Procedures Revised For Issuing Letter Rulings.

Rev. Proc. 2002-1

PART III. ADMINISTRATIVE, PROCEDURAL, AND MISCELLANEOUS

This revenue procedure explains how the Internal Revenue Service gives guidance to taxpayers on issues under the jurisdiction of the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions & Products), the Associate Chief Counsel (Income Tax & Accounting), the Associate Chief Counsel (International), the Associate Chief Counsel (Passthroughs & Special Industries), the Associate Chief Counsel (Procedure and Administration), and the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). 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.

Operating divisions of the Service

The Service includes four operating divisions that are responsible for meeting the needs of the taxpayers they serve. These operating divisions are:

(1) Large and Mid-Size Business Division (LMSB), which generally serves corporations, S corporations, and partnerships with assets in excess of $10 million;

(2) Small Business/Self-Employed Division (SB/SE), which generally serves corporations, S corporations, and partnerships with assets less than or equal to $10 million; estates and trusts; individuals filing an individual federal income tax return with accompanying Schedule C (Profit or Loss from Business (Sole Proprietorship)), Schedule E (Supplemental Income and Loss), or Schedule F (Profit or Loss from Farming), or Form 2106 (Employee Business Expenses) or Form 2106-EZ (Unreimbursed Employee Business Expenses); and individuals with international tax returns;

(3) Wage and Investment Division (W&I), which generally serves individuals with wage and investment income only (and with no international tax returns) filing an individual federal income tax return without accompanying Schedule C, E, or F, or Form 2106 or Form 2106-EZ; and

(4) Tax Exempt and Government Entities Division (TE/GE), which serves three distinct taxpayer segments: employee plans, exempt organizations, and government entities.

Description of terms used in this revenue procedure

For purposes of this revenue procedure --

(1) any reference to director or field office refers to the Director, Field Operations, LMSB, the Area Director, Field Compliance, SB/SE, or the Director, Compliance, W&I, as appropriate, and their respective offices or, when appropriate, the Director, International, LMSB, the Director, Employee Plans Examinations, the Director, Exempt Organizations Examinations, the Director, Federal, State & Local Governments, the Director, Tax Exempt Bonds, or the Director, Indian Tribal Governments, and their respective offices;

(2) any reference to area office refers to Appeals LMSB Area Office or Appeals SB/SE-TE/GE Area Office, as appropriate;

(3) the term "taxpayer" includes all persons subject to any provision of the Internal Revenue Code (including issuers of section 103 obligations) and, when appropriate, their representatives; and

(4) the term "national office" refers to the Office of Associate Chief Counsel (Corporate), the Office of Associate Chief Counsel (Financial Institutions & Products), the Office of Associate Chief Counsel (Income Tax & Accounting), the Office of Associate Chief Counsel (International), the Office of Associate Chief Counsel (Passthroughs & Special Industries), the Office of Associate Chief Counsel (Procedure and Administration), or the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), as appropriate.

Updated annually

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

Letter ruling

.01 A "letter ruling" is a written statement issued to a taxpayer by the national office that interprets and applies the tax laws to the taxpayer's specific set of facts. A letter ruling includes the written permission or denial of permission by the national office to a request for 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 12 of this revenue procedure, unless it is accompanied by a "closing agreement."

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

Determination letter

.03 A "determination letter" is a written statement issued by a 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. 96-13, 1996-1 C.B. 616.

Information letter

.04 An "information letter" is a statement issued either by the national office or by a 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. The taxpayer should provide a daytime telephone number with the taxpayer's request for an information letter. An information letter is advisory only and has no binding effect on the Service.

Revenue ruling

.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.

Oral guidance

.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 in general or on the Office of Chief Counsel in particular 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 or before a federal court.

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 field 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

Taxpayers also may request determination letters within the jurisdiction of the appropriate director offices that relate to the Code sections under the jurisdiction of the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions & Products), the Associate Chief Counsel (Income Tax & Accounting), the Associate Chief Counsel (International), the Associate Chief Counsel Passthroughs & Special Industries), the Associate Chief Counsel (Procedure and Administration), or the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities).

Issues under the jurisdiction of the Associate Chief Counsel (Corporate)

.01 Issues under the jurisdiction of the Associate Chief Counsel (Corporate) include those that involve consolidated returns, corporate acquisitions, reorganizations, liquidations, redemptions, spin-offs, 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.

Issues under the jurisdiction of the Associate Chief Counsel

Issues under the jurisdiction of the Associate Chief Counsel (Income

Issues under the jurisdiction of the Associate Chief Counsel

For the procedures to obtain advance pricing agreements under section 482, see Rev. Proc. 96-53, 1996-2 C.B. 375, as modified by Notice 98-65, 1998-2 C.B. 803.

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. 96-13. However, competent authority consideration for an advance pricing agreement should be requested under Rev. Proc. 96-53.

Issues under the jurisdiction of the Associate Chief Counsel

Issues under the jurisdiction of the Associate Chief Counsel

Issues under the jurisdiction of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities)

.07 Issues under the jurisdiction of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) 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 Commissioner, Tax Exempt and Government Entities Division), employment taxes, taxes on self- employment income, tax-exempt obligations, mortgage credit certificates, Qualified Zone Academy Bonds (QZADS), and federal, state, local, and Indian tribal governments.

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

.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.

Employee plans and exempt organizations

.02 The procedures for obtaining letter rulings, determination letters, etc., on employee plans and exempt organizations are under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division. See Rev. Proc. 2002-4, this Bulletin. See also Rev. Proc. 2002-6, 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 Commissioner, Tax Exempt and Government Entities Division, see Rev. Proc. 2002-8, this Bulletin.

