Rev. Proc. 72-3

Section 1. Purpose

The purpose of this Revenue Procedure is to describe the general procedures of the Internal Revenue Service in issuing rulings, determination, opinion, and information letters to taxpayers and in entering into closing agreements on specific issues as to the interpretation or application of the Federal tax laws (other than those under the jurisdiction of the Alcohol, Tobacco and Firearms Division). This Revenue Procedure also informs taxpayers and their representatives where they may direct requests for rulings, determination and opinion letters, and closing agreements; and outlines procedures to be followed in order to promote efficient handling of their inquiries.

Sec. 2. General Practice and Definitions

.01 It is the practice of the Service to answer inquiries of individuals and organizations, whenever appropriate in 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. If a taxpayer's request for a ruling concerns an action that may have an impact on the environment, compliance by the Service with the requirements of the National Environmental Policy Act of 1969 (Public Law 91-190) may result in delay in issuing the ruling. Accordingly, taxpayers requesting rulings should take this factor into account. District Directors of Internal Revenue apply the statutes, 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 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, where appropriate, the office of the Director, Office of International Operations.

.02 A "ruling" is a written statement issued to a taxpayer or his authorized representative by the National Office that interprets and applies the tax laws to a 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 Income Tax Division and the Miscellaneous and Special Provisions Tax Division.

.03 A "determination letter" is a written statement issued by a District Director in response to a written inquiry by an individual or an organization that applies to the particular facts involved, the principles and precedents previously announced by the National Office. A determination letter is issued only where a determination can be made on the basis of clearly established rules as set forth in the statute, Treasury Decision or regulation, or by a ruling, opinion, or court decision published in the Internal Revenue Bulletin. Where such a determination cannot be made, such as where the question presented involves a novel issue or the matter is excluded from the jurisdiction of a District Director by the provisions of section 4 of this Revenue Procedure, a determination letter will not be issued. However, with respect to determination letters in the pension trust area, see Revenue Procedure 72-6, page 710, this Bulletin.

.04 An "opinion letter" is a written statement issued by the National Office as to the acceptability of the form of a master or prototype plan and any related trust or custodial account under sections 401 and 501(a) of the Internal Revenue Code of 1954.

.05 An "information letter" is a statement issued either by the National Office or by a District Director that does no more than call 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 when the nature of the request from the individual or the organization suggests that it is seeking general information, or where the request does not meet all the requirements of section 6 of this Revenue Procedure, and it is believed that such general information will assist the individual or organization.

.06 A "Revenue Ruling" is an official interpretation by the Service that has been published in the Internal Revenue Bulletin. 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.

.07 A "closing agreement," as the term is used herein, is an agreement between the Commissioner of Internal Revenue or his delegate and a taxpayer with respect to a specific issue or issues entered into pursuant to the authority contained in section 7121 of the Code. Such a closing agreement is based on a ruling that has been signed by the Commissioner or his delegate and 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 material fact. They may be entered into where it is advantageous to have the matter permanently and conclusively closed, or where 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. Where 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. 3 Rulings Issued by the National Office

.01 In income and gift tax matters, and in matters involving excise taxes imposed under Chapter 42 of the Code, the National Office issues rulings on prospective transactions and on completed transactions before the return is filed. However, rulings will not ordinarily be issued if the identical issue is present in a return of the taxpayer for a prior year which is under active examination or audit by a district office, or is being considered by a branch office of the Appellate Division. The National Office issues rulings involving the exempt status of organizations under section 501 or 521 of the Code, only to the extent provided in Revenue Procedure 72-4, page 706, Revenue Procedure 72-5, page 709, of this Bulletin, and Revenue Procedure 68-13, C.B. 1968-1, 764. The National Office issues rulings involving qualification of plans under section 401 of the Code only to the extent provided in Revenue Procedure 72-6, page 710, of this Bulletin. The National Office issues opinion letters as to the acceptability of the form of master or prototype plans and any related trusts or custodial accounts under sections 401 and 501(a) of the Code only to the extent provided in Revenue Procedure 72-7, page 715, and Revenue Procedure 72-8, page 716, of this Bulletin. 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 4.06 of this Revenue Procedure as to the authority of District Directors to issue determination letters in this connection.

