IRS PUBLISHES ANNUAL REVISION OF PROCEDURES FOR ISSUING RULING LETTERS.

Rev. Proc. 91-1

                          TABLE OF CONTENTS

This revenue procedure explains how the Internal Revenue Service gives guidance to taxpayers on issues under the jurisdiction of the Associate Chief Counsel (Technical). It explains the kinds of guidance and the manner in which guidance is requested by taxpayers and provided by the Service.

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

SEC. 2. IN WHAT FORM IS GUIDANCE PROVIDED BY THE OFFICE OF THE ASSOCIATE CHIEF COUNSEL (TECHNICAL)?

The Service provides guidance in the form of rulings, closing agreements, determination letters, information letters, revenue rulings, and oral advice.

01 A "letter ruling" is a written statement issued to a taxpayer by the Service's National Office that interprets and applies the tax laws to the taxpayer's specific set of facts. Once issued, a letter ruling may be revoked or modified for any number of reasons, as explained in section 11 of this revenue procedure, unless it is accompanied by a "closing agreement."

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

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

If, in a single case, closing agreements are requested for each of a number of taxpayers, such agreements are entered into only if the number of taxpayers is 25 or less. However, if the issue and holding are identical for all taxpayers and they number more than 25, a "mass closing agreement" will be entered into with the taxpayer who is authorized by the others to represent the entire group.

02 A "determination letter" is a written statement issued by a District Director of the Service that applies the principles and precedents previously announced by the National Office to a specific set of facts. It is issued only when a determination can be made based on clearly established rules in the statute or regulations, or on a position in a ruling, opinion, or court decision published in the Internal Revenue Bulletin that specifically answers the questions presented.

03 An "information letter" is a statement issued either by the National Office or by a District Director. It 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 taxpayer's inquiry indicates a need for general information. It may also be issued when the taxpayer's request doesn't meet the requirements for requesting a ruling, and the Service thinks general information will help the taxpayer.

04 A "revenue ruling" is an interpretation by the Service that has been published in the Internal Revenue Bulletin. It is the conclusion of the Service on how the law is applied to a specific set of facts. Revenue rulings are issued only by the National Office and are published for the information and guidance of taxpayers, Internal Revenue Service personnel, and other interested parties.

Because each revenue ruling represents the conclusion of the Service regarding the application of law to the entire statement of facts involved, taxpayers, Service personnel, and others concerned are cautioned against reaching the same conclusion in other cases unless the facts and circumstances are substantially the same. They should consider the effect of subsequent legislation, regulations, court decisions, revenue rulings, notices, and announcements. See Rev. Proc. 89-14, 1989-1 C.B. 814, which states the objectives of and standards for the publication of revenue rulings and revenue procedures in the Internal Revenue Bulletin.

05

(1) No oral rulings, and no written rulings in response to oral requests

The Service does not orally issue rulings, nor does it issue letter rulings or determination letters in response to oral requests from taxpayers. However, Service employees ordinarily will discuss with taxpayers or their representatives inquiries regarding whether the Service will rule on particular issues and questions relating to procedural matters about submitting ruling requests for a particular case.

(2) Discussion possible on substantive issues

At the discretion of the Service, and as time permits, substantive issues also may be discussed. However, such a discussion will not be binding on the Service and cannot be relied on as a basis for obtaining retroactive relief under the provisions of section 7805(b) of the Code.

Substantive tax issues involving the taxpayer that are under examination or in litigation will not be discussed by Service employees not directly involved in the examination or litigation of such issues. However, a tax issue may be discussed even though the issue is affected by a nontax issue pending in litigation.

A taxpayer may seek oral technical guidance from a Taxpayer Service Representative in a District Office or Service Center when preparing a return or report. Oral guidance is advisory only, and the Service is not bound recognize it in the examination of the taxpayer's return.

SEC. 3. ON WHAT ISSUES MAY TAXPAYERS REQUEST WRITTEN GUIDANCE UNDER THIS PROCEDURE?

Taxpayers may request letter rulings, information letters, and closing agreements on issues within the jurisdiction of the Associate Chief Counsel (Technical) under this procedure. They also may request determination letters within the jurisdiction of the appropriate district director offices that relate to Code sections under the jurisdiction of the Associate Chief Counsel (Technical).

Issues under the jurisdiction of the Associate Chief Counsel (Technical) include all issues under the jurisdiction of the various Assistant Chief Counsels as explained below.

01 Issues under the Assistant Chief Counsel (Corporate) include those that involve corporate acquisitions; transfers of corporate stock or other property in connection with corporate reorganizations, separations, redemptions, and liquidations; consolidated returns; allocation of income and deductions among taxpayers; acquisitions made to evade or avoid income tax; corporate income taxes; earnings and profits; and the effects of certain ownership changes.

02 Issues under the Assistant Chief Counsel (Employee Benefits and Exempt Organizations) involve income tax and other tax aspects of executive compensation and employee benefit programs (other than those within the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations)); employment taxes, and taxes on self-employment income.

03 Issues under the Assistant Chief Counsel (Financial Institutions and Products) involve banks, savings and loan associations, real estate investment trusts (REITs), regulated investment companies (RICs), real estate mortgage investment conduits (REMICs), tax exempt obligations, mortgage credit certificates, insurance companies and products, and financial products.

04 Issues under the Assistant Chief Counsel (Income Tax and Accounting) involve recognition and timing of income and deductions of individuals and corporations, sales and exchanges, capital gains and losses, various administrative provisions, accounting methods and periods, installment sales, equipment leasing, inventories, and the alternative minimum tax.

05 Issues under the Assistant Chief Counsel (Passthroughs and Special Industries) involve income taxes of S corporations (except accounting periods and methods) and certain noncorporate taxpayers (including partnerships and trusts); estate, gift, generation- skipping transfer, and certain excise taxes; depreciation, depletion, and other engineering issues; cooperative housing corporations; farmers' cooperatives (under section 521 of the Code); the low-income housing credit; research and experimental expenditures; shipowners' protection and indemnity associations (under section 526); and certain homeowners associations (under section 528).

SEC 4. ON WHAT ISSUES MUST WRITTEN GUIDANCE BE REQUESTED UNDER DIFFERENT PROCEDURES?

01 The instructions for obtaining rulings, closing agreements, and information letters on tax issues involving interpreting or applying the federal tax laws and income tax treaties relating to international transactions are contained in Rev. Proc. 87-4, 1987-1 C.B. 529, as modified by Rev. Proc. 88-4, 1988-1 C.B. 586. See also Rev. Proc. 90-17, 1990-1 C.B. 479 (user fees).

02 The procedures for obtaining rulings, etc., that apply to federal alcohol, tobacco, and firearms taxes under Subtitle E of the Internal Revenue Code are under the jurisdiction of the Bureau of Alcohol, Tobacco and Firearms. (See 26 CFR 601.328.)

03 Procedures for obtaining rulings, determination letters, etc., on employee plans and exempt organizations are under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations). See Rev. Proc. 90-4, 1990-1 C.B. 410. See also Rev. Proc. 90-17 (user fees).

SEC. 5. UNDER WHAT CIRCUMSTANCES DOES THE NATIONAL OFFICE ISSUE RULINGS?

01 In income and gift tax matters, the National Office issues rulings on proposed transactions and on completed transactions if the request is submitted before the return is filed for the year in which the transaction that is the subject of the request was completed.

