It is almost tax season again. Some will be brave and try to fill out their own tax returns.
After all, it should be easy. Just follow the instructions.
Even professional tax preparers look to the tax-form instructions in filling out complicated tax returns.
I mean, if you can't rely on the IRS to get the instructions to completing a tax return right, then who can you rely on to make sure your tax return is prepared correctly and you are paying the right amount of tax?
The answer to that is: You must rely on yourself — not the IRS.
The Tax Court has ruled that taxpayers cannot rely on the IRS instructions when filing a tax return and paying tax. Basically, the taxpayers have to get it right even though the IRS doesn't.
The question for taxpayers and tax professionals is: “Do you know what each provision of the Tax Code of 1986, as amended, actually says and how it should be applied?”
While it seems to be perfectly clear that if anybody would know how to fill out a tax form it would be the IRS, that's not how the IRS or the Tax Court see it. According to the Tax Court, taxpayers are expected to know when the IRS is wrong.
The most recent case espousing this as the law (Rodriguez v. Commissioner) involved the court interpreting sections of the tax code involving foreign tax issues that are mind-boggling complex.
While the IRS got the decision and won the case, it is also clear that the Tax Court had to jump through hoops and stretch a bit to create interpretations of the tax law to reach that result.
Although the taxpayers said that the tax form instructions were unambiguous, the court bought into the IRS argument and curious interpretation of prior court decisions that even if the instructions were ambiguous or inaccurate, so what — the taxpayers should know better.
As we are about to enter the beginning of “tax season,” every taxpayer and their tax advisers should realize that when it comes to tax, the taxpayer is still liable to pay even if the instructions provided by the IRS to filing their tax return are wrong.
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