.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.

.03 In employment and excise tax matters (except excise taxes imposed under Chapter 42 of the Code), the National Office issues rulings with respect to prospective transactions and to completed transactions either before or after the return is filed. However, the National Office will not ordinarily rule with respect to an issue, whether related to a prospective or a completed transaction, if it knows or has reason to believe that the same or an identical issue is before any field office (including any branch office of the Appellate Division) in connection with an examination or audit of the liability of the same taxpayer for the same or a prior period.

.04 The Service 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 branch office of the Appellate Division) in connection with an examination or audit of the liability of the same taxpayer for the same or a prior period.

.05 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 an inquiry 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 an inquiry 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.

(3) If an inquiry presents an issue that cannot be reasonably resolved prior to the issuance of regulations, a ruling will not be issued.

(4) 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, he 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, for example, 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.

Sec. 4. Determination Letters Issued by District Directors

.01 In income and gift tax matters, and in matters involving excise taxes imposed under Chapter 42 of the Code, District Directors issue determination letters in response to taxpayers' written requests submitted to their offices involving completed transactions which affect returns over which they have audit jurisdiction, but only if the answer to the question presented is covered specifically by statute, Treasury Decision or regulation, or specifically by a ruling, opinion, or court decision published in the Internal Revenue Bulletin. A determination letter will not usually be issued with respect to a question which 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 sections 4.05 and 4.06 below.

.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 audited by their offices, but only if the answer to the questions presented are specifically covered by statute, Treasury Decision or regulation, or by 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.

.03 In employment and excise tax matters (except excise taxes imposed under Chapter 42 of the Code), District Directors issue determination letters in response to written requests from taxpayers who have filed or who are required to file returns over which they have audit jurisdiction, but only if the answer to the questions presented are specifically covered by statute, Treasury Decision or regulation, or by a ruling, opinion, or court decision published in the Internal Revenue Bulletin. Because of the impact of these taxes upon the business operation of the taxpayer and because of special problems of administration both to the Service and to the taxpayer, District Directors may take appropriate action in regard to such requests, whether they relate to completed or prospective transactions or returns previously filed or to be filed.

.04 Notwithstanding the provisions of sections 4.01, 4.02, and 4.03 above, a District Director will not issue a determination letter in response to an inquiry which presents a question specifically covered by statute, regulations, 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 the Appellate Division, (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 inquiry is with regard to a taxpayer or taxpayers who have filed or are required to file returns over which his office has or will have audit jurisdiction. Notwithstanding the provisions of section 4.03, a District Director will not issue a determination letter on an employment tax question when the specific question involved has been or is being considered by the Central Office of the Social Security Administration. Nor will District Directors issue determination letters on excise tax questions if a request is for a 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 5.02.

.05 District Directors issue determination letters as to the qualification of plans under sections 401 and 405(a) of the Code, and as to the exempt status of related trusts under section 501 of the Code, to the extent provided in Revenue Procedure 72-6, page 710, this Bulletin, and Revenue Procedure 72-8, page 716, this Bulletin. Selected District Directors also issue determination letters as to the qualification of certain organizations for exemption from Federal income tax under sections 501 and 521 of the Code, to the extent provided in Revenue Procedure 72-4.

.06 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 his income tax return for the year in which the property was involuntarily converted.

.07 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 response is made to such inquiry prior to an examination or audit, it will be considered a tentative finding in any subsequent examination or audit of the return.

