Administrative sources of tax guidance. Most of the administrative sources come from the U.S. Treasury Department and within the department, the Internal Revenue Service. Table 1.1, “Administrative Sources of Tax Guidance” below lists the sources of administrative tax guidance, where that information is reported, and the type of authority it carries.

Judicial sources of tax guidance. A taxpayer unable to resolve an issue with the IRS, can take the dispute to the federal courts. The first step is to go to a court of original jurisdiction, and there are several to select from. Each court’s characteristics and authority are shown in Table 1.2, “Federal Courts of Original (Trial) Jurisdiction” below.

Working with an attorney, taxpayers would decide where to best pursue a case through the court system based on the characteristics of the courts. A case in the Tax Court could be heard by judges more familiar with tax cases. If a taxpayer wished a jury to decide the issues, the district court in which the taxpayer resides would hear the case. However, to have a case heard in District Court, a taxpayer needs to pay the deficiency in advance and then collect from the government if the case is won.

If the government loses a case at the trial level, an appeal could be made, but that is not certain. The case may be a weak one and an appeal might be considered as too weak to pursue. Another reason might be that the IRS wants to pursue a similar case in another court or jurisdiction.

District courts, the Tax Court, and the Court of Federal Claims must follow the precedents set by the court of appeals under which the original court resides (there are regional courts of appeals and a federal circuit). A particular court of appeals does not need to follow the decisions of another court of appeals. All courts must abide by decisions of the U.S. Supreme Court, where decisions from a court of appeals can be heard.

Court decisions can be an important source of tax law. Prior to the availability of computerized tax services, tax practitioners learned how court decisions were cited by different publishers. For example,

The same case could be cited differently by another publisher. Additional examples are not provided in this introductory text on federal individual income tax. For a more comprehensive coverage, the tax student should refer to a tax text like West Federal Taxation: Comprehensive Volume or Prentice Hall: Federal Taxation.

With computerization, there are now major tax research services that electronically provide updates of the basic law, administrative sources, and court decisions on the issues we need to know more about. The major providers of electronic tax services and/or online electronic tax service include:

The Internal Revenue Code, regulations, revenue rulingsrevenue rulingsAdministrative source of guidance on how tax law might be applied by the IRS., court decisions, appeals court decisions, and interpretations by tax experts of all those sources may seem like an impossible mountain of information when first learning income tax. It should be remembered, however, that many tax questions, especially for most individual income taxpayers, are not new and the answers are readily available. Beginning tax students should first look for answers in the one tax source that is free: IRS publications and instructions. The IRS has a publication available on almost any topic, and it’s a good place to start when first learning about a tax issue. Go to http://www.irs.gov and click on “Forms and Publications.”