If the taxpayer is requesting a letter ruling regarding a decedent's estate tax and the estate tax return is due to be filed before the letter ruling is expected to be issued, the taxpayer should obtain an extension of time for filing the return and should notify the national office branch considering the letter ruling request that an extension has been obtained.

If the return is filed before the letter ruling is received from the national office, the taxpayer must disclose on the return that a letter ruling has been requested, attach a copy of the pending letter ruling request to the return, and notify the national office that the return has been filed. See section 8.04 of this revenue procedure. The national office will make every effort to issue the letter ruling within 3 months of the date the return was filed.

If the taxpayer requests a letter ruling after the return is filed, but before the return is examined, the taxpayer must notify the field office having jurisdiction over the return that a letter ruling has been requested, attach a copy of the pending letter ruling request, and notify the national office that a return has been filed. See section 8.04 of this revenue procedure. The national office will make every effort to issue the letter ruling within 3 months of the date the return has been filed.

If the letter ruling cannot be issued within that 3-month period, the national office will notify the field office having jurisdiction over the return, who may, by memorandum to the national office, grant an additional period for the issuance of the letter ruling.

In matters involving additional estate tax under $ 2032A(c)

.06 In matters involving additional estate tax under $ 2032A(c), the national office issues letter rulings on proposed transactions and on completed transactions that occurred before the return is filed.

In matters involving qualified domestic trusts under $ 2056A

.07 In matters involving qualified domestic trusts under $ 2056A, the national office issues letter rulings on proposed transactions and on completed transactions that occurred before the return is filed.

In generation-skipping transfer tax matters

.08 In general, the national office issues letter rulings on proposed transactions that affect the generation-skipping transfer tax and on completed transactions that occurred before the return is filed. In the case of a generation-skipping trust or trust equivalent, letter rulings are issued either before or after the trust or trust equivalent has been established. The national office will issue letter rulings on the application of the effective date rules for generationskipping transfer tax (§ 1433 of the Tax Reform Act of 1986, 1986–3 (Vol. 1) C.B. 1, 648) to wills, trusts, and trust equivalents in existence on October 22, 1986, and to generationskipping transfers taking place on or before October 22, 1986.

In employment and excise tax matters

.09 In employment and excise tax matters, the national office issues letter rulings on proposed transactions and on completed transactions either before or after the return is filed for those transactions.

Requests regarding employment status (employer/employee relationship) from federal agencies and instrumentalities should be submitted directly to the national office. Requests regarding employment status from other taxpayers must first be submitted to the appropriate Service office listed on the current Form SS-8 (Rev. January 2001). See section 6.04 of this revenue procedure. Generally, the employer is the taxpayer and requests the letter ruling. If the worker asks for the letter ruling, both the worker and the employer are considered to be the taxpayer and both are entitled to the letter ruling.

The national office usually will not issue a letter ruling if, at the time the letter ruling is requested, the identical issue is involved in the taxpayer's return for an earlier period and that issue

(1) is being examined by a field office;

(2) is being considered by an area office;

(3) is pending in litigation in a case involving the taxpayer or a related taxpayer;

Sec. 5.05

(4) has been examined by a field office or considered by an area office and the statutory period of limitations on assessment or on filing a claim for refund or credit of tax has not expired; or

(5) has been examined by a field office or considered by an area office and a closing agreement covering the issue or liability has not been entered into by a field office or by an area office.

If a return involving an issue for a particular year is filed while a request for a letter rul

а ing on that issue is pending, the national office will issue the letter ruling unless it is notified by the taxpayer or otherwise learns that an examination of that issue or an examination of the identical issue on an earlier year's return has been started by a field office. See section 8.04 of this revenue procedure. Even if an examination has begun, the national office ordinarily will issue the letter ruling if the director agrees, by memorandum, to the issuance of the letter ruling.

