidential material deleted may be obtained upon request from the Department of Revenue, Office of Chief Counsel. The purpose of a private letter ruling is to advise a taxpayer of the department’s application of the tax laws to a specific factual situation unique to the taxpayer.

Regulation:

The department issues regulations which are published in Title 61 of the Pennsylvania Code. The purpose of a regulation is to provide taxpayers with rules of general application so that they might clearly understand their rights and duties under the law. Regulations comprise activities of the department in which the legislative element predominates. They are designed to implement, interpret law or prescribe policy, or to govern the procedure or practice requirements of the department.

How you might use that is support in your tax research ?

Tax professionals often must document and communicate their tax research. Ruling/Regulation is important since tax planning ideas can cause prior tax returns to be amended or adjusted long after originally filed. The tax professional may have long since forgotten the reasons for his or her research conclusions, so it is essential that the relevant tax authorities and rationales be thoroughly documented and clearly explained. In some cases, the tax professionals who prepared the research may no longer be with the firm, increasing the importance of written communication that others can follow easily.

Also, identify any areas that you feel might be considered vague and open to interpretation

Areas are – a) where conflict between rules & regulation

                     b) where objectives are not identifiable