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Week 4 Problems

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What is the difference between primary and secondary authority?

According to the book, tax reference materials are usually classified as primary "authoritative" sources or secondary "reference" sources. Thus, primary source materials include the Internal Revenue Code (Statutory Authority), Treasury Regulations and Internal Revenue Service Rulings (Administrative Authority), and the various decisions of the trial courts and the appellate courts (Judicial Authority).  On the other hand, secondary reference materials consist primarily of the various loose-leaf tax reference services. In addition, additional secondary materials include periodicals, textbooks and treatises, published papers from tax institutes and symposia, and newsletters.  However, while the editorial opinions included in the secondary reference materials are extremely knowledgeable and comprehensive, neither the IRS nor the courts will afford any authoritative weight to these opinions. But, one exception is Mertens, Law of Federal Income Taxation. This tax service is often quoted in judicial decisions.

Lastly, both primary and secondary sources can be accessed through one of the computer-assisted research services. These electronic data bases are updated daily and contain many source documents not normally found in the traditional tax library.

The IRS Appeals officers are permitted in consider what is known as “hazards of litigation” in arriving at a settlement with the taxpayer. That said, the term “hazards of litigation” simply means the IRS’s chances of losing a particular issue or set of issues at trial.

Consequently, one of the most important things a tax lawyer does in a docketed case is create doubt in the mind of the Appeals officer that the IRS will prevail at trial. In addition, this is a decidedly different function than what a tax lawyer, CPA or Enrolled Agent is called upon to do when representing his or her client in an audit examination.