Question

Regulations may have retroactive effect in which of the following circumstances:

a. The Regulation is designed to prevent abuse by taxpayers.
b. The Regulation relates to internal Treasury Department policies, practices, or procedures.
c. Both (a) and (b).
d. Regulations can never be effective retroactively.

Answer 1

Regulations can have retroactive effect in certain circumstances such as preventing abuse by taxpayers or relating to internal Treasury Department policies, practices, or procedures.

Step-by-step explanation:

Regulations can have retroactive effect in both of the following circumstances:

1. The regulation is designed to prevent abuse by taxpayers.
2. The regulation relates to internal Treasury Department policies, practices, or procedures.

In these situations, the regulations can apply to past events or transactions, even if they were conducted prior to the regulations being enacted.