The National Office ordinarily does not issue rulings if, at the time the ruling is requested, the identical issue is involved in the taxpayer's return for an earlier period, and that issue --

(1) is being examined by a District Director,

(2) is being considered by an Appeals Office,

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

(4) has been examined by a District Director or considered by an Appeals Office, and the statutory period of limitation has not expired for either assessment or filing a claim for refund, or a closing agreement covering the issue of liability has not been entered into by a District Director or by an Appeals Office.

If a return dealing with an issue for a particular year is filed while a request for ruling on that issue is pending, the National Office will issue the ruling unless it is notified by the taxpayer that an examination of that issue or the identical issue on an earlier year's return has been started by a District Director. See section 8.04. However, even if an examination has begun, the National Office ordinarily will issue the letter ruling if the District Director agrees, by memorandum, to permit the ruling to be issued.

The National Office does not issue letter rulings on the replacement of involuntarily converted property, whether or not the property has been replaced, if the taxpayer has already filed a return for the tax year in which the property was converted. However, the District Director may issue a determination letter in this case. See section 6.01 for more information.

The National Office generally does not issue letter rulings on the classification of an organization if a return has been filed for the organization for an earlier period. However, the National Office will consider ruling requests concerning the classification of an existing organization as a partnership. See Rev. Proc. 86-12, 1986-1 C.B. 534 and Rev. Proc. 89-12, 1989-1 C.B. 398.

02 If a request for an extension of time under section 1.9100--1 of the regulations is submitted after the return is filed but before the return is examined, the procedures under Rev. Proc. 91-1 (this revenue procedure) apply. See, however, Rev. Proc. 79-63, 1979-2 C.B. 578, which concerns applications for relief under section 1.9100-1 of the regulations, and section 7 of this revenue procedure. If an examination of the return has begun, or is being considered by an Appeals Office, the provisions of Rev. Proc. 91-2, this Bulletin, apply.

03 In general, the National Office issues prospective letter rulings on transactions affecting the estate tax on the prospective estate of a living person and rulings affecting the estate tax on the estate of a decedent before the decedent's estate tax return is filed. The National Office will not issue rulings for prospective estates on computations of tax, actuarial factors, and factual matters.

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

If the return is filed before the ruling is issued, the taxpayer must disclose on the return that a letter ruling has been requested, attach a copy of the pending ruling request to the return, and notify the National Office that the return has been filed. The National Office will make every effort to issue the ruling within 3 months of the date the return was filed.

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

04 In matters involving additional estate tax under section 2032A(c), the National Office issues letter rulings on prospective transactions and on completed transactions that occurred before the return is filed.

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

06 In employment and excise tax matters, the National Office issues letter rulings on prospective transactions and on completed transactions either before or after the return is filed for those transactions. Requests regarding employment status (employer/employee relationship) from federal agencies and instrumentalities as well as from states, political subdivisions and their wholly-owned instrumentalities should be submitted directly to the National Office. Requests from other taxpayers must first be submitted to the taxpayer's District Office. See section 6.04. Generally, the employer is the taxpayer and requests the ruling. However, if the worker asks for the ruling, both the worker and the employer are considered to be the taxpayer and both are entitled to the ruling.

The National Office usually will not issue letter rulings if, at the time the ruling is requested, the identical issue is involved in the taxpayer's return for an earlier period and that issue --

(1) is being examined by a District Director,

(2) is being considered by an Appeals Office,

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

(4) has been examined by a District Director or considered by an Appeals Office and the statutory period of limitation has not expired for either assessment or filing a claim for refund or credit of tax, or a closing agreement covering the issue or liability has not been entered into by a District Director or by an Appeals Office. However, if a District Director began an examination of the issue involved in the ruling request, the National Office usually will issue the letter ruling if the District Director agrees, by memorandum, to permit the ruling to be issued.

07 The National Office issues letter rulings on matters arising under the Code and related statutes and regulations that involve --

(1) the time, place, manner, and procedures for reporting and paying taxes,

(2) the assessment and collection of taxes (including interest and penalties),

(3) the abatement, credit, or refund of overassessments or overpayments of tax, or

(4) the filing of information returns.

Letter rulings ordinarily are not issued, if, at the time the letter ruling is requested, the identical issue is involved in the taxpayer's return for an earlier period, and that issue --

(a) is being examined by a District Director,

(b) is being considered by an Appeals Office,

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

(d) has been examined by a District Director or considered by an Appeals Office and the statutory period of limitation has not expired for assessment or filing a claim for refund or credit of tax, or a closing agreement covering the issue or liability has not been entered into by a District Director or Appeals Office.

If a return involving an issue for a particular year is filed while a request for a letter ruling on that issue is pending, the National Office will issue the letter ruling, unless the District Director has started an examination of that issue or an examination of the identical issue on an earlier year's return. But, even if an examination has begun, the National Office ordinarily will issue the letter ruling if the District Director agrees, by memorandum, to permit the letter ruling to be issued.

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

The National Office may, however, issue letter rulings to groups or associations on their own tax status or liability if the request otherwise meets the requirements for requesting a ruling.

09 Unless the issue is covered by section 7 of this procedure or by Rev. Proc. 91-3, this Bulletin, pending the adoption of regulations (either temporary or final) that interpret the provisions of any act, a ruling may be issued under the following conditions:

(1) If the letter ruling request presents an issue for which the answer seems clear by applying the statute to the facts, a letter ruling will be issued.

(2) If the ruling request presents an issue for which the answer seems reasonably certain but not entirely free from doubt, a ruling will be issued.

(3) The Service will consider all letter ruling requests and do its best to issue a ruling even if the answer does not seem reasonably certain with respect to issues relating to Code sections enacted by the Tax Reform Act of 1986 and subsequent Acts amending the Internal Revenue Code.

A letter ruling will not be issued if the ruling request presents an issue that cannot be readily resolved before regulations are issued. However, section 2.03 of Rev. Proc. 88-18, 198 C.B. 6 provides that when the Service has closed a regulations project or does not intend to open a regulations project, the appropriate Branch will consider all letter ruling requests unless the issue is covered by section 7 of this revenue procedure or by Rev. Proc. 91-3, also in this Bulletin.

SEC. 6. UNDER WHAT CIRCUMSTANCES DO DISTRICT DIRECTORS ISSUE DETERMINATION LETTERS?

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

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

Normally, District Directors do not issue determination letters on the tax consequences of proposed transactions. However, a District Director may issue a determination letter on the replacement, even though not yet made, of involuntarily converted property under section 1033, if the taxpayer has filed an income tax return for the year in which the property was involuntarily converted.

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

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

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

Request for a determination of employment status (Form SS-8) from taxpayers (other than federal or state instrumentalities or political subdivisions) must be submitted to the District Office where the taxpayer resides and not directly to the National Office. See also section 5.06.

05 A District Director will not issue a determination letter in response to any request if --

(1) it appears that the taxpayer has directed a similar inquiry to the National Office,

(2) the same issue involving the same taxpayer or related taxpayer is pending in a case in litigation or 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 shown that the request concerns a return which has been filed or is required to be filed and over which the District Director has or will have examination jurisdiction.

