PROCEDURES REVISED FOR ISSUING LETTER RULINGS.

Rev. Proc. 95-1

                          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 (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), and the Associate Chief Counsel (International). It explains the kinds of guidance and the manner in which guidance is requested by taxpayers and provided by the Service. A sample format of a request for a letter ruling is provided in Appendix B.

For purposes of this revenue procedure, (1) any reference to District Directors or District Offices includes their respective offices, or when appropriate, the Assistant Commissioner (International); and (2) the word "taxpayer" includes all persons subject to any provision of the Internal Revenue Code (including issuers of section 103 obligations) and, when appropriate, their representatives.

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

SECTION 2. IN WHAT FORM IS GUIDANCE PROVIDED BY THE OFFICES OF THE ASSOCIATE CHIEF COUNSEL (DOMESTIC), ASSOCIATE CHIEF COUNSEL (EMPLOYEE BENEFITS AND EXEMPT ORGANIZATIONS), ASSOCIATE CHIEF COUNSEL (ENFORCEMENT LITIGATION), AND ASSOCIATE CHIEF COUNSEL (INTERNATIONAL)?

The Service provides guidance in the form of letter 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 Office of Associate Chief Counsel (Domestic), the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Office of Associate Chief Counsel (Enforcement Litigation), or the Office of Associate Chief Counsel (International), (each hereafter referred to as the "National Office") that interprets and applies the tax laws to the taxpayer's specific set of facts. A letter ruling includes the written permission or denial of permission by the National Office to a change in a taxpayer's accounting method or accounting period. Once issued, a letter ruling may be revoked or modified for any number of reasons, as explained in section 11 of this revenue procedure, unless it is accompanied by a "closing agreement."

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

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

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

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

A determination letter does not include assistance provided by the U.S. competent authority pursuant to the mutual agreement procedure in tax treaties as set forth in Rev. Proc. 91-23, 1991-1 C.B. 534, as amplified by Rev. Proc. 91-22, 1991-1 C.B. 526, and as clarified by Rev. Proc. 91-26, 1991-1 C.B. 543.

.04 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 (including a tax treaty) 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 or if the taxpayer's request does not meet the requirements of this revenue procedure and the Service thinks general information will help the taxpayer. An information letter is advisory only and has no binding effect on the Service.

.05 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, 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 other concerned parties 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.

.06

(1) NO ORAL RULINGS, AND NO WRITTEN RULINGS IN RESPONSE TO ORAL REQUESTS.

The Service does not orally issue letter rulings or determination letters, 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 requests for letter rulings or determination letters 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 upon as a basis for obtaining retroactive relief under the provisions of section 7805(b).

Substantive tax issues involving the taxpayer that are under examination, in Appeals, or in litigation will not be discussed by Service employees not directly involved in the examination, appeal, or litigation of the issues unless the discussion is coordinated with those Service employees who are directly involved in the examination, appeal, or litigation of the issues. The taxpayer or the taxpayer's representative ordinarily will be asked whether the oral request for guidance or information relates to a matter pending before another office of the Service.

If a tax issue is not under examination, in Appeals, or in litigation, the 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 to recognize it, for example, in the examination of the taxpayer's return.

The Service does not respond to letters seeking to confirm the substance of oral discussions, and the absence of a response to such a letter is not confirmation of the substance of the letter.

SECTION 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 (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), and the Associate Chief Counsel (International) under this revenue procedure. The National Office issues letter rulings to answer written inquiries of individuals and organizations about their status for tax purposes and the tax effects of their acts or transactions when appropriate in the interest of sound tax administration.

Taxpayers also may request determination letters within the jurisdiction of the appropriate District Director offices that relate to the Code sections under the jurisdiction of the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International).

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

(1) Issues under the Assistant Chief Counsel (Corporate) include those that involve consolidated returns, corporate acquisitions, reorganizations, liquidations, redemptions, spinoffs, transfers to controlled corporations, distributions to shareholders, corporate bankruptcies, the effect of certain ownership changes on net operating loss carryovers and other tax attributes, debt vs. equity determinations, allocation of income and deductions among taxpayers, acquisitions made to evade or avoid income tax, and certain earnings and profits questions.

(2) Issues under the Assistant Chief Counsel (Financial Institutions and Products) include those that involve income taxes of 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 (MCCs), insurance companies and products, and financial products.

(3) Issues under the Assistant Chief Counsel (Income Tax and Accounting) include those that 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.

(4) Issues under the Assistant Chief Counsel (Passthroughs and Special Industries) include those that involve income taxes of S corporations (except accounting periods and methods) and certain noncorporate taxpayers (including partnerships, common trust funds, and trusts); estate, gift, generation-skipping transfer, and certain excise taxes; amortization, depreciation, depletion, and other engineering issues; cooperative housing corporations; farmers' cooperatives (under section 521); the low-income housing, disabled access, and qualified electric vehicle credits; research and experimental expenditures; shipowners' protection and indemnity associations (under section 526); and certain homeowners associations (under section 528).

.02 Issues under the jurisdiction of the Associate Chief Counsel (Employee Benefits and Exempt Organizations) include those that 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 jurisdiction of the Associate Chief Counsel (Enforcement Litigation) include issues only under the jurisdiction of the Assistant Chief Counsel (General Litigation). Issues under the Assistant Chief Counsel (General Litigation) include those that involve collection.

.04 Issues under the jurisdiction of the Associate Chief Counsel (International) include the tax treatment of nonresident aliens and foreign corporations; withholding of tax on nonresident aliens and foreign corporations; foreign tax credit; determination of sources of income; income from sources without the United States; subpart F questions; domestic international sales corporations (DISCs); foreign sales corporations (FSCs); international boycott determinations; treatment of certain passive foreign investment companies; and income affected by treaty.

For the procedures to obtain advance pricing agreements under section 482, see Rev. Proc. 91-22, 1991-1 C.B. 526, as corrected by Rev. Proc. 91-22A, 1991-1 C.B. 534, and as modified by Rev. Proc. 95-1 (this revenue procedure).

For the procedures concerning competent authority relief arising under the application and interpretation of tax treaties between the United States and other countries, see Rev. Proc. 91-23. However, competent authority consideration for an advance pricing agreement should be requested under Rev. Proc. 91-22.

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

.01 The procedures for obtaining letter rulings, etc., that apply to federal alcohol, tobacco, and firearms taxes under subtitle E of the Code are under the jurisdiction of the Bureau of Alcohol, Tobacco and Firearms. (See 26 C.F.R. section 601.328 (1994)).

.02 The procedures for obtaining letter 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. 95-4, this Bulletin. See also Rev. Proc. 95-6, this Bulletin, for the procedures for issuing determination letters on the qualified status of pension, profit- sharing, stock bonus, annuity, and employee stock ownership plans under sections 401, 403(a), 409, and 4975(e)(7), and the status for exemption of any related trusts or custodial accounts under section 501(a).

For the user fee requirements applicable to requests for letter rulings, determination letters, etc., under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations), see Rev. Proc. 95-8, this Bulletin.

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

.01 In income and gift tax matters, the National Office generally issues a letter ruling on a proposed transaction and on a completed transaction if the letter ruling 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 a letter ruling 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 --

(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 a related taxpayer;

(4) 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 for filing a claim for refund or credit of tax; or

(5) has been examined by a District Director or considered by an Appeals Office and a closing agreement covering the issue or 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 a letter ruling on that issue is pending, the National Office will issue the letter ruling unless it is notified by the taxpayer or otherwise learns 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 of this revenue procedure. However, even if an examination has begun, the National Office ordinarily will issue the letter ruling if the District Director agrees, by memorandum, to the issuance of the letter ruling.

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 taxable year in which the property was converted. However, the District Director may issue a determination letter in this case. See section 6.01 of this revenue procedure.

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 letter ruling requests concerning the classification of an existing organization as a partnership. See Rev. Proc. 92-35, 1992-1 C.B. 790, as amplified by Rev. Proc. 94-46, 1994-28 I.R.B. 129, Rev. Proc. 89-12, 1989-1 C.B. 798, as supplemented by Rev. Proc. 92-33, 1992-1 C.B. 782, and as amplified by Rev. Proc. 94-46 and Rev. Proc. 91-13, 1991-1 C.B. 477 (checklist questionnaire); and Rev. Proc. 86-12, 1986-1 C.B. 534.

.02 The National Office will consider a request for an extension of time for making an election or other application for relief under section 301.9100-1 of the Procedure and Administration Regulations. Even if submitted after the return covering the issue presented in the section 301.9100-1 request has been filed and even if submitted after an examination of the return has begun or after the issues in the return are being considered by an Appeals Office, a section 301.9100-1 request is a letter ruling request. Therefore, the section 301.9100-1 request should be submitted pursuant to this revenue procedure.

However, an election made pursuant to section 4 of Rev. Proc. 92-85, 1992-2 C.B. 490, as modified by Rev. Proc. 95-1 (this revenue- procedure), and Rev. Proc. 93-28, 1993-2 C.B. 344, is not a letter ruling request and does not require payment of any user fee. See section 14.03(1) of this revenue procedure. Such an election pertains to an automatic extension of time under section 301.9100-1.

(1) A section 301.9100-1 request (other than an election made pursuant to section 4 of Rev. Proc. 92-85) must be in the general form of, and meet the general requirements for, a letter ruling request. These requirements are given in section 8 of this revenue procedure. In addition, the section 301.9100-1 request must --

(a) include the information required by Rev. Proc. 92-85; and

(b) state whether the taxpayer's return covering the issue presented in the section 301.9100-1 request is being examined by a District Director or whether the issues in the return are being considered by an Appeals Office.