SECTION 5. UNDER WHAT CIRCUMSTANCES DOES THE NATIONAL OFFICE ISSUE

(1) CIRCUMSTANCES UNDER WHICH A LETTER RULING IS NOT ORDINARILY ISSUED. 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 --

(a) is being examined by a director;

(b) is being considered by an area office;

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

(d) has been examined by a director or considered by an area office and the statutory period of limitations on assessment or on filing a claim for refund or credit of tax has not expired; or

(e) has been examined by a director or considered by an area office and a closing agreement covering the issue or liability has not been entered into by a director or by an area 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 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 director agrees, by memorandum, to the issuance of the letter ruling.

(2) NO LETTER RULING ON A PROPERTY CONVERSION AFTER RETURN FILED. The national office does not issue a letter ruling 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 director may issue a determination letter in this case. See section 6.01 of this revenue procedure.

(3) CERTAIN LATE S CORPORATION AND RELATED ELECTIONS. In lieu of requesting a letter ruling under this revenue procedure, a taxpayer may obtain relief for certain late S corporation and related elections by following the procedures in Rev. Proc. 98-55, 1998-2 C.B. 643, or Rev. Proc. 97-48, 1997-2 C.B. 521. A request made pursuant to Rev. Proc. 98-55 or Rev. Proc. 97-48 does not require payment of any user fee. See section 3.05 of Rev. Proc. 98-55, section 3 of Rev. Proc. 97-48, and section 15.03(2) of this revenue procedure.

A section 301.9100 request for extension of time for making an election or for other relief

.02 The national office will consider a request for an extension of time for making an election or other application for relief under section 301.9100-3 of the Procedure and Administration Regulations. Even if submitted after the return covering the issue presented in the section 301.9100 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 or a federal court, a section 301.9100 request is a letter ruling request. Therefore, the section 301.9100 request should be submitted pursuant to this revenue procedure.

However, an election made pursuant to section 301.9100-2 is not a letter ruling request and does not require payment of any user fee. See section 301.9100-2(d) and section 15.03(1) of this revenue procedure. Such an election pertains to an automatic extension of time.

(1) FORMAT OF REQUEST. A section 301.9100 request (other than an election made pursuant to section 301.9100-2) 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 request must include the information required by section 301.9100-3(e).

(2) PERIOD OF LIMITATIONS. The running of any applicable period of limitations is not suspended for the period during which a section 301.9100 request has been filed. See section 301.9100-3(d)(2). If the period of limitations on assessment under section 6501(a) for the taxable year in which an election should have been made or any taxable year that would have been affected by the election had it been timely made will expire before receipt of a section 301.9100 letter ruling, the Service ordinarily will not issue a section 301.9100 ruling. See section 301.9100-3(c)(1)(ii). Therefore, the taxpayer must secure a consent under section 6501(c)(4) to extend the period of limitations on assessment. Note that the filing of a claim for refund under section 6511 does not extend the period of limitations on assessment. If section 301.9100 relief is granted, the Service may require the taxpayer to consent to an extension of the period of limitations on assessment. See section 301.9100- 3(d)(2).

(3) TAXPAYER MUST NOTIFY NATIONAL OFFICE IF EXAMINATION OF RETURN BEGINS WHILE REQUEST IS PENDING. If the Service starts an examination of the taxpayer's return for the taxable year in which an election should have been made or any taxable year that would have been affected by the election had it been timely made while a section 301.9100 request is pending, the taxpayer must notify the national office. See section 301.9100-3(e)(4)(i) and section 8.04(1)(b) of this revenue procedure.

(4) NATIONAL OFFICE WILL NOTIFY THE DIRECTOR, APPEALS OFFICER, OR GOVERNMENT COUNSEL OF A SECTION 301.9100 REQUEST IF RETURN IS BEING EXAMINED OR IS BEING CONSIDERED BY AN AREA OFFICE OR A FEDERAL COURT. If the taxpayer's return for the taxable year in which an election should have been made or any taxable year that would have been affected by the election had it been timely made is being examined by a field office or considered by an area office or a federal court, the national office will notify the appropriate director, appeals officer, or government counsel that a section 301.9100 request has been submitted to the national office. The examining officer, appeals officer, or government counsel is not authorized to deny consideration of a section 301.9100 request. The letter ruling will be mailed to the taxpayer and a copy will be sent to the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer's tax return, appeals officer, or government counsel.

Determinations under section 999(d) of the Internal Revenue Code

.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.

In matters involving section 367

.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.

In estate tax matters

.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.

In limited circumstances, the national office will consider a request for an estate tax letter ruling after the return is filed but before the return is examined. In such a case, 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.

In limited circumstances, the taxpayer requests a letter ruling after the return is filed but before the return is examined. In such a case, the taxpayer must state in the letter ruling request that the return has been filed but has not been examined, and must also notify the director having jurisdiction over this return that a letter ruling has been requested and provide a copy of the letter ruling request to the director. If the director agrees to the consideration of the letter ruling request by the national office, the national office will make every effort to issue the letter within 3 months of the date the letter ruling request was filed.

If the letter ruling cannot be issued within the 3-month period, the national office will notify the 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.

In matters involving additional estate tax under section 2032A(c)

.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.

In matters involving qualified domestic trusts under section 2056A

.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.

In generation-skipping transfer tax matters

.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.

