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Sunday, June 04, 2017

FAQs Are Not Legal Authority

The IRS's Small Business/Self Employed Division (SB/SE) has indicated that the IRS will add a provision to the Internal Revenue Manual at IRM 4.10.7 describing the lack of precedential value the IRS will grant to IRS FAQs.

The IRS often publishes guides and instructions for taxpayers on the website to assist taxpayers in compliance. These can include FAQs (Frequently Asked Questions, with related answers).

The IRM provision will provide that FAQs appearing on that Treasury does not publish in the Internal Revenue Bulletin are not legal authority and should not be used to sustain tax positions unless the FAQs themselves, or the IRS via press release, notice or announcement, indicate otherwise.

So in other words, the IRS is saying “here is our interpretation, but even if you follow it, we can disagree with you later.” Presumably, this is a two-edged sword for the IRS. With pronouncements like this, the IRS should likewise not be able to use a taxpayer’s failure to follow a FAQ against the taxpayer (but somehow I don’t think that is going to happen).

IRS Small Business/Self Employed Division Memo “Interim Guidance on use of Frequently Asked Questions (FAQs) and other items posted to” (May 18, 2017)

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