Ten Steps to Tax Research
Step 1) Establish the Facts; Identify the Issues
When researching a tax question you must first establish the facts of the specific case you are researching and then accurately identify the relevant potential issues presented by the problem. West's Federal Tax Research (Raabe, et al.) outlines the steps to follow in the tax research process. It also serves as a valuable reference to the primary and secondary sources of tax research with illustrative examples of how to use them and how to interpret citations to them. Much of the discussion in this tutorial is based on material from this textbook. As an example problem, we will look at the question of whether and under what circumstances you can take a home office deduction.
Step 2) Make a List of Possible Keywords, Concepts and Terminology
In doing tax research you will find that specific words and phrases are used to refer to common tax problems. Each tax question is associated with specific tax terminology. Begin your search by making a list of potential keywords that describe the tax questions. For our current example we can try the following: "Home Office" "Business" "Home" "Expenses" "Deductions".
Step 3) Find an Overview of the Topic in a Tax Reporter
Search one of the tax reporting services using your keywords to find an overview of the topic. UF subscribes to four Web-based reporters: the Standard Federal Tax Reporter in the CCH IntelliConnect, the United States Tax Reporter and the Federal Tax Coordinator 2d in RIA CHECKPOINT (Students Register Here), and BNA's Tax and Accounting Center. The home office deduction is discussed in several places in these reporters. You may also use one of the annual handbooks, RIA's Federal Tax Handbook or CCH's U.S. Master Tax Guide, as entry points to the tax reporters. In "Soliman Test Gets Evicted from Home Office," (¶48,905, 1999 Standard Federal Tax Reporter) CCH reviews the history of the home office deduction and discusses a recent change in tax law that liberalizes the rules for deducting home office expenses, overturning a Supreme Court ruling.
Step 4) Identify Relevant IRS Code Sections, Regulations and Rulings, Publications and Other Relevant Primary Authority
The Standard Federal Tax Reporter (RIA) and the United States Tax Reporter (CCH) are both arranged by Internal Revenue Code Section. This emphasizes the primacy of the Code as the basis for tax law. Administrative sources that interpret and explain the Code include Treasury Department and IRS Regulations, Revenue Rulings and other pronouncements. These documents are published in the Internal Revenue Bulletin and cumulated twice a year in the Cumulative Bulletin. In our home office example, Congress amended Code Sec. 280A(c)(1) to make it easier for taxpayers to claim a home office deduction when using their homes for "administrative and management activities of the taxpayer's trade or business" when "there is no other fixed location where the taxpayer conducts substantial administrative or management activities of the trade or business." (¶48,908, 1999 Standard Federal Tax Reporter). Congressional Committee Reports clarify congressional intent in making changes to the tax law. The House Report for the Taxpayer Relief Act of 1997, PL 105-34, explains that "the Committee believes that the Supreme Court's decision in Soliman unfairly denies a home office deduction to a growing number of taxpayers who manage their business activities from their homes." In 1998, in response to the change in the tax law, the IRS issued Publication 587 - Business Use of Your Home (Including Use by Day-Care Providers) to explain how the new provisions of the law will be applied. The publication can be downloaded from the IRS Web site.
Step 5) Find Relevant Court Cases
Judicial sources of tax law consist of the various court rulings on federal tax matters. These court cases are published in the United States Tax Court Cases, Tax Court Memorandum Decisions, RIA's American Federal Tax Reports and CCH's U.S. Tax Cases. Hyperlinked references to the full-text of these cases are found throughout CCH IntelliConnect and RIA CHECKPOINT. The key case in our home office example is Commissioner v. Soliman 113 S.Ct. 701 (1993), wherein the Supreme Court reversed a Court of Appeals ruling in favor of granting Soliman's claim for a home office deduction. The case began in the United States Tax Court.
Step 6) Use a Citator to Update Cases
Citators are tax research tools that enable you to trace a court case (called a cited case) and find out both its history and how it has been cited in other court cases (citing cases). Once the Soliman case was decided by the Supreme Court in 1993, which redefined and restricted the principal place of business requirements of Code Sec. 280A(c)(1), it had enormous influence on all subsequent cases as indicated by the number of cases the citators list where it was cited favorably or the reasoning was followed. It took an Act of Congress in 1997 to change the Internal Revenue Code to make it easier for people to take the home office deduction. Both CCH IntelliConnect and RIA CHECKPOINT have citators hyperlinked to the full text of the relevant cases and IRS documents.
Step 7) Search Current Tax News Sources for the Latest Developments
Tax Analysts is a leading publisher of tax news and analysis. It covers federal, state and international tax issues. RIA's Federal Taxes Weekly Alert Newsletter and CCH's Federal Tax Weekly report current tax-related items including recent court decisions, IRS actions, legislative developments and other tax news. You should check these sources to make sure you are aware of any recent or prospective developments affecting your area of inquiry. They are included in RIA CHECKPOINT and CCH IntelliConnect. Current tax news sources are also available in Factiva and Lexis-Nexis.
Step 8) Find In-depth Journal Articles and Tax Planning Materials
There are many specialized Tax Journals that regularly publish in-depth articles on tax topics especially in areas where the tax law has recently changed or is unsettled. Examples include The Tax Adviser, Journal of Taxation, and the Tax Analyst Journals. Tax Analysts specializes in analyzing complex tax issues. You'll find direct links to leading journals on the Tax Journals page. You can search for articles in these journals by using one of the Articles databases such as ABI/INFORM, Business Source Premier, Factiva, or LexisNexis. Tax planning services are written for tax practitioners to help them advise clients. We have access to tax planning materials in RIA CHECKPOINT.
Step 9) Look for Tax Treatises
Tax treatises are written by experts in specific areas of tax law and are meant to be comprehensive, up-to-date treatments of the topic. UF subscribes to the BNA Tax and Accounting Center which includes Tax Management Portfolios. There are also some Warren, Gorham & Lamont treatises in RIA CHECKPOINT.
Step 10) Putting It All Together
The Internet-based tax services, RIA CHECKPOINT and CCH IntelliConnect enable you to search across multiple publications simultaneously and retrieve documents from tax reporters, the Internal Revenue Code, IRS Regulations and Revenue Rulings, court cases, tax newsletters, editorial analyses and planning materials, all of which have hyperlinked cross-references. You can supplement these material with in-depth Articles from the Tax Journals and tax treatises. You may wish to explore some of the other tax-related Web sites such as Tax World, the IRS.gov, or sites listed in the Tax and Accounting Sites Directory. And remember that you can always find a detailed listing of and links to tax information sources in the Tax Information Center.