Legal Definitions - REV. PROC.

REV. PROC. stands for REVENUE PROCEDURE.

A Revenue Procedure is an official statement published by the Internal Revenue Service (IRS) that provides detailed guidance on administrative matters related to tax law. Unlike a Revenue Ruling, which interprets how tax law applies to specific facts, a Revenue Procedure outlines the specific steps, processes, and requirements that taxpayers or IRS personnel must follow to comply with tax laws or to obtain certain tax benefits or determinations. Think of it as a "how-to" guide or a set of instructions from the IRS on various tax-related administrative actions.

• Example 1: Changing an Accounting Method

  A small business, "Green Thumb Landscaping," decides to change its method of accounting for inventory from the FIFO (First-In, First-Out) method to the LIFO (Last-In, First-Out) method to better reflect its costs. The IRS does not allow businesses to simply switch accounting methods without approval. A specific Revenue Procedure would detail the exact steps Green Thumb Landscaping must take, including which forms to file, the deadlines for submission, and any conditions that must be met for the change to be approved by the IRS. This illustrates how a Revenue Procedure provides a clear, step-by-step process for taxpayers to follow for a significant tax-related administrative action.

• Example 2: Requesting an Extension for Filing

  Due to a natural disaster, "Coastal Construction Inc." is unable to gather all necessary financial documents to file its corporate income tax return by the original deadline. Instead of just missing the deadline, the company can refer to a relevant Revenue Procedure. This procedure would outline the specific criteria for requesting an extension of time to file, the particular form to use (e.g., Form 7004), the information required on that form, and the method for submitting the request to the IRS. This demonstrates how Revenue Procedures provide instructions for taxpayers seeking administrative relief or adjustments to standard tax deadlines.

• Example 3: Applying for Tax-Exempt Status

  A newly formed non-profit organization, "Community Art Collective," wants to apply for 501(c)(3) tax-exempt status. While there is a primary application form (Form 1023), a specific Revenue Procedure might detail the streamlined application process available for smaller organizations, the types of organizations that qualify for automatic approval, or the specific documentation required to support the application for different types of non-profits. This shows how Revenue Procedures provide administrative guidelines for obtaining a particular tax status or benefit, ensuring applicants understand the precise requirements and procedures.