When conducting tax research sometimes the tax code provides an unclear answer for the tax
researcher to provide to their client. Not all the circumstance may line up, so it is hard to come up
with a clear-cut answer. As discussed in previous discussion, secondary resources such as reliable
tax newsletters, articles, journals, etc. are a great source to reference in order to help get a clearer
understanding of the situation you are trying to research. They can provide more comprehensive
detail on tax matter and tend to have less complex language that is easier to understand.
To go beyond this, tax researchers could also reference committee reports. Committee reports are
reports published by the House and Senate committees regarding legislative measures, results
made by Congress, reports regarding matters in committee conferences, and oversight or
investigative activities (Congress.gov, n.d.). These reports can be accessed by the public and are
uploaded to Congress.gov daily. Committee reports can be used to determine court rulings or
decisions made regarding different tax situations. Therefore, a tax researcher can use specific
vocabulary when searching for committee reports to pull up reports that may discuss similar
situations to their clients and give information’s one what decisions were made. This can help them
come to a better conclusion when tax codes are not providing a clear answer.
One example of when I used additional resources to reach a conclusion for a client, is when I was
preparing a 1040NR. The client had produced income in a foreign company and I needed to convert
to foreign dollars to US dollar, so it could be reported on the US return. So, I researched the specific
conversion rates on the IRS website and used them to come to the right dollar amount. I then
placed a pdf attachment of the conversion rates into the clients specific file we use to organize their
documents. Another example, is when I was preparing another 1040NR and I needed to translate a
line on a foreign return to see if it entailed data that needed to be included on their US return. So I
translated the line, and then conducted some research to see if the item was necessary for the US
return and I concluded that it was not.
If the code sections do not provide an answer, where would you turn for additional resources?
Committee Reports can be a very useful tool when a tax code section does not provide an answer
to a topic a CPA is researching. Some of the additional resources that can be of immense value to a
tax professional include tax treaties, treasury regulations, and committee reports. Tax treaties serve
as instrumental documents that contain comprehensive details relating to tax-related matters
(Internal Revenue Service, n.d.). Tax professionals also can search old court rulings that have similar
facts; however, this method may not be the best tool for decision-making due to the fact that case-
by-case instances normally have slight differences.
How often should we reference the committee reports to see what was discussed on the
congressional floor?
Referencing committee reports to see what was discussed on the congressional floor is not
mandated on a regular basis. In order to understand the law or whenever there is any ambiguity,
we can always refer to the committee reports. Additionally, there may be situations where we are
unable to align our client's problems with the applicable laws.
Give an example of when you would (or did) use additional resources to find the answer for a
client's unique situation.
The other day I had a unique situation where I was required to use additional resources to find an
answer for one of our client's unique situations. This client worked as a travel blogger overseas for
349 days in various countries (spending no more than 30 days in one single country) and was paid
by a U.S. company that issued her a W-2 with federal withholdings. Our client insisted that she
qualified for an exemption allowing her to claim a deduction of her entire W-2 amount, resulting in
no federal income tax. Due to the unique circumstances to our firm, we were required to
investigate the IRS rules for form 2555, as well as assistance from an international tax professional
outside of the firm. This resulted in her being able to take the deductions, requiring no federal
income tax to be paid on her individual return, while also not requiring her to file tax returns in any
other country, therefore, she was able to pay zero tax on all her income due to this rule.
References:
Researching tax treaties. Internal Revenue Service. (n.d.).
https://www.irs.gov/individuals/international-taxpayers/researching-tax-treaties
Congress.gov. (n.d.). About Committee Reports of the U.S. Congress.
https://www.congress.gov/help/committee-reports
