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.14 Generally not on federal tax consequences of proposed legislation
.15 Issuance of a letter ruling before the issuance of a regulation or other published guidance
.16 Not on frivolous issues
.17 No “comfort” rulings

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

.01 In income and gift tax matters
.02 In estate tax matters
.03 In generation-skipping transfer tax matters.

.... .04 In employment and excise tax matters......... .05 Circumstances under which determination letters are not issued by a director .06 Requests concerning income, estate, or gift tax returns .... .07 Attach a copy of determination letter to taxpayer's return .08 Review of determination letters.

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SECTION 7. UNDER WHAT CIRCUMSTANCES DOES THE SERVICE HAVE DISCRETION TO ISSUE

LETTER RULINGS AND DETERMINATION LETTERS?....... .01 Ordinarily not in certain areas because of factual nature of the problem .02 Not on alternative plans or hypothetical situations .03 Ordinarily not on part of an integrated transaction .04 Ordinarily not on questions involving the validity of the federal income tax or similar matters .05 On constructive sales price under § 4216(b) or § 4218(c) ........ .06 Ordinarily not on which of two entities is the common law employer.

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SECTION 8. WHAT ARE THE GENERAL INSTRUCTIONS FOR REQUESTING LETTER RULINGS AND

DETERMINATION LETTERS?..... .01 Certain information required in all requests

(1) Complete statement of facts and other information
(2) Copies of all contracts, wills, deeds, agreements, instruments, other documents, and foreign laws
(3) Analysis of material facts
(4) Statement regarding whether same issue is in an earlier return ....
(5) Statement regarding whether same or similar issue was previously ruled on or requested, or is currently pending.
(6) Statement regarding interpretation of a substantive provisions of an income or estate tax treaty....
(7) Letter from Bureau of Indian Affairs relating to a letter ruling request for recognition of Indian tribal

government status or status as a political subdivision of an Indian tribal government...
(8) Statement of supporting authorities.......
(9) Statement of contrary authorities
(10) Statement identifying pending legislation......

... (11) Statement identifying information to be deleted from copy of letter ruling or determination letter for public

inspection....... (12) Signature by taxpayer or authorized representative.. (13) Authorized representatives. (14) Power of attorney and declaration of representative ... (15) Penalties of perjury statement (16) Number of copies of request to be submitted (17) Sample format for a letter ruling request..

(18) Checklist for letter ruling requests
.02 Additional information required in certain circumstances

(1) To request separate letter rulings for multiple issues in a single situation
(2) To designate recipient of original or copy of letter ruling or determination letter.
(3) To request a particular conclusion on a proposed transaction ......
(4) To request expedited handling ........
(5) To receive any document related to the letter ruling request by facsimile transmission (fax).
(6) To submit a request for a letter ruling by fax
(7) To request a conference.

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(8) To obtain the applicable user fee for substantially identical letter rulings or identical accounting method

changes ..... .03 Address to send the request ........

(1) Requests for letter rulings.

(2) Requests for determination letters .04 Pending letter ruling requests .05 When to attach letter ruling to return.. .06 How to check on status of request ............ .07 Request may be withdrawn or national office may decline to issue letter ruling .08 Compliance with Treasury Department Circular No. 230.

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IIIII

SECTION 9. WHAT OTHER CHECKLISTS, GUIDELINE REVENUE PROCEDURES, NOTICES, SAFE

HARBOR REVENUE PROCEDURES, AND AUTOMATIC CHANGE REVENUE PROCEDURES

APPLY TO CERTAIN REQUESTS? . .01 Checklists, guideline revenue procedures, and notices.. .02 Safe harbor revenue procedures .03 Automatic change revenue procedures..

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SECTION 10. HOW DOES THE NATIONAL OFFICE HANDLE LETTER RULING REQUESTS?.......

.01 Controls request and refers it to appropriate Associate Chief Counsel's office
.02 Branch representative contacts taxpayer within 21 days..........
.03 Notifies taxpayer if any issues have been referred to another branch or office .
.04 Determines if transaction can be modified to obtain favorable letter ruling.
.05 Is not bound by informal opinion expressed
.06 Tells taxpayer if request lacks essential information during initial contact....
.07 Requires prompt submission of additional information requested after initial contact.........
.08 Near the completion of the ruling process, advises the taxpayer of conclusions and, if the Service will rule

adversely, offers the taxpayer the opportunity to withdraw the letter ruling request..
.09 May request draft of proposed letter ruling near the completion of the ruling process
.10 Issues separate letter rulings for substantially identical letter rulings and generally issues a single letter ruling for

identical accounting method changes ........ .11 Sends a copy of the letter ruling to appropriate Service official ...,

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SECTION 11. HOW ARE CONFERENCES SCHEDULED?