(2) The running of any applicable statute of limitations is not suspended for the period during which a section 301.9100-1 request has been filed. If the statute of limitations on assessment under section 6501(a) for the year which a timely filed election would have been made or for any affected succeeding year will expire before receipt of a section 301.9100-1 letter ruling, the Service ordinarily will to issue a section 301.9100-1 ruling. See section 5.02(2) of Rev. Proc. 92-85. Therefore, the taxpayer is responsible for seeking an extension of the statute of limitations on assessment. Note that the filing of a claim for refund under section 6511 does not extend the statute of limitations on assessment. If section 301.9100-1 relief is granted, the Service may require the taxpayer to consent to an extension of the statute of limitations on assessment. See section 8.02 of Rev. Proc. 92-85.

(3) If an examination of any return covering the issue presented in the section 301.9100-1 request is started while a section 301.9100-1 request is pending, the taxpayer must notify the National Office. See section 8.04 of this revenue procedure.

(4) If the taxpayer's return covering the issue presented in the section 301.9100-1 request is being examined by a District Director or the issues in the return are being considered by an Appeals Office, the National Office will notify the appropriate District Office or Appeals Office that a section 301.9100-1 request has been submitted to the National Office. The Examining Officer or the Appeals Officer is not authorized to deny consideration of a section 301.9100-1 request. The letter ruling will be mailed to the taxpayer, and the appropriate District Office or Appeals Office will be sent a copy.

.03 Under Rev. Proc. 77-9, 1977-1 C.B. 542, the Office of Associate Chief Counsel (International) issues determinations under section 999(d) that may deny certain benefits of the foreign tax credit, deferral of earnings of foreign subsidiaries and domestic international sales corporations (DISCs), and tax exemption for foreign trade income of a foreign sales corporation or a small foreign sales corporation (FSC or small FSC) to a person, if that person, a member of a controlled group (within the meaning of section 993(a)(3)) that includes the person, or a foreign corporation of which a member of the controlled group is a United States shareholder, agrees to participate in, or cooperate with, an international boycott. Requests for determinations under Rev. Proc. 77-9 are letter ruling requests and, therefore, should be submitted to the Associate Chief Counsel (International) pursuant to this revenue procedure.

.04 Unless the issue is covered by section 7 of this revenue procedure, the Office of Associate Chief Counsel (International) may issue a letter ruling under section 367 even if the taxpayer does not request a letter ruling as to the characterization of the transaction under the reorganization provisions of the Code. The Office of Associate Chief Counsel (International) will determine the section 367 consequences of a transaction based on the taxpayer's characterization of the transaction but will indicate in the letter ruling that it expresses no opinion as to the characterization of the transaction under the reorganization. However, the Office of Associate Chief Counsel (International) may decline to issue a section 367 ruling in situations in which the taxpayer inappropriately characterizes the transaction under the reorganization provisions.

.05 In general, the National Office issues prospective letter rulings on transactions affecting the estate tax on the prospective estate of a living person and 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 letter 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 letter 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 letter ruling request that an extension has been obtained.

If the return is filed before the letter ruling is received from the National Office, the taxpayer must disclose on the return that a letter ruling has been requested, attach a copy of the pending letter ruling request to the return, and notify the National Office that the return has been filed. See section 8.04 of this revenue procedure. The National Office will make every effort to issue the letter 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.

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

.07 In matters involving qualified domestic trusts under section 2056A, the National Office issues letter rulings on proposed transactions and on completed transactions that occurred before the return is filed.

.08 In general, the National Office issues letter rulings on proposed transactions that affect the generation-skipping transfer tax and on completed transactions that occurred 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 letter 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 (Vol. 1) C.B. 1, 648) 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.

.09 In employment and excise tax matters, the National Office issues letter rulings on proposed 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 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 of this revenue procedure. Generally, the employer is the taxpayer and requests the letter ruling. However, if the worker asks for the letter ruling, both the worker and the employer are considered to be the taxpayer and both are entitled to the letter ruling.

The National Office usually will not issue a letter ruling 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 --

(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 a related taxpayer;

(4) 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 for filing a claim for refund or credit of tax; or

(5) has been examined by a District Director or considered by an Appeals Office and a closing agreement covering the issue or liability has not been entered into by a District Director or by an Appeals Office.

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

.10 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 an overassessment or overpayment of tax; or

(4) the filing of information returns.

A letter ruling ordinarily is 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;

(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 for filing a claim for refund or credit of tax; or

(e) has been examined by a District Director or considered by an Appeals Office and 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 it is notified by the taxpayer or otherwise learns that an examination of that issue or an examination of the identical issue on an earlier year's return has been started by a District Director. See section 8.04 of this revenue procedure. But, even if an examination has begun, the National Office ordinarily will issue the letter ruling if the District Director agrees, by memorandum, to the issuance of the letter ruling.

.11 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 objectives of and standards for the publication of revenue rulings and revenue procedures in the Internal Revenue Bulletin.

The National Office, however, may issue letter rulings to groups or associations on their own tax status or liability if the request meets the requirements of this revenue procedure.

.12 The National Office does not issue letter rulings to foreign governments or their political subdivisions about the U.S. tax effects of their laws. The National Office also does not issue letter rulings on the effect of a tax treaty on the tax laws of a treaty country for purposes of determining the tax of the treaty country. See section 12.02 of Rev. Proc. 91-23, 1991-1 C.B. 542. However, the National Office will continue to exchange correspondence with treaty partners pursuant to the consultation provisions in tax treaties. In addition, the National Office may issue letter rulings to foreign governments or their political subdivisions on their own tax status or liability under U.S. law if the request meets the requirements of this revenue procedure.

.13 The National Office also does not issue letter rulings on a matter involving the federal tax consequences of any proposed federal, state, local, municipal, or foreign legislation. The National Office, however, may provide general information in response to an inquiry.

.14 Unless the issue is covered by section 7 of this revenue procedure, or by Rev. Proc. 95-3, this Bulletin, or Rev. Proc. 95-7, this Bulletin, a letter ruling may be issued before the adoption of regulations (either temporary or final) that interpret the provisions of any act 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 or for which the answer seems reasonably certain but not entirely free from doubt, a letter ruling will be issued.

(2) The Service will consider all letter ruling requests and use its best efforts to issue a letter ruling even if the answer does not seem reasonably certain where the issuance of a letter ruling is in the best interests of tax administration.

(3) A letter ruling will not be issued if the ruling request presents an issue that cannot be readily resolved before regulations are issued. However, when the Service has closed a regulations project that might have answered the issue or decides not 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. 95-3 or Rev. Proc. 95-7.

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

District Directors issue determination letters only if the question presented is specifically answered by a statute, tax treaty, or regulation, or by a conclusion stated in a revenue 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.

Requests for a determination of employment status (Form SS-8) from taxpayers (other than federal agencies and instrumentalities) must be submitted to the District Office where the taxpayer resides and not directly to the National Office. See also section 5.09 of this revenue procedure.

.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 a 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 that 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 a 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 section 4218(c), which deal with special provisions applicable to the manufacturers excise tax. The National Office, however, will issue letter 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 of this revenue procedure 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. 95-2, this Bulletin.

SECTION 7. UNDER WHAT CIRCUMSTANCES DOES THE SERVICE HAVE DISCRETION TO ISSUE LETTER 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. 95-3 and Rev. Proc. 95-7, provide a list of these areas. This list is not all-inclusive because the Service may decline to issue a letter ruling or a determination letter when appropriate in the interest of sound tax administration or 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 interests 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 a letter ruling on only part of an integrated transaction. If, however, a part of a transaction falls under a no-rule area, a letter ruling on other parts of the transaction may be issued. Before preparing the letter ruling request, a taxpayer should call the Branch having jurisdiction for the matters on which the taxpayer is seeking a letter ruling to discuss whether the National Office will issue a letter ruling on part of the transaction.

If two or more items or sub-methods of accounting are interrelated, the National Office ordinarily will not issue a letter ruling on a change in accounting method involving only one of the items or sub-methods.

.04 The National Office will issue letter rulings in all cases on the determination of a constructive sales price under section 4216(b) or section 4218(c) 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.

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

This section explains the general instructions for requesting letter rulings and determination letters on all matters. Requests for letter rulings and determination letters require the payment of the applicable user fee listed in Appendix A of this revenue procedure. For additional user fee requirements, see section 14 of this revenue procedure.

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

.01

(1) COMPLETE STATEMENT OF FACTS AND OTHER INFORMATION. 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 --

(a) names, addresses, telephone numbers, and taxpayer identification numbers of all interested parties. (The term "all interested parties" does not mean all shareholders of a widely held corporation requesting a letter ruling relating to a reorganization, or all employees where a large number may be involved.);

(b) the annual accounting period, and the overall method of accounting (cash or accrual) for maintaining the accounting books and filing the federal income tax return, of all interested parties;

(c) 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);

(d) a description of the taxpayer's business operations;

(e) a complete statement of the business reasons for the transaction; and

(f) a detailed description of the transaction.

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, true copies of relevant documents, 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 pertinent to the transaction must be submitted with the request. The taxpayer must also submit certified English translations of all applicable foreign laws and a copy of those laws with the request. For guidelines on the acceptability of such documents, see Rev. Rul. 67-308, 1967-2 C.B. 254.

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) ANALYSIS OF MATERIAL FACTS. All material facts in documents must be included, rather than merely incorporated by reference, in the taxpayer's initial request or in supplemental letters. These facts must be accompanied by an analysis of their bearing on the issue or issues, specifying the provisions that apply.

(4) STATEMENT REGARDING WHETHER SAME ISSUE IS IN AN EARLIER RETURN. The request must state 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, or of a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504).