In employment and excise tax matters

.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 regarding employment status from other taxpayers must first be submitted to the appropriate Service office listed on the current Form SS-8 (Rev. January 2001). 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 director;

(2) is being considered by an area office;

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

(4) has been examined by a director or considered by an area office and the statutory period of limitations on assessment or on filing a claim for refund or credit of tax has not expired; or

(5) has been examined by a director or considered by an area office and a closing agreement covering the issue or liability has not been entered into by a director or by an area 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 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 director agrees, by memorandum, to the issuance of the letter ruling.

In administrative provisions matters

.10

(1) IN GENERAL. The national office issues letter rulings on matters arising under the Code and related statutes and regulations that involve --

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

(b) the assessment and collection of taxes (including interest and penalties);

(c) the abatement, credit, or refund of an overassessment or overpayment of tax; or

(d) the filing of information returns.

(2) CIRCUMSTANCES UNDER WHICH A LETTER RULING IS NOT ORDINARILY ISSUED. 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 --

(a) is being examined by a director;

(b) is being considered by an area office;

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

(d) has been examined by a director or considered by an area office and the statutory period of limitations on assessment or on filing a claim for refund or credit of tax has not expired; or

(e) has been examined by a director or considered by an area office and a closing agreement covering the issue or liability has not been entered into by a director or area 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 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.

In Indian tribal government matters

.11 Pursuant to Rev. Proc. 84-37, 1984-1 C.B. 513, as modified by Rev. Proc. 86-17, 1986-1 C.B. 550, Rev. Proc. 2002-1 (this revenue procedure), the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) issues determinations recognizing a tribal entity as an Indian tribal government within the meaning of section 7701(a)(40) or as a political subdivision of an Indian tribal government under section 7871(d) if it determines, after consultation with the Secretary of the Interior, that the entity satisfies the statutory definition of an Indian tribal government or has been delegated governmental functions of an Indian tribal government. Requests for determinations under Rev. Proc. 84-37 are letter ruling requests, and, therefore, should be submitted to the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities) pursuant to this revenue procedure.

(1) DEFINITION OF INDIAN TRIBAL GOVERNMENT. The term "Indian tribal government" is defined under section 7701(a)(40) to mean the governing body of any tribe, band, community, village or group of Indians, or (if applicable) Alaska Natives, that is determined by the Secretary of the Treasury, after consultation with the Secretary of the Interior, to exercise governmental functions. Section 7871(d) provides that, for purposes of section 7871, a subdivision of an Indian tribal government shall be treated as a political subdivision of a state if the Secretary of the Treasury determines, after consultation with the Secretary of the Interior, that the subdivision has been delegated the right to exercise one or more of the substantial governmental functions of the Indian tribal government.

(2) INCLUSION IN LIST OF TRIBAL GOVERNMENTS. Rev. Proc. 2001-15, 2001-5 I.R.B. 465, provides a list of Indian tribal governments that are treated similarly to states for certain federal tax purposes. Rev. Proc. 84-36, 1984-1 C.B. 510, as modified by Rev. Proc. 86-17 provides a list of political subdivisions of Indian tribal governments that are treated as political subdivisions of states for certain federal tax purposes. Under Rev. Proc. 84-37, tribal governments or subdivisions recognized under section 7701(a)(40) or section 7871(d) will be included on the list of recognized tribal government entities in revised versions of Rev. Proc. 2001-15 or Rev. Proc. 84-36.

Generally not to business associations or groups

.12 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.

Generally not to foreign governments

.13 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 13.02 of Rev. Proc. 96-13, 1996-1 C.B. at 626. However, treaty partners can continue to address matters such as these under the provisions of the applicable tax treaty. 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.

Generally not on federal tax consequences of proposed legislation

.14 The national office does not issue letter rulings on a matter involving the federal tax consequences of any proposed federal, state, local, municipal, or foreign legislation. However, the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government entities) may issue letter rulings regarding the effect of proposed state, local, or municipal legislation upon an eligible deferred compensation plan under section 457(b) provided that the letter ruling request relating to the plan complies with the other requirements of this revenue procedure. The national office also may provide general information in response to an inquiry.

Issuance of a letter ruling before the issuance of a regulation or

(1) ANSWER IS CLEAR OR IS REASONABLY CERTAIN. 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) ANSWER IS NOT REASONABLY CERTAIN. 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) ISSUE CANNOT BE READILY RESOLVED BEFORE A REGULATION OR ANY OTHER PUBLISHED GUIDANCE IS ISSUED. A letter ruling will not be issued if the letter ruling request presents an issue that cannot be readily resolved before a regulation or any other published guidance is issued. However, when the Service has closed a regulation project or any other published guidance project that might have answered the issue or decides not to open a regulation project or any other published guidance project, the appropriate branch will consider all letter ruling requests unless the issue is covered by section 7 of this revenue procedure, Rev. Proc. 2002-3, or Rev. Proc. 2002-7.

SECTION 6. UNDER WHAT CIRCUMSTANCES DO DIRECTORS ISSUE DETERMINATION

In income and gift tax matters

.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, directors do not issue determination letters on the tax consequences of proposed transactions. However, a 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.

In estate tax matters

.02 In estate tax matters, 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.

In generation-skipping transfer tax matters

.03 In generation-skipping transfer tax matters, directors issue determination letters in response to written requests affecting the generation-skipping transfer tax returns over which the directors 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.

In employment and excise tax matters

.04 In employment and excise tax matters, 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 appropriate Service office listed on the current Form SS-8 (Rev. January 2001) and not directly to the national office. See also section 5.09 of this revenue procedure.

Circumstances under which determination letters are not issued by

(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 area office;

(3) the determination letter is requested by an industry, trade association, or similar group;

(4) the request involves an industry-wide problem.

Under no circumstances will a 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 director has, or will have, examination jurisdiction.

A 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.