A District Director will not issue a determination letter on an employment tax question if the specific question for the same taxpayer or related taxpayer 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 on determining constructive sales price under section 4216(b) or 4218(c) of the Code, which deal with special provisions applicable to the manufacturers excise tax. The National Office, however, will issue rulings in this area. See sections 6.04 and 7.04 of this revenue procedure.

06 A request received by a District Director on a question concerning an income, estate, or gift tax return already filed will be, in general, considered in connection with the examination of the return. If a response is made to the request before the return is examined, it will be considered a tentative finding in any later examination of that return.

07 A taxpayer who receives a determination letter before filing a return about any transaction that has been consummated and that is relevant to the return being filed should attach a copy of the determination letter to the return when it is filed.

08 Determination letters issued under sections 6.01 through 6.04 above are not reviewed by the National Office before they are issued. 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 as explained in Rev. Proc. 91-2, also in this Bulletin.

SEC. 7. UNDER WHAT CIRCUMSTANCES DOES THE SERVICE HAVE DISCRETION TO ISSUE RULINGS AND DETERMINATION LETTERS?

01 The Service ordinarily will not issue letter rulings or determination letters in certain areas because of the factual nature of the problem involved or because of other reasons. Rev. Proc. 91-3, in this Bulletin, provides a list of these areas. This list is not all inclusive, because the Service may decline to issue a ruling or a determination letter on other grounds, whenever warranted by the facts or circumstances of a particular case.

Instead of issuing a letter ruling or determination letter, the National Office or a District Director may, when it is considered appropriate and in the best interest of the Service, issue an information letter calling attention to well established principles of tax law.

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

03 The National Office ordinarily will not issue letter rulings on only part of an integrated transaction.

04 The National Office will issue rulings in all cases on the determination of a constructive sales price under section 4216(b) or 4218(c) of the Code and in all other cases on prospective transactions, if the law or regulations require a determination of the effect of a proposed transaction for tax purposes.

SEC. 8. WHAT ARE THE GENERAL INSTRUCTIONS FOR REQUESTING RULINGS AND DETERMINATION LETTERS?

This section explains the general instructions for requesting letter rulings and determination letters on all matters. Specific and additional instructions also apply to requesting letter rulings and determination letters on certain matters. Those matters are listed in section 9 followed by a reference (usually to another revenue procedure) where more information can be obtained.

01

(1) Complete statement of facts and other information required. Each request for a letter ruling or a determination letter must contain a complete statement of all facts relating to the transaction. These facts include: names, addresses, telephone numbers, and taxpayer identification numbers of all interested parties; the location of the District Office that has or will have examination jurisdiction over the return (not the Service Center where the return is filed); a complete statement of the business reasons for the transaction; and a detailed description of the transaction. (The term "all interested parties" does not mean all shareholders of a widely held corporation requesting a ruling relating to a reorganization, or all employees where a large number may be involved.)

The Service will usually not rule on only one step of a larger integrated transaction. See section 7.03 of this revenue procedure. However, if such a letter ruling is requested, the facts, circumstances, etc. relating to the entire transaction must be submitted.

(2) Copies of all contracts, wills, deeds, agreements, instruments, and other documents. True copies of all contracts, wills, deeds, agreements, instruments, trust documents, proposed disclaimers, and other documents in the transaction must be submitted with the request. Each document, other than the request, should be labelled and attached to the request in alphabetical sequence. Original documents, such as contracts, wills, etc., should not be submitted because they become part of the Service's file and will not be returned.

If the request concerns a corporate distribution, reorganization, or similar transaction, the corporate balance sheet and profit and loss statement should be submitted. If the request relates to a prospective transaction, the most recent balance sheet and profit and loss statement should be submitted.

(3) All material facts in documents must be included in the taxpayer's letter requesting a ruling or in supplemental letters, and not merely incorporated by reference. These facts must be accompanied by an analysis of their bearing on the issue or issues, specifying the provisions that apply.

(4) The request must contain a statement of whether, to the best of the knowledge of both the taxpayer and the taxpayer's representatives, the same issue is in an earlier return of the taxpayer (or in a return for any year of a related taxpayer within the meaning of section 267 of the Code, or of a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504).

If the same issue is in an earlier return, the statement must specify whether the issue --

(a) is being examined by a District Director,

(b) has been examined, but the statutory period of limitation has not expired for either assessing tax or filing a claim for refund or credit of tax,

(c) has been examined, but a closing agreement covering the issue or liability has not been entered into by a District Director,

(d) is being considered by an Appeals Office in connection with a return from an earlier period,

(e) has been considered by an Appeals Office in connection with a return from an earlier period, but the statutory period of limitation has not expired for either assessing tax or filing a claim for refund or credit of tax,

(f) has been considered by an Appeals Office in connection with a return from an earlier period, but a closing agreement covering the issue or liability has not been entered into by an Appeals Office, or

(g) is pending in litigation in a case involving the taxpayer or a related taxpayer.

(5) The request must also state whether, to the best of the knowledge of both the taxpayer and the taxpayer's representatives, the Service previously ruled on the same or similar issues for the taxpayer or a predecessor, or whether the taxpayer or any representatives previously submitted the same or similar issue to the Service but withdrew it before a ruling was issued.

If the same issue was previously submitted, the statement must give the date it was submitted, withdrawn, or ruled on, and other details of the Service's consideration of the issue.

(6) If the taxpayer advocates that the Service reach a particular conclusion, an explanation of the grounds for that conclusion and the relevant authorities to support it must be included. Even if not advocating a particular tax treatment of a proposed transaction, the taxpayer must still furnish views on the tax results of the proposed transaction and a statement of relevant authorities to support those views.

In addition, the taxpayer is encouraged to inform the Service about, and discuss the implications of, any authority believed to be contrary to the position advanced, such as legislation (or pending legislation), tax treaties, court decisions, regulations, notices, revenue rulings, revenue procedures or, announcements. If the taxpayer determines that there are no contrary authorities, a statement in the letter ruling request to this effect would be helpful.

Identifying and discussing contrary authorities will generally enable Service personnel to understand the issue and relevant authorities more quickly. When Service personnel receive the request, they will have before them the taxpayer's thinking on the effect and applicability of contrary authorities. This information should make research easier and lead to earlier action by the Service. If the taxpayer does not disclose and distinguish significant contrary authorities, the Service may need to request additional memorandums, which will delay action on the request.

At the time of filing the letter ruling request, the taxpayer should include in the request a statement identifying any pending legislation that may affect the proposed transaction. In addition, if, after the request is filed but before a letter ruling is issued, legislation is introduced, the taxpayer should notify the Service.

(7) The text of rulings and determination letters is open to public inspection under section 6110 of the Code. The Service makes deletions from the text before it is made available for inspection. To help the Service make the deletions required by section 6110(c), the taxpayer should provide a statement indicating the deletions desired.

A taxpayer who wants only names, addresses, and identifying numbers to be deleted should state this in the request. A taxpayer who wants more information deleted should submit a separate document indicating those deletions. The document must be accompanied by a copy of the request and supporting documents on which the taxpayer should bracket the material to be deleted. The deletions statement must indicate the statutory basis, under section 6110(c) of the Code, for each proposed deletion.

The deletions statement must not appear or be referred to anywhere in the request for a letter ruling or determination letter. If the taxpayer decides to ask for additional deletions before the ruling or determination letter is issued, additional statements may be submitted.

