Be Wary about Relying on IRS Guidance

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On behalf of Silver Tax Group posted in IRS Tax Audits on Thursday, October 5, 2017.

There’s a lot of tax advice that is best for Michigan residents not to follow. This is understandable because very few people can understand the intricacies of the tax code. What is more disturbing is when the faulty tax advice comes from the IRS.

An investment publication called MarketWatch warns taxpayers that they should be careful about following advice on the IRS website. The Frequently Asked Questions (FAQs) segment and other so-called unofficial guidance on the site may not be reliable.

The IRS provides three categories for guidance:

  1. IRS regulations which are generally binding. Even reliance upon temporary regulations will not result in assessing penalties.
  2. The IRS publishes a number of sources known as “official guidance.” This includes Revenue Rulings, Revenue Procedures and a variety of announcements and notices included in bulletins. In theory, taxpayers cannot be assessed penalties and taxes for following this official guidance.
  3. The IRS publishes its “unofficial guidance.” Unofficial guidance can include website articles, press released, various forms, tax instructions and its FAQs. Though the IRS publishes this information, it also maintains that taxpayers cannot rely upon it. If a taxpayer relies upon this information and later finds out it is wrong, they will still face penalties.

Guidance changes over time

What is even worse, all of these materials are subject to change without notice. This means you could follow the unofficial guidance of the IRS and still face a tax audit by the IRS.

When you have questions concerning tax issues such as what forms to file and what deductions to take, professional advice and representation may be in order. An experienced attorney can assist and, when necessary, raise a defense to the IRS.

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