Sec. 5. Discretionary Authority To Issue Rulings and Determination Letters

.01 There are certain areas where, 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 ruling or a determination letter is not issued on alternative plans of proposed transactions or on hypothetical situations. A list of these areas is set forth in Revenue Procedure 72-9, page 718, this Bulletin. This list is not all inclusive since the Service may decline to issue rulings or determination letters 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 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 coming within the provisions of sections 1491 and 1492 of the Code, or an exchange coming within the provisions of section 367 of the Code. The National Office will also issue rulings in all cases involving the determination of a constructive sales price under section 4216(b) or 4218(e) of the Code.

Sec. 6. 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 present requests in duplicate under other circumstances.

.02 Each request for a ruling or a determination letter must contain a complete statement of all relevant 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 audit jurisdiction over the return or report of each party; 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. However, relevant facts reflected in documents submitted must be included in the taxpayer's statement 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. (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 in a plan.) The request must contain a statement whether, to the best of the knowledge of the taxpayer or his representative, the identical issue is being considered by any field office of the Service in connection with an active examination or audit of a tax return already filed or is being considered by a branch office of the Appellate Division. Where the request pertain to only one step of a larger integrated transaction, the facts, circumstances, etc., must be submitted with respect to the entire transaction. If the request is for an advance ruling under section 367 of the Code, see Revenue Procedure 68-23, C.B. 1968-1, 821.

(Revenue Procedure 68-23 contains guidelines for taxpayers and their representatives in connection with requests for rulings under section 367.) If the request is for a ruling under section 351 of the Code, see Revenue Procedure 70-17, C.B. 1970-2, 490. (Revenue Procedure 70-17 sets forth the information to be included in the request for a ruling under section 351 of the Code.) Original documents should not be submitted because documents and exhibits become a part of the Internal Revenue Service file which cannot be returned. If the request is with respect to a corporate distribution, reorganization, or other similar or related transaction, the corporate balance sheet nearest the date of the transaction should be submitted. (If the request relates to a prospective transaction, the most recent balance sheet should be submitted.)

.03 As an alternative procedure for the issuance of rulings on prospective transactions, the taxpayer may submit a summary statement of the facts he considers controlling the issue, in addition to the complete statement required for ruling requests by section 6.02 above. Assuming agreement with the taxpayer's summary statement, the Service will use it as the basis for the ruling. Any 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 6.02 above; and

(2) A summary statement of the facts which he believes should be controlling in reaching the requested conclusion. Where 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 contained in 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 where it is inconsistent with other procedures applicable to specific situations such as: requests for permission to change accounting method or period; application for recognition of exempt status under section 501 or 521 of the Code; or rulings on employment tax status.

.04 If the taxpayer is contending for a particular determination, he must furnish an explanation of the grounds for his contentions, together with a statement of relevant authorities in support of his views. Even though the taxpayer is urging no particular determination with regard to a proposed or prospective transaction, he must state his views as to the tax results on the proposed action and furnish a statement of relevant authorities to support such views.

.05 If the request is with respect to the qualification of a plan under section 401 or 405(a) of the Code, see Revenue Procedure 72-6, and Revenue Procedure 72-8. If the request is with respect to the qualification of an organization for exemption from Federal income tax under section 501 or 521 of the Code, see Revenue Procedure 72-4, Revenue Procedure 72-5, and Revenue Procedure 68-13, C.B. 1968-1, 764.

.06 A request by or for a taxpayer must be signed by the taxpayer or his authorized representative. If the request is signed by a representative of the taxpayer, or if the representative is to appear before the Internal Revenue Service in connection with the request, he 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 he is currently qualified as an attorney and he 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 he is currently qualified as a certified public accountant and he is authorized to represent the principal; or

