Is whatever an IRS agent tells me the law?

Where the claim comes from

People understandably assume that if the agency collecting the tax gives an answer, the answer must be right and must protect them. IRS phone assistors, publications, and online tools answer millions of questions a year, and most of those answers are correct.

But the people giving that help are applying the law, not making it. When an answer is incomplete, based on missing facts, or simply wrong, the law still decides the tax. The myth confuses help with authority.

What the law actually says

Treas. Reg. §1.6662-4(d)(3)(iii) lists what counts as "authority" for accuracy-related penalty purposes. The list includes the Code, regulations, revenue rulings and procedures, court cases, certain legislative history, private letter rulings, IRS press releases, and notices and announcements published in the Internal Revenue Bulletin. It does not include IRS publications, FAQs, or phone answers.

The IRS's statement on taxpayer reliance says that rulings and procedures published in the Bulletin "may be used as precedents." It also says informal guidance, including FAQs, publications, forms, and web pages, "will not be relied on, used, or cited as precedents by Service personnel in the disposition of cases." The same statement says that reasonable reliance on an FAQ is considered in deciding whether certain penalties apply.

IRC §6404(f) requires the IRS to abate any penalty or addition to tax caused by erroneous advice given to you in writing by an IRS employee acting in an official capacity. That applies only if you asked for the advice in writing, reasonably relied on it, and gave adequate and accurate information. It removes penalties and additions to tax, not the tax itself.

The Internal Revenue Manual treats oral advice separately, as a possible basis for reasonable-cause penalty relief (IRM 20.1.1.3.3.4.2). Relief depends on the facts, including what you asked, what you were told, and whether you can document it.

Some IRS actions do bind the government. A closing agreement under IRC §7121 is final and conclusive for the matters it covers, except in cases of fraud, malfeasance, or misrepresentation of a material fact. A private letter ruling issued to you generally protects you on the facts you described. These are formal, written, signed determinations. A phone call, a chat session, or a comment from an examiner during an audit is not.

What is true and what is not

Suppose a phone assistor tells you a payment is deductible, and it is not. The IRS can still disallow the deduction and assess the tax and interest. If you can show what you asked, when, and what you were told, you may be able to get penalties removed for reasonable cause. If the same advice came in a written response to your written request, §6404(f) requires abatement of the resulting penalties.

• True: IRS publications and FAQs are useful explanations and often reflect the IRS's position.
• True: reasonable reliance on IRS guidance or advice can matter for penalties.
• Not true: an IRS employee's statement changes the tax the law imposes.
• Not true: IRS publications carry the same weight as the Code or regulations.

What to do instead

Treat IRS help as a starting point. For any position that matters, identify the Code section, regulation, or published guidance behind it. When you call the IRS, write down the date, time, the assistor's name and badge number, your exact question, and the answer. Save copies of any FAQ or web page you rely on, since pages change.

For significant or unusual issues, consider a written request. Where available, a private letter ruling can generally be relied on by the taxpayer who requested it, although it requires a user fee and takes time. For most people, a documented analysis from a credentialed tax professional, with the authorities cited, is the practical route.

If you received a notice that contradicts what the IRS told you, respond by the deadline, explain what you were told, include your notes, and ask for penalty relief where it fits. Tax and interest usually still apply, but penalties may not.

How ebotCPA helps

We research the Code, regulations, and published guidance behind your position and tell you how strong it is. If an IRS notice followed advice you received, we prepare the response and any request for penalty relief based on your records.

Book a $497 Case Analysis to have Ebot Mbi, CPA, EA review your facts before you act.

Primary sources

1. Treas. Reg. §1.6662-4(d)(3)(iii). Types of authority for accuracy-related penalty purposes.

   “notices, announcements and other administrative pronouncements published by the Service in the Internal Revenue Bulletin”

   Lists the sources that count as authority. IRS publications, FAQs, and oral advice are not on the list.

2. 26 U.S.C. §6404(f). Abatement of penalties caused by erroneous written IRS advice.

   “The Secretary shall abate any portion of any penalty or addition to tax attributable to erroneous advice furnished to the taxpayer in writing by an officer or employee of the Internal Revenue Service, acting in such officer's or employee's official capacity.”

   Requires penalty abatement only for written advice given in response to a specific written request.

3. IRS, General overview of taxpayer reliance on guidance published in the Internal Revenue Bulletin and FAQs. Precedential value of Bulletin guidance versus FAQs and informal guidance.

   “Informal guidance has not been published in the Bulletin and will not be relied on, used, or cited as precedents by Service personnel in the disposition of cases.”

   Explains that informal guidance is not precedent, while reasonable reliance on it may be considered for penalties.

4. IRM 20.1.1.3.3.4.1–20.1.1.3.3.4.2. Reasonable cause: written advice and oral advice from the IRS.

   Tells IRS employees how to evaluate penalty relief requests based on written or oral IRS advice.

Frequently asked questions