A director also will not issue a determination letter on determining constructive sales price under section 4216(b) or section 4218(c), which deal with special provisions applicable to the manufacturer's excise tax. The national office, however, will issue letter rulings in this area. See section 7.05 of this revenue procedure.

Requests concerning income, estate, or gift tax returns

.06 A request received by a director on a question concerning an income, estate, or gift tax return already filed generally will be 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.

Attach a copy of determination letter to taxpayer's return

.07 A taxpayer who, before filing a return, receives a determination letter 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.

Review of determination letters

.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 director to reconsider the matter or to request technical advice from the national office as explained in Rev. Proc. 2002-2, this Bulletin.

SECTION 7. UNDER WHAT CIRCUMSTANCES DOES THE SERVICE HAVE DISCRETION

Instead of issuing a letter ruling or determination letter, the national office or a 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.

Not on alternative plans or hypothetical situations

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

Ordinarily not on part of an integrated transaction

.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.

Not on frivolous issues

.04 A letter ruling or determination letter ordinarily will not be issued on on frivolous issues. A "frivolous issue" is one without basis in fact or law, or that espouses a position which has been held by the courts to be frivolous or groundless. Examples of frivolous or groundless issues include, but are not limited to:

(1) frivolous "constitutional" claims, such as claims that the requirement to file tax returns and pay taxes constitutes an unreasonable search barred by the Fourth Amendment; violates Fifth and Fourteenth Amendment protections of due process; violates Thirteenth Amendment protections against involuntary servitude; or is unenforceable because the Sixteenth Amendment does not authorize nonapportioned direct taxes or was never ratified;

(2) claims that income taxes are voluntary, that the term "income" is not defined in the Internal Revenue Code, or that preparation and filing of income tax returns violates the Paperwork Reduction Act;

(3) claims that tax may be imposed only on coins minted under a gold or silver standard or that receipt of Federal Reserve Notes does not cause an accretion to wealth;

(4) claims that a person is not taxable on income because he or she falls within a class entitled to "reparation claims" or an extra- statutory class of individuals exempt from tax, e.g., "free-born" individuals;

(5) claims that a taxpayer can refuse to pay taxes on the basis of opposition to certain governmental expenditures;

(6) claims that taxes apply only to federal employees; only to residents of Puerto Rico, Guam, the U.S. Virgin Islands, the District of Columbia, or "federal enclaves"; or that the Internal Revenue Code imposes taxes on U.S. citizens and residents only on income derived from foreign based activities;

(7) claims that wages or personal service income are not "income," are "nontaxable receipts," or "are a nontaxable exchange for labor;" or

(8) other claims the courts have characterized as frivolous or groundless.

On constructive sales price under section 4216(b) or section 4218(c)

.05 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.

Ordinarily not on which of two entities is a common law employer

.06 A letter ruling or determination letter ordinarily will not be issued on which of two entities, under common law rules applicable in determining the employer-employee relationship, is the employer, when one entity is treating the worker as an employee.

SECTION 8. WHAT ARE THE GENERAL INSTRUCTIONS FOR REQUESTING LETTER

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.

Certain information required in all requests

.01

Facts

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

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

(e) 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.

Documents and foreign laws

(2) COPIES OF ALL CONTRACTS, WILLS, DEEDS, AGREEMENTS, INSTRUMENTS, OTHER DOCUMENTS, AND FOREIGN LAWS.

(a) 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.

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

If any document, including any balance sheet and profit and loss statement, is in a language other than English, the taxpayer must also submit a certified English translation of the document, along with a true copy of the document. For guidelines on the acceptability of such documents, see paragraph (c) of this section 8.01(2).

Each document, other than the request, should be labeled 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.

(b) FOREIGN LAWS. The taxpayer must submit with the request a copy of the relevant parts of all foreign laws, including statutes, regulations, administrative pronouncements, and any other relevant legal authority. The documents submitted must be in the official language of the country involved and must be copied from an official publication of the foreign government or another widely available, generally accepted publication. If English is not the official language of the country involved, the taxpayer must also submit a copy of an English language version of the relevant parts of all foreign laws. This translation must be: (i) from an official publication of the foreign government or another widely available, generally accepted publication; or (ii) a certified English translation submitted in accordance with paragraph (c) of this section 8.01(2).

The taxpayer must identify the title and date of publication, including updates, of any widely available, generally accepted publication that the taxpayer (or the taxpayer's qualified translator) uses as a source for the relevant parts of the foreign law.

(c) STANDARDS FOR ACCEPTABILITY OF SUBMISSIONS OF DOCUMENTS IN A LANGUAGE OTHER THAN ENGLISH AND CERTIFIED ENGLISH TRANSLATIONS OF LAWS IN A LANGUAGE OTHER THAN ENGLISH. The taxpayer must submit with the request an accurate and complete certified English translation of the relevant parts of all contracts, wills, deeds, agreements, instruments, trust documents, proposed disclaimers, or other documents in a language other than English. If the taxpayer chooses to submit certified English translations of foreign laws, those translations must be based on an official publication of the foreign government or another widely available, generally accepted publication. In either case, the translation must be that of a qualified translator and must be attested to by the translator. The attestation must contain: (i) a statement that the translation submitted is a true and accurate translation of the foreign language document or law; (ii) a statement as to the attestant's qualifications as a translator and as to that attestant's qualifications and knowledge regarding income tax matters; and (iii) the attestant's name and address.

Analysis of material facts

(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.

