Rev. Proc. 79-45

Section 1. Purpose

The purpose of this Revenue Procedure is to supersede Rev. Proc. 72-3, 1972-1 C.B. 698, by providing revised procedures for issuing rulings and determination and information letters to taxpayers and entering into closing agreements on specific issues involving the interpretation or application of the Federal tax laws. This Revenue Procedure also informs taxpayers and their representatives where to send requests for rulings and determination and information letters, and outlines procedures to be followed to promote efficient handling of their requests.

Sec. 2. Scope

This Revenue Procedure only applies to ruling requests, information letters, and closing agreements that are under the jurisdiction of the Assistant Commissioner (Technical) and requests for determination letters under the jurisdiction of field offices that pertain to Code sections under the jurisdiction of the Assistant Commissioner (Technical). The Assistant Commissioner (Technical) acts as the principal assistant to the Commissioner in providing basic principles and rules for the uniform interpretation and application of the Federal tax laws under the jurisdiction of the Assistant Commissioner (Technical). The procedures for obtaining rulings, etc. specifically applicable to Federal firearms taxes under Subtitle E of the Internal Revenue Code of 1954 are under the jurisdiction of the Bureau of Alcohol, Tobacco and Firearms. The procedures for obtaining rulings, determination letters, etc., specifically applicable to employee plans and exempt organizations are under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations). However, the jurisdiction of the Assistant Commissioner (Technical) includes section 521 of the Code, relating to exemption of farmers' cooperatives from tax; section 526, relating to shipowners' protection and indemnity associations; section 527(a), (b), (c), (d), (e), and (g), relating to political organizations, and section 528, relating to certain homeowners associations.

Sec. 3. Changes

.01 Section 2 has been added to reflect the areas under the jurisdiction of the Assistant Commissioner (Technical).

.02 Section 4.03 has been added to define the terms "taxpayer" and "National Office," respectively, for purposes of this Revenue Procedure.

.03 Section 5.01 revises section 3.01 of Rev. Proc. 72-3 to reflect the amendment made to section 367 of the Code by section 1042(a) of the Tax Reform Act of 1976 [Pub. L. 94-455, 1976-3 C.B. (Vol. 1) 1, 110], allowing a taxpayer to file a request for a ruling on certain transactions not later than the close of the 183rd day after the beginning of such transfer, which may be after a return has been filed.

.04 Section 5.01 narrows the provision of section 3.01 of Rev. Proc. 72-3 that the National Office ordinarily will not issue a ruling if the identical issue is involved in a return of the taxpayer for a prior period by providing that the National Office ordinarily will not issue a ruling if the identical issue is involved in a return of the taxpayer for a prior period and that issue is under examination or has been examined by a District Director or is being considered or has been considered by an Appeals office and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into. Also, the National Office will not issue rulings on only part of an integrated transaction.

.05 Sections 5.02 and 7.02 expand sections 3.02 and 4.02 of Rev. Proc. 72-3 by adding a provision for the issuance of rulings and determination letters with respect to the generation-skipping transfer tax and recapture tax prescribed by sections 2611 and 2032A(c) of the Code as added by the Tax Reform Act of 1976 [Pub. L. 94-455, 1976-3 C.B. (Vol. 1) 1, 355].

.06 Section 5.04 has been added to publicize the administrative provisions matters on which the National Office issues rulings.

.07 Section 6 has been added to call attention to the procedures contained in Rev. Proc. 77-9, 1977-1 C.B. 542, under which the National Office issues determinations under section 999(d) of the Code when there is participation in or cooperation with an international boycott.

.08 Section 7.03 revises section 4.03 of Rev. Proc. 72-3 by eliminating the issuance of determination letters in the employment and excise tax areas on prospective transactions.

.09 Section 9 expands section 6 of Rev. Proc. 72-3 by adding procedures for taxpayers to follow regarding disclosure under section 6110 of the Code. Section 9.03 was added to allow a taxpayer to request a separate ruling letter on each issue contained in a single request and to receive such if the Service determines that this is feasible. Section 9.05 clarifies section 6.02 of Rev. Proc. 72-3 to provide that all material facts reflected in documents submitted must be included in the taxpayer's letter requesting a ruling plus supplemental letters and not merely incorporated by reference. Section 9.05 also adds the requirement that material facts furnished to the Service by telephone or orally at a conference must be confirmed by letter to the Service within 21 calendar days in order to be considered part of the file. Section 9.06 clarifies section 6.02 of Rev. Proc. 72-3 by providing that a request for a ruling must contain a statement whether, to the best of the knowledge of the taxpayer and the taxpayer's representative(s), if any, the identical issue (1) is under examination by a District Director in a return of the taxpayer, (2) has been examined and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into by a District Director, (3) is or has been considered by an Appeals office and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into by an Appeals office, or (4) is pending in litigation. Section 9.06 also adds the requirement that the request must contain a statement whether, to the best of the knowledge of the taxpayer and the taxpayer's representative(s), the identical or similar issue has been ruled on by the Service to the taxpayer or predecessor of the taxpayer and, if so, when and with what results. Also, if after the request is filed but before a ruling is issued, the taxpayer has knowledge that an examination of the issue by a District Director has been initiated, the taxpayer must notify the National Office of such action. Further, if a return is filed prior to the receipt of a ruling from the National Office concerning the return, a copy of the request must be attached to such return. Section 9.08 adds to section 6.04 of Rev. Proc. 72-3 the requirement that if there is any legislation, regulations, revenue rulings or revenue procedures contrary to the position advanced by the taxpayer, such must be furnished by the taxpayer. If the taxpayer determined that there is none, a statement to this effect must be made in the ruling request. Section 9.11 is a new section that provides that copies of rulings will be sent to not more than two representatives of the taxpayer provided that they are at different addresses. Section 9.12 revises section 6.07 of Rev. Proc. 72-3 by providing that ruling requests should be addressed to the Assistant Commissioner (Technical) rather than to the Commissioner. Section 9.18 revises section 6.13 of Rev. Proc. 72-3 by substituting the name and telephone number shown on the acknowledgement of receipt of the ruling request in place of the Division Director's office and telephone number as the contact for obtaining information regarding the status of a case. Section 9.22 revises section 6.15 of Rev. Proc. 72-3 to reflect the provisions of Rev. Proc. 77-5, 1977-1 C.B. 536, for handling protests of rulings under section 367. Section 9.23 has been added to call attention to the appeal procedures set forth in Rev. Proc. 76-33, 1976-2 C.B. 655, with regard to adverse determination letters under section 521 of the Code and revocation or modification of exemption rulings and determination letters under section 521.

.10 Section 10 has been added to reflect the procedure contained in Rev. Proc. 76-29, 1976-2 C.B. 646, requiring Service personnel, within 15 working days after receipt of certain ruling requests, to contact the taxpayer to discuss informally the procedural and substantive issues involved in the ruling request.