If the statement is affirmative, it 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) STATEMENT REGARDING WHETHER SAME OR SIMILAR ISSUE PREVIOUSLY RULED ON OR REQUESTED, OR CURRENTLY PENDING. The request must also state whether, to the best of the knowledge of both the taxpayer and the taxpayer's representatives --

(a) the Service previously ruled on the same or a similar issue for the taxpayer (or a related taxpayer within the meaning of section 267, or a member of an affiliated group of which the taxpayer is also a member within the meaning of section 1504) or a predecessor;

(b) the taxpayer, a related taxpayer, a predecessor, or any representatives previously submitted a request involving the same or a similar issue to the Service but withdrew the request before a letter ruling or determination letter was issued;

(c) the taxpayer, a related taxpayer, or a predecessor previously submitted a request involving the same or a similar issue that is currently pending with the Service; or

(d) at the same time as this request, the taxpayer or a related taxpayer is presently submitting another request involving the same or a similar issue to the Service.

If the statement is affirmative for (a), (b), (c), or (d) of this section 8.01(5), the statement must give the date the request was submitted; if applicable, the date the request was withdrawn or ruled on; and other details of the Service's consideration of the issue.

(6) STATEMENT OF SUPPORTING AUTHORITIES. If the taxpayer advocates 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 all events, the request must include a statement of whether the law in connection with the request is uncertain and whether the issue is adequately addressed by relevant authorities.

(7) STATEMENT OF CONTRARY AUTHORITIES. The taxpayer is also 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 request to this effect would be helpful. If the taxpayer does not furnish either contrary authorities or a statement that none exists, the Service in complex cases or those presenting difficult or novel issues may request submission of contrary authorities or a statement that none exists. Failure to comply with this request may result in the Service's refusal to issue a letter ruling or determination letter.

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 information, which will delay action on the request.

(8) STATEMENT IDENTIFYING PENDING LEGISLATION. At the time of filing the request, the taxpayer must identify any pending legislation that may affect the proposed transaction. In addition, if legislation is introduced after the request is filed but before a letter ruling or determination letter is issued, the taxpayer must notify the Service.

(9) STATEMENT IDENTIFYING INFORMATION TO BE DELETED FROM COPY OF LETTER RULING OR DETERMINATION LETTER FOR PUBLIC INSPECTION. The text of letter rulings and determination letters is open to public inspection under section 6110. 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), a request for a letter ruling or determination letter must be accompanied by a statement indicating the deletions desired ("deletions statement"). If the deletions statement is not submitted with the request, a Service representative will tell the taxpayer that the request will be closed if the Service does not receive the deletions statement within 21 calendar days. See section 10.06 of this revenue procedure.

(a) A taxpayer who wants only names, addresses, and identifying numbers to be deleted should state this in the deletions statement. If the taxpayer wants more information deleted, the deletions statement 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) for each proposed deletion.

If the taxpayer decides to ask for additional deletions before the letter ruling or determination letter is issued, additional deletions statements may be submitted.

(b) The deletions statement must not appear in the request, but instead must be made in a separate document and placed on top of the request for a letter ruling or determination letter.

(c) The deletions statement must be signed and dated by the taxpayer or the taxpayer's authorized representative.

(d) The taxpayer should follow the same procedures above to propose deletions from any additional information submitted after the initial request. An additional deletions statement, however, is not required with each submission of additional information if the taxpayer's initial deletions statement requests that only names, addresses, and identifying numbers are to be deleted and the taxpayer wants only the same information deleted from the additional information.

(e) After receiving from the Service the notice under section 6110(f)(1) of intention to disclose the letter 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 letter ruling or determination letter. The taxpayer must send a written statement within 20 calendar days to the Service office indicated on the notice of intention 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 letter 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 letter ruling or determination letter was issued.

Within 20 days after the Service receives the response to the notice under section 6110(f)(1), 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 letter ruling or determination letter. However, these matters may be taken up at any conference that is otherwise scheduled regarding the request.

(f) After receiving the notice under section 6110(f)(1) of intention 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 Service office indicated on the notice of intention 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.

(10) SIGNATURE BY TAXPAYER OR AUTHORIZED REPRESENTATIVE. The request for a letter ruling or determination letter must be signed and dated by the taxpayer or the taxpayer's authorized representative.

(11) AUTHORIZED REPRESENTATIVES. 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 and who is not currently under suspension or disbarment from practice before the Service. 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 duly qualified to practice in any state, possession, territory, commonwealth, or the District of Columbia and who is not currently under suspension or disbarment from practice before the service. 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 currently enrolled to practice before the Service and is currently under suspension or disbarment from 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. For the rules on who may practice before the Service, see Treasury Department Circular No. 230 (31 C.F.R. part 10 (1994)); or

(d) Any other person, including a foreign representative, who has received a "Letter of Authorization" from the Director of Practice under section 10.7(d) of Treasury Department Circular No. 230. A person may make a written request for a "Letter of Authorization" to: Office of Director of Practice, HR:DP, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC 20224. Section 10.7(d) of Circular No. 230 authorizes the Commissioner to allow an individual who is not otherwise eligible to practice before the Service to represent another person in a particular matter.

The above requirements do not apply to a regular full-time employee representing his or her employer, to a general partner representing his or her partnership, to a bona fide officer representing his or her corporation, association, or organized group, or to trustee, receiver, guardian, personal representative, administrator, or executor representing a trust, receivership, guardianship, or estate. A preparer of a return (other than a person referred to in paragraph (a), (b), (c), or (d) of this section 8.01(11) who is not a full-time employee, general partner, bona fide officer, or an administrator, trustee, etc., may not represent a taxpayer in connection with a letter ruling or a determination letter. See section 10.7(c) of Treasury Department Circular No. 230.

A foreign representative (other than a person referred to in paragraph (a), (b), (c), or (d) of this section 8.01(11) is not authorized to practice before the Service and, therefore, must withdraw from representing a taxpayer in a request for a letter ruling or a determination letter. In this situation, the nonresident alien or foreign entity must submit the request for a letter ruling or a determination letter on the individual's or the entity's own behalf or through a person referred to in paragraph (a), (b), (c), or (d) of this section 8.01(11).

(12) POWER OF ATTORNEY AND DECLARATION OF REPRESENTATIVE. Any authorized representative, whether or not enrolled to practice, must also comply with the conference and practice requirements of the Statement of Procedural Rules (26 C.F.R. section 601.501-509 (1994)), which provide the rules for representing a taxpayer before the Service. It is preferred that Form 2848, Power of Attorney and Declaration of Representative, be used to provide the representative's authorization (Part I of Form 2848, Power of Attorney) and the representative's qualification (Part II of Form 2848, Declaration of Representative). The name of the person signing Part I of Form 2848 should also be typed or printed on this form. For additional information regarding the power of attorney form, see section 8.02(2) of this revenue procedure.

For the requirement regarding compliance with Treasury Department Circular No. 230, see section 8.08 of this revenue procedure.

(13) PENALTIES OF PERJURY STATEMENT. A request for a letter ruling or determination letter and any factual information or change in the 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 LETTER 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 all submissions.

The declaration must be signed and dated by the taxpayer, not the taxpayer's 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 letter 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.

(14) NUMBER OF COPIES OF REQUEST TO BE SUBMITTED. Generally, taxpayers need only submit one copy of the request for a letter ruling or determination letter. However, two copies are required if --

(a) the taxpayer is requesting separate letter rulings or determination letters on different issues as explained later under section 8.02(1) of this revenue procedure;

(b) the taxpayer is requesting deletions other than names, addresses, and identifying numbers, as explained in section 8.01(9)(a) of this revenue procedure; or

(c) a closing agreement (as defined in section 2.02 of this revenue procedure) is being requested on the issue presented.

(15) SAMPLE FORMAT FOR A LETTER RULING REQUEST. To assist taxpayers or their representatives in preparing a letter ruling request, a sample format for a letter ruling request is provided in Appendix B. This format is not required to be used by a taxpayer or taxpayer's representative. If the letter ruling request is not identical or similar to the format in Appendix B, the different format will not defer consideration of the letter ruling request.

(16) CHECKLIST FOR LETTER RULING REQUESTS. The Service will be able to respond more quickly to a taxpayer's letter ruling request if the request is carefully prepared and complete. The checklist in Appendix C 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. The checklist in Appendix C must be completed to the extent required by the instructions in the checklist, signed and dated by the taxpayer or the taxpayer's representative, and placed on top of the letter ruling request. If the checklist in Appendix C is not received, a branch representative will ask the taxpayer or the taxpayer's representative to submit the checklist, which may delay action on the letter ruling request.

For letter ruling requests on certain matters, specific checklists supplement the checklist in Appendix C. These checklists are listed in section 9.01 of this revenue procedure and must also be completed and placed on top of the letter ruling request along with the checklist in Appendix C.

Copies of the checklist in Appendix C can be obtained by calling (202) 622-7560 (not a toll-free call). A photocopy of this checklist may be used.

.02

(1) TO REQUEST SEPARATE LETTER RULINGS FOR MULTIPLE ISSUES IN A 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 letter 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 interests 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 letter rulings or that requests for other letter rulings are pending.

(2) TO DESIGNATE RECIPIENT OF ORIGINAL OR COPY OF LETTER RULING OR DETERMINATION LETTER. Unless the power of attorney provides otherwise, the Service will send the original of the letter ruling or determination letter to the taxpayer and a copy of the letter ruling or determination letter to the taxpayer's representative. It is preferred that Form 2848, Power of Attorney and Declaration of Representative, be used to provide the representative's authorization. See section 8.01(12) of this revenue procedure.

