In the study of the Liao 遼 Dynasty’s governance of the Yanyun 燕雲 region one important historical source is an account concerning tax reductions implemented by Liu Liufu 劉六符 in the Yanyun region contained in Lu You’s 陸游 notebook entitled Laoxuean Biji 老学庵筆記. Although the research to date has questioned the reliability of this account, it has failed to explain why Lu You would have included such a dubious account among the historical records he copied into his notebook. In this article, the author, through a comprehensive study of the historical records related to the Liao Dynasty contained in Laoxuean Biji and another Lu You notebook entitled Jiashi Jiuwen 家世旧聞, attempts to clarify the origins of the tax reduction account. As the title, Old Recollections About Family History, implies, Jiashi Jiuwen is a collection of narrative passed on to Lu You from his grandfather Lu Dian 陸佃 and father Lu Zai 陸宰. Some of the volume’s information pertaining to the Liao was provided by Lu Dian’s recollections concerning his experiences while dispatched to the Liao court. Due to the fact that Lu You wrote a postscript to Lu Dian’s accounts of those experiences entitled Shilao Lu 使遼録, the author concludes that the information in Jiashi Jiuwen must have extracted from Shilao Lu, which has been lost. Returning to the tax reduction account in Lu You’s Laoxuean Biji, the author points to the personage of one Liu Xiao 劉霄, who was the grandson of the same Liu Liufu who enacted the tax reduction and an acquaintance of Lu Dian while the latter was at the Liao court. Liu Xiao was probably the person who informed Lu Dian of his grandfather’s accomplishment in the Yanyun region. Finally, the author takes up the authenticity of the “tax reduction account.” By refuting its part about Liao Emperor Xing following any advice given by Liu Liufu during his negotiations with the Song Dynasty concerning increases in annual payments, Qing Period bibliographical scholar Bi Yuan 畢沅 denied the reliability of the “tax reduction account” in its entirety. However, the author refers to other sources in concluding that there are other parts of the account that ring true, meaning that the account can be used as a historical source in combination with other evidence. For example, the account is an excellent source for understanding that internal politics and diplomatic policy of the Liao Dynasty were linked organically to winning the consent of the Han-Chinese people of Yanyun. Furthermore, the account is extremely valuable for observing not only the Liao Dynasty’s governance of Han-Chinese regions and the international relations surrounding it, but also its character as a nomadic state.