.11 Section 11.01 adds to section 7.01 of Rev. Proc. 72-3 the requirement that a conference will be arranged by telephone, if possible, and must be held within 21 calendar days after contact has been made. An extension of the 21 day period will be granted only if justified in writing by the taxpayer and approved by the Chief or Assistant Chief of the Technical branch to which the case is assigned. Section 11.02 clarifies section 7.02 of Rev. Proc. 72-3 by providing that a person who has authority to sign for the branch chief will attend the taxpayer's conference of right. Section 11.03 is a new section that provides that in employment tax matters, only the party entitled to the ruling is entitled to a conference of right. Section 11.04 is a new section that provides that no tape, stenographic, or other verbatim recording of a conference will be made. Section 11.06 limits an invitation to an additional conference subsequent to the conference of right to when an adverse holding is proposed but on a new issue or on the same issue but different grounds from those discussed at the first conference. Section 11.07 expands section 7.04 of Rev. Proc. 72-3 by adding the procedures contained in Rev. Proc. 73-8, 1973-1 C.B. 754, that additional information must be furnished to the National Office by the taxpayer within 21 calendar days after a conference of right and if not received by the Service within such time, a ruling will be issued on the basis of the information on hand or, when appropriate, no ruling will be issued. An extension of the 21-day period may be extended only if justified in writing by the taxpayer and approved by the Chief or Assistant Chief of the Technical branch to which the case is assigned.

.12 Section 17.04 clarifies and conforms section 13.04 of Rev. Proc. 72-3 to section 7.01(5) of Rev. Proc. 78-24, 1978-2 C.B. 503, relating to what constitutes notice to a taxpayer that a ruling issued to a taxpayer is in error or not in accord with the current views of the Service so that such ruling may not be relied on by the taxpayer. Section 17.07, relating to the retroactivity of the revocation or modification of a ruling issued covering a continuing action or a series of actions, has been expanded by adding an income tax continuing action example.

Sec. 4. General Practice and Definitions

.01 It is the practice of the Service to answer inquiries of individuals and organizations, whenever appropriate the interest of sound tax administration, as to their status for tax purposes and as to the tax effects of their acts or transactions. One of the functions of the National Office of the Service is to issue rulings in such matters.

.02 District Directors of Internal Revenue apply the statutes and tax treaties, regulations, revenue rulings, and other precedents published in the Internal Revenue Bulletin in the determination of tax liability, the collection of taxes, and the issuance of information letters and determination letters in answer to taxpayers' inquiries or requests. For purposes of this Revenue Procedure, any reference to District Director or district office also includes, when appropriate, the director of an Internal Revenue Service Center and the Director of International Operations, or their respective offices.

.03 For purposes of this Revenue Procedure the term "taxpayer" includes all persons subject to any provision of the Internal Revenue Code and, whenever appropriate, their representative(s) and any reference to National Office means only the Office of the Assistant Commissioner (Technical).

.04 A "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. Rulings are issued only by the National Office. The issuance of rulings is under the general supervision of the Assistant Commissioner (Technical) and has been largely redelegated to the Directors of the Corporation Tax Division and the Individual Tax Division.

.05 A "determination letter" is a written statement issued by a District Director in response to a written inquiry by a taxpayer that applies the principles and precedents previously announced by the National Office to a specific set of facts. A determination letter is issued only when a determination can be made on the basis of clearly established rules as set forth in the statute or regulations, or by a position stated in a ruling, opinion, or court decision published in the Internal Revenue Bulletin that specifically answers the question presented. If a determination cannot be made, for example, when the question presented involves a novel issue or the matter is excluded from the jurisdiction of a District Director by the provisions of section 7 of this Revenue Procedure, a determination letter will not be issued.

.06 An "information letter" is a statement issued either by the National Office or by a District Director that calls attention to a well-established interpretation or principle of tax law, without applying it to a specific set of facts. An information letter may be issued if the request indicates that general information is sought or if the request does not meet the requirements of section 9 of this Revenue Procedure, and if it is believed that such general information will assist the individual or organization.

.07 A "revenue ruling" is an interpretation by the Service that has been published in the Internal Revenue Bulletin. It represents the conclusion of the Service on the application of the law to the entire set of facts involved. Revenue rulings are issued only by the National Office and are published for the information and guidance of taxpayers, Internal Revenue Service officials, and others concerned.

.08 A "closing agreement," as the term is used herein, is an agreement between the Commissioner of Internal Revenue or the Commissioner's delegate and a taxpayer with respect to a specific issue or issues that is entered into pursuant to the authority contained in section 7121 of the Code. A closing agreement is based on a ruling that has been signed by the Commissioner or the Commissioner's delegate in which it is indicated that a closing agreement will be entered into on the basis of the holding of the ruling letter. Closing agreements are final and conclusive except upon a showing of fraud, malfeasance, or misrepresentation of a material fact. They may be entered into when it is advantageous to have the matter permanently and conclusively closed, or when a taxpayer can show good and sufficient reasons for an agreement and the Government will sustain no disadvantage by its consummation. In appropriate cases, taxpayers may be requested to enter into a closing agreement as a condition to the issuance of a ruling. When in a single case, closing agreements are requested on behalf of each of a number of taxpayers, such agreements are not entered into if the number of such taxpayers exceeds twenty-five. However, in a case where the issue and holding are identical as to all of the taxpayers and the number of taxpayers is in excess of twenty-five, a "mass closing agreement" will be entered into with the taxpayer who is authorized by the others to represent the entire group.

Sec. 5. Rulings Issued by the National Office

.01 In income and gift tax matters, the National Office issues rulings on prospective transactions and on completed transactions before the return is filed for those transactions. However, rulings will be issued to taxpayers after the return is filed if a ruling is required by section 367 of the Code and the ruling request is timely filed pursuant to that section. The National Office issues rulings involving the exempt status of organizations under section 521. See Rev. Proc. 72-4, 1972-1 C.B. 706. Rulings ordinarily will not be issued to taxpayers if at the time the request for ruling is submitted, the identical issue is involved in a return of the taxpayer for a prior period and that issue is under examination by a District Director or is under consideration by an Appeals office, or has been examined by a District Director or considered by an Appeals office and the statutory period of limitation on assessment or refund of tax has not expired, or a closing agreement has not been entered into by a District Director or by an Appeals office. If a return involving an issue for a particular year is filed while a request for a ruling on that issue is pending, the National Office will issue the ruling unless the taxpayer notifies the National Office as discussed in Section 9.06 that an examination of the issue for which a ruling is requested or an examination of the identical issue on a prior year's return has been initiated by a District Director. However, even in the event that an examination is initiated, the National Office ordinarily will issue the ruling if the District Director agrees, by memorandum, to permit the issuance of the ruling. The National Office will not issue rulings with respect to the replacement of involuntarily converted property, even though replacement has not been made, if the taxpayer has filed a return for the taxable year in which the property was converted. However, see section 7.05 of this Revenue Procedure as to the authority of District Directors to issue determination letters in this connection. Furthermore, the National Office will not issue rulings on only part of an integrated transaction.

.02 In estate tax matters, the National Office issues rulings with respect to transactions affecting the estate tax of a decedent before the estate tax return is filed. It will not rule with respect to such matters after the estate tax return has been filed, nor will it rule on matters relating to the application of the estate tax to property or the estate of a living person.

1 In generation-skipping transfer tax matters, the National Office issues rulings with respect to transactions affecting the generation-skipping transfer tax before the return is filed. Rulings will not be issued until after the generation-skipping trust or trust equivalent has been established. Rulings will not be issued with respect to a generation-skipping transfer tax matter before the subject distribution or termination takes place.

2 In matters involving additional tax under section 2032A(c), the National Office issues rulings on prospective transactions and on completed transactions before the return is filed for those transactions.

