What is a Revenue Ruling

A revenue ruling is a published opinion of the Internal Revenue Service stating

how it would rule on future tax questions based on the same circumstances. It is
an IRS tax decision resulting from an interpretation of an unclear regulation.
These rulings are used for guidance to taxpayers, tax preparers, accountants
and attorneys in anticipating tax treatment by the IRS. They have the force of law
and may be relied upon until otherwise decided by the federal tax court or a new
revenue ruling.

A revenue ruling is an official IRS interpretation of the tax law as it applies to specific
factual situations. Taxpayers are expected to rely on these rulings when deciding upon the
most appropriate tax treatment of their own taxable transactions. A taxpayer who ignores
an applicable revenue ruling when preparing a tax return can be subject to fines and
penalties. If there is no revenue ruling that applies to the specific circumstances of a
taxpayer, the taxpayer can apply to the IRS for advice, which results in a private letter
ruling. The IRS requires that a fee be paid before it will issue a private letter ruling. The
IRS may elect to convert a private letter ruling into a revenue ruling, thereby making it
binding on all IRS employees and taxpayers.

Revenue rulings are intended to provide guidance to IRS employees in how the y interpret
the tax law when dealing with taxpayers.

A revenue ruling is an official interpretation by the IRS of the Internal Revenue Code,
related statutes, tax treaties and regulations. It is the conclusion of the IRS on how the
law is applied to a specific set of facts. Revenue rulings are published in the Internal
Revenue Bulletin for the information of and guidance to taxpayers, IRS personnel and
tax professionals. For example, a revenue ruling may hold that taxpayers can deduct
certain automobile expenses.

Regulation
A regulation is issued by the Internal Revenue Service and Treasury Department to
provide guidance for new legislation or to address issues that arise with respect to
existing Internal Revenue Code sections. Regulations interpret and give directions
on complying with the law. Regulations are published in the Federal Register.
Generally, regulations are first published in proposed form in a Notice of Proposed
Rulemaking (NPRM). After public input is fully considered through written comments
and even a public hearing, a final regulation or a temporary regulation is published as a
Treasury Decision (TD), again, in the Federal Register.