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Posted October 16th, 2017

What Makes Up the Tax Law?

This is an important matter, because it goes to what can be relied upon in trying to answer certain gift planning questions.

The bedrock tax law is the Internal Revenue Code (IRC), which has passed both congressional houses and been signed into law by the president. (The Constitution speaks even more fundamentally to certain tax issues but operates largely in the background of the tax arena.)

The IRC is a series of broad strokes. Congress leaves the details to the Internal Revenue Service (IRS), whose job is to interpret, administer and enforce the IRC. The IRS’s interpretation of the IRC is found in various pronouncements:

  • The Regulations are the principal pronouncement. Here, for example, we find certain date-of-gift rules for charitable gifts and copious detail on charitable remainder trusts (CRTs). The Regulations have the force of law and are presumed to be correct.
  • Other IRC pronouncements include
    • revenue rulings, which have the force of law;
    • revenue procedures, which, for example, contain specimen CRT agreements and which have the force of law;
    • various IRS Publications on a plethora of topics, such as receipt and valuation requirements for charitable gifts, which cannot be relied upon and do not have the force of law: and
    • IRS private letter rulings, which are an important source of information about charitable gift planning but which can be relied upon only by the party who obtained the ruling.

Next time, we’ll begin looking at some important IRS rulings on charitable giving.  After that, we’ll turn to the courts and look at some equally important court opinions on charitable giving.

by Jon Tidd, Esq

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