Section 1.6694-2(b)(3) - "authorities"

The Authority Requirement of §1.6662-4(d)(3)(iii)

Section 1.6694-2(b)(3) provides that the authorities considered in determining whether a position satisfies the more likely than not standard are those authorities provided in §1.6662-4(d)(3)(iii) (or any successor provision). The return preparers must also take into account the types of authorities cited in §1.6662-4(d)(3)(iii) which references the relevant authorities that return preparers are required to take into account: applicable provisions of the Internal Revenue Code and other statutory provisions; proposed, temporary and final regulations construing such statutes; revenue rulings and revenue procedures; tax treaties and regulations, and Treasury Department and other official explanations of such treaties; court cases; congressional intent as reflected in committee reports, joint explanatory statements of managers included in conference committee reports, and floor statements made prior to enactment by one of a bill's managers; General Explanations of tax legislation prepared by the Joint Committee on Taxation (the Blue Book); private letter rulings and technical advice memoranda; actions on decisions and general counsel memoranda; Internal Revenue Service information or press releases; and notices, announcements and other administrative pronouncements published by the Service in the Internal Revenue Bulletin. Conclusions reached in treatises, legal periodicals, legal opinions or opinions rendered by tax professionals are not authority.

Most tax return preparers do not have the technical resources to research the applicable law and stay current on changes in the tax law. It is my opinion that most of the return preparers, includilng the CPA professionals, do not subscribe to a tax research service because either the firm is too small or because they have found little need to do indepentant tax research. Whether or not positions taken are disclosed to the IRS, it is imparative that tax return preparers get ready to support the complex factual and legal issues taken in tax returns if they want to continue to prepare tax returns for their livelihood.