On 12/26, in another thread, Bees Knees wrote:
Bees, I'm not really following your argument here...
On the one hand, you seem to be saying that the text of the tax code is full of technical and clerical errors, that any attempt to interpret it is an exercise in futility, and that tax pros should simply ignore the text of the law, and rely entirely on interpretations provided by the IRS and other sources such as The Tax Book and CCH.
But then you assert that "the IRS is making up law," and that "the code as written" does not support the IRS interpretation of UDC.
You are actually proving my point. When the law is ambiguous or vague, and there is no controlling court decision, we cannot and should not blindly rely on the interpretation of the IRS or other sources. We may have to read the law itself and reach our own conclusions. That is exactly what you are doing when you say that "the IRS is making up law here." You are declaring that the guidance from the IRS is incorrect, and that your own interpretation of the tax code is correct.
In some cases, even when a court has ruled that an IRS interpretation is wrong, the IRS continues to print publications that present the "wrong" opinion. They sometimes refuse to honor a court decision if they plan to appeal it, or if it conflicts with a decision in another appellate district. The IRS actually tells us this right on the first or second page of Pub. 17.
And in one noteworthy court decision, the tax court wrote that even a Revenue Ruling is merely "the opinion of one of the litigants" in the case.
IRS notices (such as Notice 2008-5) and IRS publications and instructions are informal opinions and guidance from the IRS; revenue rulings are formal opinions and guidance from the IRS. Any of them can be wrong.
While it is certainly true that the IRS instructions for 2005 and 2006 tax returns said that a qualifying relative cannot be the qualifying child "of anyone else," the IRS never offered any guidance on what this meant, and this language was itself an attempt to present the new law in plain English. Perhaps it was just a clerical error in the IRS instructions.
The IRS, until now, has never addressed the questions we raised. I challenge anyone to find an IRS document that clearly and explicitly says that a nine year old with no income is the qualifying child of his twin brother. This conclusion is an interpretation of an interpretation. And no, that's not a typo. The claim that two brothers are qualifying children of each other is nowhere to be found in any IRS document; it is simply one way--and a rather far-fetched way--of reading the tax law and the IRS instructions.
The IRS has now clarified that this is NOT how they are interpreting the code. I don't think the IRS ever interpreted the code this way. Notice 2008-5 does not reflect a change in the IRS interpretation; it clarifies what they meant all along.
Okay... I'll concede that maybe the IRS itself couldn't really figure out what the new law meant, and intentionally used ambiguous language in their pubs and instructions because they wanted to leave these issues open to multiple interpretations while they tried to figure it out, or while their staff attorneys sought informal guidance from Congress. But that doesn't change my argument; the IRS is sometimes wrong.
Bees, if they IRS is misinterpreting this section of the tax code, why did you say that "reading and interpreting the tax code is not always a smart thing to do"?
If this section of the tax code is crystal clear, as you think it is, and the IRS is misinterpreting it, then why should I rely on the IRS interpretation of any section of the tax code?
Burton M. Koss
koss@usakoss.net
I think this case illustrates why reading and interpreting the tax code is not always a smart thing to do.
Clearly, the code as written does not support this new ruling. The IRS is making up law here, and I read and interpret the tax code every day.
Yes I remember our debate last year. I remember I was right and you were wrong. The fact that IRS now agrees with you, which makes you right, doesn't mean its right according to the code. The only reason IRS is stepping in here is because Congress messed up the code, which they do all the time. Every year they have to pass a technical corrections bill to fix hundreds of code errors.
And you think the average tax pro is suppose to waste time reading that garbage?
Clearly, the code as written does not support this new ruling. The IRS is making up law here, and I read and interpret the tax code every day.
Yes I remember our debate last year. I remember I was right and you were wrong. The fact that IRS now agrees with you, which makes you right, doesn't mean its right according to the code. The only reason IRS is stepping in here is because Congress messed up the code, which they do all the time. Every year they have to pass a technical corrections bill to fix hundreds of code errors.
And you think the average tax pro is suppose to waste time reading that garbage?
On the one hand, you seem to be saying that the text of the tax code is full of technical and clerical errors, that any attempt to interpret it is an exercise in futility, and that tax pros should simply ignore the text of the law, and rely entirely on interpretations provided by the IRS and other sources such as The Tax Book and CCH.
But then you assert that "the IRS is making up law," and that "the code as written" does not support the IRS interpretation of UDC.
You are actually proving my point. When the law is ambiguous or vague, and there is no controlling court decision, we cannot and should not blindly rely on the interpretation of the IRS or other sources. We may have to read the law itself and reach our own conclusions. That is exactly what you are doing when you say that "the IRS is making up law here." You are declaring that the guidance from the IRS is incorrect, and that your own interpretation of the tax code is correct.
In some cases, even when a court has ruled that an IRS interpretation is wrong, the IRS continues to print publications that present the "wrong" opinion. They sometimes refuse to honor a court decision if they plan to appeal it, or if it conflicts with a decision in another appellate district. The IRS actually tells us this right on the first or second page of Pub. 17.
And in one noteworthy court decision, the tax court wrote that even a Revenue Ruling is merely "the opinion of one of the litigants" in the case.
IRS notices (such as Notice 2008-5) and IRS publications and instructions are informal opinions and guidance from the IRS; revenue rulings are formal opinions and guidance from the IRS. Any of them can be wrong.
While it is certainly true that the IRS instructions for 2005 and 2006 tax returns said that a qualifying relative cannot be the qualifying child "of anyone else," the IRS never offered any guidance on what this meant, and this language was itself an attempt to present the new law in plain English. Perhaps it was just a clerical error in the IRS instructions.
The IRS, until now, has never addressed the questions we raised. I challenge anyone to find an IRS document that clearly and explicitly says that a nine year old with no income is the qualifying child of his twin brother. This conclusion is an interpretation of an interpretation. And no, that's not a typo. The claim that two brothers are qualifying children of each other is nowhere to be found in any IRS document; it is simply one way--and a rather far-fetched way--of reading the tax law and the IRS instructions.
The IRS has now clarified that this is NOT how they are interpreting the code. I don't think the IRS ever interpreted the code this way. Notice 2008-5 does not reflect a change in the IRS interpretation; it clarifies what they meant all along.
Okay... I'll concede that maybe the IRS itself couldn't really figure out what the new law meant, and intentionally used ambiguous language in their pubs and instructions because they wanted to leave these issues open to multiple interpretations while they tried to figure it out, or while their staff attorneys sought informal guidance from Congress. But that doesn't change my argument; the IRS is sometimes wrong.
Bees, if they IRS is misinterpreting this section of the tax code, why did you say that "reading and interpreting the tax code is not always a smart thing to do"?
If this section of the tax code is crystal clear, as you think it is, and the IRS is misinterpreting it, then why should I rely on the IRS interpretation of any section of the tax code?
Burton M. Koss
koss@usakoss.net
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