The deletion statement may be signed by either the taxpayer or the authorized representatives.

The taxpayer should follow the same procedures to propose deletions from any additional information submitted after the initial request.

After receiving from the Service the notice under section 6110(f)(1) of the Code of intent to disclose the ruling or determination letter (including a copy of the version proposed to be open to public inspection and notation of third-party communications under section 6110(d)), the taxpayer may protest the disclosure of certain information in the ruling or determination letter. The taxpayer must send a written statement within 20 calendar days to the Internal Revenue Service office indicated on the notice of intent to disclose. The statement must identify those deletions that the Service has not made, and that the taxpayer believes should have been made. The taxpayer must also submit a copy of the version of the ruling or determination letter and bracket the deletions proposed that have not been made by the Service. Generally, the Service will not consider deleting any material that the taxpayer did not propose to be deleted before the ruling or determination letter was issued.

Within 20 days after the Service receives the response to the notice under section 6110(f)(1) of the Code, the Service will mail to the taxpayer its final administrative conclusion regarding the deletions to be made. The taxpayer does not have the right to a conference to resolve any disagreements concerning material to be deleted from the text of the ruling. However, these matters may be taken up at any conference that is otherwise scheduled regarding the request.

After receiving the notice under section 6110(f)(1) of the Code of intent to disclose, but within 60 calendar days after the date of notice, the taxpayer may send a request for delay of public inspection under either section 6110(g)(3) or (4). The request for delay must be sent to the Internal Revenue Service office indicated on the notice of intent to disclose. A request for delay under section 6110(g)(3) must contain the date on which it is expected that the underlying transaction will be completed. The request for delay under section 6110(g)(4) must contain a statement from which the Commissioner may determine that there are good reasons for the delay.

(8) The request must be signed by the taxpayer or the taxpayer's authorized representative.

(9) To sign the request or to appear before the Service in connection with the request, the representative must be:

(a) 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. He or she must file a written declaration with the Service showing current qualification as an attorney and current authorization to represent the taxpayer;

(b) A certified public accountant who is qualified to practice in any state, possession, territory, commonwealth, or the District of Columbia. He or she must file a written declaration with the Service showing current qualification as a certified public accountant and current authorization to represent the taxpayer;

(c) An enrolled agent who is a person other than an attorney or certified public accountant that is enrolled to practice before the Service. He or she must file a written declaration with the Service showing current enrollment and authorization to represent the taxpayer. Either the enrollment number or the expiration date of the enrollment card must be included in the declaration. (See Treasury Department Circular No. 230 for the rules on who may practice before the Service);

(d) A foreign representative with a "Letter of Authorization" from the Director of Practice. A foreign representative must have received a "Letter of Authorization" from the Director of Practice under section 10.7(b) of Treasury Department Circular No. 230. Foreign representatives may make a written request for a "Letter of Authorization" to: Office of Director of Practice, HR:DP, Internal Revenue Service, 1111 Constitution Ave., N.W., Washington, DC 20224. Section 10.7(b) of Circular No. 230 authorizes the Commissioner to allow any person to represent another without enrollment for the purpose of a particular matter; or

Any authorized representative, listed in (a) through (d), whether or not enrolled to practice, must also comply with the conference and practice requirements of the Statement of Procedural Rules (26 C.F.R. section 601.501-.509 (1990)).

The requirements (a) through (d) above do not apply to an individual representing his or her full-time employer, or to a bona fide officer, administrator, trustee, etc., representing a corporation, trust, estate, association, or organized group.

It is preferred that either, Form 2848, Power of Attorney, or Form 2828-D, Tax Information Authorization, be used to provide the representative's authorization. The name of the person signing this document should also be typed or printed on the power of attorney form.

(10) Statement attesting to accuracy of request and additional submissions. A request for a ruling or determination letter and any factual information or change in the ruling request submitted at a later time must be accompanied by the following declaration: "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." A taxpayer who submits additional factual information on several occasions may provide one declaration that refers to each submission.

The declaration must be signed by the taxpayer, not the representative. The person who signs for a corporate taxpayer must be an officer of the corporate taxpayer who has personal knowledge of the facts, and whose duties are not limited to obtaining a ruling or determination letter from the Service. If the corporate taxpayer is a member of an affiliated group filing consolidated returns, a penalties-of-perjury statement must also be signed and submitted by an officer of the common parent of the group.

The person signing for a trust or partnership must be a trustee or general partner who has personal knowledge of the facts.

(11) Applicable user fee. Section 10511 of the Revenue Act of 1987, Pub. L. 100-203, enacted December 22, 1987, requires taxpayers to pay user fees for requests for rulings, opinion letters, determination letters, and similar requests. Rev. Proc. 90-17, 1990-1 C.B. 479, contains the schedule of fees and provides guidance for administering the user fee requirements. The user fee for each category of submission under the jurisdiction of the Associate Chief Counsel (Technical) is as follows:

 (a) Accounting periods

 All other rulings (which include accounting

(12) Generally, taxpayers need only submit one copy of the request for a ruling or determination letter. However, two copies are required if:

(a) the taxpayer is requesting separate rulings or letters on different issues as explained later under section 8.02;

(b) the taxpayer is requesting deletions other than names, addresses, and identifying numbers, as explained in section 8.01(7); or

(c) a closing agreement (as defined in section 2.01) is being requested on the issue presented.

(13) The Service will be able to respond more quickly to a taxpayer's ruling request if the request is carefully prepared and complete. The checklist in Appendix A of this revenue procedure is designed to assist taxpayers in preparing a request by reminding them of the essential information and documents to be furnished with the request. For requests mailed or hand delivered after January 31, 1991, the checklist must be completed to the extent required by the instructions in the checklist, signed by the taxpayer or the taxpayer's representative, and placed on top of the ruling request. Copies of the checklist can be obtained by calling (202) 566-3129 (not a toll-free call). A photocopy of the checklist in this revenue procedure may be used.

02 Expeditious Handling

(1) To request separate letter rulings for multiple issues in single situation. If more than one issue is presented in a request for a letter ruling, the Service generally will issue a single letter ruling covering all the issues. However, if the taxpayer requests separate rulings on any of the issues (because, for example, one letter ruling is needed sooner than another), the Service will usually comply with the request unless it is not feasible or not in the best interest of the Service to do so. A taxpayer who wants separate letter rulings on multiple issues should make this clear in the request and submit two copies of the request.

In issuing each letter ruling, the Service will state that it has issued separate rulings or that requests for other rulings are pending.

(2) To have copies sent to other representatives. A taxpayer who has more than one representative should designate which representatives are to receive a copy of the ruling. Copies of letter rulings will be sent to no more than two representatives, but only if they are located at different mailing addresses. If a taxpayer does not designate which representative is to receive a copy of the letter ruling, the Service will send a copy of the letter ruling to the first representative named on the most recent power of attorney.

If the original of the letter ruling is to be sent to a representative, the power of attorney should contain a statement to that effect and give the representative's mailing address. In such cases, a copy of the letter ruling will be sent to the taxpayer.

(3) To request a particular conclusion on a prospective transaction. A taxpayer who is requesting a particular conclusion on a prospective transaction may make the request for a letter ruling in two parts. This type of request is referred to as a "two-part ruling request." The first part must include the complete statement of facts and related documents described in section 8.01 earlier. The second part must include a summary statement of the facts the taxpayer believes to be controlling in reaching the conclusion requested.