.03 In employment and excise tax matters, the National Office issues rulings on prospective transactions and on completed transactions either before or after the return is filed for those transactions. In employment tax matters, generally the taxpayer is the person who engages the worker. However, if the worker requests the ruling, both the worker and the person who engages the worker will be considered to be the taxpayer and both are entitled to the ruling. The National Office will not ordinarily issue rulings to taxpayers if at the time the request for ruling is submitted, the identical issue is involved in a return of the taxpayer for a prior period and that issue is under examination by a District Director or under consideration by an Appeals office or has been examined by a District Director or considered by an Appeals office and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into by a District Director or by an Appeals office. However, if a District Director initiates an examination of the issue involved in the ruling request, the National Office ordinarily will issue the ruling if the District Director agrees, by memorandum, to permit the issuance of the ruling.

.04 In administrative provisions matters, the National Office issues rulings on issues arising under the provisions of the Internal Revenue Code and related statutes, and the regulations thereunder, that relate primarily to the time, place, manner, and procedures, prescribed for reporting and paying taxes; assessing and collecting taxes (including interest and penalties); abating, crediting, or refunding overassessments or overpayments of tax; and filing information returns. Rulings ordinarily will not be issued to taxpayers if at the time the request for a ruling is submitted, the identical issue is involved in a return of the taxpayer for a prior period and that issue is under consideration by a District Director or the Director of a Service Center or has been considered and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into. If a return involving an issue for a particular year is filed while a request for a ruling on that issue is pending, the National Office will issue the ruling unless an examination of the issue for which a ruling is requested or an examination of the identical issue on a prior year's return has been initiated by a District Director or a Director of a Service Center. However, even in the event that consideration is initiated, the National Office ordinarily will issue the ruling if the District Director or the Director of a Service Center agrees, by memorandum, to permit the issuance of the ruling. Rulings ordinarily will not be issued to taxpayers if at the time the request for ruling is submitted, the identical issue is involved in a return of the taxpayer for a prior period and that issue is under consideration by an Appeals office or has been considered by an Appeals office and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into.

.05 The National Office will not issue rulings to business, trade, or industrial associations, or to other similar groups relating to the application of the tax laws to members of the group. However, rulings may be issued to such groups or associations relating to their own tax status or liability, provided such tax status or liability is not an issue before any field office (including any Appeals office) in connection with an examination of the same taxpayer for the same or a prior period under the conditions stated in section 5.

.06 Pending the adoption of regulations (either temporary or final) that reflect the provisions of any Act, consideration will be given to the issuance of rulings under the conditions set forth below.

1 If the ruling request presents an issue on which the answer seems to be clear from an application of the provisions of the statute to the facts described, a ruling will be issued in accordance with usual procedures.

2 If the ruling request presents an issue on which the answer seems reasonably certain but not entirely free from doubt, a ruling will be issued only if it is established that a business emergency requires a ruling or that unusual hardship will result from failure to obtain a ruling. In any case in which the taxpayer believes that a business emergency exists or that an unusual hardship will result from failure to obtain a ruling, the taxpayer should submit with the request a separate letter setting forth the facts necessary for the Service to make a determination in this regard. In this connection, the Service will not deem a "business emergency" to result from circumstances within the control of the taxpayer, such as, scheduling within an inordinately short time the closing date for a transaction or a meeting of the board of directors or the shareholders of a corporation. However, if the ruling request presents an issue that cannot be reasonably resolved prior to the issuance of regulations, a ruling will not be issued.

Sec. 6. Determinations Under Section 999(d) of the Code

Rev. Proc. 77-9, 1977-1 C.B. 542, sets forth procedures under which the National Office issues determinations under section 999(d) of the Code that may deny certain benefits of the foreign tax credit, deferral of earnings of foreign subsidiaries, and domestic international sales corporation (DISC) to a person, if that person, or a member of a controlled group (within the meaning of section 993(a)(3)) that includes that person, or a foreign corporation of which a member of the controlled group is a United States shareholder, agrees to participate in or cooperate with an international boycott.

Sec. 7. Determination Letters Issued by District Directors

.01 In income and gift tax matters, District Directors issue determination letters in response to taxpayers' written requests submitted to their offices involving completed transactions that affect returns over which they have examination jurisdiction, but only if the question presented is specifically answered by statute or regulation, or specifically answered by the position stated in a ruling, opinion, or court decision published in the Internal Revenue Bulletin. A determination letter usually will not be issued with respect to a question that involves a return to be filed by the taxpayer if the identical question is involved in a return or returns already filed by the taxpayer. District Directors will not issue determination letters as to the tax consequences of prospective or proposed transactions, except as provided in section 7.05.

.02 In estate tax matters, District Directors issue determination letters in response to written requests submitted to their offices affecting the estate tax returns of decedents that will be examined by their offices, but only if the question presented is specifically answered by statute or regulation, or specifically answered by the position stated in a ruling, opinion, or court decision published in the Internal Revenue Bulletin. District Directors will not issue determination letters relating to matters involving the application of the estate tax to property or the estate of a living person.

1 In generation-skipping transfer tax matters, District Directors issue determination letters in response to written requests submitted to their offices affecting the generation-skipping transfer tax returns that will be examined by their offices, but only if the questions presented are specifically answered by statute or regulation, or specifically answered by a position stated in a ruling, opinion, or court decision published in the Internal Revenue Bulletin. District Directors will not issue determination letters relating to matters involving the application of the generation-skipping transfer tax before the subject distribution or termination takes place.

.03 In employment tax matters, District Directors issue determination letters on completed transactions in response to written requests from taxpayers over which they have examination jurisdiction, but only if the question presented is specifically answered by statute or regulation, or specifically answered by the position stated in a ruling, opinion, or court decision published in the Internal Revenue Bulletin.

.04 Notwithstanding the provisions of sections 7.01, 7.02, and 7.03, a District Director will not issue a determination letter in response to a request that presents a question specifically answered by statute or regulation, or specifically answered by the position stated in rulings, etc., published in the Internal Revenue Bulletin, where (1) it appears that the taxpayer has directed a similar inquiry to the National Office, (2) the identical issue involving the same taxpayer is pending in a case before an Appeals office, (3) the determination letter is requested by an industry, trade association, or similar group, or (4) the request involves an industry-wide problem. Under no circumstances will a District Director issue a determination letter unless it is clearly indicated that the request is with regard to a taxpayer or taxpayers who have filed or are required to file returns over which the District Director has or will have examination jurisdiction. Notwithstanding the provisions of section 7.03, a District Director will not issue a determination letter on an employment tax question when the specific question for the same taxpayer involved has been or is being considered by the Central Office of the Social Security Administration or the Railroad Retirement Board. Nor will District Directors issue determination letters for determination of a constructive sales price under section 4216(b) or 4218(e) of the Code. However, the National Office will issue rulings in this area. See section 8.03.

.05 District Directors issue determination letters with regard to the replacement of involuntarily converted property under section 1033 of the Code even though the replacement has not been made, if the taxpayer has filed an income tax return for the year in which the property was involuntarily converted.

.06 A request received by a District Director with respect to a question involved in an income, estate, or gift tax return already filed will, in general, be considered in connection with the examination of the return. If a response is made to such a request prior to examination of the return, it will be considered a tentative finding in any subsequent examination of such return.

Sec. 8. Discretionary Authority to Issue Rulings and Determination Letters

.01 There are certain areas in which, because of the inherently factual nature of the problem involved, or for other reasons, the Service will not issue, or ordinarily will not issue, rulings or determination letters. A list of these areas is set forth in Rev. Proc. 79-14, 1979-1 C.B. 496. This list is not all inclusive since the Service may decline to issue a ruling or a determination letter on other questions whenever warranted by the facts or circumstances of a particular case. The National Office and District Directors may, when it is deemed appropriate and in the best interest of the Service, issue information letters calling attention to well-established principles of tax law.

