On August 14, 2000, Tax Executives Institute filed the following brief with the Supreme Court of the United States concerning the deference to be accorded revenue rulings
issued by the Internal Revenue Service.
A careful reading of Revenue Ruling
94-38 indicates the three factor test was applied by comparing the value, life, and use of the property after the cleanup to when it was acquired by the taxpayer.
The ruling specifically distinguishes Revenue Ruling
77-17, which held that losses sustained in the open market resulting from fraudulent activity of a corporation's officers or directors are capital in nature.
Third, the IRS should "scrub" the Cumulative Bulletin to remove all revenue rulings
and other published guidance inconsistent with the final regulations or that no longer reflect the views of the IRS.
Along with the revenue procedure, the IRS issued Revenue Ruling
2002-35, which clarifies that payments to employees for equipment they are required to provide as a condition of employment are wages for federal employment tax purposes, unless such payments are paid under an accountable plan.
The IRS has also been in the process of issuing revenue rulings
in the health care area that deal with, among other things, not-for-profit status and maintaining that status.
A revenue ruling
is an official interpretations by the IRS of the internal revenue laws, statues, and regulations and sets forth the conclusions of the IRS on how tax is applied to an entire set of facts.
While a revenue ruling
is a pronouncement of the agency of the government charged with interpreting and enforcing the tax laws, courts have frequently held that an IRS ruling is merely the opinion of an attorney or group of attorneys who work for one party to the controversy.
However, Revenue Ruling
55-431 states that "as a general rule, an individual who accepts an occasional invitation to make a speech .
Although Correll elevates longstanding rulings that have Congressional approval to some type of legal status on par with statutes, the average revenue ruling
does not fall into that category.
In a surprising decision, Revenue Ruling
2004-18 has "clarified" Revenue Ruling
94-38 and Revenue Ruling
98-25 by specifying that previously deductible environmental cleanup costs must be capitalized as indirect costs of inventory in accordance with IRC section 263A.
Moreover, even if the IRS were to challenge the employer's reliance on its outdated rulings, it will likely be precluded from arguing against the public guidance articulated in an outstanding revenue ruling