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of Internal Revenue
Tax Administration

The function of the Internal Revenue Service is to
administer the Internal Revenue Code. Tax policy
for raising revenue is determined by Congress.

With this in mind, it is the duty of the Service to
carry out that policy by correctly applying the
laws enacted by Congress; to determine the rea-
sonable meaning of various Code provisions in
light of the Congressional purpose in enacting
them; and to perform this work in a fair and im-
partial manner, with neither a government nor
a taxpayer point of view.
At the heart of administration is interpretation of
the Code. It is the responsibility of each person
in the Service, charged with the duty of interpret-
ing the law, to try to find the true meaning of the
statutory provision and not to adopt a strained
construction in the belief that he is "protecting
the revenue." The revenue is properly protected
only when we ascertain and apply the true mean-
ing of the statute.

The Service also has the responsibility of apply-
ing and administering the law in a reasonable,
practical manner. Issues should only be raised by
examining officers when they have merit, never
arbitrarily or for trading purposes. At the same
time, the examining officer should never hesitate
to raise a meritorious issue. It is also important
that care be exercised not to raise an issue or to
ask a court to adopt a position inconsistent with
an established Service position.
Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great courtesy and
considerateness. It should never try to overreach,
and should be reasonable within the bounds of
law and sound administration. It should, however,
be vigorous in requiring compliance with law and
it should be relentless in its attack on unreal tax
devices and fraud.

These principles of tax administration were previously published
in the Internal Revenue Bulletin as Revenue Procedure 64-22,
1964-1 (Part I) C.B. 689. They are restated here to emphasize
their importance to all employees of the Internal Revenue Service.

Cumulative Bulletin 1978-2 is a consolidation of
all items of a permanent nature published in the

Revenue Rulings and Review Proce- the prior ruling is modified because it rate rulings. If the new ruling does dures (hereinafter referred to as "rul- corrects a published position. (Com- more than restate the substance of a ings") that have an effect on previous pare with amplified and clarified, prior ruling, a combination of terms rulings use the following defined terms above).

is used. For example, modified and to describe the effect:

Obsoleted describes a previously superseded describes a situation where Amplified describes situation published ruling that is not considered the substance of a previously pubwhere no change is being made in a

determinative with respect to future lished ruling is being changed in part prior published position, but the prior

transactions. This term is most com- and is continued without change in position is being extended to apply monly used in a ruling that lists pre- part and it is desired to restate the to a variation of the fact situation set viously published rulings that are ob- valid portion of the previously pubforth therein. Thus, if an earlier ruling soleted because of changes in law or lished ruling in a new ruling that is held that a principle applied to A, and regulations. A ruling may also be ob- self contained. In this case the prethe new ruling holds that the same

soleted because the substance has been viously published ruling is first modiprinciple also applies to B, the earlier included in regulations subsequently fied and then, as modified, is superruling is amplified. (Compare with adopted.

seded. modified, below).

Revoked describes situations where Supplemented is used in situations Clarified is used in those instances

the position in the previously pub- in which a list, such as a list of the where the language in a prior ruling

lished ruling is not correct and the names of countries, is published in a is being made clear because the lan

correct position is being stated in the ruling and that list is expanded by new ruling

adding further names in subsequent guage has caused, or may cause, some confusion. It is not used where a posi

Superseded describes a situation rulings. After the original ruling has tion in a prior ruling is being changed.

where the new ruling does nothing been supplemented several times, a

more than restate the substance and new ruling may be published that inDistinguished describes a situation

situation of a previously published cludes the list in the original ruling where a ruling mentions a previously ruling (or rulings). Thus, the term is and the additions, and supersedes all published ruling and points out an

used to republish under the 1954 prior rulings in the series. essential difference between them.

Code and regulations the same posi- Suspended is used in rare situations Modified is used where the sub- tion published under the 1939 Code to show that the previous published stance of a previously published posi- and regulations. The term is also used rulings will not be applied pending tion is being changed. Thus, if a prior when it is desired to republish in a some future action such as the issuruling held that a principle applied to single ruling a series of situations, ance of new or amended regulations, A but not to B, and the new ruling names, etc., that were previously pub- the outcome of cases in litigation, or holds that it applies to both A and B, lished over a period of time in sepa- the outcome of a Service study. Abbreviations The following abbreviations in cur- F.A.A.A.-Federal Alcohol Adminis- Pub.L.-Public Law. rent use and formerly used will appear tration Act.

PS—Pension, profit-sharing, stock in material published in the Bulletin. FICA–Federal Insurance Contribu- bonus or annuity plan ruling. A, B, C, etc.-Names of individuals.

tions Act.

R.E.I.T.-Real Estate Investment Acq.--Acquiescence. F.R.-Federal Register.

Trust. A.R.R.—Committee on Appeals and

FUTA_Federal Unemployment Tax Rev. Proc.-Revenue Procedure. Review recommendation.

Act.

Rev. Rul.-Revenue Ruling. A.T.-Alcohol and tobacco tax rul

G.C.M.—Chief Counsel's memoran- R.S. Revised Statute. ing.

dum (formerly General Counsel's S.M. Solicitor's Memorandum. B.T.A.-Board of Tax Appeals.

memorandum).

Sol. Op-Solicitor's Opinion. C.B.-Cumulative Bulletin.

I.R.B.--Internal Revenue Bulletin. S.P.R.-Statement of Procedural CFR-Code of Federal Regulations.

IR-Mim. Published IR-Mimeo- Rules.

graph. C.T.-Carriers Taxing Act of 1937.

S.R.-Solicitor's Recommendation. Ct.D.-Court Decision. I.T.-Income tax ruling.

