Unauthorized Tax Elections

Unauthorized tax elections are those devices and techniques that taxpayers employ to achieve sought-after objectives but that are not specifically endorsed under the Internal Revenue Code. Often evolving over time, they are a common feature of the nation’s tax system. While unauthorized tax elections can prove subversive, in many instances, if properly and timely addressed, their existence can produce salutary benefits vis-à-vis their eradication or formal institutionalization. This analysis explores the general contours of unauthorized tax elections and the critical signaling roles that they provide, alerting Congress and the Treasury Department to shortcomings and vulnerabilities in the Internal Revenue Code’s statutory language and/or structural design.

It concludes that both the legislative and administrative branches of government would be wise to not ignore these signals but instead to swiftly address them.