Rev. Proc. 69-12

Section 1. Purpose.

The purpose of this Revenue Procedure is to set forth a procedure for protesting adverse determinations under section 367 of the Internal Revenue Code of 1954.

Sec. 2. Background.

Advance rulings on certain transactions involving foreign corporations required under section 367 of the Code are issued by the Director, Income Tax Division. These rulings constitute a finding under section 367 that the exchange in question is or is not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income tax.

Revenue Procedure 68-23, C.B. 1968-1, 821, describes guidelines used by the Internal Revenue Service in considering requests for rulings under section 367 of the Code. The guidelines usually will be followed in issuing rulings. However, notwithstanding the guidelines, an adverse ruling may be issued in any case if, based on all the facts and circumstances, it is determined that it has not been established that tax avoidance is not one of the principal purposes of the transaction. On the other hand, a favorable ruling may be issued if, based on all the facts and circumstances of the case, it is established that tax avoidance is not one of the principal purposes of the transaction.

Sec. 3. Procedure.

A protest to an adverse determination under section 367 will be considered only after the issuance of an adverse ruling letter to the taxpayer. Upon receipt of the ruling letter, the taxpayer may, within 90 days, protest the adverse determination by directing a letter to the Assistant Commissioner (Technical). The letter should include the following information:

.01 A copy of the ruling letter.

.02 An explanation of the reasons for the protest, the grounds for contending that one of the principal purposes for the transaction is not the avoidance of Federal income taxes, and arguments in support of a protest as to the validity of a ruling position set forth in the guidelines announced in Revenue Procedure 68-23. No factual material not previously submitted and considered by the Income Tax Division should be included in the protest.

.03 Whether a conference is desired.

.04 Names of those persons (including authorized representatives) expected to attend the conference.

If the Assistant Commissioner decides that a conference should be granted, the taxpayer will be notified of the time and date of the conference. The conference will be held in the office of the Assistant Commissioner (Technical) in Washington, D.C., by a board established for this purpose by the Assistant Commissioner. Action will be taken on the protest only after consideration by the board of the material submitted in writing and the oral arguments, if any.

Whether or not there is a conference, all protests will be considered by the board and the board will notify the Income Tax Division of its decision. The taxpayer will be notified by the Income Tax Division of the results of the board's consideration of the protest.

Sec. 4. Inquiries.

Inquiries in regard to this Revenue Procedure should be addressed to the Assistant Commissioner (Technical), Attention: T:I:R, Internal Revenue Service, Washington, D.C. 20224.