(a) TO HAVE COPIES SENT TO MULTIPLE REPRESENTATIVES. When a taxpayer has more than one representative, the Service will send the copy of the letter ruling or determination letter to the first representative named on the most recent power of attorney. If the taxpayer wants an additional copy of the letter ruling or determination letter sent to the second representative listed in the power of attorney, the taxpayer must check the appropriate box on Form 2848. If this form is not used, the taxpayer must state in the power of attorney that a copy of the letter ruling or determination letter is to be sent to the second representative listed in the power of attorney. Copies of the letter ruling or determination letter, however, will be sent to no more than two representatives.

(b) TO HAVE ORIGINAL SENT TO TAXPAYER'S REPRESENTATIVE. A taxpayer may request that the original of the letter ruling or determination letter be sent to the taxpayer's representative. In this case, a copy of the letter ruling or determination letter will be sent to the taxpayer.

If the taxpayer wants the original of the letter ruling or determination letter sent to the taxpayer's representative, a statement to that effect must be attached to Form 2848 (see Form 2848, Specific Instructions for Line 7). If this form is not used, the taxpayer must state in the power of attorney that the original of the letter ruling or determination letter is to be sent to the taxpayer's representative. A taxpayer who has more than one representative should designate in the attached statement to Form 2848 (or in the power of attorney) which representative is to receive the original of the letter ruling or determination letter.

(c) TO HAVE NO COPY SENT TO TAXPAYER'S REPRESENTATIVE. If a taxpayer does not want a copy of the letter ruling or determination letter sent to any representative, the taxpayer must check the appropriate box on Form 2848. If this form is not used, the taxpayer must state in the power of attorney that a copy of the letter ruling or determination letter is not to be sent to any representative.

(3) TO REQUEST A PARTICULAR CONCLUSION ON A PROPOSED TRANSACTION. A taxpayer who is requesting a particular conclusion on a proposed transaction may make the request for a letter ruling in two parts. This type of request is referred to as a "two-part letter ruling request." The first part must include the complete statement of facts and related documents described in section 8.01 of this revenue procedure. 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 the facts and to seek more information in developing the 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; or rulings on employment tax status.

After the Service has resolved the issues presented by a letter ruling request, the Service representative may request that the taxpayer submit a proposed draft of the letter ruling to expedite the issuance of the ruling. See section 10.16 of this revenue procedure.

(4) TO REQUEST EXPEDITIOUS HANDLING. The Service processes requests for letter rulings 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 must be made in writing, preferably in a separate letter with, or soon after filing, the request for the letter ruling or determination letter. It must explain the need for expeditious 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 for the user fee is received.

The Service cannot give assurance that any letter ruling or determination 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 regard for the time it may take to obtain a letter ruling or determination letter, will not be considered a sufficient reason to process a request ahead of its regular order. Also, the possible effect of fluctuation in the market price of stocks on a transaction will not be considered a sufficient reason to process a request out of order. Accordingly, the Service urges taxpayers to submit their requests well in advance of the contemplated transaction.

(5) TO RECEIVE A LETTER RULING OR SUBMIT A REQUEST FOR A LETTER RULING BY FACSIMILE TRANSMISSION. A letter ruling ordinarily is not sent by facsimile (fax) transmission. However, if the taxpayer requests, a copy of a letter ruling may be faxed to the taxpayer or the taxpayer's authorized representative. A letter ruling, however, is not issued until the ruling is mailed. See section 301.6110-2(h) of the Income Tax Regulations.

A request to fax a copy of the letter ruling to a taxpayer or the taxpayer's representative must be made in writing, either as part of the original letter 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 letter ruling is to be faxed.

In addition, because of the nature of a fax transmission, a statement containing a waiver of any disclosure violations resulting from the fax transmission must accompany the request. Nevertheless, the National Office will take certain precautions to protect confidential information. For example, the National Office will use a cover sheet that identifies the intended recipient of the fax and the number of pages transmitted and that contains a statement prohibiting unauthorized disclosure of the letter ruling if a recipient of the faxed letter ruling is not the intended recipient of the fax. The letter ruling will be faxed by the Communications Unit of the Technical Services Staff (CC:DOM:CORP:T:C).

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 faxed letter ruling request will not be forwarded to the rulings branch for action until the check for the user fee is received.

This section does not apply 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 11.11(2) of this revenue procedure.

.03

(1) REQUESTS FOR LETTER RULINGS should be sent to the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, at the following address:

     Internal Revenue Service

(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 14 and Appendix A of this revenue procedure.

.04

The taxpayer must notify the National Office if, after the letter ruling request is filed but before a letter ruling is issued, the taxpayer knows that --

(1) an examination of the issuse or the identical issue on an earlier year's return has been started by a District Director;

(2) in the case of a section 301.9100-1 request, an examination of the return covering the issue presented in the section 301.9100-1 request has been started by a District Director. See section 5.02(3) of this revenue procedure; or

(3) legislation that may affect the transaction is introduced. See section 8.01(8) of this revenue procedure.

In addition, if the taxpayer files a return before a letter ruling is received from the National Office concerning the issue, the taxpayer must notify the National Office that the return has been filed. The taxpayer must also attach a copy of the letter ruling request to the return to alert the District Office and thereby avoid premature District action on the issue.

This section also applies to pending requests for a closing agreement on a transaction for which a letter ruling is not requested or issued, and for advance pricing agreements.

.05

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

.06

A taxpayer or the taxpayer's authorized representative may obtain information regarding the status of a request by calling the person whose name and telephone number are shown on the acknowledgement of receipt of the request or the appropriate Branch representative who contacts the taxpayer as explained in section 10.02 of this revenue procedure.

.07

If a taxpayer withdraws a request for a letter ruling or if the National Office declines to issue a letter ruling, 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. The taxpayer may withdraw a request for a letter ruling or determination letter at any time before the letter ruling or determination letter is signed by the Service. Correspondence and exhibits related to a request that is withdrawn or related to a letter ruling request for which the National Office declines to issue a letter ruling will not be returned to the taxpayer. See section 8.01(2) of this revenue procedure. In appropriate cases, the Service may publish its conclusions in a revenue ruling or revenue procedure.

The user fee will not be returned for a letter ruling request that is withdrawn. If the National Office declines to issue a letter ruling on all of the issues in the request, the user fee will be returned. If the National Office, however, issues a letter ruling on some, but not all, of the issues, the user fee will not be returned. See section 14.09 of this revenue procedure for additional information regarding refunds of user fees.

.08

The taxpayer's authorized representative, whether or not enrolled, must comply with Treasury Department Circular No. 230, which provides the rules for practice before the Service. In those situations where the National Office believes that the taxpayer's representative is not in compliance with Circular No. 230, the National Office will bring the matter to the attention of the Director of Practice.

For the requirement regarding compliance with the conference and practice requirements, see section 8.01(12) of this revenue procedure.

SECTION 9. WHAT OTHER CHECKLISTS, GUIDELINE REVENUE PROCEDURES, SAFE HARBOR REVENUE PROCEDURES, AND AUTOMATIC CHANGE REVENUE PROCEDURES APPLY TO CERTAIN REQUESTS?

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

.01 For requests relating to the following Code sections and subject matters, see the following checklists and guideline revenue procedures.

 CODE OR REGULATION            REVENUE PROCEDURE

 CODE OR REGULATION         REVENUE PROCEDURE

 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 letter rulings will be controlled by the Technical Services Staff of the Assistant Chief Counsel (Corporate) (CC:DOM:CORP:T). That office will examine the incoming documents for completeness, process the user fee, and forward the file to the appropriate Assistant Chief Counsel or, for letter ruling requests under the jurisdiction of the Associate Chief Counsel (International), to the Office of Associate Chief Counsel (International). The Assistant Chief Counsel's office or the Office of Associate Chief Counsel (International), as appropriate, will assign the letter ruling 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 discuss the procedural issues in the letter ruling request with the taxpayer or, if the request includes a properly executed power of attorney, with the authorized representative 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 Branch representative will tell the taxpayer --

(1) whether the Branch 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.

EXCEPT FOR CASES INVOLVING A REQUEST FOR CHANGE IN ACCOUNTING METHOD OR ACCOUNTING PERIOD, THE 21 CALENDAR DAY PROCEDURE APPLIES TO: ALL MATTERS WITHIN THE JURISDICTION OF THE ASSISTANT CHIEF COUNSEL (CORPORATE), THE ASSISTANT CHIEF COUNSEL (INCOME TAX AND ACCOUNTING), THE ASSISTANT CHIEF COUNSEL (PASSTHROUGHS AND SPECIAL INDUSTRIES), THE ASSOCIATE CHIEF COUNSEL (EMPLOYEE BENEFITS AND EXEMPT ORGANIZATIONS), THE ASSOCIATE CHIEF COUNSEL (ENFORCEMENT LITIGATION), AND THE ASSOCIATE CHIEF COUNSEL (INTERNATIONAL); AND ALL MATTERS WITHIN THE JURISDICTION OF THE ASSISTANT CHIEF COUNSEL (FINANCIAL INSTITUTIONS AND PRODUCTS), EXCEPT CASES CONCERNING INSURANCE ISSUES REQUIRING ACTUARIAL COMPUTATIONS.

.03 If the letter ruling request 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 letter 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 or materially alter a taxpayer's proposed accounting method or accounting period.

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).

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

(1) 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 Branch representative will tell the taxpayer during the initial contact that the request will be closed if the Service does not receive the information within 21 calendar days unless an extension of time is granted. See sections 10.07(1) and (2) of this revenue procedure for instructions on submissions of additional information.

(2) 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 Senior Technical 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.