.01 Schedules a conference if requested by taxpayer
.02 Permits taxpayer one conference of right ..
.03 Disallows verbatim recording of conferences ........
.04 Makes tentative recommendations on substantive issues
.05 May offer additional conferences
.06 Requires written confirmation of information presented at conference.
.07 May schedule a pre-submission conference .......
.08 May schedule a conference to be held by telephone........

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SECTION 12. WHAT EFFECT WILL A LETTER RULING HAVE?.......

43 .01 May be relied on subject to limitations .....

43 .02 Will not apply to another taxpayer........

44 .03 Will be used by a field office in examining the taxpayer's return

44 .04 May be revoked or modified if found to be in error.............

44 .05 Letter ruling revoked or modified based on material change in facts applied retroactively.

44 .06 Not otherwise generally revoked or modified retroactively .......... .07 Retroactive effect of revocation or modification applied to a particular transaction .......

45 .08 Retroactive effect of revocation or modification applied to a continuing action or series of actions

45 .09 Generally not retroactively revoked or modified if related to sale or lease subject to excise tax ......

46 .10 May be retroactively revoked or modified when transaction is entered into before the issuance of the letter ruling ..... 46 .11 May be retroactively revoked or modified when transaction is entered into after a change in material facts

46 .12 Taxpayer may request that retroactivity be limited .......

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(1) Request for relief under $ 7805(b) must be made in required format
(2) Taxpayer may request a conference on application of § 7805(b)

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SECTION 13. WHAT EFFECT WILL A DETERMINATION LETTER HAVE?

.01 Has same effect as a letter ruling .........
.02 Taxpayer may request that retroactive effect of revocation or modification be limited

(1) Request for relief under § 7805(b) must be made in required format
(2) Taxpayer may request a conference on application of $ 7805(b)....

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SECTION 14. UNDER WHAT CIRCUMSTANCES ARE MATTERS REFERRED BETWEEN A FIELD OFFICE

AND THE NATIONAL OFFICE? ...... .01 Requests for determination letters .02 No-rule areas ...

.03 Requests for letter rulings.... SECTION 15. WHAT ARE THE USER FEE REQUIREMENTS FOR REQUESTS FOR LETTER RULINGS AND

DETERMINATION LETTERS? .01 Legislation authorizing user fees .02 Requests to which a user fee applies .03 Requests to which a user fee does not apply .04 Exemptions from the user fee requirements .05 Fee schedule ............ .06 Applicable user fee for a request involving multiple offices, fee categories, issues, transactions, or entities .07 Applicable user fee for substantially identical letter rulings or identical accounting method changes .08 Method of payment.. .09 Effect of nonpayment or payment of incorrect amount .10 Refunds of user fee ....... .11 Request for reconsideration of user fee..

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SECTION 16. WHAT ARE THE GENERAL PROCEDURES APPLICABLE TO INFORMATION LETTERS

ISSUED BY THE NATIONAL OFFICE? .01 Will be made available to the public .02 Deletions made under the Freedom of Information Act .03 Effect of information letters

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SECTION 17. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 2002–1? .......

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SECTION 19. WHAT IS THE EFFECTIVE DATE OF THIS REVENUE PROCEDURE? ....

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APPENDIX B-SAMPLE FORMAT FOR A LETTER RULING REQUEST .......

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APPENDIX C—CHECKLIST FOR A LETTER RULING REQUEST

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APPENDIX D-LIST OF SMALL BUSINESS/SELF-EMPLOYED DIVISION (SB/SE) COMPLIANCE AREA

DIRECTORS FOR REQUESTING DETERMINATION LETTERS.......

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This revenue procedure explains how the Service gives guidance to taxpayers on issues under the jurisdiction of the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions and Products), the Associate Chief Counsel (Income Tax and Accounting), the Associate Chief Counsel (International), the Associate Chief Counsel (Passthroughs and Special Industries), the Associate Chief Counsel (Procedure and Administration), and the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). It explains the kinds of guidance and the manner in which guidance is requested by taxpayers and provided by the Service. A sample format of a request for a letter ruling is provided in Appendix B.