10

In administrative provisions matters

(1) In general. The national office issues letter rulings on matters arising under the Code and related statutes and regulations that involve

(a) the time, place, manner, and procedures for reporting and paying taxes;
(b) the assessment and collection of taxes (including interest and penalties);

(c) the abatement, credit, or refund of an overassessment or overpayment of tax; or

(d) the filing of information returns.

(2) Circumstances under which a letter ruling is not ordinarily issued. The national office ordinarily does not issue a letter ruling if, at the time the letter ruling is requested, the identical issue is involved in the taxpayer's return for an earlier period and that issue—

(a) is being examined by a field office;

(b) is being considered by an area office;

(c) is pending in litigation in a case involving the taxpayer or a related taxpayer;

(d) has been examined by a field office or considered by an area office and the statutory period of limitations on assessment or on filing a claim for refund or credit of tax has not expired; or

(e) has been examined by a field office or considered by an area office and a closing agreement covering the issue or liability has not been entered into by a field office or area office.

If a return involving an issue for a particular year is filed while a request for a letter ruling on that issue is pending, the national office will issue the letter ruling unless it is notified by the taxpayer or otherwise learns that an examination of that issue or an examination of the identical issue on an earlier year's return has been started by a field office. See section 8.04 of this revenue procedure. But, even if an examination has begun, the national office ordinarily will issue the letter ruling if the director agrees, by memorandum, to the issuance of the letter ruling.

In Indian tribal government matters

.11 Pursuant to Rev. Proc. 84–37, 1984–1 C.B. 513, as modified by Rev. Proc. 86–17, 1986–1 C.B. 550, and Rev. Proc. 2003–1 (this revenue procedure), the Office of Division Counsel/ Associate Chief Counsel (Tax Exempt and Government Entities) issues determinations recognizing a tribal entity as an Indian tribal government within the meaning of § 7701(a)(40) or as a political subdivision of an Indian tribal government under $ 7871(d) if it determines, after consultation with the Secretary of the Interior, that the entity satisfies the statutory definition of an Indian tribal government or has been delegated governmental functions of an Indian tribal government. Requests for determinations under Rev. Proc. 84–37 are let

Sec. 5.11 ter ruling requests, and, therefore, should be submitted to the Office of Division Counsel/ Associate Chief Counsel (Tax Exempt and Government Entities) pursuant to this revenue procedure.

(1) Definition of Indian tribal government. The term “Indian tribal government” is defined under $ 7701(a)(40) to mean the governing body of any tribe, band, community, village or group of Indians, or (if applicable) Alaska Natives, that is determined by the Secretary of the Treasury, after consultation with the Secretary of the Interior, to exercise governmental functions. Section 7871(d) provides that, for purposes of $ 7871, a subdivision of an Indian tribal government shall be treated as a political subdivision of a state if the Secretary of the Treasury determines, after consultation with the Secretary of the Interior, that the subdivision has been delegated the right to exercise one or more of the substantial governmental functions of the Indian tribal government.

(2) Inclusion in list of tribal governments. Rev. Proc. 2001–15, 2001-1 C.B. 465, provides a list of Indian tribal governments that are treated similarly to states for certain federal tax purposes. Rev. Proc. 84–36, 1984–1 C.B. 510, as modified by Rev. Proc. 86–17, provides a list of political subdivisions of Indian tribal governments that are treated as political subdivisions of states for certain federal tax purposes. Under Rev. Proc. 84–37, tribal governments or subdivisions recognized under $ 7701(a)(40) or $ 7871(d) will be included on the list of recognized tribal government entities in revised versions of Rev. Proc. 2001–15 or Rev. Proc. 84-36.

Generally not to business associations or groups

.12 The national office does not issue letter rulings to business, trade, or industrial associations or to similar groups concerning the application of the tax laws to members of the group. But groups and associations may submit suggestions of generic issues that would be appropriately addressed in revenue rulings. See Rev. Proc. 89–14, which states the objectives of, and standards for, the publication of revenue rulings and revenue procedures in the Internal Revenue Bulletin.