(3) If the taxpayer does not submit the information requested during the initial contact within the time provided, the letter ruling request will be closed and the taxpayer will be notified in writing. 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.

(4) 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

(1) Material facts furnished to the Service by telephone or 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(13) of this revenue procedure. 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.

To facilitate prompt action on letter 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 telephone number to which the information can be faxed. A copy of this information and a signed perjury statement, however, must be mailed or delivered to the Service.

(2) Additional information should be sent to:

     Internal Revenue Service

     Internal Revenue Service

(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 Senior Technical 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 letter 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. IF THE SERVICE RECEIVES THE INFORMATION AFTER THE LETTER RULING REQUEST IS CLOSED, THE REQUEST MAY BE REOPENED AND TREATED AS A NEW REQUEST. HOWEVER, THE TAXPAYER MUST PAY ANOTHER USER FEE BEFORE THE CASE CAN BE REOPENED.

.08 A taxpayer may request a conference regarding a letter 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 letter 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) of this revenue procedure, 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 in section 10.07(3) of this revenue procedure 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 section 10.12 of this revenue procedure. 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 have a thorough and informed 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. But see section 10.12 of this revenue procedure for situations in which the Service may offer additional conferences.

In employment tax matters, only the party entitled to the letter ruling is entitled to a conference. See section 5.09 of this revenue procedure.

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

.11 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 letter ruling or limit the revocation or modification of a prior letter 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.

.12 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 additional conferences, including conferences with an official higher than the Branch level, if the Service decides they are needed. Such conferences are not offered as a matter of course simply because the Branch has reached an adverse decision. In general, conferences with higher level officials are offered only if the Service determines that the case presents significant issues of tax policy or tax administration and that the consideration of these issues would be enhanced by additional conferences with the taxpayer.

.13 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 of this revenue procedure for instructions on submission of additional information. If the additional information is not received within that time, a letter 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 or the taxpayer's representative of the Service's approval or denial of the requested extension are the same as those stated in section 10.07(3) of this revenue procedure regarding submitting additional information.

.14 Sometimes it will be advantageous to both the Service and the taxpayer to hold a conference before the taxpayer submits the letter 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 of the letter ruling request or other detailed written description of the proposed transaction before the pre- submission conference.

Any discussion of substantive issues at a pre-submission 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). A letter ruling request submitted following a pre-submission conference will not necessarily be assigned to the Branch that held the pre-submission conference.

.15 Infrequently, taxpayers request that their conference of right be held by telephone. This may occur, for example, when 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, Senior Technician Reviewer (or Senior Technical Reviewer), or Assistant to the Branch Chief (or Assistant Branch Chief) of the Branch to which the case is assigned will decide if it is appropriate in the particular case to hold the conference of right by telephone. If the request is approved, the taxpayer will be advised when to call the Service representatives (not a toll-free call).

.16 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 letter 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 disk in a word processing format. The typed draft will become part of the permanent files of the National Office, and the word processing disk will not be returned. If the Service representative requesting the draft letter ruling cannot answer specific questions about the format of the word processing disk, the questions can be directed to Wayne Thomas at 202-622-7560 or Roberta Hardaker at 202-622-3563 (not toll-free calls).

The proposed letter ruling (both typed draft and word processing 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 of this revenue procedure.

SECTION 11. WHAT EFFECT WILL A LETTER 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).

.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 is taken by the District Director. Such a referral to the National Office will be treated as a request for technical advice and the provisions of Rev. Proc. 95-2, 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 2.02 of this revenue procedure, 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 statute of limitations unless the Service uses its discretionary authority under section 7805(b) to limit the retroactive effect of the revocation or modification.

A letter ruling may be revoked or modified due to --

(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, revenue procedure, notice, 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 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 letter ruling was issued or to a taxpayer whose tax liability was directly involved in the letter 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 proposed transaction; and

(5) the taxpayer directly involved in the letter ruling acted in good faith in relying on the letter ruling, and revoking the letter 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 a member of an industry is not directly involved in a letter ruling issued to another member and, therefore, 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 letter 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. It will not apply to a similar transaction in the same year or any other year. And, except in unusual circumstances, the application of that letter 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 of this revenue procedure 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 letter ruling is later found to be in error or no longer in accord with the position of the Service, the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, ordinarily will limit the retroactive effect of the revocation or modification to a date that is not earlier than that on which the letter ruling is modified or revoked. For example, the retroactive effect of the revocation or modification of a letter ruling covering a continuing action or series of actions ordinarily would be limited in the following situations when the letter 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. However, the taxpayer ordinarily would be protected only for the payment received after the letter ruling was issued and before the revocation or modification of the letter ruling.

(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 letter 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 A taxpayer is not protected against retroactive revocation or modification of a letter ruling involving a transaction completed before the issuance of the letter ruling or involving a continuing action or series of actions occurring before the issuance of the letter ruling because the taxpayer did not enter into the transactions relying on a letter ruling.

.10 If a letter ruling is issued covering a particular transaction and the material facts on which the letter ruling is based are later changed, a taxpayer is not protected against retroactive revocation or modification of the letter ruling when the transaction is completed after the change in the material facts. Similarly, a taxpayer is not protected against retroactive revocation or modification of a letter ruling involving a continuing action or a series of actions occurring after the material facts on which the letter ruling is based have changed.

.11 Under section 7805(b), the Service may prescribe any extent to which a revocation or modification of 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 (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation) or the Associate Chief Counsel (International), as appropriate, limit the retroactive effect of any revocation or modification of the letter ruling or determination letter.

(1) REQUEST FOR RELIEF UNDER SECTION 7805(b) 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 letter ruling request. These requirements are given in section 8 of this revenue procedure. Specifically, the request must also --

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

(b) state the relief sought;

(c) explain the reasons and arguments in support of the relief requested (including a discussion of the five items listed in section 11.05 of this revenue procedure and any other factors as they relate to the taxpayer's particular situation); and

(d) include any documents bearing on the request.

A request that the Service limit the retroactive effect of a revocation or modification of a letter ruling may be made in the form of a separate request for a letter ruling when, for example, a revenue ruling has the effect of modifying or revoking a letter 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 letter 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 17.04 of Rev. Proc. 95-2.

When germane to a pending letter ruling request, a request to limit the retroactive effect of a modification or revocation of a letter 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 A CONFERENCE ON APPLICATION OF SECTION 7805(b).

A taxpayer who requests the application of section 7805(b) in a separate letter ruling request has the right to a conference in the National Office as explained in sections 10.09, 10.11, and 10.12 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 of this revenue procedure. 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.

SECTION 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).

.02 A District Director does not have authority under section 7805(b) to limit the modification or revocation of the determination letter. Therefore, if a District Director proposes to modify or revoke a determination letter, the taxpayer may request limitation of the retroactive effect of the modification or revocation by asking the District Director who issued the determination letter to seek technical advice from the National Office. See section 17.02(2) of Rev. Proc. 95-2.

(1) REQUEST FOR RELIEF UNDER SECTION 7805(b) MUST BE MADE IN REQUIRED FORMAT.

A taxpayer's request to limit the retroactive effect of the modification or revocation of the determination letter must be in the form of, and meet the general requirements for, a technical advice request. See section 17.04 of Rev. Proc. 95-2. The request must also --

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

(b) state the relief sought;

(c) explain the reasons and arguments in support of the relief sought (including a discussion of the five items listed in section 11.05 of this revenue procedure and any other factors as they relate to the taxpayer's particular situation); and

(d) include any documents bearing on the request.

(2) TAXPAYER MAY REQUEST A CONFERENCE ON APPLICATION OF SECTION 7805(b).

When technical advice is requested regarding the application of section 7805(b), 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 sections 12 and 17.05 of Rev. Proc. 95-2.

SECTION 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 notify the taxpayer that the matter has been referred.

District Directors will also refer to the National Office any request for a determination letter that in their judgment 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 notify the taxpayer 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 of this revenue procedure, and it is decided not to issue a letter ruling or an information letter, the National Office will notify the taxpayer and will then forward the request to the appropriate District Office for association with the related return.

SECTION 14. WHAT ARE THE USER FEE REQUIREMENTS FOR REQUESTS FOR LETTER RULINGS AND DETERMINATION LETTERS?

.01 LEGISLATION AUTHORIZING USER FEES. Section 10511 of the Revenue Act of 1987, Pub. L. 100-203, 101 Stat. 1330-382, 1330-446, enacted December 22, 1987, as amended by Section 11319 of the Omnibus Budget Reconciliation Act of 1990, 1991-2 C.B. 481, 511, enacted November 5, 1990, and by section 743 of the Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809, ___, enacted December 8, 1994 (hereafter the three laws are referred to as the "Act"), provides that the Secretary of the Treasury or delgate (the "Secretary") shall establish a program requiring the payment of user to the Service fees for requests to the Service for letter rulings, opinion letters, determination letters, and similar requests. The fees apply to requests made on or after February 1, 1988, and before October 1, 2000. The fees charged under the program (1) are to vary according to categories or subcategories established by the Secretary; (2) are to be determined after taking into account the average time for, and difficulty of, complying with requests in each category and subcategory; and (3) are to be payable in advance. The Secretary is to provide for exemptions and reduced fees under the program as the Secretary determines to be appropriate, but the average fee applicable to each category must not be less than the amount specified in the Act.

.02 REQUESTS TO WHICH A USER FEE APPLIES. In general, user fees apply to all requests for letter rulings, determination letters, and advance pricing agreements submitted by or on behalf of taxpayers. They also apply to requests for closing agreements described in paragraph (A)(2)(e) of Appendix A of this revenue procedure, all requests for renewal of advance pricing agreements, and all requests for reconsideration of letter rulings or determination letters. Requests to which a user fee applies must be accompanied by the appropriate fee as determined from the fee schedule provided in Appendix A of this revenue procedure. The fee may be refunded as provided in section 14.09 below.

