Plain meaning
A prior legal decision that may guide or bind how later cases are decided.
Also called
persuasive authority
binding precedent
Key points
- Precedent helps explain how legal authority is created, interpreted, challenged, or applied.
- Tax results often depend on both statutory wording and how courts or administrative bodies interpret that wording.
- The level of authority matters: a statute, regulation, appellate decision, trial decision, and administrative guidance do not all carry the same weight.
- For readers, the concept helps separate a binding legal rule from a factual result, policy proposal, administrative position, or litigation step.
Why it comes up
Precedent helps determine how courts follow earlier tax decisions and how taxpayers assess litigation risk. It can affect how tax rules are enacted, interpreted, enforced, challenged, or reported to the public.