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The Service includes four operating divisions that are responsible for meeting the needs of the taxpayers they serve. These operating divisions are:

(1) Large and Mid-Size Business Division (LMSB), which generally serves corporations, S corporations, and partnerships with assets in excess of $10 million;

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(2) Small Business/Self-Employed Division (SB/SE), which generally serves corporations, S corporations, and partnerships with assets less than or equal to $10 million; estates and trusts; individuals filing an individual federal income tax return with accompanying Schedule C (Profit or Loss from Business (Sole Proprietorship)), Schedule E (Supplemental Income and Loss), Schedule F (Profit or Loss from Farming), Form 2106 (Employee Business Expenses) or Form 2106-EZ (Unreimbursed Employee Business Expenses); and individuals with international tax returns;

(3) Wage and Investment Division (WI), which generally serves individuals with wage and investment income only (and with no international tax returns) filing an individual federal income tax return without accompanying Schedule C, E, or F, or Form 2106 or Form 2106-EZ, and

(4) Tax Exempt and Government Entities Division (TE/GE), which serves three distinct taxpayer segments: employee plans, exempt organizations, and government entities.

Description of terms used in this revenue procedure

For purposes of this revenue procedure—

(1) any reference to director or field office refers to the Director, Field Operations, LMSB, the Area Director, Field Compliance, SB/SE, or the Director, Compliance, W&I, as appropriate, and their respective offices or, when appropriate, the Director, International, LMSB, the Director, Employee Plans Examinations, the Director, Exempt Organizations Examinations, the Director, Federal, State & Local Governments, the Director, Tax Exempt Bonds, or the Director, Indian Tribal Governments, and their respective offices;

(2) any reference to area office refers to Appeals Area Office;

(3) the term “taxpayer” includes all persons subject to any provision of the Internal Revenue Code (including issuers of § 103 obligations) and, when appropriate, their representatives; and

(4) the term “national office” refers to the Office of Associate Chief Counsel (Corporate), the Office of Associate Chief Counsel (Financial Institutions and Products), the Office of Associate Chief Counsel (Income Tax and Accounting), the Office of Associate Chief Counsel (International), the Office of Associate Chief Counsel (Passthroughs and Special Industries), the Office of Associate Chief Counsel (Procedure and Administration), or the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), as appropriate.

Updated annually

The revenue procedure is updated annually as the first revenue procedure of the year, but may be modified or amplified during the year.

Sec. 1

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SECTION 2. IN WHAT FORM
IS GUIDANCE PROVIDED BY
THE OFFICES OF
ASSOCIATE CHIEF COUNSEL
(CORPORATE), ASSOCIATE
CHIEF COUNSEL
(FINANCIAL INSTITUTIONS
AND PRODUCTS),
ASSOCIATE CHIEF COUNSEL
(INCOME TAX AND
ACCOUNTING), ASSOCIATE
CHIEF COUNSEL
(INTERNATIONAL),
ASSOCIATE CHIEF COUNSEL
(PASSTHROUGHS AND
SPECIAL INDUSTRIES),
ASSOCIATE CHIEF COUNSEL
(PROCEDURE AND
ADMINISTRATION), AND
DIVISION
COUNSEL/ASSOCIATE CHIEF
COUNSEL (TAX EXEMPT
AND GOVERNMENT
ENTITIES)?

Letter ruling

.01 A “letter ruling” is a written statement issued to a taxpayer by the national office that interprets and applies the tax laws to the taxpayer's specific set of facts. A letter ruling includes the written permission or denial of permission by the national office to a request for a change in a taxpayer's accounting method or accounting period. Once issued, a letter ruling may be revoked or modified for any number of reasons, as explained in section 12 of this revenue procedure, unless it is accompanied by a “closing agreement."

Closing agreement

.02 A closing agreement is a final agreement between the Service and a taxpayer on a specific issue or liability. It is entered into under the authority in § 7121 and is final unless fraud, malfeasance, or misrepresentation of a material fact can be shown.

A closing agreement may be entered into when it is advantageous to have the matter permanently and conclusively closed or when a taxpayer can show that there are good reasons for an agreement and that making the agreement will not prejudice the interests of the Government. In appropriate cases, a taxpayer may be asked to enter into a closing agreement as a condition to the issuance of a letter ruling.

If, in a single case, a closing agreement is requested for each person in a class of taxpayers, separate agreements are entered into only if the class consists of 25 or fewer taxpayers. If the issue and holding are identical for the class and there are more than 25 taxpayers in the class, a “mass closing agreement” will be entered into with the taxpayer who is authorized by the others to represent the class.

Determination letter

.03 A "determination letter” is a written statement issued by a director that applies the principles and precedents previously announced by the national office to a specific set of facts. It is issued only when a determination can be made based on clearly established rules in the statute, a tax treaty, or the regulations, or based on a conclusion in a revenue ruling, opinion, or court decision published in the Internal Revenue Bulletin that specifically answers the questions presented.

A determination letter does not include assistance provided by the U.S. competent authority pursuant to the mutual agreement procedure in tax treaties as set forth in Rev. Proc. 96–13, 1996–1 C.B. 616.

Sec. 2

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