cumulative bulletin - Internal Revenue Service

1 SEQ 0001 JOB C21-001-007 PAGE-0001 COVER REVISED 28 AUG96 AT 02:25 BY LR DEPTH: PICAS WIDTH 46 PICAS COMPOSITE COLOR778/00000/28 AUG96/C21-0011995 2 Revenuecumulativebulletin1995 2 July DecemberDepartment of the TreasuryInternal Revenue ServiceSEQ 0003 JOB C21-002-004 PAGE-0001 IN THIS ISSUE REVISED 28 AUG96 AT 02:25 BY LR DEPTH: PICAS WIDTH 46 PICAS COMPOSITE COLOR778/00000/28 AUG96/C21-0021995 2 This IssueMission of the Service and Statement ofPrinciples of Internal Revenue TaxAdministrationiiIntroductioniiiDefini tion of Terms and AbbreviationsivNumerical Finding ListvFinding List of Current Action on Previous PublishedItemsviTax Court1 Part I. Rulings and Decisions Under the Internal RevenueCode of 19863 Part II. Treaties and Tax LegislationTable of Contents324 Subpart B.

2 Legislation and Related CommitteeReports325 Part III. Administrative, Proceduraland Miscellaneous327 Notice of Proposed Rulemaking463 Disbarments and Suspensions List507 Summaries of Disciplinary Actions Taken bythe Director of Practice510 Index511 SEQ 0005 JOB C21-003-012 PAGE-0002 MISSION REVISED 28 AUG96 AT 02:25 BY LR DEPTH: PICAS WIDTH 46 PICAS COMPOSITE COLOR778/00000/28 AUG96/C21-003ii1995 2 of the ServiceThe purpose of the Internal Revenue Service is tocollect the proper amount of tax Revenue at the leastcost; serve the public by continually improving thequality of our products and services ; and perform in amanner warranting the highest degree of publicconfidence in our integrity, efficiency and of Principlesof Internal RevenueTax AdministrationThe function of the Internal Revenue Service is toadminister the Internal Revenue Code.

3 Tax policyfor raising Revenue is determined by this in mind, it is the duty of the Service tocarry out that policy by correctly applying the lawsenacted by Congress; to determine the reasonablemeaning of various Code provisions in light of theCongressional purpose in enacting them; and toperform this work in a fair and impartial manner,with neither a government nor a taxpayer point the heart of administration is interpretation of theCode. It is the responsibility of each person in theService, charged with the duty of interpreting thelaw, to try to find the true meaning of the statutoryprovision and not to adopt a strained construction inthe belief that he or she is protecting the Revenue . The Revenue is properly protected only when we as-certain and apply the true meaning of the Service also has the responsibility of applyingand administering the law in a reasonable,practical manner.

4 Issues should only be raised byexamining officers when they have merit, neverarbitrarily or for trading purposes. At the sametime, the examining officer should never hesitateto raise a meritorious issue. It is also importantthat care be exercised not to raise an issue or toask a court to adopt a position inconsistent withan established Service should be both reasonable andvigorous. It should be conducted with as littledelay as possible and with great courtesy andconsiderateness. It should never try to overreach,and should be reasonable within the bounds of lawand sound administration. It should, however, bevigorous in requiring compliance with law and itshould be relentless in its attack on unreal taxdevices and principles of tax administration were previously published in theInternal Revenue bulletin as Revenue Procedure 64 22, 1964 1 (Part 1) 689.

5 They are restated here to emphasize their importance to allemployees of the Internal Revenue 0006 JOB C21-003-012 PAGE-0003 MISSION REVISED 28 AUG96 AT 02:25 BY LR DEPTH: PICAS WIDTH 46 PICAS COMPOSITE COLOR778/00000/28 AUG96/C21-0031995 2 Internal Revenue bulletin is the authoritativeinstrument of the Commissioner of Internal Revenue forannouncing official rulings and procedures of theInternal Revenue Service and for publishing TreasuryDecisions, Executive Orders, Tax Conventions, legisla-tion, court decisions, and other items of generalinterest. It is published weekly and may be obtainedfrom the Superintendent of Documents on a subscrip-tion basis. bulletin contents of a permanent nature areconsolidated semiannually into cumulative Bulletins,which are sold on a single-copy is the policy of the Service to publish in the Bulletinall substantive rulings necessary to promote a uniformapplication of the tax laws, including all rulings thatsupersede, revoke, modify, or amend any of thosepreviously published in the bulletin .

