Brady Cox

First Page


Last Page


Document Type



Many taxpayers rely on guidance materials the IRS provides in order to comprehend the United States Tax Code and pay an accurate tax. However, many, if not all, of these taxpayers would likely be startled to learn that their reliance on these IRS guidance materials is perilous. That is, that reliance upon these guidance materials will not support a taxpayer’s tax treatment decisions if the IRS decides that the decisions were incorrect under substantive law. However, because the courts have not decisively concluded which financial consequences a taxpayer faces or escapes by relying on informal IRS guidance, “peril” remains undefined. Does the taxpayer face all three? Does she face the tax deficiency and the associated interest charges but escape the penalty? Does she face the deficiency but escape the penalty and interest? This Comment answers these questions by looking at how the IRS, the courts, and the Internal Revenue Code (the Code) currently define peril and then offers a proposed statutory amendment to redefine peril in a way that compromises governmental interests of justice and taxpayer concerns of fairness.