S.S.T.-Social Security Tax. Del. Order-Delegation Order.

M, N, X, Y, Z, etc.-Names of cor- S.T.-Sales tax ruling D.C.-Treasury Department circular. porations, places or businesses, ac- Stat.—Statutes at Large. DISC—Domestic International Sales cording to context.

T.C.-Tax Court.
Corporations.

M.T.-Miscellaneous tax ruling. T.D.-Treasury Decision.
E.0.- Executive Order.
Mim.--Published mimeograph.

T.I.R.-Technical Information Re

lease. ERISA-Employee Retirement In- Nonacq.-Nonacquiescence.

0.D.Office Decision. come Security Act.

U.S.C. United States Code. E.T.-Estate and gift tax ruling.

P.T.E.- Prohibited Transactions Ex- x and y represent numbers and sums Em. T.-Employment tax ruling.

emption.

of money.

Delegation Orders—Continued 162 (Rev. 1), 484 170, 485 171, 485 172, 485 Notices: 485

Revenue Procedures Continued 78-26, 505 78-27, 526 78-28, 526 78-29, 526 78-30, 529 78-31. 531 78-32, 532 78-33, 532 78-34, 535 78-35, 536 78-36, 538 78-37, 540 78-38, 542 78-39, 542

Committee Reports: Senate: 95-746 (P.L. 95-615), 422 95-762 (P.L. 95-345), 357 95-797 (P.L. 95-628), 439 95-885 (P.L. 95-565), 401 95-952 (P.L. 95-339), 353 95-1127 (P.L. 95-458), 369 House 95-744 (P.L. 95-472), 375 95-1129, Part 2 (P.L. 95-339), 353 95-1226 (P.L. 95-479), 378 95-1232 (P.L. 95-427), 365 95-1383 (P.L. 95-630), 454 95-1485 (P.L. 95-599), 406 95-1605 (P.L. 95-497), 385 95-1608 (P.L. 95-502), 395 95-1656 (P.L. 95-488), 379 Conference 95-1369 (P.L. 95-339), 355 95-1797 (P.L. 95-599), 413 95-1798 (P.L. 95-615), 432 Court Decisions: 1993, 327 1994, 336 Delegation Orders: 3 (Rev. 3), 463 4 (Rev. 5), 463 4 (Rev. 6), 465 5 (Rev. 9), 466 8 (Rev. 5), 467 8 (Rev. 6), 467 14 (Rev. 1), 467 23 (Rev. 7), 468 35 (Rev. 8), 468 35 (Rev. 9), 468 42 (Rev. 8), 469 42 (Rev. 9), 469 42 (Rev. 10), 469 51 (Rev. 2), 470 60 (Rev. 3), 470 60 (Rev. 4), 471 66 (Rev. 7), 472 66 (Rev. 8), 473 75 (Rev. 8), 474 77 (Rev. 10), 475 77 (Rev. 11), 475 93 (Rev. 4), 475 93 (Rev. 5), 475 97 (Rev. 15), 476 97 (Rev. 16), 477 100 (Rev. 2), 478 101 (Rev. 1), 478 107 (Rev. 3), 479 107 (Rev. 4), 479 109 (Rev. 3), 479 109 (Rev. 4), 480 111 (Rev. 4), 480 112 (Rev. 5), 481 113 (Rev. 5), 481 113 (Rev. 6), 482 116 (Rev. 2), 482 130 (Rev. 1), 482 136 (Rev. 3), 483 139 (Rev. 4), 483 156, Amend. 8, 483 157 (Rev. 2), 484 160 (Rev. 2), 484

Proclamation: 485 Prohibited Transaction Exemptions: 78-6, 272 78-7, 275 78-8, 276 78-9, 277 78-10, 278 78-11, 282 78-12, 283 78-13, 284 78-14, 287 78-15, 288 78-16, 289 78-17, 290 78-18, 291 78-19, 292 78-20, 300 78-21, 301 78-22, 302 Public Laws: 95-339, 353 95-345, 356 95-427, 363 95-458, 367 95-472, 373 95-473, 377 95-479, 377 95-488, 378 95-496, 381 95-497, 382 95-498, 392 95-499, 393 95-502, 393 95-510, 398 95-524, 399 95-565, 399 95-599, 403 95-602, 415 95-615, 415 95-616, 435 95-628, 435 95-630, 446 Railroad Retirement Quarterly Rates: 254 Revenue Procedures: 78-14, 486 78-15, 488 78-16, 489 78-17. 490 78-18, 491 78-19, 491 78-20, 498 78-21, 499 78-22, 499 78-23, 503 78-24, 503 78-25, 505

Revenue Rulings: 78-259, 8 78-260, 99 78-261, 125 78-262, 170 78-263, 252 78-264, 9 78-265, 107 78-266, 123 78-267, 171 78-268, 10 78-269, 209 78-270, 215 78-271, 239 78-272, 247 78-273, 163 78-274, 220 78-275, 221 78-276, 256 78-277, 268 78-278, 134 78-279, 135 78-280, 139 78-281, 204 78-282, 235 78-283, 243 78-284, 253 78-285, 137 78-286, 145 78-287, 146 78-288, 179 78-289, 180 78-290, 183 78-291, 186 78-292, 233 78-293, 266 78-294, 141 78-295, 165 78-296, 183 78-297, 188 78-298, 258 78-299, 304 78-300, 100 78-301, 103 78-302, 94 78-303, 122 78-304, 169 78-305, 172 78-306, 218 78-307, 222 78-308, 259 78-309, 123 78-310, 173 78-311, 260 78-312, 265

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