6 All publishedrulings apply retroactively unless otherwise relating solely to matters of internalmanagement are not published; however, statements ofinternal practices and procedures that affect the rightsand duties of taxpayers are rulings represent the conclusions of theService on the application of the law to the pivotal factsstated in the Revenue ruling. In those based onpositions taken in rulings to taxpayers or technicaladvice to Service field offices, identifying details andinformation of a confidential nature are deleted toprevent unwarranted invasions of privacy and to complywith statutory and procedures reported in the bulletin do nothave the force and effect of Treasury DepartmentRegulations, but they may be used as rulings will not be relied on, used, or citedas precedents by Service personnel in the disposition ofother cases.

7 In applying published rulings and proce-dures, the effect of subsequent legislation, regulations,court decisions, rulings, and procedures must beconsidered, and Service personnel and others con-cerned are cautioned against reaching the sameconclusions in other cases unless the facts andcircumstances are substantially the bulletin 1995 2 is a consolidation of allitems of permanent nature published in the weeklyBulletins 1995 26 through 1995 52 for the period ofJuly 1 through December 31, Internal Revenue cumulative bulletin is dividedinto four parts as follows:Part I. 1986 part includes rulings and decisions based onprovisions of the Internal Revenue Code of II. Treaties and Tax part is divided into two subparts as follows:Subpart A, Tax Conventions, and Subpart B, Legislationand Related Committee III.

8 Administrative, Procedural, and the extent practicable, pertinent cross references tothese subjects are contained in the other Parts andSubparts. Also included in this part are Bank SecrecyAct Administrative Rulings. Bank Secrecy Act Admin-istrative Rulings are issued by the Department of theTreasury s Office of the Assistant Secretary(Enforcement).Notice of Proposed preambles and text of proposed regulations thatwere published in the Federal Register during this sixmonth period are printed in this section. Included inthis section is a list of person disbarred or suspendedfrom practice before the Internal Revenue 0010 JOB C21-004-017 PAGE-0004 TERMS REVISED 28 AUG96 AT 02:25 BY LR DEPTH: PICAS WIDTH 46 PICAS COMPOSITE COLOR778/00000/28 AUG96/C21-004iv1995 2 of TermsRevenue rulings and Revenue proce-dures (hereinafter referred to as rul-ings ) that have an effect on previousrulings use the following defined termsto describe the effect.

9 Amplified describes a situation whereno change is being made in a priorpublished position, but the prior positionis being extended to apply to a variationof the fact situation set forth , if an earlier ruling held that aprinciple applied to A, and the newruling holds that the same principle alsoapplies to B, the earlier ruling isamplified. (Compare with modified,below).Clarified is used in those instanceswhere the language in a prior ruling isbeing made clear because the languagehas caused, or may cause, some confu-sion. It is not used where a position ina prior ruling is being describes a situationwhere a ruling mentions a previouslypublished ruling and points out anessential difference between is used where the substanceof a previously published position isbeing changed.

10 Thus, if a prior rulingheld that a principle applied to A butnot to B, and the new ruling holds thatit applies to both A and B, the priorruling is modified because it corrects apublished position. (Compare with am-plified and clarified, above).Obsoleted describes a previouslypublished ruling that is not considereddeterminative with respect to futuretransactions. This term is most com-monly used in a ruling that listspreviously published rulings that areobsoleted because of changes in law orregulations. A ruling may also beobsoleted because the substance hasbeen included in regulations subse-quently describes situations wherethe position in the previously publishedruling is not correct and the correctposition is being stated in the describes a situationwhere the new ruling does nothingmore than restate the substance andsituation of a previously publishedruling (or rulings).