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. These committee reports are a very important source of legislative
history, and they are issued for most bills that do become laws. Normally, there is a committee
report from both the House and Senate committees that are considered legislation (2023). These
committee reports are considered primary sources when used for research (Sawyers & Gill, 2021).
The Committee Report is published after a bill is introduced into the House. The report states the
reason that the bill is being proposed. The reasoning then establishes the legislative intent behind
the law if enacted (IRM).
Committee Reports tend to provide a reprint of the text of the bill, describe the bill’s purpose, and
give the reasoning of the committee’s recommendations on the bill. The section-by-section analysis
of the bill in the committee report can also be very helpful when trying to determine if this report
would help with a CPA's research. These reports can be found on the Congress website, Senate
website, or GovInfo.gov (2023).
Committee Reports are a good source to reference when the IRC sections do not fully answer the
questions that you are researching. Sometimes, the code can be vague or what is stated in the code
can be taken multiple different ways. With these occurrences, the Committee Reports can be a
great source to see what initiated this law being passed, and what was the intent for this law. This
can help to give an individual more information on the background of the code which can help
determine if the law applies to their research project.
Sometimes code can be very vague or have confusing verbiage where it is difficult to understand
how it applies to a taxpayer. First, it is always important to check the IRC bulletin board and see if
the IRS has made any publications to follow up on the code you are researching. The IRS tends to
follow up if there is a lot of contention about how the code is affecting the nation. If that is not
possible, the next best bet is to see if any researching among your peers and gathering the opinions
of other accountants. This can be through various articles/blog posts where CPAs and other
advisors discussing the topic and reaching their own conclusions. While generally that will suffice if
you see a consensus among them, sometimes there is no straight answer in that method either.
The next best option is to dig through tax court cases and see if any of them reflect your client’s
specific issue.
We had this specific situation arise in my firm about a month ago dealing with tax laws between
California and Virginia. The brief summary was our client sold their home old home in California
while being a full resident in Virginia. Usually when you sell a home and have a net gain, you get
taxed in both states but receive a credit in your home state. However, the client received a notice
saying that they could not receive a credit in Virginia and owed the full tax. After doing some
research, we found that California and Virginia have a reciprocal tax credit law and the credit
should have been claimed in California. We found this information through a specific court case
related to this issue. If it was not for that, we would have had no clue why this situation occurred
as our tax program calculated things automatically on the general state laws.
References:
(2022, 15 February). Virginia Tax. Rulings of the Tax Commissioner. Credit: Tax Paid to Another State
- California
https://www.tax.virginia.gov/laws-rules-decisions/rulings-tax-commissioner/22-31
Guides: Legislative History Research Guide: Committee Reports. Committee Reports - Legislative
History Research Guide - Guides at Georgetown Law Library. (2023, June).
https://guides.ll.georgetown.edu/c.php?g=278869&p=1862825
IRM § 4.10.7.2.2, Citing the IRM
Sawyers, R., & Gill, S. (2021). Federal Tax Research (12th ed.). Cengage Learning US.