Same issue in an earlier return

(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 director;

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

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

(d) is being considered by an area office in connection with a return from an earlier period;

(e) has been considered by an area office in connection with a return from an earlier period, but the statutory period of limitation on assessment or on filing a claim for refund or credit of tax has not expired;

(f) has been considered by an area 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 area office; or

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

Same or similar issue previously submitted or currently pending

(5) STATEMENT REGARDING WHETHER SAME OR SIMILAR ISSUE WAS PREVIOUSLY RULED ON OR REQUESTED, OR IS 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 (including an application for change in accounting method) 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 (including an application for change in accounting method) 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 (including an application for change in accounting method) 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, the date the request was withdrawn or ruled on, if applicable, and other details of the Service's consideration of the issue.

Interpretation of a substantive provision of an income or estate tax

(a) the tax authority of the treaty jurisdiction has issued a ruling on the same or similar issue for the taxpayer, 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 any predecessor;

(b) the same or similar issue for the taxpayer, a related taxpayer, or any predecessor is being examined, or has been settled, by the tax authority of the treaty jurisdiction or is otherwise the subject of a closing agreement in that jurisdiction; and

(c) the same or similar issue for the taxpayer, a related taxpayer, or any predecessor is being considered by the competent authority of the treaty jurisdiction.

Letter from Bureau of Indian Affairs relating to Indian tribal

The taxpayer wishing to expedite the letter ruling process may send a request to verify tribal status to the following address at BIA:

     Branch of Tribal Government & Alaska

(8) 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.

Statement of authorities contrary to taxpayer's views

(9) 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.

Statement identifying pending legislation

(10) 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.

Deletions statement required by section 6110

(11) 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) FORMAT OF DELETIONS STATEMENT. 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) LOCATION OF DELETIONS STATEMENT. 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) SIGNATURE. The deletions statement must be signed and dated by the taxpayer or the taxpayer's authorized representative. A stamped signature is not permitted.

(d) ADDITIONAL INFORMATION. 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) TAXPAYER MAY PROTEST DELETIONS NOT MADE. 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 calendar 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) TAXPAYER MAY REQUEST DELAY OF PUBLIC INSPECTION. 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 of Internal Revenue may determine that there are good reasons for the delay.

Signature on request

(12) 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. A stamped signature is not permitted.

Authorized representatives

(13) AUTHORIZED REPRESENTATIVES. To sign the request or to appear before the Service in connection with the request, the taxpayer's authorized representative must be:

Attorney

(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;

Certified public accountant

(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;

Enrolled agent

(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 not 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 (2001));

Enrolled actuary

(d) An enrolled actuary who is a person, other than an attorney or certified public accountant, that is currently enrolled as an actuary by the Joint Board for the Enrollment of Actuaries pursuant to 29 U.S.C. section 1242 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 enrolled actuary and current authorization to represent the taxpayer. Practice before the Service as an enrolled actuary is limited to representation with respect to issues involving sections 401, 403(a), 404, 412, 413, 414, 4971, 6057, 6058, 6059, 6652(e), 6652(f), 6692, and 7805(b); former section 405; and 29 U.S.C. section 1083; or

A person with a "Letter of Authorization"

(e) 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, SC:DOP, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, D.C. 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.

Employee, general partner, bona fide officer, administrator,

Preparer of a return

(g) A preparer of a return (other than a person referred to in paragraph (a), (b), (c), (d), or (e) of this section 8.01(13)) who is not a full-time employee, general partner, bona fide officer, an administrator, a trustee, etc., or an individual representing his or her immediate family 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.

Foreign representative

(h) A foreign representative (other than a person referred to in paragraph (a), (b), (c), (d), or (e) of this section 8.01(13)) 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), (d), or (e) of this section 8.01(13).

Power of attorney and declaration of representative

(14) 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 601.501-601.509 (2001)), 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 1 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. A stamped signature is not permitted. An original, a copy, or a facsimile transmission (fax) of the power of attorney is acceptable so long as its authenticity is not reasonably disputed. 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.

Penalties of perjury statement

(15) PENALTIES OF PERJURY STATEMENT.

(a) FORMAT OF PENALTIES OF PERJURY STATEMENT. A request for a letter ruling or determination letter and any 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 [INSERT, AS APPROPRIATE: THIS REQUEST OR THIS MODIFICATION TO THE REQUEST], INCLUDING ACCOMPANYING DOCUMENTS, AND, TO THE BEST OF MY KNOWLEDGE AND BELIEF, [INSERT, AS APPROPRIATE: THE REQUEST OR THE MODIFICATION] CONTAINS ALL THE RELEVANT FACTS RELATING TO THE REQUEST, AND SUCH FACTS ARE TRUE, CORRECT, AND COMPLETE."

See section 10.07(1) of this revenue procedure for the penalties of perjury statement applicable for submissions of additional information.

(b) SIGNATURE BY TAXPAYER. The declaration must be signed and dated by the taxpayer, not the taxpayer's representative. A stamped signature is not permitted.

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, a state law partnership, or a limited liability company must be, respectively, a trustee, general partner, or member-manager who has personal knowledge of the facts.

Number of copies of request to be submitted

(16) NUMBER OF COPIES OF REQUEST TO BE SUBMITTED. Generally, a taxpayer needs only to submit one copy of the request for a letter ruling or determination letter. If, however, more than one issue is presented in the letter ruling request, the taxpayer is encouraged to submit additional copies of the request.

Further, two copies of the request for a letter ruling or determination letter 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(11)(a) of this revenue procedure (one copy is the request for the letter ruling or determination letter and the second copy is the deleted version of such request); or

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

Sample of a letter ruling request

(17) SAMPLE FORMAT FOR A LETTER RULING REQUEST. To assist a taxpayer or the taxpayer's representative 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 the taxpayer or the 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.