If the Service accepts the taxpayer's statement of controlling facts, it will base its letter ruling on these facts. Ordinarily, this statement will be incorporated into the letter ruling. However, the Service reserves the right to rule on the basis of a more complete statement of facts and to seek more information in developing facts and restating them.

A taxpayer who chooses this two-part procedure has all the rights and responsibilities provided in this revenue procedure.

Taxpayers may not use the two-part procedure if it is inconsistent with other procedures, such as those dealing with requests for permission to change accounting methods or periods; applications for recognition of exempt status under section 521 of the Code; or rulings on employment tax status.

After the Service has resolved the issues presented by a letter ruling request, to expedite the issuance of rulings, the taxpayer may submit a draft of a proposed letter ruling. See section 10.15.

(4) To request expeditious handling. The Service processes requests for letter ruling and determination letters in order of the date received, and as expeditiously as possible. A taxpayer who has a compelling need to have a request processed ahead of the regular order must request expeditious handling. The request may be made in writing, preferably in a separate letter with, or soon after, the request for the letter ruling or determination letter. It must explain the need for special handling.

If the request for expeditious handling is not made in a separate letter, then the letter in which the letter ruling or determination letter request is made should say, at the top of the first page: "Expeditious Handling Is Requested. See page ____ of this letter."

A request for expeditious handling will not be forwarded to a rulings branch for action until the check or money order for the user fee in the correct amount is received.

The Service cannot give assurance that any letter ruling 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 regard for the time it may take to obtain a letter ruling or determination letter, will not be considered sufficient reason to process a request ahead of its regular order. Nor will the possible effect of fluctuation in the market price of stocks on a transaction be considered sufficient reason to process a request out of order. Accordingly, taxpayers are urged to submit their letter ruling requests well in advance of the contemplated transaction.

(5) To receive or submit letter rulings by facsimile transmission. Letter rulings ordinarily are not issued by facsimile transmission (fax). However, if the taxpayer requests it, an advanced copy of a letter ruling may be faxed to the taxpayer or the taxpayer's authorized representative. Such a request must be made in writing, either as part of the original ruling request or prior to the approval of the letter ruling. The request must contain the fax number of the taxpayer or the taxpayer's authorized representative to whom the facsimile copy is to be sent. Original letter ruling requests by fax are discouraged because such requests must be treated in the same manner as requests by letter; for example, the letter ruling request will not be forwarded to the rulings branch for action until the check for the user fee is received. This section is not applicable to the high volume requests submitted by taxpayers for a change in accounting method or a change in accounting period.

(6) To request a conference. A taxpayer who wants to have a conference on the issues involved should indicate this in writing when, or soon after, filing the request. See also sections 10.08, 10.09, and 11.10(2) of this revenue procedure.

03

(1) Requests for letter rulings from the National Office should be sent to the Internal Revenue Service, Associate Chief Counsel (Technical), Attention CC:CORP:T, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

Requests may also be hand delivered to Room 6561, 1111 Constitution Avenue, N.W., Washington, DC between 8:30 am. and 4:00 p.m. on working days. After working hours, they may be hand delivered to the drop box at the 12th Street entrance of the same building.

(2) Requests for determination letters should be sent to the IRS District Director whose office has or will have examination jurisdiction over the taxpayer's return. For fees required with determination letter requests see section 6.03(6) of Rev. Proc. 90- 17, 1990-1 C.B. 479.

04 If, after the request is filed but before a letter ruling is issued, the taxpayer knows that an examination of the issue by a District Director has been started, the taxpayer must notify the National Office of such action. If the taxpayer files a return before a letter ruling is received from the National Office concerning the issue, the taxpayer must attach a copy of the request to the return. This alerts the District Office and may avoid premature District action on the issue.

A taxpayer who receives a letter ruling before filing a return about any transaction that has been consummated and that is relevant to the return being filed must attach a copy of the ruling to the return when it is filed.

05 A taxpayer may obtain information regarding the status of a request by calling the person whose name and telephone number are shown on the acknowledgment of receipt of the request or the appropriate Branch representative who contacts the taxpayer as explained in section 10.02.

06 A taxpayer may withdraw a request for a letter ruling or determination letter at any time before the letter of reply is signed by the Service. If a request for a letter ruling is withdrawn, the National Office will notify the appropriate District Director and may give its views on the issues in the request to the appropriate District Director to consider in any later examination of the return. Correspondence and exhibits related to a request that is withdrawn will not be returned to the taxpayer. Nor will the user fee be returned. In appropriate cases, the Service may publish its conclusions in a revenue ruling or revenue procedure.

07 In those situations where the National Office believes that the taxpayer's representative is not in compliance with Treasury Department Circular 230, which provides the rules for practice before the Service, (31 CFR Part 10), 1985-2 C.B. 742, as amended by regulations (31 CFR Part 10) published January 22, 1986 and effective as of that same date, the National Office will bring the matter to the attention of the Director of Practice.

SEC. 9. WHAT OTHER CHECKLISTS AND GUIDELINE REVENUE PROCEDURES APPLY TO CERTAIN REQUESTS?

Specific revenue procedures supplement the general instructions for requests explained in section 8 and apply to requests for rulings regarding the Code sections and matters listed in this section.

For requests relating to the following Code sections and subject matters, see the following:

 CODE SECTION             REVENUE PROCEDURE

The National Office will issue letter rulings on the matters and under the circumstances explained in sections 3 and 5 of this revenue procedure and in the manner explained in this section.

01 All requests for ruling letters will be controlled by the Technical Branch of the Assistant Chief Counsel (Corporate) (CC:CORP:T). That branch will examine the incoming documents for completeness, process the user fee, and forward the file to the appropriate Assistant Chief Counsel. The Assistant Chief Counsel's office will assign the request to one of its branches.

02 Within 21 calendar days after a letter ruling request has been received in the Branch having jurisdiction, a representative of the Branch will contact the taxpayer to discuss the procedural issues in the letter ruling request. If the request includes a properly executed power of attorney, the branch contact will be with the authorized representatives unless the power of attorney provides otherwise. If the case is complex or a number of issues are involved, it may not be possible for the Branch representative to discuss the substantive issues during this initial contact. However, when possible, for each issue within the Branch's jurisdiction, the representative will tell the taxpayer --

(1) whether the representative will recommend that the Service rule as the taxpayer requested, rule adversely on the matter, or not rule,

(2) whether the taxpayer should submit additional information to enable the Service to rule on the matter, or

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

03 If the letter ruling requested involves matters within the jurisdiction of more than one Branch, a representative of the Branch that received the request will tell the taxpayer within the initial 21 days:

(1) that the matters within the jurisdiction of another Branch have been referred to that Branch for consideration, and

(2) that a representative of that Branch will contact the taxpayer within 21 calendar days after receiving the referral to informally discuss the procedural and, to the extent possible, the substantive issues in the request.

04 If a less than fully favorable ruling is indicated, the Branch representative will tell the taxpayer whether minor changes in the transaction or adherence to certain published positions would bring about a favorable ruling. The Branch representative may also tell the taxpayer the facts that must be furnished in a document to comply with Service requirements. However, the Branch representative will not suggest precise changes that would materially alter the form of the proposed transaction.

