Revenue Ruling #90-91
Published in IRB 1990-44, p 11, October 29, 1990.
Code Sec. 6662 - Imposition of Accuracy-Related Penalty
Internal Revenue Service: Notices and announcements: Substantial
authority.--All Notices and Announcements are considered authorities for
purposes of determining substantial authority under Code Sec. 6662(d)(2)(B)(i).
Rev. Rul. 87-138 modified, and as modified, superseded.
This revenue ruling reconsiders Rev. Rul. 87-138, 1987-2 C.B. 287,
in light of the repeal of section 6661 of the Internal Revenue Code by
the Revenue Reconciliation Act of 1989, Pub. L. No. 101-239, 103 Stat.
Rev. Rul. 87-138 holds that, for purposes of applying the penalty
imposed under section 6661 of the Code, notices and announcements released
by the Internal Revenue Service are to be considered authority and the
Service will be bound by substantive or procedural guidance provided in
a notice or announcement to the same extent as a revenue ruling or revenue
procedure. Rev. Rul. 87-138 also holds that notices and announcements issued
on or after December 28, 1987, will include specific reliance language
designating them as “administrative pronouncements,” as that term is used
in section 1.6661-3(b)(2) of the Income Tax Regulations, if they contain
substantive or procedural guidance intended by the Service to be relied
upon by taxpayers as authority.
The Revenue Reconciliation Act of 1989 (the “Act”) repealed section
6661 of the Code effective for returns the due date for which (determined
without regard to extensions) is after December 31, 1989, and revised and
consolidated the penalties relating to accuracy of tax returns under section
6662 of the Code. The portion of the new accuracy-related penalty imposed
by section 6662(b)(2) and (d) that is attributable to a substantial understatement
of income tax is generally the same as the substantial understatement penalty
provided in former section 6661. However, according to the committee reports
accompanying the Act, Congress intended that the list of authorities upon
which taxpayers may rely, contained in section 1.6661-3(b)(2) of the regulations,
be expanded to include, among other items, notices published by the Internal
Revenue Service. See, e.g., H.R. Rep. No. 101-247, 101st Cong., 1st Sess.,
The Service announced, in Notice 90-20, 1990-1 C.B. 328, dated March
5, 1990, that for purposes of applying the substantial understatement portion
of the accuracy-related penalty imposed under new section 6662(b)(2) and
(d) of the Code, all notices and announcements issued by the Service and
published in the Internal Revenue Bulletin are considered authority and
may be relied upon to the same extent as a revenue ruling or revenue procedure.
Notice 90-20 also announced that the definition of “authority” for purposes
of section 6662(d)(2)(B)(i) applies retroactively to former section 6661(b)(2)(B)(i).
As a result, it is no longer necessary that notices and announcements include
specific reliance language designating them as “administrative pronouncements”
upon which taxpayers may rely. Rev. Rul. 87-138, therefore, is no longer
Effect on Other Documents
Rev. Rul. 87-138 is hereby modified and, as modified, is superseded.
The principal author of this revenue ruling is Gail M. Winkler of
the Office of Assistant Chief Counsel (Income Tax and Accounting). For
further information regarding this revenue ruling, contact Mrs. Winkler
on (202) 566-5985 (not a toll-free call).
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