Checklist

(18) 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) or a copy can be obtained from this revenue procedure in Internal Revenue Bulletin 2002-1 on the IRS web site at http://www.irs.ustreas.gov/prod/bus_info/bullet.html. A photocopy of this checklist may be used.

Additional information required in certain circumstances

.02

Multiple issues

(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.

Power of attorney

(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. In this case, the letter ruling or determination letter is addressed to the taxpayer. 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(14) of this revenue procedure.

Copies of letter ruling or determination letter sent to multiple

Original of letter ruling or determination letter sent to taxpayer's

If the taxpayer wants the original of the letter ruling or determination letter sent to the taxpayer's 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 the original of the letter ruling or determination letter is to be sent to the taxpayer's representative. When a taxpayer has more than one representative, the Service will send the original of the letter ruling or determination letter to the first representative named in the most recent power of attorney.

No copy of letter ruling or determination letter sent to taxpayer's

"Two-Part" letter ruling requests

(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 10.09 of this revenue procedure.

Expedited handling

(4) TO REQUEST EXPEDITED HANDLING. The Service ordinarily processes requests for letter rulings and determination letters in order of the date received. Expedited handling means that a request is processed ahead of the regular order. Expedited handling is granted only in rare and unusual cases, both out of fairness to other taxpayers and because the Service seeks to process all requests as expeditiously as possible and to give appropriate deference to normal business exigencies in all cases not involving expedited handling.

A taxpayer who has a compelling need to have a request processed ahead of the regular order may request expedited handling. This request must explain in detail the need for expedited handling. The request for expeditious handling must be made in writing, preferably in a separate letter with, or soon after filing, the request for the letter ruling or determination letter. If the request 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: "EXPEDITED HANDLING IS REQUESTED. SEE PAGE __ OF THIS LETTER."

A request for expedited handling will not be forwarded to a rulings branch for action until the check for the user fee is received.

Whether a request for expedited handling will be granted is within the Service's discretion. The Service may grant the request when a factor outside a taxpayer's control creates a real business need to obtain a letter ruling or determination letter before a certain time in order to avoid serious business consequences. Examples include situations in which a court or governmental agency has imposed a specific deadline for the completion of a transaction, or a transaction must be completed expeditiously to avoid an imminent business emergency (such as the hostile takeover of a corporate taxpayer), provided that the taxpayer can demonstrate that the deadline or business emergency, and the need for expedited handling, resulted from circumstances that could not reasonably have been anticipated or controlled by the taxpayer. To qualify for expedited handling in such situations, the taxpayer must also demonstrate that the taxpayer submitted the request as promptly as possible after becoming aware of the deadline or emergency. The extent to which the letter ruling or determination letter complies with all of the applicable requirements of this revenue procedure, and fully and clearly presents the issues, is a factor in determining whether expedited treatment will be granted. When the Service agrees to process a request out of order, it cannot give assurance that any letter ruling or determination letter will be processed by the time requested.

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.

Because most requests for letter rulings and determination letters cannot be processed ahead of the regular order, the Service urges all taxpayers to submit their requests well in advance of the contemplated transaction. In addition, to facilitate prompt action on letter ruling requests, taxpayers are encouraged to ensure that their initial submissions comply with all of the requirements of this revenue procedure (including the requirements of other applicable guidelines set forth in section 9 of this revenue procedure), to prepare "two-part" requests described in section 8.02(3) of this revenue procedure when possible, and to provide any additional information requested by the Service promptly.

Facsimile transmission (fax) of any document related to the letter

A request to fax a copy of any document related to the letter ruling request to the taxpayer or the taxpayer's authorized representative must be made in writing, either as part of the original letter ruling request or prior to the mailing, or with respect to the letter ruling prior to the signing, of the document. The request must contain the fax number of the taxpayer or the taxpayer's authorized representative to whom the document is to be faxed.

Because of the unsecured nature of a fax transmission, 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, that does not identify the taxpayer by name or identifying number, and that contains a statement prohibiting unauthorized disclosure of the document if a recipient of the faxed document is not the intended recipient of the fax. Also, for example, the cover sheet should be faxed in an order in which it will become the first page covering the faxed document.

Except for the letter ruling, the document will be faxed by a branch representative. The letter ruling will be faxed by either a representative of the branch issuing the letter ruling or the Communications, Records and User Fee Unit of the Technical Services staff (CC:PA:T:CRU).

Fax of letter ruling request

(6) TO SUBMIT A REQUEST FOR A LETTER RULING BY FAX. 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.

Requests for a change in accounting method or a change in accounting period must not be submitted by fax.

Requesting a conference

(7) 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 11.01, 11.02, and 12.11(2) of this revenue procedure.

Substantially identical letter rulings or identical accounting method

Address to send the request

.03

Requests for letter rulings

(1) REQUESTS FOR LETTER RULINGS. Requests for letter rulings should be sent to the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions & Products), the Associate Chief Counsel (Income Tax & Accounting), the Association Chief Counsel (International), the Associate Chief Counsel (Passthroughs & Special Industries), the Associate Chief Counsel (Procedure and Administration), or the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), as appropriate. The package should be marked: RULING REQUEST SUBMISSION.

(a) Requests for letter rulings should be sent to the following address:

     Internal Revenue Service

     Courier's Desk

(2) REQUESTS FOR DETERMINATION LETTERS

(a) If LMSB has or will have examination jurisdiction over the taxpayer's tax return, the taxpayer should send a request for a determination letter to the following address:

     Internal Revenue Service

(c) Other taxpayers should send a request for a determination letter to the appropriate director whose office has or will have examination jurisdiction over the taxpayer's return. The appropriate director for a taxpayer under the jurisdiction of SB/SE is listed in Appendix D.