.02 A ruling or a determination letter is not issued on alternative plans of proposed transactions or on hypothetical situations.

.03 The National Office will issue rulings in all cases on prospective or future transactions when the law or regulations require a determination of the effect of a proposed transaction for tax purposes, as in the case of a transfer under sections 1491 and 1492 of the Code. The National Office will issue rulings on all transfers described in section 367(a)(1) if the request is filed within 183 days after the beginning of the transfer. The National Office also will issue rulings in all cases involving the determination of a constructive sales price under section 4216(b) or 4218(e).

Sec. 9. Instructions to Taxpayer

.01 A request for a ruling or a determination letter is to be submitted in duplicate if (1) more than one issue is presented in the request or (2) a closing agreement is requested with respect to the issue presented. It is not necessary to submit requests in duplicate under other circumstances.

.02 A request for a ruling or determination letter and any factual information subsequently submitted must be accompanied by a declaration in the following form. "Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of the requested ruling or determination letter are true, correct, and complete." The declaration may not be made by the taxpayer's authorized representative(s). It must be signed by the person or persons on whose behalf the request is made. In the case of a corporate taxpayer, the person who must sign for the corporate taxpayer must be an officer of the corporate taxpayer who has personal knowledge of the facts. The officer must be one whose duties are not limited to the procurement of a ruling or determination letter from the Service.

.03 In cases in which more than one issue is presented in a request for a ruling, the Service generally will issue a single ruling letter. However, the taxpayer may request a separate ruling letter on any of the issues. Unless the Service determines that it is not feasible or not in the best interest of the Service to comply with the taxpayer's request, separate ruling letters will be issued.

.04 When multiple issues are involved in a single factual situation and separate letters requesting rulings are submitted, a statement to this effect must be included in each ruling letter request. The Service in issuing each ruling shall state that separate rulings have been issued or requests for rulings are pending.

.05 Each request for a ruling or a determination letter must contain a complete statement of all of the facts relating to the transaction. Such facts include: names, addresses, and taxpayer identifying numbers of all interested parties; the location of the District Office that has or will have jurisdiction over the return; a full and precise statement of the business reasons for the transaction; and a carefully detailed description of the transaction. In addition, true copies of all contracts, wills, deeds, agreements, instruments, and other documents involved in the transaction must be submitted with the request. Original documents, such as contracts, wills, etc., should not be submitted because they become part of the Service file and will not be returned. All material facts reflected in documents submitted must be included in the taxpayer's letter requesting a ruling or in supplemental letters, and not merely incorporated by reference, and must be accompanied by an analysis of their bearing on the issue or issues, specifying the pertinent provisions. Material facts furnished to the Service by telephone or orally at a conference must be promptly confirmed by letter to the Service accompanied by a declaration in the form described in section 9.02. This confirmation must be furnished within 21 calendar days to be considered part of the request. An extension of the 21-day period will be granted only if justified in writing by the taxpayer and approved by the Chief or Assistant Chief of the Technical Branch to which the case is assigned. (The term "all interested parties" is not to be construed as requiring a list of all shareholders of a widely held corporation requesting a ruling relating to a reorganization, or a list of employees where a large number may be involved.)

.06 The request must contain a statement whether, to the best of the knowledge of the taxpayer and the taxpayer's representative(s), if any, the identical issue (1) is under examination by a District Director in a return of the taxpayer (or of a related taxpayer within the meaning of section 267 of the Code or a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504), (2) has been examined and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into by a District Director, (3) is under consideration by an Appeals office in connection with a return of the taxpayer for a prior period, or such issue has been considered by an Appeals office and the statutory period of limitation on assessment or refund of tax has not expired or a closing agreement has not been entered into by an Appeals office, or (4) is pending in litigation. The request must contain a statement whether, to the best of the knowledge of the taxpayer and the taxpayer's representative(s), the identical or similar issue has been ruled on by the Service to the taxpayer or predecessor of the taxpayer and, if so, when and with what results. Furthermore, if after the request is filed but before a ruling is issued, the taxpayer has knowledge that an examination of the issue by a District Director has been initiated, the taxpayer must notify the National Office of such action. If a return is filed prior to the receipt of a ruling from the National Office concerning the return, a copy of the request must be attached to such return.

When the request pertains to only one step of a larger integrated transaction, the facts, circumstances, etc., must be submitted with respect to the entire transaction.

The following revenue procedures relate to requests for rulings under certain sections of the Code: Rev. Proc. 79-4, 1979-1 C.B. 483 (guidelines for submission of requests for rulings under sections 103 and 7478 as to whether interest on certain governmental obligations can be excluded from the gross income of those who own them); Rev. Proc. 73-35, 1973-2 C.B. 490 (guidelines concerning a request for a ruling under section 302 or 311); Rev. Proc. 73-17, 1973-2 C.B. 465 (guidelines concerning a request for a ruling under section 332, 334(b)(1) or 334(b)(2)); Rev. Proc. 75-32, 1975-2 C.B. 555 (guidelines concerning a request for a ruling under section 337); Rev. Proc. 73-36, 1973-2 C.B. 496 (guidelines concerning a request for a ruling under section 331 or 346); Rev. Proc. 73-10, 1973-1 C.B. 760 (guidelines concerning a request for a ruling under section 351); Rev. Proc. 75-35, 1975-2 C.B. 561 (guidelines concerning a request for a ruling under section 355); Rev. Proc. 68-23, 1968-1 C.B. 821, Rev. Proc. 69-19, 1969-2 C.B. 301, Rev. Proc. 74-36, 1974-2 C.B. 491, Rev. Proc. 76-20, 1976-1 C.B. 560, Rev. Proc. 77-5, 1977-1 C.B. 536, and Rev. Proc. 77-17, 1977-1 C.B. 77 (guidelines concerning a request for a ruling under section 367). However, see section 7.367 of the Temporary Income Tax Regulations under the Tax Reform Act of 1976, which superseded the previously mentioned Revenue Procedures to the extent of any overlapping rules. Rev. Proc. 75-29, 1975-1 C.B. 754, Rev. Proc. 76-4, 1976-1 C.B. 543, Rev. Proc. 76-24, 1976-1 C.B. 563, Rev. Proc. 76-44, 1976-2 C.B. 668, and Rev. Proc. 77-4, 1977-1 C.B. 536 (guidelines for changes to closing agreements as a condition to issuing rulings under section 367); and Rev. Proc. 74-26, 1974-2 C.B. 478, Rev. Proc. 75-11, 1975-1 C.B. 652, Rev. Proc. 75-24, 1975-1 C.B. 719, Pev. Proc. 76-22, 1976-1 C.B. 562, Rev. Proc. 76-26, 1976-2 C.B. 643, and Rev. Proc. 77-27, 1977-2 C.B. 537 (guidelines concerning requests for rulings handled by the Reorganization Branch of the Corporation Tax Division). If the request is with respect to a corporate distribution, reorganization, or other similar or related transaction, the corporate balance sheet and profit and loss statement nearest the date of the transaction should be submitted. (If the request relates to a prospective transaction, the most recent balance sheet and profit and loss statement should be submitted.)

