Internal revenue service an overview with a focus on charity oversight



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Tax Glossary




  • Action on Decision – An announcement by the IRS with regard to whether it considers a particular court decision to have settled a point of law or whether the agency will continue to litigate the same issue when it arrises in other courts or other jurisdictions. The announcements are published in the semi-annual Cumulative Bulletin.




  • Cumulative Bulletin – a semi-annual compendium of matters originally published in the Internal Revenue Bulletin and intended as the permanent citable source for the matters.




  • Determination Letter – a determination letter is issued in response to the filing of an application for tax-exempt status. Unlike a private letter ruling, it does not recite or analyze specific facts in light of the law, but rather provides an overall conclusion based on the information provided in the application. It may be relied upon by the applicant so long as the material facts remain unchanged, and in the case of charities, it may be relied upon by donors until public notice of revocation is made in the Internal Revenue Bulletin.




  • Field Service Advice – advice provided by IRS Counsel to revenue agents conducting audits and to other field personnel, such as service center employees, who encounter issues requiring legal interpretation. Field service advice is publicly-disclosed in redacted form to prevent disclosure of identifying information.




  • General Counsel Memorandum – The practice of IRS Counsel’s Office until the 1990s was to provide legal advice to the enforcement staff of the IRS, including the Exempt Organizations Division, in the form of formal memoranda. The memoranda were publicly released, however, IRS Counsel’s Office has abandoned the practice of providing formal memoranda, nevertheless, such memoranda are still referenced by revenue agents and taxpayers in the course of discussions of particular tax issues.




  • Information Letter – an information letter is a letter that describes generally settled matters of tax compliance without the specificity or reliance of a private letter ruling. Information letters are publicly released.




  • Internal Revenue Bulletin – the Bulletin is the weekly official publication of the IRS, typically containing new regulations, revenue procedures and rulings, as well as other announcements.




  • Internal Revenue Manual – The Manual is literally a guide to running the Internal Revenue Service. Sections describe everything from personnel rules to the processing of taxpayer cases. Part IV of the IRM provides information about procedures and law applicable to audits generally, and charity audits in particular; Part VII describes the tax rules applicable to charities and other tax-exempt organizations.




  • Private Letter Ruling – a private letter ruling is a letter from the IRS that analyzes a particular proposed activity or action and provides the IRS’s conclusion as to the tax impact. While private letter rulings are made public, only the taxpayer that requested the ruling is entitled to rely on it. Others may only use it as an indication of how the IRS might interpret similar facts in future situations. Private letter rulings are made public in redacted form to shield the particular taxpayer’s identity.




  • Revenue Procedure – revenue procedures provide official guidance on how taxpayers may meet their obligations under the Internal Revenue Code. For example, revenue procedures describe how to request private letter rulings or the current user fee schedule.




  • Revenue Ruling – revenue rulings are the IRS’s interpretation of tax law as it applies to a particular fact pattern and are published in the weekly Internal Revenue Bulletin. Taxpayers may rely on revenue rulings, however, because revenue rulings are not issued through the public notice and comment process, courts tend to view them as simply the opinion of the IRS, and do not necessarily accord them much weight.




  • Technical Advice – technical advice is the response of the IRS National Office to a request for assistance from a revenue agent conducting an audit. The advice is based on facts and law gathered by the agent, which are also provided to the taxpayer. After a formal conference of right, the National Office will issue a technical advice memorandum to the agent setting forth the analysis of the law to the particular facts uncovered in the examination. Technical advice memoranda are publicly released in redacted form to shield the particular taxpayer involved.




  • Technical Assistance – technical assistance is general information provided by the National Office to a field office of the IRS , that is, it does not purport to analyze a particular taxpayer’s facts as in the technical advice process. Technical assistance memoranda are made public.




  • Thirty-Day Letter – the colloquial name for a proposed adverse finding coming from an IRS audit in which the the taxpayer has 30 days to decide whether to take the tentative finding to the IRS Appeals function before it becomes final.




  • Treasury Regulations – are jointly developed by the Treasury and the IRS through a public notice and comment process and constitute the official government interpretation of the Internal Revenue Code. Regulations may be relied upon by taxpayers and generally have the force and effect of law. Courts tend to give regulations deference.




  • Ninety-Day Letter – the colloquial name for the final adverse finding coming from an IRS audit. The letter provides that the taxpayer has 90 days to challenge the conclusion in court.




  • Publication 78 – A telephone book-sized list of organizations to which contributions are deductible as charitable contributions for purposes of federal income tax. Donors are entitled to rely on a listing in Publication 78 for purposes of contribution deduction until notice of a change in the listed organization’s status is published in the Internal Revenue Bulletin.





Forms


  • Form 990 – The annual information return series filed by a tax-exempt organization. It includes the Form 990-N, the Form 990-EZ and the Form 990.




  • Form 990-PF – The annual combined information and tax return filed by a private foundation.




  • Form 990-T – The annual tax return filed by an otherwise tax-exempt organization to report and pay income tax on the income from activities that are not substantially related to the achievement of the organization’s tax purpose.




  • Form 1023 – The application for federal income tax exemption filed by an organization seeking recognition of tax-exempt status under section 501(c)(3).




  • Form 1024 – The application for federal income tax exemption filed by an organization seeking recogntion of tax-exempt status under provisions other than section 501(c)(3), e.g. section 501(c)(4).






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