If, at the end of this discussion, the Branch representative determines that a meeting in the National Office would be more helpful to develop or exchange information, a meeting will be offered and an early meeting date arranged. When offered, this meeting is in addition to the taxpayer's conference of right that is described in section 10.09 of this revenue procedure.

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

06 If a request for a letter ruling or determination letter does not comply with all the provisions of this revenue procedure, the representative will tell the taxpayer during the initial contact which requirements have not been met.

If the request lacks essential information, which may include additional information needed to satisfy the procedural requirements of this revenue procedure, as well as substantive changes to transactions or documents needed from the taxpayer, the representative will tell the taxpayer that the request will be closed if the Service does not receive the information within 30 calendar days. See section 10.07 for instructions on submissions of additional information. 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 the information is received. However, the taxpayer must pay another user fee before the case can be reopened.

A request for a letter ruling sent to the District Director that does not comply with the provisions of this revenue procedure will be returned by the District Director so that the taxpayer can make corrections before sending it to the National Office.

07 Material facts furnished to the Service by telephone, fax, or orally at a conference must be promptly confirmed by letter to the Service with a declaration that the information is provided under penalties of perjury in the form described in section 8.01(10).

This confirmation and any additional information requested by the Service that is not part of the information requested during the initial contact must be furnished within 21 calendar days to be considered part of the request.

(1) To speed up work on ruling requests, taxpayers are encouraged to submit additional information by fax as soon as the information is available. The Service representative who requests additional information can provide a phone number to which the information can be faxed. A copy of this information and a signed perjury statement must, however, be mailed or delivered to the Service.

(2) Additional information should be sent to the same address as the original ruling request. Internal Revenue Service; Associate Chief Counsel (Technical), Attn: CC:CORP:T; P.O. Box 7604; Ben Franklin Station, Washington, DC 20044. See section 8.03. However, the additional information should include the name, office symbols, and room number of the Service representative who requested the information. In addition, the taxpayer's name and the case control number (which the Service representative can provide) should be included.

(3) An extension of the 21-day period will be granted only if justified in writing by the taxpayer and approved by the Branch Chief, Senior Technician Reviewer, or Assistant to the Branch Chief (or Assistant Branch Chief) of the Branch to which the case is assigned. A request for extension should be submitted before the end of the 21-day period. If unusual circumstances close to the end of the 21-day period make a written request impractical, the taxpayer should notify the National Office within the 21-day period that there is a problem, and that the written request for extension will be coming soon. The taxpayer will be told promptly, and later in writing, of the approval or denial of the requested extension. If the extension request is denied, there is no right of appeal.

(4) If the taxpayer does not follow the instructions for submitting additional information or requesting an extension within the time provided, a ruling will be issued on the basis of the information on hand, or, if appropriate, no letter ruling will be issued. When the Service decides not to issue a letter ruling because essential information is lacking, the case will be closed and the taxpayer notified in writing.

08 A taxpayer may request a conference regarding a ruling request. Normally, a conference is scheduled only when the National Office considers it to be helpful in deciding the case or when an adverse decision is indicated. If conferences are being arranged for more than one request for a ruling involving the same taxpayer, they will be scheduled so as to cause the least inconvenience to the taxpayer. As stated in section 8.02(6), a taxpayer who wants to have a conference on the issue or issues involved should indicate this in writing when, or soon after, filing the request.

If a conference has been requested, the taxpayer will be notified by telephone, if possible, of the time and place of the conference, which must then be held within 21 calendar days after this contact. Instructions for requesting an extension of the 21-day period and notifying the taxpayer or the taxpayer's representative of the Service's approval or denial of the request for extension are the same as those explained earlier in section 10.07 regarding providing additional information.

09 A taxpayer is entitled, as a matter of right, to only one conference in the National Office, except as explained under "additional conferences" below. This conference normally will be held at the Branch level and will be attended by a person who, at the time of the conference, has the authority to sign the letter ruling in his or her own name or for the Branch Chief.

When more than one Branch has taken an adverse position on an issue in a letter ruling request, or when the position ultimately adopted by one Branch will affect that adopted by another, a representative from each Branch with the authority to sign in his or her own name or for the Branch Chief will attend the conference. If more than one subject is to be discussed at the conference, the discussion will constitute a conference on each subject.

To promote 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, the conference of right may be held earlier. No taxpayer has a right to appeal the action of a Branch to an Assistant Chief Counsel or to any other official of the Service.

In employment tax matters, only the party entitled to the ruling is entitled to a conference. See section 5.06 of this revenue procedure.

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

10 The senior Service representative present at the conference ensures that the taxpayer has the opportunity to present views on all the issues in question. A Service representative explains the Service's tentative decision on the substantive issues and the reasons for that decision. If the taxpayer asks the Service to limit the retroactive effect of any ruling or limit the revocation or modification of a prior ruling, a Service representative will discuss the recommendation concerning this issue and the reasons for the recommendation. The Service representatives will not make a commitment regarding the conclusion that the Service will finally adopt.

11 The Service will offer the taxpayer an additional conference if, after 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 limit on the number of conferences to which a taxpayer is entitled does not prevent the Service from offering further conferences if it decides they are needed.

12 The taxpayer should furnish to the National Office any additional data, reasoning, precedents, etc., that were proposed by the taxpayer and discussed at the conference but not previously or adequately presented in writing. The taxpayer must furnish the additional information within 21 calendar days from the date of the conference. See section 10.07 for instructions on submission of additional information. If the additional information is not received within that time, a ruling will be issued on the basis of the information on hand or, if appropriate, no ruling will be issued.

Procedures for requesting an extension of the 21-day period and notifying the taxpayer of the Service's approval or denial of the requested extension are the same as those stated in section 10.07 earlier regarding submitting additional information.

13 Sometimes it will be advantageous to both the Service and the taxpayer to hold a conference before the taxpayer submits the ruling request to discuss substantive or procedural issues relating to a proposed transaction. Such conferences are held only when the taxpayer actually intends to make a request and only on a time- available basis. Generally, the taxpayer will be asked to provide a draft ruling request or other detailed written description of the proposed transaction before the conference.

Any discussion of substantive issues at such a conference is advisory only, is not binding on the Service, and cannot be relied upon as a basis for obtaining retroactive relief under the provisions of section 7805(b) of the Code. A ruling request submitted following such a conference will not necessarily be assigned to the Branch that held that conference.

14 Infrequently, taxpayers request that their conference of right be held by telephone. This may occur, for example, where a taxpayer wants a conference of right but believes that the issue involved does not warrant incurring the expense of traveling to Washington, DC. If a taxpayer makes such a request, the Branch Chief will decide if it is appropriate in the particular case to hold the conference of right by telephone. If the request is approved by the Branch Chief, the taxpayer will be advised of the time when the Service representatives will be available to discuss the tentative adverse position so that the taxpayer can arrange to call at that time.

15 To accelerate issuance of letter rulings, in appropriate cases near the completion of the ruling process, the Service representative may request that the taxpayer or the taxpayer's representative submit a proposed draft of the letter ruling on the basis of discussions of the issues. The taxpayer, however, is not required to prepare a draft letter ruling in order to receive a letter ruling.

The format of the submission should be discussed with the Service representative who requests the draft ruling. The representative usually can provide a model of the letter ruling to be submitted and will discuss the facts, analysis, and letter ruling language to include.