.07 As an alternative procedure for the issuance of rulings on prospective transactions, the taxpayer may submit a summary statement of the facts the taxpayer considers controlling the issue, in addition to the complete statement required for ruling requests by section 9.05. If the National Office agrees with the taxpayer's summary statement, the National Office will use it as the basis for the ruling. A taxpayer wishing to adopt this procedure should submit with the request for ruling:

(1) A complete statement of facts relating to the transaction, together with related documents, as required by section 9.05; and

(2) A summary statement of the facts believed to be controlling in reaching the requested conclusion. When the taxpayer's statement of controlling facts is accepted, the ruling will be based on these facts and only this statement will ordinarily be incorporated in the ruling letter. It is emphasized, however, that:

(a) This procedure for a "two-part" ruling request is elective with the taxpayer and is not to be considered a required substitute for the regular procedures provided by this Revenue Procedure;

(b) Taxpayers' rights and responsibilities are the same under the "two-part" ruling request procedure as those provided in this Revenue Procedure;

(c) The Service reserves the right to rule on the basis of a more complete statement of facts it considers controlling and to seek further information in developing facts and restating them for ruling purposes; and

(d) The "two-part" ruling request procedure will not apply when it is inconsistent with other procedures such as those dealing with: particular submission requests for permission to change accounting method or period; applications for recognition of exempt status under section 521 of the Code; or rulings on employment tax status.

.08 If the taxpayer is contending for a particular determination, an explanation of the grounds for the contentions must be furnished, together with a statement of relevant authorities in support of the taxpayer's views. Even though the taxpayer is urging no particular determination with regard to a proposed or prospective transaction, the taxpayer's views as to the tax results on the proposed action and a statement of relevant authorities to support such views shall be furnished. In addition, the taxpayer must inform the Service of, and discuss the implications of, any legislation, or tax treaties, court decisions, regulations, revenue rulings or revenue procedures that the taxpayer determines are contrary to the position advanced by the taxpayer. If the taxpayer determines that there are no contrary authorities, a statement to this effect must be made in the ruling request.

.09 In order to assist the National Office in making the deletions, required by section 6110(c) of the Code, from the text of rulings and determination letters, which are open to public inspection pursuant to section 6110(a), there must accompany requests for such rulings or determination letters either a statement of the deletions proposed by the person requesting the ruling or determination letter and the statutory basis for each proposed deletion, or a statement that no information other than names, addresses, and taxpayer identifying numbers need be deleted. Such statement shall be made in a separate document. The statement of proposed deletions shall be accompanied by a copy of the request for a ruling or determination letter and supporting documents, on which shall be indicated, by the use of brackets, the material that the person making such request indicates should be deleted pursuant to section 6110(c). The statement of proposed deletions shall indicate the statutory basis, under section 6110(c), for each proposed deletion. The statement of proposed deletions shall not appear or be referred to anywhere in the request for a ruling or determination letter. If the person making the request decides to request additional deletions pursuant to section 6110(c) prior to the time the ruling or determination letter is issued, additional statements may be submitted.

.10 A request by or for a taxpayer must be signed by the taxpayer or the taxpayer's authorized representative. If the request is signed by a representative of the taxpayer, or if the representative is to appear before the Service in connection with the request, the representative must be:

1 an attorney who is a member in good standing of the bar of the highest court of any State, possession, territory, Commonwealth, or the District of Columbia, and who files with the Service a written declaration that the attorney is currently qualified as an attorney and is authorized to represent the principal;

2 a certified public accountant who is duly qualified to practice in any State, possession, territory, Commonwealth, or the District of Columbia, and who files with the Service a written declaration that the certified public accountant is currently qualified as a certified public accountant and is authorized to represent the principal; or

3 a person, other than an attorney or certified public accountant who is currently enrolled to practice before the Service, and who files with the Service a written declaration that such person is currently enrolled (including in the declaration either the enrollment number or the expiration date of the enrollment card) and of authorization to represent the principal. (See Treasury Department Circular No. 230 (31 CFR Part 10), revised, 1966-2 C.B. 1171, amended 1967-1 C.B. 433, and 1970-2 C.B. 644, for the rules on who may practice before the Service.) The above requirements do not apply to an individual representing the individual's full-time employer, or to a bona fide officer, administrator, administratrix, trustee, etc., representing a corporation, trust, estate, association, or organized group. An unenrolled preparer of a return (other than an attorney or certified public accountant referred to in (1) and (2) above) who is not a full-time employee or a bona fide officer, administrator, administratrix, trustee, etc., may not represent a taxpayer with respect to a ruling or a determination letter. Any authorized representative, whether or not enrolled to practice, must also comply with the conference and practice requirements of the Statement of Procedural Rules (26 CFR 601). Form 2848, Power of Attorney, and Form 2848-D, Authorization and Declaration, may be used with regard to rulings, closing agreements, and determination letters requested under this Revenue Procedure.

.11 If a taxpayer has more than one representative, sending a copy of the ruling to any one representative shall be sufficient. Copies of rulings will be sent to not more than two representatives provided that they are located at different mailing addresses. If a taxpayer does not designate which representative is to receive a copy of the ruling, a copy of the ruling will be sent to the first representative named on the latest power of attorney. If the original of the ruling is to be sent to a representative, the power of attorney should contain a statement to that effect and designate the mailing address of such representative.

.12 A request for a ruling letter by the National Office should be addressed to the Internal Revenue Service, Assistant Commissioner (Technical), Attention: T:FP:T, 1111 Constitution Avenue, N.W., Washington, D.C., 20224. A request for a determination letter should be addressed to the District Director of Internal Revenue whose office has or will have examination jurisdiction of the taxpayer's return.

.13 Any request for a ruling or determination letter that does not comply with all the provisions of this Revenue Procedure will be acknowledged, and the requirements that have not been met will be pointed out. If a request for a ruling lacks essential information, the taxpayer will be advised that if the information is not forthcoming within 30 days, the request will be closed. If the information is received after the request is closed, the request will be reopened and treated as a new request as of the date of the receipt of the essential information. A request for a ruling letter addressed to the District Director that does not comply with the provisions of this Revenue Procedure will be returned by the District Director for corrections prior to sending it directly to the National Office.

.14 A taxpayer who desires a conference on the issue or issues involved should indicate such desire in writing when filing the request or soon thereafter.

.15 It is the practice of the Service to process requests for ruling and determination letters in regular order and as expeditiously as possible. Consideration of a request for processing ahead of its regular order, or by a specified time, delays the processing of other matters. Requests for processing ahead of the regular order must be made in writing, preferably in a separate letter submitted with the request or subsequent thereto. If the request is not made in a separate letter, then the letter in which such request is made should state, at the top of the first page: "A Request for Expeditious Handling is Contained Herein. See page of this letter." The request should state a compelling need for such treatment. No assurance can be given that any letter will be processed by the time requested. For example, the scheduling of a closing date for a transaction or a meeting of the board of directors or shareholders of a corporation without due regard to the time it may take to obtain a ruling or determination letter will not be deemed sufficient reason for handling a request ahead of its regular order. Nor will the possible effect of fluctuation in the market price of stocks on a transaction be deemed sufficient reason for handling a request out of order. Requests by telegram will be treated in the same manner as requests by letter. Ruling and determination letters ordinarily will not be issued by telegram. A request for expeditious handling will not cause the Communications Branch to route the case to the Ruling Branch ahead of normal processing; and a request for expeditious handling will not be considered until the underlying ruling request has been found to satisfy the section 6110 requirements.