.03 REQUESTS TO WHICH A USER FEE DOES NOT APPLY. User fees do not apply to --

(1) elections made pursuant to section 4 of Rev. Proc. 92-85, pertaining to automatic extensions of time under section 301.9100-1 (see section 5.02 of this revenue procedure);

(2) requests for information letters; or

(3) requests for a change in accounting period or accounting method permitted to be made by a published automatic change revenue procedure (see section 9.03 of this revenue procedure).

.04 EXEMPTIONS FROM THE USER FEE REQUIREMENTS. The user fee requirements do not apply to --

(1) departments, agencies, or instrumentalities of the United States that certify that they are seeking a letter ruling or determination letter on behalf of a program or activity funded by federal appropriations. The fact that a user fee is not charged does not have any bearing on whether an applicant is treated as an agency or instrumentality of the United States for purposes of any provision of the Code; or

(2) requests as to whether a worker is an employee for federal employment taxes and income tax withholding purposes (chapters 21, 22, 23, and 24 of subtitle C of the Code) submitted on Form SS-8, Information for Use in Determining Whether a Worker Is an Employee for Federal Employment Taxes and Income Tax Withholding, or its equivalent.

.05 FEE SCHEDULE. The schedule of user fees is provided in Appendix A. See Rev. Proc. 95-8, for the user fee requirements applicable to requests for letter rulings, determination letters, etc., under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations).

.06 APPLICABLE USER FEE FOR A REQUEST INVOLVING MULTIPLE OFFICES, FEE CATEGORIES, ISSUES, TRANSACTIONS, OR ENTITIES.

(1) REQUESTS INVOLVING SEVERAL OFFICES. If a request dealing with only one transaction involves more than one of the offices within the Service (for example, one issue is under the jurisdiction of the Associate Chief Counsel (Domestic) and another issue is under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations)), only one fee applies, namely the highest fee that otherwise would apply to each of the offices involved. See Rev. Proc. 95-8, for the user fees applicable to issues under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations).

(2) REQUESTS INVOLVING SEVERAL FEE CATEGORIES. If a request dealing with only one transaction involves more than one fee category, only one fee applies, namely the highest fee that otherwise would apply to each of the categories involved.

(3) REQUESTS INVOLVING SEVERAL ISSUES. If a request dealing with only one transaction involves several issues, a request for a change in accounting method dealing with only one item or sub-method of accounting involves several issues, or a request for a change in accounting period dealing with only one item involves several issues, the request is treated as one request. Therefore, only one fee applies, namely the fee that applies to the particular category or subcategory involved. The addition of a new issue relating to the same transaction or item will not result in an additional fee, unless the issue places the transact or item in a higher fee category.

(4) REQUESTS INVOLVING SEVERAL UNRELATED TRANSACTIONS. If a request involves several unrelated transactions, a request for a change in accounting method involves several unrelated items or sub- methods of accounting, or a request for a change in accounting period involves several unrelated items, each transaction or item is treated as a separate request. As a result, a separate fee will apply for each unrelated transaction or item. An additional fee will apply if the request is changed by the addition of an unrelated transaction or item not contained in the initial request.

(5) REQUESTS INVOLVING SEVERAL ENTITIES. Each entity involved in a transaction (for example, a reorganization) that desires a separate letter ruling in its own name must pay a separate fee regardless of whether the transaction or transactions may be viewed as related. In certain situations, however, a reduced user fee may be charged. See paragraph (A)(4) of Appendix A of this revenue procedure.

.07 METHOD OF PAYMENT. Each request to the Service for a letter ruling, determination letter, advance pricing agreement, closing agreement described in paragraph (A)(2)(e) of Appendix A of this revenue procedure, or reconsideration of a letter ruling or determination letter must be accompanied by a check or money order, payable to the Internal Revenue Service, in the appropriate amount. (However, the user fee check or money order should not be attached to the Form 2553, Election by a Small Business Corporation, when it is filed at the Service Center. If on the Form 2553 the corporation requests a ruling that it be permitted to use a fiscal year under section 6.03 of Rev. Proc. 87-32, the Service Center will forward the request to the National Office. When the National Office receives the Form 2553 from the Service Center, it will notify the taxpayer that the fee is due.) Taxpayers should not send cash.

.08 EFFECT OF NONPAYMENT OR PAYMENT OF INCORRECT AMOUNT. If a request is not accompanied by a properly completed check or money order or is accompanied by a check or money order for less than the correct amount, the respective office within the Service that is responsible for issuing the letter ruling, determination letter, advance pricing agreement, closing agreement, or reconsideration of a letter ruling or determination letter generally will exercise discretion in deciding whether to immediately return the request. If a request is not immediately returned, the taxpayer will be contacted and given a reasonable amount of time to submit the proper fee. If the proper fee is not received within a reasonable amount of time, the entire request will then be returned. However, the Service will usually defer substantive consideration of a request until proper payment has been received. The return of a request to the taxpayer may adversely affect substantive rights if the request is not perfected and resubmitted to the Service within 30 days of the date of the cover letter returning the request.

If a request is accompanied by a check or money order for more than the correct amount, the request will be accepted and the amount of the excess payment will be returned to the taxpayer.

.09 REFUNDS OF USER FEE. In general, the fee will not be refunded unless the Service declines to rule on all issues for which a ruling is requested.

(1) THE FOLLOWING SITUATIONS ARE EXAMPLES OF SITUATIONS IN WHICH THE FEE WILL NOT BE REFUNDED.

(a) The request for a letter ruling, determination letter, etc. is withdrawn at any time subsequent to its receipt by the Service, unless the only reason for withdrawal is that the Service has advised the taxpayer that a higher user fee than was sent with the request is applicable and the taxpayer is unwilling to pay the higher fee.

(b) The request is procedurally deficient, although accompanied by the proper fee or an overpayment and is not timely perfected by the requester. When there is a failure to timely perfect the request, the case will be considered closed and the failure to perfect will be treated as a withdrawal for purposes of this revenue procedure. See section 10.06(3) of this revenue procedure.

(c) A letter ruling, determination letter, etc. is revoked in whole or in part at the initiative of the Service. The fee paid at the time the original letter ruling, determination letter, etc. was requested will not be refunded.

(d) The request contains several issues and the Service rules on some, but not all, of the issues. The highest fee applicable to the issues on which the Service rules will not be refunded.

(e) The taxpayer asserts that a letter ruling the taxpayer received covering a single issue is erroneous or not responsive (other than an issue on which the Service has declined to rule) and requests reconsideration. The Service, upon reconsideration, does not agree that the letter ruling is erroneous or is not responsive. The fee accompanying the request for reconsideration will not be refunded.

(f) The situation is the same as described in paragraph (e) of this section 14.09(1) except that the letter ruling covered several unrelated transactions. The Service, upon reconsideration, does not agree with the taxpayer that the letter ruling is erroneous or is not responsive for all of the transactions, but does agree that it is erroneous as to one transaction. The fee accompanying the request for reconsideration will not be refunded except to the extent applicable to the transaction for which the Service agrees the letter ruling was in error.

(g) The request is for a supplemental letter ruling, determination letter, etc., concerning a change in facts (whether significant or not) relating to the transaction ruled on.

(h) The request is for reconsideration of an adverse or partially adverse letter ruling or a final adverse determination letter, and the taxpayer submits arguments and authorities not submitted before the original letter ruling or determination letter was issued.

(2) THE FOLLOWING SITUATIONS ARE EXAMPLES OF SITUATIONS IN WHICH THE FEE WILL BE REFUNDED.

(a) In a situation to which section 14.09(1)(h) of this revenue procedure does not apply, the taxpayer asserts that a letter ruling the taxpayer received covering a single issue is erroneous or is not responsive (other than an issue on which the Service declined to rule) and requests reconsideration. The Service agrees, upon reconsideration, that the letter ruling is erroneous or is not responsive. The fee accompanying the taxpayer's request for reconsideration will be refunded.

(b) In a situation to which section 14.09(1)(h) of this revenue does not apply, the taxpayer requests a supplemental letter ruling, determination letter, etc., to correct a mistake that the Service agrees it made in the original letter ruling, determination letter, etc., such as a mistake in the statement of facts or in the citation of a Code section. Once the Service agrees that it made a mistake, the fee accompanying the request for the supplemental letter ruling, determination letter, etc. will be refunded.

(c) The taxpayer requests and is granted relief under section 7805(b) in connection with the revocation in whole or in part, of a previously issued letter ruling, determination letter, etc. The fee accompanying the request for relief will be refunded.

.10 REQUEST FOR RECONSIDERATION OF USER FEE. A taxpayer that believes the user fee charged by the Service for its request for a letter ruling, determination letter, advance pricing agreement, or closing agreement is either not applicable or incorrect and wishes to receive a refund of all or part of the amount paid (see section 14.09 of this revenue procedure may request reconsideration and, if desired, the opportunity for an oral discussion by sending a letter to the Service at the applicable Post Office Box or other address given in section 8.03 in this revenue procedure. Both the incoming envelope and the letter requesting such reconsideration should be prominently marked "USER FEE RECONSIDERATION REQUEST." No user fee is required for these requests. The request should be marked for the attention of:

 If the matter involves primarily:       Mark for the attention of:

SECTION 15. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 94-1?

