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The difference between a tax opinion and tax ruling

On Behalf of | Aug 15, 2019 | IRS Issues

Taxpayers in Georgia and around the country may find that they need guidance from the IRS to answer a question about their return. The IRS may be willing to issue a private letter ruling, and generally speaking, any guidance provided by the ruling is binding. Alternatively, the government may offer to issue a tax opinion, which is generally not binding. However, it may be faster to get a tax opinion as opposed to the private letter ruling.

It is also more likely that the IRS will provide a tax opinion as opposed to a ruling. In fact, the agency has a list of subjects that it says it cannot or will not provide a ruling on. It is worth noting that a taxpayer may not get a ruling if his or her position is so strong that the answer to the question should be clear.

There is a $28,300 fee for asking for a ruling, and it may not be possible to get it back even if the request is rescinded. Furthermore, if a request is rescinded, an audit notice gets sent to a local IRS office. This means that an individual or business tax return may be at a higher risk for further scrutiny. Finally, it can take months for a final ruling to be issued as opposed to just days for an opinion.

Those who fail to pay income taxes on wages or other income may face an audit from the IRS. The same may be true if a person or entity fails to file a tax return or fail to pay business, payroll or other taxes owed. An attorney may help a person obtain guidance that could help to clarify what a taxpayer owes in a previous, current or future tax year.