(3) a person, other than an attorney or certified public accountant, enrolled to practice before the Service, and who files with the Service a written declaration that he is currently enrolled (including in the declaration either his enrollment number or the expiration date of his enrollment card) and that he is authorized to represent the principal. (See Treasury Department Circular No. 230. Revised, C.B. 1966-2, 1171, as amended, C.B. 1967-1, 433, and C.B. 1970-2, 644, for the rules on who may practice before the Service.) The above requirements do not apply to an individual representing his full-time employer, or to a bona fide officer, administrator, 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 clauses 1 and 2 above) who is not a full-time employee or a bona fide officer, administrator, trustee, etc., may not represent a taxpayer with respect to a ruling or a determination letter. Any authorized representative, whether or not he is enrolled to practice, must also comply with the conference and practice requirements of the Statement of Procedural Rules (26 CFR 601). Forms 2848, Power of Attorney, and 2848-D, Authorization and Declaration, may be used with regard to rulings, determination letters, and opinion letters requested under this Revenue Procedure, Revenue Procedure 72-4, Revenue Procedure 72-5, Revenue Procedure 72-6, Revenue Procedure 72-7, Revenue Procedure 72-8, and Revenue Procedure 68-13, C.B. 1968-1, 764.

.07 A request for a ruling or opinion letter by the National Office should be addressed to the Commissioner of Internal Revenue, Attention: T:PS:T, 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 audit jurisdiction of the taxpayer's return. See also Revenue Procedure 72-4, Revenue Procedure 72-5, Revenue Procedure 72-6, Revenue Procedure 72-7, Revenue Procedure 72-8, and Revenue Procedure 68-13, C.B. 1968-1, 764.

.08 Any request for a ruling or an opinion 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. A request for a ruling or opinion 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 completion prior to sending it to the National Office. .09 A taxpayer or his representative who desires an oral discussion of the issue or issues involved should indicate such desire in writing when filing the request or soon thereafter in order that the conference may be arranged at that stage of the consideration when it will be most helpful.

.10 It is the practice of the Service to process requests for ruling, opinion, and determination letters in regular order and as expeditiously as possible. Compliance with a request for consideration of a particular matter ahead of its regular order, or by a specified time, tends to delay the disposition of other matters. Requests for processing ahead of the regular order, made in writing in a separate letter submitted with the request or subsequent thereto and showing clear need for such treatment, will be given consideration as the particular circumstances warrant. However, 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, opinion, or determination letter will not be deemed sufficient reason for handling a request ahead of its regular order. Neither 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, opinion, and determination letters ordinarily will not be issued by telegram.

.11 The Director, Income Tax Division, has primary responsibility for issuing rulings in areas involving the application of Federal income and employment taxes and the interest equalization tax to corporate and noncorporate taxpayers (including individuals, partnerships, estates, and trusts); those involving income tax conventions or treaties with foreign countries; those involving depreciation, depletion, and valuation issues; and those involving the taxable status of exchanges and distributions in connection with corporate reorganizations, organizations, liquidations, etc.

.12 The Director, Miscellaneous and Special Provisions Tax Division, has primary responsibility for issuing rulings with respect to organizations exempt from income tax; matters involving the qualification of pension, annuity, profit-sharing, stock bonus, and bond purchase plans; the tax treatment of employees and their beneficiaries and deductions for employer contributions under such plans; areas involving the application of Federal estate and gift taxes, including estate and gift tax conventions or treaties with foreign countries; certain excise taxes; the procedure and administration provisions of the Internal Revenue Code; and matters requiring actuarial determinations.

.13 A taxpayer or his representative desiring to obtain information as to the status of his case may do so by contacting the following offices with respect to matters in the areas of their responsibility:

                                                  Telephone Numbers

.15 Where a taxpayer has received an adverse ruling under section 367 of the Code, a protest directed to the position upon which the adverse ruling is based will be considered by an informal board established for this purpose by the Assistant Commissioner (Technical). All protests, whether or not there is a conference, 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. This procedure is invoked by a written request directed to the Assistant Commissioner (Technical).

Sec. 7. Conferences in the National Office

.01 If a conference has been requested, the taxpayer will be notified of the time and place of the conference. A conference is normally scheduled only when the Service deems it will be helpful in deciding the case or 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.

