IRM (Internal Revenue Manual)
The IRM is the Internal Revenue Manual. It is a good source of information to help taxpayers, agents and examiners understand how the IRS procedures and guidelines work. For taxpayers and tax practitioners, it may help provide some insight on how the IRS will proceed on a certain tax matter, but in real life application, the IRM has no bearing on your specific case – as it does not carry the force of law.
What is the IRM (Internal Revenue Manual)?
The IRM is the Internal Revenue Manual and is a source of information to help taxpayers, agents and examiners understand how the IRS procedures and guidelines work.
It is published as mere guidelines for the IRS agents and examiners in following their own procedures.
Is Your Tax Representative Relying on IRM as Law?
This is a common issue with former IRS personnel who mistakenly believe the IRM has the force of law when representing their own clients against the IRS.
Oftentimes, the practitioner will “give-up” on the matter before it even starts.
Because they will not take a position that deviates from the IRM — even though that is exactly how tough tax cases are won and even though the IRM has no force of law.
For the client, it feels as if the Attorney or Tax Practitioner is still working for the IRS and not for the Client. As a result, they provide their client a major disservice.
IRM Case Holdings and Rulings
Let’s look at some cases on the issue of whether the IRM has force of law:
U.S. vs Hom
“Our court of appeals, however, has foreclosed that argument by holding that “[t]he Internal Revenue Manual does not have the force of law and does not confer rights on taxpayers.” Fargo v. Comm’r of Internal Revenue, 447 F.3d 706, 713 [97 AFTR 2d 20062381] (9th Cir. 2006). Thus, defendant’s argument fails.”
U.S. v. Fargo
“The Internal Revenue Manual does not have the force of law and does not confer rights on taxpayers.”
Carlson v. United States
“Procedures in the Internal Revenue Manual are intended to aid in the internal administration of the IRS; they do not confer rights…”
Marks v. Comm’r
“It is well-settled, however, that the provisions of the manual are directory rather than mandatory, are not codified regulations, and clearly do not have the force and effect of law. See, e.g., Pomeroy v. United States, 864 F.2d 1191, 1194-95 (5th Cir. 1989).”
Valen Mfg. Co. v. United States
“Reliance Upon Internal Revenue Manual In a final attempt to secure forgiveness of the penalty assessments, Valen Manufacturing argues that the IRS’s own Internal Revenue Manual suggests that the situation present in this case might justify a finding of reasonable cause for the delinquent tax filings and payments.
The provisions of the manual, however, only “govern the internal affairs of the Internal Revenue Service. They do not have the force and effect of law.” United States v. Horne, 714 F.2d 206, 207 (1st Cir. 1983) (quoting Einhorn v. DeWitt, 618 F.2d 347, 350 (5th Cir. 1980)). See generally Reich v. Manganas, 70 F.3d 434, 437 (6th Cir. 1995) (“Internal operating manuals . . . do not carry the force of law, bind the agency, or confer rights upon the regulated entity.”). This argument is, therefore, also without”merit.
The IRM Has No Force of Law
In conclusion, it is important to remember that the Internal Revenue manual is little more than an internal publication used by employees of the IRS.
It is a great tool to provide some assistance on how an examiner or agent may respond when dealing with an IRS tax issue. But, as courts nationwide have ruled, the IRM is not law.
You should be wary of any attorney or tax practitioner who cites to the IRM as if it had force of law.
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