In addition to a typed draft, taxpayers are encouraged to submit this draft on a floppy disk in a word processing format. The typed draft will become part of the permanent files of the National Office; the word processing disk will not be returned. If the Service representative requesting the draft ruling cannot answer specific questions about the format of the word processing disk, the questions can be directed to Wayne Thomas at 202-566-3129 or Roberta Hardaker at 202-566-6674 (not toll-free calls).

The proposed ruling (both typed draft and floppy disk) should be sent to the same address as any additional information and contain in the transmittal the information that should be included with any additional information (for example, a penalties of perjury statement is required). See section 10.07.

SEC. 11. WHAT EFFECT WILL A RULING HAVE?

01 A taxpayer ordinarily may rely on a letter ruling received from the Service subject to the conditions and limitations described in this section.

02 A taxpayer may not rely on a letter ruling issued to another taxpayer. See section 6110(j)(3) of the Code.

03 When determining a taxpayer's liability, the District Director must ascertain whether:

(1) the conclusions stated in the letter ruling are properly reflected in the return,

(2) the representations upon which the letter ruling was based reflected an accurate statement of the material facts,

(3) the transaction was carried out substantially as proposed, and

(4) there has been any change in the law that applies to the period during which the transaction or continuing series of transactions were consummated.

If, when determining the liability, the District Director finds that a letter ruling should be modified or revoked, the findings and recommendations of the District Director will be forwarded to the National Office for consideration before further action. Such a referral to the National Office will be treated as a request for technical advice and the provisions of Rev. Proc. 91-2 will be followed. Otherwise, the letter ruling is to be applied by the District Office in its determination of the taxpayer's liability. Appropriate coordination with the National Office will be undertaken if any field official having jurisdiction over a return or other matter proposes to reach a conclusion contrary to a letter ruling previously issued to the taxpayer.

04 Unless it was part of a closing agreement as described in section 2.01, a letter ruling found to be in error or not in accord with the current views of the Service may be modified or revoked. If a letter ruling is revoked or modified, the revocation or modification applies to all years open under the statutes, unless the Service uses its discretionary authority under section 7805(b) of the Code to limit the retroactive effect of the revocation or modification.

A letter ruling may be revoked or modified by --

(1) a notice to the taxpayer to whom the letter ruling was issued,

(2) the enactment of legislation or ratification of a tax treaty,

(3) a decision of the United States Supreme Court,

(4) the issuance of temporary or final regulations, or

(5) the issuance of a revenue ruling, a revenue procedure, or other statement published in the Internal Revenue Bulletin.

Consistent with these provisions, if a letter ruling relates to a continuing action or a series of actions, it ordinarily will be applied until any one of the events described above occurs or until it is specifically withdrawn. Publication of a notice of proposed rulemaking will not affect the application of any letter ruling issued under the procedures in this revenue procedure.

05 Except in rare or unusual circumstances, the revocation or modification of a letter ruling will not be applied retroactively to the taxpayer for whom the ruling was issued or to a taxpayer whose tax liability was directly involved in the ruling provided that --

(1) there has been no misstatement or omission of material facts,

(2) the facts at the time of the transaction are not materially different from the facts on which the letter ruling was based,

(3) there has been no change in the applicable law,

(4) the letter ruling was originally issued for a prospective transaction, and

(5) the taxpayer directly involved in the letter ruling acted in good faith in relying on the letter ruling, and revoking the ruling retroactively would be to the taxpayer's detriment. For example, the tax liability of each shareholder is directly involved in a letter ruling on the reorganization of a corporation. However, the tax liability of members of an industry is not directly involved in a letter ruling issued to one of the members, and the holding in a revocation or modification of a letter ruling to one member of an industry may be retroactively applied to other members of the industry. By the same reasoning, a tax practitioner may not extend to one client the non-retroactive application of a modification or revocation of a letter ruling previously issued to another client.

If a letter ruling is revoked by letter with retroactive effect, the letter will, except in fraud cases, state the grounds on which the ruling is being revoked and explain the reasons why it is being revoked retroactively.

06 A letter ruling issued on a particular transaction represents a holding of the Service on that transaction only. And, except in unusual circumstances, the application of that ruling to the transaction will not be affected by the later issuance of regulations (either temporary or final), if conditions (1) through (5) in section 11.05 above are met.

However, if a letter ruling on a transaction is later found to be in error or no longer in accord with the position of the Service, it will not protect a similar transaction of the taxpayer in the same year or later year.

07 If a letter ruling is issued covering a continuing action or series of actions, and the ruling is later found to be in error, or no longer in accord with the position of the Service, the Associate Chief Counsel (Technical) ordinarily will limit the retroactive effect of the revocaton or modification to a date that is not earlier than that on which the ruling is modified or revoked. For example, the retroactive effect of revocation or modification of a ruling applied to a continuing action or series of actions would be limited in the following situations when the ruling is in error or no longer in accord with the position of the Service:

(1) A taxpayer received a letter ruling that certain payments are excludable from gross income for federal income tax purposes.

(2) A taxpayer rendered a service or provided a facility that is subject to the excise tax on services or facilities, and, in relying on a letter ruling received, did not pass the tax on to the user of the service or the facility.

(3) An employer incurred liability under the Federal Insurance Contributions Act, but, in relying on a letter ruling received, neither collected the employee tax nor paid the employee and employer taxes under the Act. The retroactive effect would be limited for both the employer and employee tax. However, the limitation would be conditioned on the employer furnishing wage data, as may be required by section 31.6011(a)-1 of the Employment Tax Regulations.

08 A letter ruling holding that the sale or lease of a particular article is subject to the manufacturer's excise tax or the retailer's excise tax may not retroactively revoke or modify an earlier ruling holding that the sale or lease of such an article was not taxable, if the taxpayer to whom the letter ruling was issued, in relying on the earlier letter ruling, gave up possession or ownership of the article without passing the tax on to the customer. (Section 1108(b), Revenue Act of 1926.)

09 Taxpayers are not protected against retroactive revocation of letter rulings involving completed transactions other than those described in sections 11.07 and 11.08, because they did not enter into the transactions relying on a ruling.

10 Under section 7805(b) of the Code, the Service may prescribe any extent to which a letter ruling or determination letter will be applied without retroactive effect.

A taxpayer to whom a letter ruling or determination letter has been issued may request that the Associate Chief Counsel (Technical) limit the retroactive effect of any revocation or modification of the letter ruling or determination letter.

(1) Request for section 7805(b) relief must be made in required format

A request to limit the retroactive effect of the revocation or modification of a letter ruling must be in the general form of, and meet the general requirements for, a ruling request. These requirements are given in section 8. Specifically, the request must --

(a) state that it is being made under section 7805(b) of the Code,

(b) contain a statement of the relief sought,

(c) give an explanation of the reasons and arguments in support of the relief requested, and

(d) be accompanied by any documents bearing on the request.

The explanation in support of the relief sought under section 7805(b) should include a discussion of the five items listed in section 11.05 of this revenue procedure as they relate to the taxpayer's particular situation.

A request that the Service limit the retroactive effect of revocation or modification of a letter ruling may be made in the form of a separate request for a ruling when, for example, a revenue ruling has the effect of modifying or revoking a ruling previously issued to the taxpayer, or when the Service notifies the taxpayer of a change in position that will have the effect of revoking or modifying the ruling. However, when notice is given by the District Director during an examination of the taxpayer's return, or during consideration by the Chief, Appeals Office, a request to limit retroactive effect must be made in the form of a request for technical advice as explained in section 15.04 of Rev. Proc. 91-2.