(d) For fees required with determination letter requests, see section 15 and Appendix A of this revenue procedure.

Pending letter ruling requests

.04

(1) CIRCUMSTANCES UNDER WHICH THE TAXPAYER MUST NOTIFY THE NATIONAL OFFICE. 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 --

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

(b) in the case of a section 301.9100 request, an examination of the return for the taxable year in which an election should have been made or any taxable year that would have been affected by the election had it been timely made has been started by a director. See section 301.9100-3(e)(4)(i) and section 5.02(3) of this revenue procedure;

(c) legislation that may affect the transaction has been introduced. See section 8.01(10) of this revenue procedure; or

(d) another letter ruling request (including an application for change in accounting method) has been submitted by the taxpayer (or a related party 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) involving the same or similar issue that is currently pending with the Service.

(2) TAXPAYER MUST NOTIFY THE NATIONAL OFFICE IF RETURN IS FILED AND MUST ATTACH THE REQUEST TO THE RETURN. 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 field office and thereby avoid premature field action on the issue.

This section 8.04 also applies to pending requests for a closing agreement on a transaction for which a letter ruling is not requested or issued, and for an advance pricing agreement.

When to attach letter ruling to return

.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.

How to check on status of request

.06 The 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.

Request may be withdrawn or national office may decline to issue

(1) IN GENERAL. A 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.

(2) NOTIFICATION OF APPROPRIATE SERVICE OFFICIAL.

(a) REQUEST TO CHANGE AN ACCOUNTING METHOD. If a taxpayer withdraws or the national office declines to grant (for any reason) a request to change from or to adopt an improper method of accounting, the national office will notify, by memorandum, the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer's tax return and the Change in Method of Accounting Technical Advisor, and may give its views on the issues in the request to the Service official to consider in any later examination of the return.

(b) ALL OTHER LETTER RULING REQUESTS. If a taxpayer withdraws a letter ruling request (other than a request to change from or to adopt an improper method of accounting) or if the national office declines to issue a letter ruling (other than a letter ruling pertaining to a request to change from or to adopt an improper method of accounting), the national office generally will notify, by memorandum, the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer's tax return and may give its views on the issues in the request to the Service official to consider in any later examination of the return. This section 8.07(2)(b) generally does not apply if the taxpayer withdraws the letter ruling request and submits a written statement that the transaction has been, or is being, abandoned and if the national office has not formed an adverse opinion.

(c) NOTIFICATION OF SERVICE OFFICIAL MAY CONSTITUTE CHIEF COUNSEL ADVICE. If the memorandum to the Service official referred to in paragraphs (a) and (b) of this section 8.07(2) provides more than the fact that the request was withdrawn and the national office was tentatively adverse, or that the national office declines to grant a change in method of accounting or issue a letter ruling, the memorandum would constitute Chief Counsel Advice, as defined in section 6110(i)(1), subject to public inspection under section 6110. For example, if the memorandum explains the national office's reasoning for its tentatively adverse position on the issues in the request, the memorandum would constitute Chief Counsel Advice.

(3) REFUNDS OF USER FEE. 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 15.10 of this revenue procedure for additional information regarding the refunds of user fees.

Compliance with Treasury Department Circular No. 230

.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 when 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(14) of this revenue procedure.

SECTION 9. WHAT OTHER CHECKLISTS, GUIDELINE REVENUE PROCEDURES,

Checklists, guideline revenue procedures, and notices

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

 CODE OR REGULATION            REVENUE PROCEDURE AND NOTICE

.02 For requests relating to the following Code sections and subject matters, see the following safe harbor revenue procedures.

 CODE OR REGULATION         REVENUE PROCEDURE

.03 For requests to change an accounting period or accounting method, see the following automatic change revenue procedures published and/or in effect as of December 31, 2001. A taxpayer complying timely with an automatic change revenue procedure will be deemed to have obtained the consent of the Commissioner to change the taxpayer's accounting period or accounting method, as applicable.

 CODE SECTION               REVENUE PROCEDURE

Controls request and refers it to appropriate Associate Chief Counsel's Office or Assistant Chief Counsel's Office

.01 All requests for letter rulings will be controlled by the Technical Services staff of the Associate Chief Counsel (Procedure and Administration) (CC:PA:T). That office will examine the incoming documents for completeness, process the user fee, and forward the file to the appropriate Associate Chief Counsel's office or, for letter ruling requests under the jurisdiction of the Associate Chief Counsel (Procedure and Administration) or the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), to the appropriate Assistant Chief Counsel. The Associate Chief Counsel's office or the Assistant Chief Counsel's office, as appropriate, will assign the letter ruling request to one of its branches.

Branch representative contacts taxpayer within 21 days

.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 ASSOCIATE CHIEF COUNSEL (CORPORATE), THE ASSOCIATE CHIEF COUNSEL (INCOME TAX AND ACCOUNTING), THE ASSOCIATE CHIEF COUNSEL (INTERNATIONAL), THE ASSOCIATE CHIEF COUNSEL (PASSTHROUGHS & SPECIAL INDUSTRIES), THE ASSOCIATE CHIEF COUNSEL (PROCEDURE AND ADMINISTRATION), AND THE DIVISION COUNSEL/ASSOCIATE CHIEF COUNSEL (TAX EXEMPT AND GOVERNMENT ENTITIES); AND ALL MATTERS WITHIN THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL (FINANCIAL INSTITUTIONS AND PRODUCTS), EXCEPT CASES CONCERNING INSURANCE ISSUES REQUIRING ACTUARIAL COMPUTATIONS.

