@Opus 17 wrote:
....if a taxpayer relies on the instructions in the official IRS publications, and the instructions turned out to be faulty, could they use the instructions as a perfect defense?
This is well settled and has actually occurred in the past where the instructions were in error or otherwise inconsistent with the Code and/or Regs.
The taxpayer could use the publication (or instructions) as authority to avoid any penalties that might be imposed (for understating income tax liability) but not any assessment of tax and interest.
See Treas. Reg. §1.6662-4 re what is considered to be "substantial authority".