The national office may issue letter rulings to groups or associations on their own tax status or liability if the request meets the requirements of this revenue procedure.

Generally not to foreign governments

.13 The national office does not issue letter rulings to foreign governments or their political subdivisions about the U.S. tax effects of their laws. The national office also does not issue letter rulings on the effect of a tax treaty on the tax laws of a treaty country for purposes of determining the tax of the treaty country. See section 13.02 of Rev. Proc. 2002– 52, 2002–31 I.R.B. 242, 252. Treaty partners can continue to address matters such as these under the provisions of the applicable tax treaty. In addition, the national office may issue letter rulings to foreign governments or their political subdivisions on their own tax status or liability under U.S. law if the request meets the requirements of this revenue procedure.

Generally not on federal tax consequences of proposed legislation

.14 The national office ordinarily does not issue letter rulings on a matter involving the federal tax consequences of any proposed federal, state, local, municipal, or foreign legislation. The Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) may issue letter rulings regarding the effect of proposed state, local, or municipal legislation upon an eligible deferred compensation plan under $ 457(b) provided that the letter ruling request relating to the plan complies with the other requirements of this revenue procedure. The national office also may provide general information in response to an inquiry.

Issuance of a letter ruling before the issuance of a regulation or other published guidance

.15 Unless the issue is covered by section 7 of this revenue procedure, Rev. Proc. 2003–3, this Bulletin, or Rev. Proc. 2003–7, this Bulletin, a letter ruling may be issued before the issuance of a temporary or final regulation or other published guidance that interprets the provisions of any act under the following conditions:

(1) Answer is clear or is reasonably certain. If the letter ruling request presents an issue for which the answer seems clear by applying the statute to the facts or for which the answer seems reasonably certain but not entirely free from doubt, a letter ruling will be issued.

Sec. 5.11

(2) Answer is not reasonably certain. The Service will consider all letter ruling requests and use its best efforts to issue a letter ruling even if the answer does not seem reasonably certain where the issuance of a letter ruling is in the best interests of tax administration.

(3) Issue cannot be readily resolved before a regulation or any other published guidance is issued. A letter ruling will not be issued if the letter ruling request presents an issue that cannot be readily resolved before a regulation or any other published guidance is issued. When the Service has closed a regulation project or any other published guidance project that might have answered the issue or decides not to open a regulation project or any other published guidance project, the appropriate branch will consider all letter ruling requests unless the issue is covered by section 7 of this revenue procedure, Rev. Proc. 2003–3, or Rev. Proc. 2003–7.

Not on frivolous issues

.16 A letter ruling will not be issued on frivolous issues. A “frivolous issue” is one without basis in fact or law, or that espouses a position which has been held by the courts to be frivolous or groundless. Examples of frivolous or groundless issues include, but are not limited to:

(1) frivolous “constitutional” claims, such as claims that the requirement to file tax returns and pay taxes constitutes an unreasonable search barred by the Fourth Amendment; violates Fifth and Fourteenth Amendment protections of due process; violates Thirteenth Amendment protections against involuntary servitude; or is unenforceable because the Sixteenth Amendment does not authorize nonapportioned direct taxes or was never ratified;

(2) claims that income taxes are voluntary, that the term “income” is not defined in the Internal Revenue Code, or that preparation and filing of income tax returns violates the Paperwork Reduction Act;

(3) claims that tax may be imposed only on coins minted under a gold or silver standard or that receipt of Federal Reserve Notes does not cause an accretion to wealth;

(4) claims that a person is not taxable on income because he or she falls within a class entitled to “reparation claims” or an extra-statutory class of individuals exempt from tax, e.g., “free-born” individuals;

(5) claims that a taxpayer can refuse to pay taxes on the basis of opposition to certain governmental expenditures;

(6) claims that taxes apply only to federal employees; only to residents of Puerto Rico, Guam, the U.S. Virgin Islands, the District of Columbia, or “federal enclaves”; or that sections 861 through 865 or any other provision of the Internal Revenue Code imposes taxes on U.S. citizens and residents only on income derived from foreign based activities;

(7) claims that wages or personal service income are not “income,” are “nontaxable receipts,” or “are a nontaxable exchange for labor;"

(8) claims that income tax withholding by an employer on wages is optional; or

(9) other claims the courts have characterized as frivolous or groundless.