.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 7.03 develops. This conference will usually be held at the branch level of the appropriate division in the office of the Assistant Commissioner (Technical) and will usually be attended by a person who has authority to act for the branch chief. 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 will usually be held after the branch has had an opportunity to study the case. However, at the request of the taxpayer or his representative, the conference may be held at an earlier stage in the consideration of the case than the Service would ordinarily 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 the process of review in Technical of a holding proposed by a branch, it may appear that the final answer will involve a reversal of the branch proposal with a result less favorable to the taxpayer. Or it may appear that an adverse holding proposed by a branch will be approved, but on a new or different issue or on different grounds than those on which the branch decided the case. Under either of these circumstances, the taxpayer or his representative will be invited to another conference. 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 need arises. All additional conferences of the type discussed in this paragraph are held only at the invitation of the Service.

.04 It is the responsibility of the taxpayer to add to the case file a written record of any additional data, lines of reasoning, precedents, etc., which are proposed by the taxpayer and discussed at the conference but which were not previously or adequately presented in writing.

Sec. 8. Reference of Matters to the National Office

.01 Requests for determination letters received by the District Directors that, in accordance with the provisions of section 4 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. See also the provisions of Revenue Procedure 72-6, Revenue Procedure 72-7, and Revenue Procedure 72-8, with respect to requests relating to qualification of a plan under sections 401 and 405(a) of the Code, and Revenue Procedure 72-4, Revenue Procedure 72-5, and Revenue Procedure 68-13 C.B. 1968-1, 764, with respect to applications for recognition of exempt status under sections 501 and 521 of the Code.

.02 If the request is with regard to an issue or an area with respect to which the Service will not issue a ruling or a determination letter, such request will not be forwarded to the National Office, but the district office will advise the taxpayer that the Service will not issue a ruling or a determination letter on the issue. See section 5.01 of this Revenue Procedure.

Sec. 9. Reference of Matters to District Offices

Requests for rulings received by the National Office that, in accordance with the provisions of section 3 of this Revenue Procedure, may not be acted upon by the National Office will be forwarded for appropriate action to the district office that has or will have audit jurisdiction of the taxpayer's return and the taxpayer advised accordingly. If the request is with respect to an issue or an area of the type discussed in section 5.01, the taxpayer will be so advised and the request may be forwarded to the appropriate district office for association with the related return or report of the taxpayer.

Sec. 10. Review of Determination Letters

.01 Determination letters issued with respect to the types of inquiries authorized by sections 4.01, 4.02, and 4.03 are not generally reviewed by the National Office as they merely inform a taxpayer of a position of the Service which has been previously established either in the regulations or in a ruling, opinion, or court decision published in the Internal Revenue Bulletin. If a taxpayer believes that a determination letter of this type is in error, he may ask the District Director to reconsider the matter. He may also ask the District Director to request advice from the National Office. In such event the procedure in Revenue Procedure 72-2, page 5 this Bulletin, will be followed.

.02 The procedures for review of determination letters relating to the qualification of employers' plans under sections 401 and 405(a) of the Code are provided in Revenue Procedure 72-6.

.03 The procedures for review of determination letters relating to the exemption from Federal income tax of certain organizations under sections 501 and 521 of the Code are provided in Revenue Procedure 72-4.

Sec. 11. Withdrawal of Requests

The taxpayer's request for a ruling or a determination letter may be withdrawn at any time prior to the signing of the letter of reply. However, in such a case, the National Office may furnish its views to the District Director whose office has or will have audit jurisdiction of the taxpayer's return. The District Director will consider the information submitted in any subsequent audit or examination of the taxpayer's return. Even though a request is withdrawn, all correspondence and exhibits will be retained in the Service and will not be returned to the taxpayer.

Sec. 12. Oral Advice to Taxpayers

.01 The Service does not issue rulings or determination letters upon oral requests. Furthermore, National Office officials and employees ordinarily will not discuss a substantive tax issue with a taxpayer or his representative prior to the receipt of a written request for a ruling, since oral opinions or advice are not binding on the Service. This should not be construed as preventing a taxpayer or his representative from inquiring whether the Service will rule on a particular question. In such cases, however, the name of the taxpayer and his identifying number must be disclosed. The Service will also discuss questions relating to procedural matters with regard to submitting a request for a ruling, including the application of the provisions of section 6 above to the particular case.