.01 Section 5.02(2) is amended to remind taxpayers that if the statute of limitations on assessment under section 6501(a) will expire before receipt of a section 301.9100-1 letter ruling, the Service ordinarily will not issue a section 301.9100-1 ruling. Therefore, the taxpayer is responsible for seeking an extension of the statute of limitations on assessment. Section 5.02(2) also is amended to remind taxpayers that the filing of a protective claim for refund under section 6511 does not extend the statute of limitations on assessment.

.02 Section 5.04 is amended to provide that the Office of Associate Chief Counsel (International) may issue, rather than will issue, a letter ruling under section 367 even if the taxpayer does not request a letter ruling as to the characterization of the transaction under the reorganization provisions of the Code.

.03 Section 8.01(5) is amended to provide that a taxpayer must state whether the taxpayer, a related taxpayer, or a predecessor previously submitted a request involving the same or a similar issue that is currently pending with the Service, or whether at the same time as this request, the taxpayer or a related taxpayer is presently submitting another request involving the same or a similar issue to the Service.

.04 Section 8.01(11) is amended to conform to T.D. 8545, 1994-29 I.R.B. 22.

.05 Section 9 is updated to reflect the revenue procedures issued in 1994.

.06 Section 10.12 is amended to revise the procedures for offering additional conferences. Such conferences are not offered as a matter of course simply because the Branch has reached an adverse decision. Section 10.12 also is amended to provide that in general, conferences with an official higher than the Branch level are offered only if the Service determines that the case presents significant issues of tax policy or tax administration and that the consideration of these issues would be enhanced by additional conferences with the taxpayer.

.07 Section 14.01 is amended to conform to section 743 of the Uruguay Round Agreements Act, which extended the user fee program from October 1, 1995, to October 1, 2000.

.08 Except for the reduced user fees and the user fees for accounting period requests on Forms 1128 and 2553, and advance pricing agreement requests, the user fees in Appendix A are increased. The reduced user fee in Appendix A for substantially identical letter ruling requests is decreased.

.09 Paragraph (A)(2)(b)(i) of Appendix A is amended to clarify that the reduced user fee of $500 for a person with gross income of less than $150,000 applies to change in accounting method applications (Form 3115).

.10 The reduced user fee in Appendix A for individuals is amended to provide that the reduced user fee applies to a married individual if the combined gross income of the applicant and the applicant's spouse is less than $150,000. The gross incomes of the applicant and the applicant's spouse are not combined, however, if the applicant is legally separated from his or her spouse and the spouses do not file a joint income tax return with each other.

.11 The reduced user fee in Appendix A for domestic partnerships and corporations is amended to provide that the reduced user fee applies to domestic partnerships and corporations with total income, plus cost of goods sold, plus any interest income not subject to tax under section 103, of less than $150,000. In determining whether the gross income of the applicant is less than $150,000, the reduced user fee category for domestic partnerships and corporations also is amended to provide rules for combining the gross incomes of the applicant and certain related parties.

.12 The reduced user fee in Appendix A for U.S. persons requesting advance pricing agreements and renewals is amended to provide that the reduced user fee applies to U.S. persons with total income, plus costs of goods sold, plus any interest income not subject to tax under section 103, of less than $100,000,000.

SECTION 16. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER DOCUMENTS?

.01 Rev. Proc. 94-1, 1994-1 C.B. 378, is superseded.

.02 Rev. Proc. 91-22, 1991-1 C.B. 526, is modified by deleting all references to Rev. Proc. 87-4, Rev. Proc. 88-4, and Rev. Proc. 90-17 and replacing them with references to this revenue procedure, and by substituting for the user fee that Rev. Proc. 91-22 provides for, the corresponding user fee set forth in this revenue procedure.

.03 Rev. Proc. 92-20, 1992-1 C.B. 685, is modified by deleting all references to Rev. Proc. 90-17 and replacing them with references to this revenue procedure for requests for changes in accounting method under the jurisdiction of the Associate Chief Counsel (Domestic).

.04 Rev. Proc. 92-85, 1992-2 C.B. 490, is modified. Section 5.02(2) of Rev. Proc. 92-85 is amended to read as follows:

Ordinarily, the Service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute of limitations on assessment under section 6501(a) before receipt of a section 301.9100-1 ruling. Consequently, if necessary, a taxpayer requesting relief is responsible for seeking an extension of the statute of limitations on assessment. The filing of a request for relief under section 301.9100-1 does not suspend the running of any applicable statute of limitations. In addition, the filing of a claim for refund under section 6511 does not extend the statute of limitations on assessment.

The Service may condition a grant of relief on the taxpayer providing the Service with a statement from an independent auditor (other than an auditor providing an affidavit pursuant to section 6.06 of this revenue procedure) certifying that the requirements of section 5.02(1) of this revenue procedure are satisfied.

SECTION 17. WHAT IS THE EFFECTIVE DATE OF THIS REVENUE PROCEDURE?

.01 This revenue procedure is effective January 3, 1995, with the following exceptions:

(1) Any decrease in the user fee in Appendix A will apply to requests pending with the National Office or with district offices of the Service as of that date.

(2) Any increase in the user fee in Appendix A and any changes made to the procedural matters in paragraph (B) of Appendix A are effective only for requests postmarked or, if not mailed, received on or after January 9, 1995.

DRAFTING INFORMATION

The principal author of this revenue procedure is Kathleen Reed of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue procedure for matters under the jurisdiction of --

(1) the Associate Chief Counsel (Domestic) or the Associate Chief Counsel (Employee Benefits and Exempt Organizations), contact Ms. Reed on (202) 622-3110 (not a toll-free call);

(2) the Associate Chief Counsel (International), contact Gerard Traficanti on (202) 622-3830(not a toll-free call); or

(3) the Associate Chief Counsel (Enforcement Litigation), contact Peter J. Devlin on (202) 622-3600 (not a toll-free call).

For further information regarding user fees, contact Wayne Thomas on (202) 622-7560 (not a toll-free call).

INDEX References are to sections in Rev. Proc. 95-1

 ADDITIONAL INFORMATION

SCHEDULE OF USER FEES

 (A) FEE SCHEDULE

(1) REQUIRED CERTIFICATION. A person seeking a reduced user fee under paragraph (A)(3) of this appendix must provide the following certification in order to obtain the reduced user fee.

(a) If a person is seeking a reduced user fee under paragraph (A)(3)(a), (b), or (c) of this appendix, the person must certify in the request that his, her, or its gross income, as defined under paragraph (B)(2), (3), or (5) of this appendix, as applicable, is less than $150,000 for the last full (12 months) taxable year ending before the date the request is filed.

(b) If an organization exempt from income tax under Subchapter F of the Code is seeking a reduced user fee under paragraph (A)(3)(d) of this appendix, the organization must certify in its request that its gross receipts are less than $150,000 for the last full (12 months) taxable year ending before the date the request is filed.

(c) If a U.S. person is seeking a reduced user fee under paragraph (A)(3)(e) of this appendix, the U.S. person must certify in its request for an advance pricing agreement and renewal that its gross income, as defined under paragraph (B)(7) of this appendix, is less than $100,000,000 for the last full (12 months) taxable year ending before the date the request is filed.

(2) GROSS INCOME OF U.S. CITIZENS AND RESIDENT ALIEN INDIVIDUALS, DOMESTIC TRUSTS, AND DOMESTIC ESTATES. For purposes of the reduced user fee provided in paragraph (A)(3)(a) of this appendix for U.S. citizens and resident alien individuals, domestic trusts, and domestic estates, "gross income" is equal to "total income" as reported on their last federal income tax return (as amended) filed for a full (12 months) taxable year ending before the date the request is filed, plus any interest income not subject to tax under section 103 (interest on state and local bonds) for that period. "Total income" is a line item on federal tax returns. For example, if the 1993 Form 1040, U.S. Individual Income Tax Return, is the most recent 12-month taxable year return filed by a U.S. citizen, "total income" on the Form 1040 is the amount entered on line 23.

In the case of a request for a letter ruling or closing agreement from a domestic estate or trust that, at the time the request is filed, has not filed a federal income tax return for a full taxable year, the reduced user fee in paragraph (A)(3)(a) of this appendix will apply if the decedent's or (in the case of an individual grantor) the grantor's total income as reported on the last federal income tax return filed for a full taxable year ending before the date of death or the date of the transfer, taking into account any additions required to be made to total income described in this paragraph (B)(2), is less than $150,000. In this case, the executor or administrator of the decedent's estate or the grantor must provide the certification required under paragraph (B)(1) of this appendix.

(3) GROSS INCOME OF NONRESIDENT ALIEN INDIVIDUALS, FOREIGN TRUSTS, AND FOREIGN ESTATES. For purposes of the reduced user fee provided in paragraph (A)(3)(b) of this appendix for nonresident alien individuals, foreign trusts, and foreign estates, "gross income" is equal to "total effectively connected income" as reported on their last federal income tax return (as amended) filed for a full (12 months) taxable year ending before the date the request is filed, plus any income for the period from United States or foreign sources that is not taxable by the United States, whether by reason of section 103, an income tax treaty, section 871(h) (regarding portfolio interest), or otherwise, plus the total amount of any fixed or determinable annual or periodical income from United States sources, the United States tax liability for which is satisfied by withholding at the source. "Total effectively connected income" is a line item on federal tax returns. For example, if the 1993 Form 1O40NR, U.S. Nonresident Alien Income Tax Return, is the most recent 12-month taxable year return filed by a nonresident alien individual, "total effectively connected income" on the Form 1040NR is the amount entered on line 24.