No “comfort” rulings

.17 Except as otherwise provided in Rev. Proc. 2003–3 (e.g. under section 3.02(29), where the Service already is ruling on a significant issue in the same transaction), a letter ruling will not ordinarily be issued with respect to an issue that is clearly and adequately addressed by statute, regulations, decisions of a court, revenue rulings, revenue procedures, notices, or other authority published in the Internal Revenue Bulletin. However, the Service may in its discretion determine to issue a ruling on such an issue if the Service otherwise is issuing a ruling on another issue arising in the same transaction.

Sec. 5.17

SECTION 6. UNDER WHAT
CIRCUMSTANCES DO
DIRECTORS ISSUE
DETERMINATION LETTERS?

Directors issue determination letters only if the question presented is specifically answered by a statute, tax treaty, or regulation, or by a conclusion stated in a revenue ruling, opinion, or court decision published in the Internal Revenue Bulletin.

In income and gift tax matters

.01 In income and gift tax matters, directors issue determination letters in response to taxpayers' written requests on completed transactions that affect returns over which they have examination jurisdiction. A determination letter usually is not issued for a question concerning a return to be filed by the taxpayer if the same question is involved in a return already filed.

Normally, directors do not issue determination letters on the tax consequences

of

proposed transactions. A director may issue a determination letter on the replacement, even though not yet made, of involuntarily converted property under § 1033, if the taxpayer has filed an income tax return for the year in which the property was involuntarily converted.

In estate tax matters

.02 In estate tax matters, directors issue determination letters in response to written requests affecting the estate tax returns over which the directors have examination jurisdiction. They do not issue determination letters on matters concerning the application of the estate tax to the prospective estate of a living person.

In generation-skipping transfer tax matters

.03 In generation-skipping transfer tax matters, directors issue determination letters in response to written requests affecting the generation-skipping transfer tax returns over which the directors have examination jurisdiction. They do not issue determination letters on matters concerning the application of the generation-skipping transfer tax before the distribution or termination takes place.

In employment and excise tax matters

.04 In employment and excise tax matters, directors issue determination letters in response to written requests from taxpayers on completed transactions over which they have examination jurisdiction.

Requests for a determination of employment status (Form SS-8) from taxpayers (other than federal agencies and instrumentalities) must be submitted to the appropriate Service office listed on the current Form SS-8 (Rev. January 2001) and not directly to the national office. See also section 5.09 of this revenue procedure.

.05 A director will not issue a determination letter in response to any request if

Circumstances under which determination letters are not issued by a director

(1) it appears that the taxpayer has directed a similar inquiry to the national office;

(2) the same issue involving the same taxpayer or a related taxpayer is pending in a case in litigation or before an area office;

(3) the determination letter is requested by an industry, trade association, or similar group;

(4) the request involves an industry-wide problem; or

(5) the request involves a frivolous issue. See section 5.16 of this revenue procedure.

a

Under no circumstances will a director issue a determination letter unless it is clearly shown that the request concerns a return that has been filed or is required to be filed and over which the director has, or will have, examination jurisdiction.

A director will not issue a determination letter on an employment tax question if the specific question for the same taxpayer or a related taxpayer has been, or is being, considered by the Central Office of the Social Security Administration or the Railroad Retirement Board.

A director also will not issue a determination letter on determining constructive sales price under $ 4216(b) or $ 4218(c), which deal with special provisions applicable to the manufacturers excise tax. The national office will issue letter rulings in this area. See section 7.05 of this revenue procedure.

Sec. 6