.16 The Director, Individual Tax Division, has primary responsibility for providing basic principles for uniform interpretation and application of the Federal tax laws in those areas involving: income taxes of noncorporate taxpayers (including individuals, partnerships, estates, and trusts); political organizations under section 527 (except subsection (f)); employment taxes and taxes on self-employment income; estate, gift, generation-skipping transfer, and certain excise taxes; and procedure and administration provisions of the Internal Revenue Code, except those specifically applicable to employee plans, exempt organizations, and actuarial determinations.

.17 The Director, Corporation Tax Division, has primary responsibility for providing basic principles of and rules for uniform interpretation and application of the Federal tax laws in those areas involving: income taxes and earnings and profits of corporate taxpayers; changes in methods and periods of accounting, depreciation, depletion, valuation and other engineering issues; and the taxable status of exchanges and distributions in connection with corporate organizations, reorganizations, and liquidations; exemption of farmers' cooperatives (under section 521), shipowners' protection and indemnity associations (under section 526), and certain homeowners associations (under section 528).

.18 A taxpayer may obtain information regarding the status of a request by calling the person whose name and telephone number is shown on the acknowledgement of receipt of the request.

.19 If after receiving the notice pursuant to section 6110(f)(1) of the Code of intention to disclose the ruling or determination letter (including a copy of the version proposed to be open to public inspection and notations of third-party communications pursuant to section 6110(d)), the person requesting the ruling or determination letter desires to protest the disclosure of certain information in the ruling or determination letter, that person must within 20 days submit a written statement to the Internal Revenue Service, Chief, Rulings Disclosure Branch, Attention T:FP:R, 1111 Constitution Avenue, N.W., Washington, D.C., 20224, identifying those deletions not made by the Service that such person believes should have been made. Such person shall also submit a copy of the version of the ruling or determination letter proposed to be open to public inspection on which such person indicates, by the use of brackets, the deletions proposed by the taxpayer that have not been made by the National Office. Generally, the Service will not consider the deletion under this subparagraph of any material that the taxpayer did not, prior to the issuance of the ruling or determination letter, propose be deleted. The National Office shall, within 20 days after receipt of the response by the person requesting the ruling or determination letter to the notice pursuant to section 6110(f)(1), mail to such person its final administrative conclusion with respect to the deletions to be made. However, in no event shall the taxpayer have the right to a conference with respect to resolution of any disagreements concerning material to be deleted from the text of the technical advice memorandum, but such matters may be considered at any conference otherwise scheduled with respect to the request.

.20 After receiving the notice pursuant to section 6110(f)(1) of the Code of intention to disclose (but no later than 60 days after such notice is mailed), the person requesting a ruling or determination letter may submit a request for delay of public inspection pursuant to either section 6110(g)(3) or sections 6110(g)(3) and (4). The request for delay shall be submitted to the Internal Revenue Service, Chief, Rulings Disclosure Branch, Attention T:FP:R, 1111 Constitution Avenue, N.W., Washington, D.C., 20224. A request for delay shall contain the date on which it is expected that the underlying transaction will be completed. The request for delay pursuant to section 6110(g)(4) shall contain a statement from which the Commissioner may determine that good cause exists to warrant such delay.

.21 A taxpayer who receives a ruling or determination letter prior to filing a return with respect to any transaction that has been consummated and that is relevant to the return being filed should attach a copy of the ruling or determination letter to the return when it is filed.

.22 Protests to adverse rulings under section 367 will be processed as follows:

Pursuant to Rev. Proc. 77-5, 1977-1 C.B. 536, a taxpayer may protest an adverse, or terms and conditions, ruling letter issued on or after January 31, 1977, under section 367(a)(1) of the Code (including a ruling with respect to an exchange described in section 367(b) that began before January 1, 1978), or section 1042(e) of the Tax Reform Act of 1976 [Pub. L. 94-455, 1976-3 C.B. (Vol. 1), 115], not later than the close of the 45th day after the date of the ruling letter. A protest is considered made on the date of the postmark of a letter of protest addressed to the Assistant Commissioner (Technical), or the date that such letter is hand delivered to the Service. The letter must include: (1) a copy of the ruling letter; (2) the reasons for the protest including, where applicable, (a) the grounds for contending that none of the principal purposes for the exchange is the avoidance of Federal income tax, (b) the grounds for contending that the terms and conditions set forth in the ruling letter pursuant to which an exchange to which section 367 applies will be considered not to be in pursuance of tax avoidance are not reasonable, and (c) the arguments in support of a protest as to the validity of a ruling position published by the Service, such as a position set forth in the guidelines announced in Rev. Proc. 68-23, 1968-1 C.B. 821 (no factual material not previously submitted and considered by the Service should be included in the protest); (3) a statement whether a conference is desired; and (4) names of persons (including authorized representatives) expected to attend the conference, if granted. The Assistant Commissioner (Technical) will establish an ad hoc advisory board to consider each protest, whether or not a conference is requested. The taxpayer will be granted one conference upon request. Whether or not such a request is made the board may request one or more conferences or written submissions. The taxpayer will be notified of the time, date, and place of the conference, and of the names of the members of the board. The board will consider all materials submitted in writing by the taxpayer and oral arguments presented at the conference. The board will make its recommendation to the Assistant Commissioner (Technical) who will make a decision in the matter. Any oral arguments made at a conference by the taxpayer, which have not previously been submitted to the Service in writing, may, if desired, be submitted to the Service in writing if postmarked not later than the close of the 7th day after the day of the conference. The taxpayer will be informed of the decision of the Assistant Commissioner by certified or registered mail.

.23 For appeal procedures with regard to adverse determination letters under section 521 of the Code and revocation or modification of exemption rulings and determination letters under section 521 see Rev. Proc. 76-33, 1976-2 C.B. 655.

Sec. 10. Handling of Ruling Requests

.01 Within 15 work days after receipt of a ruling request in the Branch, Service personnel will contact the taxpayer, to discuss informally the procedural and substantive issues involved in the ruling requests.

.02 The following subject matters are included in the 15-day procedure:

1 Individual Income Tax Branch (a) Partnerships and trusts

(b) Code section 103 (issues under its jurisdiction)

(c) Real estate investment trusts

(d) Stock options

(e) Charitable remainder trusts

(f) Pooled income funds

2 All matters within the jurisdiction of the Corporation Tax Branch except cases

(a) involving a request for change in accounting methods or periods,

(b) relating to the last-in first-out method of computing inventory,

(c) concerning insurance issues involving contracts with reserves based on segregated asset accounts,

(d) concerning insurance issues requiring actuarial computations.

3 All matters within the jurisdiction of the Wage, Excise and Administrative Provisions Branch, except ruling requests from individuals for employment status submitted on Forms SS-8.

4 All matters within the jurisdiction of the Engineering and Valuation Branch (except cases involving a request for a change in accounting methods), Reorganization Branch, and Estate and Gift Tax Branch.

.03 Procedures to be followed regarding ruling requests are:

1 Within 15 work days after a ruling request has been received in the Branch having jurisdiction, a representative of the Branch will contact the taxpayer to discuss the procedural and substantive issues involved in the ruling requests covered by this procedure. As to each issue coming within the jurisdiction of the Branch, the Branch representative will inform the taxpayer:

(a) whether the Branch representative will recommend the Service rule as requested by the taxpayer, rule adversely on the matter, or not rule;

(b) whether the taxpayer should submit additional information or representations to enable the Service to rule on the matter; or

(c) whether because of the nature of the transaction, or the issue presented, a tentative conclusion on the issue cannot be reached.

