Practice

Internal guidance includes, but is not limited to, the Internal Revenue Manual, Practice Units, Chief Counsel Directive Manual, Audit Technique Guidelines, Appeals Settlement Guidelines, General Legal Advice Memorandum ("GLAM"), Instructions to IRS forms, Frequently Asked Questions ("FAQs"), Legal Memoranda, and Non-Docketed Significant Advice Review. The IRS is bound to follow federal statutes, Treasury Regulations, international treaties, and applicable case law.4 In addition, the IRS treats sub-regulatory guidance as binding.5 The IRS, however, is not bound to follow any other type of guidance that it issues.6 Of course, optically it looks bad for a government agency to refuse to follow its public pronouncements (even when they are not published in the IRB). [...]the doctrine of equitable estoppel typically does not apply to the IRS.9 The application of tax law applies based upon the unique facts and circumstances presented in each case. The IRS can assert numerous types of civil tax penalties for taxpayer noncompliance.10 The typical civil tax penalties that the IRS asserts are for filing a return late,11 failing to pay tax timely12 and so-called "accuracy-related" penalties.13 The primary way to abate a typical civil tax penalty is for the taxpayer to show it had "reasonable cause" for the failure to comply and acted in good faith.14 Reasonable cause: [I]s based on all the facts and circumstances in each situation and allows the IRS to provide relief from a penalty that would otherwise apply Reasonable cause relief is generally granted when the taxpayer exercised ordinary business care and prudence in determining his or her tax obligations but was nevertheless unable to comply with those obligations.15 Reliance on IRS oral or written advice can be a basis for showing the taxpayer exercised ordinary business care and prudence.