Final answer:
False, revenue rulings are formal IRS declarations typically issued in response to written requests, not verbal inquiries, and serve to clarify tax law application.
Step-by-step explanation:
The statement that a revenue ruling is issued by the Internal Revenue Service only in response to a verbal inquiry by a taxpayer is false. A revenue ruling is a formal declaration by the Internal Revenue Service (IRS), the agency responsible for collecting taxes, which clarifies how the law is applied to a particular set of facts. It is typically issued in response to a written request for guidance from a taxpayer or tax professional concerning specific circumstances. Issuing revenue rulings is one way that the IRS can address potential issues in tax interpretation and help prevent free-riding, which costs the US Treasury a substantial amount of uncollected tax revenue each year.
Revenue, in the context of government, is the income that is earned from taxation and other non-tax sources. It is critical for the government to collect sufficient revenue to provide goods and services to the public. Without proper revenue collection, a government cannot function effectively. The IRS plays a key role in ensuring that the correct amounts of taxes are paid and that revenue is generated for government operations.