In the case of a request for a letter ruling or closing agreement from a foreign estate or trust that, at the time the request is filed, has not filed a federal income tax return for a full taxable year, the reduced user fee in paragraph (A)(3)(b) of this appendix will apply if the decedent's or (in the case of an individual grantor) the grantor's total income or total effectively connected income, as relevant, as reported on the last federal income tax return filed for a full taxable year ending before the date of death or the date of the transfer, taking into account any additions required to be made to total income or total effectively connected income described respectively in paragraph (B)(2) of this appendix or in this paragraph (B)(3), is less than $150,000. In this case, the executor or administrator of the decedent's estate or the grantor must provide the certification required under paragraph (B)(1) of this appendix.

(4) SPECIAL RULES FOR DETERMINING GROSS INCOME OF INDIVIDUALS, TRUSTS, AND ESTATES. For purposes of paragraph (B)(2) and (3) of this appendix, the following rules apply for determining whether gross income is less than $150,000:

(a) In the case of a request from a married individual, the gross incomes (as defined in paragraph (B)(2) or (3) of this appendix, as applicable) of the applicant and the applicant's spouse must be combined. This rule does not apply to an individual who is legally separated from his or her spouse if the spouses do not file a joint income tax return with each other; and

(b) If there are two or more applicants filing the request, the gross incomes (as defined in paragraph (B)(2) or (3) of this appendix, as applicable) of the applicants must be combined.

(5) GROSS INCOME OF DOMESTIC PARTNERSHIPS AND CORPORATIONS. For purposes of the reduced user fee provided in paragraph (A)(3)(c) of this appendix for domestic partnerships and corporations, "gross income" is equal to "total income" as reported on their last federal income tax return (as amended) filed for a full (12 months) taxable year ending before the date the request is filed, plus "cost of goods sold" as reported on the same federal income tax return, plus any interest income not subject to tax under section 103 (interest on state and local bonds) for that period. "Cost of goods sold" and "total income" are line items on federal tax returns. For example, if the 1993 Form 1065, U.S. Partnership Return of Income, is the most recent 12-month taxable year return filed by a domestic partnership, "cost of goods sold" and "total income" on the Form 1065 are the amounts entered on lines 2 and 8, respectively, and if the 1993 Form 1120, U.S. Corporation Income Tax Return, is the most recent 12-month taxable year return filed by a domestic corporation, "cost of goods sold" and "total income" on the Form 1120 are the amounts entered on lines 2 and 11, respectively.

The following rules apply in determining whether gross income is less than $150,000:

(a) In the case of a request for a letter ruling or closing agreement from a domestic corporation, the gross income (as defined in this paragraph (B)(5)) of (i) all members of the applicant's controlled group (as defined in section 1563(a)), and (ii) any related taxpayer that is involved in the transaction on which the letter ruling or closing agreement is requested, must be combined; and

(b) In the case of a request for a letter ruling or closing agreement from a domestic partnership, the gross income (as defined in this paragraph (B)(5)) of (i) the partnership, and (ii) any partner who owns, directly or indirectly, 50 percent or more of the capital interest or profits interest in the partnership, must be combined.

If, at the time the request is filed, a domestic partnership or corporation has not filed a federal income tax return for a full taxable year, the reduced user fee in paragraph (A)(3)(c) of this appendix will apply if, in the aggregate, the partners' or the shareholders' gross income (as defined in paragraph (B)(2), (3), or (5) of this appendix, as applicable) is less than $150,000 for the last full taxable year ending before the date the request is filed. In this case, the partners or the shareholders must provide the certification required under paragraph (B)(1) of this appendix.

(6) GROSS RECEIPTS OF AN EXEMPT ORGANIZATION. For purposes of the reduced user fee provided in paragraph (A)(3)(d) of this appendix for organizations exempt from income tax under "Subchapter F-Exempt Organizations" of the Code, "gross receipts" is the amount of gross receipts for the last full (12 months) taxable year ending before the date the request for a letter ruling or closing agreement is filed. If there are two or more organizations exempt from income tax under Subchapter F filing the request, the gross receipts of the applicants must be combined in determining whether gross receipts are less than $150,000.

(7) GROSS INCOME OF U.S. PERSONS. For purposes of the reduced user fee provided in paragraph (A)(3)(e) of this appendix for U.S. persons requesting advance pricing agreements and renewals, "gross income" is equal to "total income" as reported on their last federal income tax return (as amended) filed for a full (12 months) taxable year ending before the date the request is filed, plus "cost of goods sold" as reported on the same federal income tax return, plus any interest income not subject to tax under section 103 (interest on state and local bonds) for that period. Gross income (as defined in this paragraph (B)(7)) of all U.S. members of the controlled group must be combined in determining whether gross income is less than $100,000,000.

APPENDIX B

SAMPLE FORMAT FOR A LETTER RULING REQUEST

INSTRUCTIONS

To assist you in preparing a letter ruling request, the Service is providing this sample format. You are not required to use this sample format. If your request is not identical or similar to the sample format, the different format will not defer consideration of your request.

(Insert the date of request)

Internal Revenue Service

(Insert the name of the taxpayer) requests a ruling on the proper treatment of (insert the subject matter of the letter ruling request) under section (insert the number) of the Internal Revenue Code.

[If the taxpayer is requesting expeditious handling, a statement to that effect must be attached to, or contained in, the letter ruling request. The statement must explain the need for expeditious handling. See section 8.04(4) of Rev. Proc. 95-1, 1995-1 I.R.B. Hereafter, all references are to Rev. Proc 95-1 unless otherwise noted.]

A. STATEMENT OF FACTS

1. Taxpayer Information

[Provide the statements required by sections 8.01(1)(a), (b), and (c).]

2. Description of Taxpayer's Business Operations

[Provide the statement required by section 8.01(1)(d).]

3. Facts Relating to Transaction

[The ruling request must contain a complete statement of the facts relating to the transaction that is the subject of the letter ruling request. This statement must include a detailed description of the transaction, including material facts in any accompanying documents, and the business reasons for the transaction. See sections 8.01(1)(e), 8.01(1)(f), and 8.01(2).

B. RULING REQUESTED

[The ruling request should contain a concise statement of the ruling requested by the taxpayer. It is preferred that the language of the requested ruling be exactly the same that the taxpayer wishes to receive.]

C. STATEMENT OF LAW

[The ruling request must contain a statement of the law in support of the taxpayer's views or conclusion and identify any pending legislation that may affect the proposed transaction. The taxpayer also is encouraged to identify and discuss any authorities believed to be contrary to the position advanced in the ruling request. See sections 8.01(6), 8.01(7), and 8.01(8).]

D. ANALYSIS

[The ruling request must contain a discussion of the facts and an analysis of the law. The taxpayer also is encouraged to identify and discuss any authorities believed to be contrary to the position advanced in the ruling request. See sections 8.01(3), 8.01(6), 8.01(7), and 8.01(8).]

E. CONCLUSION

[The ruling request should contain a statement of the taxpayer's conclusion on the ruling requested.]

F. PROCEDURAL MATTERS

1. Revenue Procedure 95-1 Statements

a. [Provide the statement required by section 8.01(4) regarding whether the same issue in the letter ruling request is in an earlier return of the taxpayer or in a return for any year of a related taxpayer.]

b. [Provide the statement required by section 8.01(5)(a) regarding whether the Service previously ruled on the same or similar issue for the taxpayer, a related taxpayer, or a predecessor.]

c. [Provide the statement required by section 8.01(5)(b) regarding whether the taxpayer, a related taxpayer, a predecessor, or any representatives previously submitted a request involving the same or similar issue but withdrew the request before the letter ruling or determination letter was issued.]

d. [Provide the statement required by section 8.01(5)(c) regarding whether the taxpayer, a related taxpayer, or a predecessor previously submitted a request involving the same or a similar issue that is currently pending with the Service.]

e. [Provide the statement required by section 8.01(5)(d) regarding whether at the same time as this request, the taxpayer or a related taxpayer is presently submitting another request involving the same or similar issue to the Service.]

f. [Provide the statement required by section 8.01(6) regarding whether the law in connection with the letter ruling request is uncertain and whether the issue is adequately addressed by relevant authorities.]

g. [If the taxpayer determines that there are no contrary authorities, a statement to that effect would be helpful. See section 8.01(7).]

h. [If the taxpayer wants to have a conference on the issues involved in the letter ruling request, the ruling request should contain a statement to that effect. See section 8.02(6).]

i. [If the taxpayer is requesting a copy of the letter ruling to be sent by facsimile (fax) transmission, the ruling request should contain a statement to that effect. This statement must also contain a waiver of any disclosure violations resulting from the fax transmission. See section 8.02(5).]

j. [If the taxpayer is requesting separate letter rulings on multiple issues, the letter ruling request should contain a statement to that effect. See section 8.02(1).]

2. Administrative

a. [The ruling request should state: "The deletions statement and checklist required by Rev. Proc. 95-1 are enclosed." See sections 8.01(9) and 8.01(16).]

b. [The ruling request should state: "The required user fee of $(Insert the amount of the fee) is enclosed." See section 14 and Appendix A.]

c. [If the taxpayer's authorized representative is to sign the letter ruling request or is to appear before the Service in connection with the request, the ruling request should state: "A Power of Attorney is enclosed." See sections 8.01(11), 8.01(12), and 8.02(2).]

                                    Very truly yours,

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 letter ruling are true, correct, and complete.

 (Insert the name of the taxpayer)

APPENDIX C

CHECKLIST IS YOUR LETTER 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 EITHER CAUSE THE RETURN OF YOUR REQUEST OR DEFER 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 ____________________________________________________

TAXPAYER'S I.D. No. ________________________________________________

DISTRICT HAVING AUDIT JURISDICTION _________________________________

ATTORNEY/P.O.A. ____________________________________________________

PRIMARY CODE SECTION _______________________________________________

CIRCLE ONE ITEM

 Yes  No                  1. Does your request involve an issue under