2 When the rulings requested involve matters within the jurisdiction of more than one Branch and/or within the jurisdiction of more than one office within the same Branch, a representative of the Branch that received the original ruling request will inform the taxpayer within the initial 15 work day contact period, that the rulings requested involving matters within the jurisdiction of another Branch and/or within the jurisdiction of another office within the same Branch and covered by this procedure, have been referred to that Branch or office for consideration and that a representative of that Branch or office will contact the taxpayer within 15 work days of the receipt by that Branch or office of the referral to informally discuss the procedural and substantive issues involved in the matters referred to that Branch or office.

3 If something less than a fully favorable ruling is indicated, the Branch representative will advise the taxpayer if minor modifications of the transaction or adherence to certain published positions will warrant the issuance of a favorable ruling. In addition, the Branch representative may inform the taxpayer of the representations that must be furnished in a document to comply with the requirements of the Service. For example, see Rev. Proc. 75-21, 1975-1 C.B. 715, and Rev. Proc. 75-28, 1975-1 C.B. 752. However, the Branch representative will not suggest precise changes that would materially alter the form of the proposed transaction. If, at the conclusion of the discussion, the Branch representative determines that a meeting in the National Office would better serve the purpose of developing or exchanging information, a meeting will be offered and an early meeting date arranged. This meeting will not be the taxpayer's conference of right as described in this Revenue Procedure.

4 The Service will not be bound by the informal opinion expressed by the Branch representative or any other authorized Service representative under this procedure, and such opinion cannot be relied upon as a basis for granting retroactive relief under the provisions of section 7805(b) of the Code.

5 The ruling request will thereafter be processed under existing procedures.

Sec. 11. Conferences in the National Office

.01 A taxpayer may request a conference only in connection with a ruling request. If a conference has been requested, the taxpayer will be notified by telephone, if possible, of the time and place of the conference. Normally, a conference is scheduled only when the National Office deems it will be helpful in deciding the case or when an adverse decision is indicated. If conferences are being arranged with respect to more than one request for a ruling involving the same taxpayer, they will be so scheduled as to cause the least inconvenience to the taxpayer. The conference must be held within 21 calendar days after contact has been made. An extension of the 21-day period will be granted only if justified in writing by the taxpayer and approved by the Chief or Assistant Chief of the Technical Branch to which the case is assigned. Generally, the taxpayer will be notified whether the extension has been granted within one workday after the receipt of the request. The taxpayer has no right to appeal denial of the extension.

.02 A taxpayer is entitled, as a matter of right, to only one conference in the National Office unless one of the circumstances discussed in section 11.06 develops. This conference normally will be held at the branch level of the appropriate division in the office of the Assistant Commissioner (Technical) and will be attended by a person who, at the time of the conference, has authority to sign the ruling letter for the branch chief in the case being discussed. If more than one subject is to be discussed at the conference, the discussion will constitute a conference with respect to each subject. In order to promote a free and open discussion of the issues, the conference usually will be held after the branch has had an opportunity to study the case. However, at the request of the taxpayer or representative, the conference of right may be held at an earlier stage in the consideration of the case than the Service ordinarily would designate. No taxpayer has a "right" to appeal the action of a branch to a division director or to any other official of the Service, nor is a taxpayer entitled, as a matter of right, to a separate conference in the Chief Counsel's office on a request for a ruling.

.03 In employment tax matters, only the party entitled to the ruling is entitled to a conference.

.04 Since conference procedures are informal, no tape, stenographic, or other verbatim recording of a conference will be made.

.05 The senior Service representative present at the conference insures that the taxpayer has full opportunity to present views on all of the issues that are in question. The Service representative explains the Service's tentative holding on the substantive issues and the reasons for such holding. If prospective application under section 7805(b) of the Code is advanced by the taxpayer, the Service representative will discuss the tentative recommendation with respect to such relief and the reasons for such tentative recommendation. No commitment will be made as to the holding that the Service will finally adopt.

.06 An invitation to an additional conference will be extended if subsequent to the conference of right an adverse holding is proposed but on a new issue or on the same issue but on different grounds from those discussed at the first conference. There is no right to another conference when a proposed holding is reversed at a higher level with a result less favorable to the taxpayer if the grounds or arguments on which the reversal is based were discussed at the conference of right. The provisions of this Revenue Procedure limiting the number of conferences to which a taxpayer is entitled will not foreclose the invitation of a taxpayer to attend further conferences when, in the opinion of National Office personnel, such further conferences are necessary. All additional conferences of the type discussed in this paragraph are held only at the invitation of the Service.

.07 It is the responsibility of the taxpayer to furnish in writing to the National Office any additional data, lines of reasoning, precedents, etc., that are proposed by the taxpayer and discussed at the conference but that were not previously or adequately presented in writing. Such additional information must be furnished by the taxpayer within 21 calendar days. If the additional information is not received within such time, a ruling will be issued on the basis of the information on hand or, when appropriate, no ruling will be issued. An extension of the 21-day period may be granted only if justified in writing by the taxpayer and approved by the chief or Assistant Chief of the Technical branch to which the case is assigned. Generally, the taxpayer will be notified whether the extension has been granted within one work day after the receipt of the request. The taxpayer has no right to appeal a denial of the extension.

Sec. 12. Referral of Matters to the National Office

.01 Requests for determination letters received by District Directors that, under the provisions of this Revenue Procedure, may not be acted upon by a district office, will be forwarded to the National Office for reply and the taxpayer advised accordingly. District Directors also refer to the National Office any request for a determination letter that in their judgment warrants the attention of the National Office.

.02 If the request involves an issue on which the Service will not issue a ruling or a determination letter, such request will not be forwarded to the National Office. The district office will advise the taxpayer that the Service will not issue a ruling or a determination letter on the issue. See section 8.01 of this Revenue Procedure.

Sec. 13. Referral of Matters to District Offices

Requests for rulings received by the National Office that, in accordance with the provisions of section 5 of this Revenue Procedure, may not be acted upon by the National Office are forwarded to the district office having examination jurisdiction of the taxpayer's return for appropriate action and the taxpayer advised accordingly. If the request is with respect to an issue or an area of the type discussed in section 8.01 and it is decided not to issue a ruling, the taxpayer will be so advised and the request will be forwarded to the appropriate district office for association with the related return.

Sec. 14. Review of Determination Letters

Determination letters issued under sections 7.01, 7.02, and 7.03 are not reviewed by the National Office prior to their issuance. If a taxpayer believes that a determination letter of this type is in error, the taxpayer may ask the District Director to reconsider the matter. The taxpayer may also ask the District Director to request technical advice from the National Office. In such event the procedure in Rev. Proc. 79-46, page 521, this Bulletin, will be followed.

Sec. 15. Withdrawal of Requests

A request for a ruling or a determination letter may be withdrawn at any time prior to the signing of the letter of reply. If a request for a ruling is withdrawn, the National Office may furnish its views on the subject matter of the request to the District Director whose office will have examination jurisdiction of the taxpayer's return for consideration in connection with any subsequent examination of the taxpayer's return. Even though a request is withdrawn, all correspondence and exhibits will be retained by the Service and will not be returned to the taxpayer. In appropriate cases, the Service may publish its findings in a revenue ruling or revenue procedure.