.02 A taxpayer may, of course, seek oral technical assistance from a district office in the preparation of his 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. 13. Effect of Rulings

.01 A taxpayer may not rely on an advance ruling issued to another taxpayer. A ruling, except to the extent incorporated in a closing agreement, may be revoked or modified at any time in the wise administration of the taxing statutes. See section 2.07 for the effect of a closing agreement. If a ruling is revoked or modified, the revocation or modification applies to all open years under the statutes, unless the Commissioner or his 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 the Commissioner or his delegate generally will exercise this authority 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 specifically section 13.08.

.02 As part of the determination of a taxpayer's liability, it is the responsibility of the District Director to ascertain whether any ruling previously issued to the taxpayer has been properly applied. It should be determined whether the representations upon which the ruling was based reflected an accurate statement of the material facts and whether the transaction actually was carried out substantially as proposed. If, in the course of the determination of the tax liability, it is the view of the District Director that a ruling previously issued to the taxpayer should be modified or revoked, the findings and recommendations of that office will be forwarded to the National Office for consideration prior to further action. Such reference to the National Office will be treated as a request for technical advice and the procedures of Revenue Procedure 72-2 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 of 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 may be effected by a notice to the taxpayer to whom the ruling originally was issued, or by a Revenue Ruling or other statement published in the Internal Revenue Bulletin.

.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 originally 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 his detriment. To illustrate, the tax liability of each employee covered by a ruling relating to a pension plan of an employer is directly involved in such ruling. Also, 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 previously issued to another client. Where a ruling to a taxpayer is revoked with retroactive effect, the notice to such taxpayer 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 13.05 above 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, except to the extent provided in section 13.07 and 13.08.

.07 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 original ruling is modified or revoked. To illustrate, if a taxpayer rendered service or provided a facility which 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 latter situation, however, the restriction of retroactive application ordinarily will be conditioned on the furnishing by the employer of wage data, or of such corrections of wage data as may be required by section 31.6011(a)-1 of the Employment Tax Regulations. Consistent with these provisions, if a ruling relates to a continuing action or a series of actions, the ruling will be applied until the date of issuance of applicable regulations or the publication of a Revenue Ruling holding otherwise, or until specifically withdrawn. Publication of a notice of proposed rulemaking will not affect the application of any ruling issued under the procedures set forth herein. (As to the effective date in cases involving revocation or modification of rulings or determination letters recognizing exemption, see section 11.01 of Rev. Proc. 72-4.)

.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 revoke or modify retroactively 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 his customer. Section 1108(b), Revenue Act of 1926.

.09 In the case of rulings involving completed transactions, other than those described in .07 and .08 above, taxpayers will not be afforded the protection against retroactive revocation provided in .05 above in the case of proposed transactions since they will not have entered into the transactions in reliance on the ruling.

Sec. 14. Effect of Determination Letters

.01 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 taxpayer to whom the determination letter was issued as is described in section 13, in the case of a ruling issued to a taxpayer, except that reference to the National Office is not necessary where, upon examination of the return, it is the opinion of the District Director that a conclusion contrary to that 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 exercise by the Commissioner or his delegate of the authority to limit the modification or revocation.

.02 In this connection see also Revenue Procedure 72-4 and Revenue Procedure 72-6.

Sec. 15. 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 13 of this Revenue Procedure do not apply.

Sec. 16. Effect on Other Documents

Revenue Procedure 69-1, C.B. 1969-1, 381, and Revenue Procedure 70-5, C.B. 1970-1, 419 are superseded by this Revenue Procedure.

Sec. 17. Effective Date

This Revenue Procedure is effective January 3, 1972, the date of its publication in the Internal Revenue Bulletin.