Tax Controversy Corner: Can Taxpayers Rely on Informal Guidance in Attempting to Comply with the TCJA?

By Megan L. Brackney
Journal of Passthrough Entities
September - October 2019 Edition

As Treasury and the IRS implement the Tax Cuts and Jobs Act (“TCJA”) of 2017, it is a good time to consider when taxpayers can rely on informal IRS guidance, such as publications, forms, instructions, and frequently asked questions (“FAQs”) on the IRS’s website. The TCJA is one of the most significant overhauls of the Code in decades, and the interpretation and implementation of many of its provisions are unclear. The IRS has published numerous resources to assist taxpayers with compliance with the new and amended Code provisions, and many taxpayers and practitioners will rely on these unofficial sources while they wait for official guidance, such as Treasury Regulations and Revenue Procedures. It seems intuitive that if you follow the instructions provided by the IRS, you will get the correct tax result, but this is not always the case. It also seems intuitive that if you follow the instructions by the IRS and still get it wrong, you should not be subject to penalties. Taxpayers may be surprised to learn that these results are far from guaranteed, but, as stated by several courts, taxpayers rely on the IRS “at their peril.”

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