When germane to a pending letter ruling request, a request to limit the retroactive effect of a modification or revocation of a ruling may be made as part of the request for the letter ruling, either initially or at any time before the letter ruling is issued. When a letter ruling that concerns a continuing transaction is modified or revoked by, for example, a subsequent revenue ruling, a request to limit retroactive effect must be made before the examination of the return that contains the transaction that is the subject of the letter ruling request.

(2) Taxpayer may request conference on retroactive effect

A taxpayer who requests the application of section 7805(b) of the Code in a separate letter ruling request has the right to a conference in the National Office as explained in sections 10.09, 10.10, and 10.11 of this revenue procedure. If the request is made initially as part of a pending letter ruling request or is made before the conference of right is held on the substantive issues, the section 7805(b) issue will be discussed at the taxpayer's one conference of right as explained in section 10.09. If the request for the application of section 7805(b) relief is made as part of a pending letter ruling request after a conference has been held on the substantive issue, and the Service determines that there is justification for having delayed the request, the taxpayer is entitled to one conference of right concerning the application of section 7805(b), with the conference limited to discussion of this issue only.

SEC. 12. WHAT EFFECT WILL A DETERMINATION LETTER HAVE?

01 A determination letter issued by a District Director has the same effect as a letter ruling issued to a taxpayer under section 11 of this revenue procedure.

If a District Director proposes to reach a conclusion contrary to that expressed in a determination letter, he or she need not refer the matter to the National Office as is required for a letter ruling found to be in error. However, the District Director must refer the matter to the National Office if the District Director desires to have the modification or revocation of the determination letter limited under section 7805(b) of the Code.

02 If a District Director proposes to modify or revoke a determination letter, the taxpayer may request limitation of the retroactive effect of modification or revocation by asking the District Director who issued the determination letter to seek technical advice from the National Office, since a District Director does not have authority under section 7805(b) of the Code to limit modification or revocation. See section 15.04 of Rev. Proc. 91-2.

(1) Request must be made in required form

The taxpayer's request must --

(a) state that it is being made under section 7805(b),

(b) contain a statement of the relief sought,

(c) contain an explanation of the reasons and arguments in support of the relief sought (including a discussion of the five items listed in section 1 1.05 of this revenue procedure as they relate to the taxpayer's situation), and

(d) include any documents bearing on the request.

(2) Taxpayer may request a conference on limitation of retroactive effect

When technical advice is requested regarding limiting modification or revocation of a determination letter, the taxpayer has the right to a conference in the National Office to the same extent as does any taxpayer who is the subject of a technical advice request. See section 11 of Rev. Proc. 91-2.

SEC. 13. UNDER WHAT CIRCUMSTANCES ARE MATTERS REFERRED BETWEEN A DISTRICT OFFICE AND THE NATIONAL OFFICE?

01 Requests for determination letters received by District Directors that, under the provisions of this revenue procedure, may not be issued by a District Office, will be forwarded to the National Office for reply. The District Office will let the taxpayer know that the matter has been referred.

District Directors will also refer to the National Office any request for a determination letter that in their judgement should have the attention of the National Office.

02 If the request involves an issue on which the Service will not issue a letter ruling or determination letter, the request will not be forwarded to the National Office. The District Office will let the taxpayer know that the Service will not issue a letter ruling or a determination letter on the issue. See section 7 of this revenue procedure for a description of no rule areas.

03 Requests for letter rulings received by the National Office that, under section 5 of this revenue procedure, may not be acted upon by the National Office will be forwarded to the District Office that has examination jurisdiction over the taxpayer's return. The taxpayer will be notified of this action. If the request is on an issue or in an area of the type discussed in section 7, and it is decided not to issue a letter ruling or an information letter, the National Office will let the taxpayer know, and the request will then be forwarded to the appropriate District Office for association with the related return.

SEC. 14. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 90-1?

01 A number of changes have been made to the revenue procedure in an effort to make it easier to read and use. First, the format is now in a question and answer form. Second, more headings have been added to the text, the table of contents has been expanded, a brief index has been added, and a section number has been added to the bottom of each page to make it easier to locate a cross reference or to cite a particular section of the revenue procedure.

02 Section 5.09(3) is amended to provide that the Service will do its best to rule on issues arising under acts after the Tax Reform Act of 1986.

03 Section 8.01(2) is amended by requesting that documents submitted with a letter ruling be labelled and attached to the request in alphabetical sequence.

04 Section 8.01(6) is amended to provide that the taxpayer should identify any pending legislation that may affect the proposed transaction.

05 Section 8.01(10) is amended to allow a taxpayer who submits additional factual information on several occasions to provide one perjury statement.

06 Section 8.01(13) is amended by adding the requirement that taxpayers include a checklist with all ruling requests.

07 Section 8.02(5) is amended to include instructions for taxpayers wishing to have ruling letters faxed to them or their authorized representatives.

08 Section 8.04 is amended to make it mandatory to attach a copy of the letter ruling to the return for the consummated transaction to which it relates.

09 Section 8.06 is amended to provide that if a request for letter ruling is withdrawn the appropriate District Director will be notified.

10 Section 10.07(1) is amended to encourage taxpayers to fax additional information as soon at it is available. A copy of this information and signed perjury statement must still be mailed or delivered to the Service.

11 Section 10.07(2) is amended to provide that the taxpayer's name and case control number (which the Service representative can provide) should be included with any additional information submitted.

12 Section 10.07(4) provides that in appropriate cases no ruling will be issued if the taxpayer does not follow the instructions for submitting additional information.

13 Section 10.14 is amended to provide for conferences by telephone under certain circumstances.

14 Section 10.15 provides that in appropriate cases the Service may request a draft (typed and on a word processing disk) of the proposed ruling near the completion of the ruling process.

15 Section 11.03 has been amended by adding that, in determining the tax liability for the transaction to which the ruling applies, the District Director must determine if there has been any change in the law that applies to the period during which the transaction or continuing series of transactions were consummated.

SEC. 15. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER DOCUMENTS?

Rev. Proc. 90-1, as modified by Rev. Proc. 90-42, 1990-31 I.R.B. 59, is superseded.

                                INDEX

CHECKLIST IS YOUR RULING REQUEST COMPLETE?

INSTRUCTIONS

The Service will be able to respond more quickly to your letter ruling request if it is carefully prepared and complete. To ensure that your request is in order, use this checklist. Complete the five items of information requested before the checklist. Answer each question by circling "Yes," "No," or "N/A." When a question contains a place for a page number, insert the page number (or numbers) of the request that gives the information called for by a yes answer to a question. Sign and date the checklist (as taxpayer or authorized representative) and place it on top of your request.

If you are an authorized representative submitting a request for a taxpayer, you must include a completed checklist with the request, or the request will either be returned to you or substantive consideration of it will be deferred until a completed checklist is submitted. If you are a taxpayer preparing your own request without professional assistance, an incomplete checklist will not be cause for returning your request or deferring substantive consideration of the request. However, you should still complete as much of the checklist as possible and submit it with your request.

TAXPAYER'S NAME ____________________________________________________