Sec. 16. Oral Advice to Taxpayers

.01 The Service does not issue ruling or determination letters upon oral requests. National Office officials and employees ordinarily will not discuss a substantive tax issue with a taxpayer prior to the receipt of a written request for a ruling since oral opinions or advice are not binding on the Service. This does not preclude a taxpayer from inquiring whether the Service will rule on a particular issue. In such cases, however, the name of the taxpayer and identifying number must be disclosed. The Service also will discuss questions relating to procedural matters with regard to submitting a request for a ruling, including the application of the provisions of section 9 to a particular case.

.02 A taxpayer may seek oral technical assistance from a Taxpayer Service Representative in a district office or service center in the preparation of a return or report, pursuant to other established procedures. Such oral advice is advisory only and the Service is not bound to recognize it in the examination of the taxpayer's return.

Sec. 17. Effect of Rulings

.01 A taxpayer may not rely on a ruling issued to another taxpayer. A ruling, except to the extent incorporated in a closing agreement, may be revoked or modified at any time under appropriate circumstances. See section 4.08 for the effect of a closing agreement. If a ruling is revoked or modified, the revocation or modification applies to all years open under the statutes, unless the Commissioner or the Commissioner's delegate exercises the discretionary authority under section 7805(b) of the Code to limit the retroactive effect of the revocation or modification. The manner in which this authority generally will be exercised is set forth in this section. With reference to rulings relating to the sale or lease of articles subject to the manufacturers excise tax and the retailers excise tax, see section 17.08.

.02 As part of the determination of a taxpayer's liability, it is the responsibility of the District Director to ascertain whether (1) any ruling previously issued to the taxpayer has been properly applied, (2) the representations upon which the ruling was based reflected an accurate statement of the material facts, and (3) the transaction actually was carried out substantially as proposed. If, in the course of determining the tax liability, the District Director finds that a ruling should be modified or revoked, the findings and recommendations of the District Director are forwarded to the National Office for consideration prior to further action. Such a referral to the National Office will be treated as a request for technical advice and the procedures of Rev. Proc. 79-46, page 521, this Bulletin, will be followed. Otherwise, the ruling is to be applied by the district office in its determination of the taxpayer's liability.

.03 Appropriate coordination with the National Office will be undertaken in the event that any other field official having jurisdiction over a return or other matter proposes to reach a conclusion contrary to a ruling previously issued to the taxpayer.

.04 A ruling found to be in error or not in accord with the current views of the Service may be modified or revoked. Modification or revocation of a ruling may be effected by (1) a notice to the taxpayer to whom the ruling was issued, (2) enactment of legislation or ratification of a tax treaty, (3) a decision of the United States Supreme Court, (4) issuance of temporary or final regulations, or (5) issuance of a revenue ruling, a revenue procedure, or other statement published in the Internal Revenue Bulletin. Consistent with these provisions, if a ruling relates to a continuing action or a series of actions, the ruling will ordinarily be applied until any one of the actions described above has taken place, or until specifically withdrawn.

.05 Except in rare or unusual circumstances, the revocation or modification of a ruling will not be applied retroactively with respect to the taxpayer to whom the ruling was issued or to a taxpayer whose tax liability was directly involved in such ruling if (1) there has been no misstatement or omission of material facts, (2) the facts subsequently developed are not materially different from the facts on which the ruling was based, (3) there has been no change in the applicable law, (4) the ruling was originally issued with respect to a prospective or proposed transaction, and (5) the taxpayer directly involved in the ruling acted in good faith in reliance upon the ruling and the retroactive revocation would be to the taxpayer's detriment. For example, the tax liability of each shareholder is directly involved in a ruling on the reorganization of a corporation. However, the tax liability of members of an industry is not directly involved in a ruling issued to one of the members, and the holding in a revocation or modification of a ruling to one member of an industry may be retroactively applied to other members of that industry. By the same reasoning, a tax practitioner may not obtain the nonretroactive application to one client of a modification or revocation of a ruling peviously issued to another client. When a ruling to a taxpayer is revoked by letter with retroactive effect, the letter will, except in fraud cases, set forth the grounds upon which the revocation is being made and the reasons why the revocation is being applied retroactively.

.06 A ruling issued to a taxpayer with respect to a particular transaction represents a holding of the Service on that transaction only. However, the application of that ruling to the transaction will not be affected by the subsequent issuance of regulations (either temporary or final), if the conditions specified in section 17.05 are met. If the ruling is later found to be in error or no longer in accord with the holding of the Service, it will afford the taxpayer no protection with respect to a like transaction in the same or subsequent year.

.07 However, if a ruling is issued covering a continuing action or a series of actions and it is determined that the ruling was in error, or no longer in accord with the holding of the Service, the Assistant Commissioner (Technical) ordinarily will limit the retroactivity of the revocation or modification to a date not earlier than that on which the ruling is modified or revoked. To illustrate, if a taxpayer receives a ruling that certain payments are excludable from gross income for Federal income tax purposes and it is later determined that the ruling is in error or no longer in accord with the holding of the Service, the Assistant Commissioner (Technical) ordinarily will restrict the retroactive application of the revocation or modification of the ruling. Further, if a taxpayer rendered service or provided a facility that is subject to the excise tax on services or facilities, and in reliance on a ruling issued to the same taxpayer did not pass the tax on to the user of the service or the facility, the Assistant Commissioner (Technical) ordinarily will restrict the retroactive application of the revocation or modification of the ruling. Likewise, if an employer incurred liability under the Federal Insurance Contributions Act, but in reliance on a ruling made to the same employer, neither collected the employee tax nor paid the employee and employer taxes under the Act, the Assistant Commissioner (Technical) ordinarily will restrict the retroactive application of the revocation or modification of the ruling with respect to both the employer tax and the employee tax. In the last situation cited, however, the restriction of retroactive application ordinarily will be conditioned on the furnishing by the employer of wage data as may be required by section 31.6011(a)-1 of the Employment Tax Regulations. Publication of a notice of proposed rulemaking will not affect the application of any ruling issued under the procedures set forth herein.

.08 A ruling holding that the sale or lease of a particular article is subject to the manufacturers excise tax or the retailers excise tax may not retroactively revoke or modify a prior ruling holding that the sale or lease of such article was not taxable, if the taxpayer to whom the ruling was issued, in reliance upon such prior ruling, parted with possession or ownership of the article without passing the tax on to the customer. Section 1108(b), Revenue Act of 1926.

.09 In the case of rulings involving completed transactions, other than those described in sections 17.07 and 17.08, taxpayers will not be afforded the protection against retroactive revocation provided in section 17.05 since they will not have entered into the transactions in reliance on the ruling.

Sec. 18. Effect of Determination Letters

A determination letter issued by a District Director in accordance with this Revenue Procedure will be given the same effect upon examination of the return of the taxpayers to whom the determination letter was issued as is described in section 17, in the case of a ruling issued to a taxpayer, expressed in the determination letter is indicated. A District Director may not limit the modification or revocation of a determination letter but may refer the matter to the National Office for the possible exercise by the Commissioner or the Commissioner's delegate a conclusion contrary to that except that reference to the National Office is not necessary when, upon examination of the return, it is the opinion of the District Director that of the authority to limit the modification or revocation.

Sec. 19. Effect of Information Letters

An information letter issued by the National Office or by a District Director is advisory only and the provisions of section 17 do not apply.

Sec. 20. Effect on Other Documents

Rev. Proc. 72-3 and Rev. Proc. 76-29 are superseded.