Notifies taxpayer if any issues have been referred to another branch

(1) that the matters within the jurisdiction of another branch or office have been referred to that branch or office for consideration; and

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

Determines if transaction can be modified to obtain favorable letter

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 11.02 of this revenue procedure.

Is not bound by informal opinion expressed

.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).

Tells taxpayer if request lacks essential information during initial

Information must be submitted within 21 calendar days

(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), (2) and (3) of this revenue procedure for instructions on submissions of additional information. To facilitate prompt action on letter ruling requests, taxpayers are encouraged to request that the Service request additional information by fax. See section 8.02(5) of this revenue procedure.

21-day period will be extended if justified and approved

(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.

Letter ruling request closed if the taxpayer does not submit

Letter ruling request mistakenly sent to a director

(4) A request for a letter ruling sent to the director will be returned by the director so that the taxpayer can send it to the national office.

Requires prompt submission of additional information requested after

(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. 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.

Additional information submitted to the Service must be accompanied by the following declaration: "UNDER PENALTIES OF PERJURY, I DECLARE THAT I HAVE EXAMINED THIS INFORMATION, INCLUDING ACCOMPANYING DOCUMENTS, AND, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THE INFORMATION CONTAINS ALL THE RELEVANT FACTS RELATING TO THE REQUEST FOR THE INFORMATION, AND SUCH FACTS ARE TRUE, CORRECT, AND COMPLETE." This declaration must be signed in accordance with the requirements in section 8.01(15)(b) of this revenue procedure. A taxpayer who submits additional factual information on several occasions may provide one declaration subsequent to all submissions that refers to all submissions.

To facilitate prompt action on letter ruling requests, taxpayers are encouraged to request that the Service request additional information by fax. See section 8.02(5) of this revenue procedure. Taxpayers also 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.

Address to send additional information

(2)(a) If a private delivery service is not used, the additional information should be sent to:

     Internal Revenue Service

     Internal Revenue Service

     Internal Revenue Service

Number of copies of additional information to be submitted

(3) Generally, a taxpayer needs only to submit one copy of the additional information. However, in appropriate cases, the national office may request additional copies of the information.

21-day period will be extended if justified and approved

(4) 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.

If taxpayer does not submit additional information

(5) 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 additional information was not timely submitted, 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.

Near the completion of the ruling process, advises the taxpayer of

May request draft of proposed letter ruling near the completion of

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

Taxpayer may also submit draft on a computer disk in a word

The proposed letter ruling (both typed draft and computer 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.

Issues separate letter rulings for substantially identical letter

(1) SUBSTANTIALLY IDENTICAL LETTER RULINGS. For letter ruling requests qualifying for the user fee provided in paragraph (A)(5)(a) of Appendix A of this revenue procedure for substantially identical letter rulings, a separate letter ruling will be issued for each entity with a common member or sponsor, or for each member of a common entity.

(2) IDENTICAL ACCOUNTING METHOD CHANGES AND RELATED SECTION 301.9100 LETTER RULINGS. For letter ruling requests qualifying for the user fee provided in paragraphs (A)(5)(b) and (c) of Appendix A of this revenue procedure for identical accounting method changes and related section 301.9100 letter rulings, a single letter ruling generally will be issued on behalf of all members of a consolidated group that file a Form 3115, Application for Change in Accounting Method, or that file a section 301.9100 request for an extension of time to file a Form 3115. However, the branch to which the case is assigned may, at its discretion, issue separate letter rulings for certain members or groups of members within a consolidated group. For example, separate letter rulings may be issued if different terms and conditions are required. Each letter ruling will include an attachment listing the section 481(a) adjustment for each member to which the letter ruling applies.

Sends a copy of the letter ruling to appropriate Service official

.11 The national office will send a copy of the letter ruling, whether favorable or adverse, to the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer's tax return.

SECTION 11. HOW ARE CONFERENCES SCHEDULED?

Schedules a conference if requested by taxpayer

.01 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(7) 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(4) of this revenue procedure regarding providing additional information.

Permits taxpayer one conference of right

.02 A taxpayer is entitled, as a matter of right, to only one conference in the national office, except as explained under section 11.05 of this revenue procedure. This conference is normally held at the branch level and is 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 associate or assistant chief counsel or to any other official of the Service. But see section 11.05 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.

Disallows verbatim recording of conferences

.03 Because conference procedures are informal, no tape, stenographic, or other verbatim recording of a conference may be made by any party.

Makes tentative recommendations on substantive issues

.04 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.

May offer additional conferences

.05 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.

Requires written confirmation of information presented at conference

.06 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(4) of this revenue procedure regarding submitting additional information.

May schedule a pre-submission conference

.07 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 if the identity of the taxpayer is provided to the Service, only if the taxpayer actually intends to make a request, only if the request involves a matter on which a letter ruling is ordinarily issued, and only at the discretion of the Service and as time permits. For example, a pre-submission conference will not be held on an income tax issue if, at the time the pre-submission conference is requested, the identical issue is involved in the taxpayer's return for an earlier period and that issue is being examined by a director. See section 5.01(1) of this revenue procedure. A letter ruling request submitted following a pre-submission conference will not necessarily be assigned to the branch that held the pre-submission conference. Also, when a letter ruling request is not submitted following a pre- submission conference, the national office may notify, by memorandum, the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer's tax return and may give its views on the issues raised during the pre-submission conference. This memorandum may constitute Chief Counsel Advice, as defined in section 6110(i), subject to disclosure under section 6110.

(1) TAXPAYER MAY REQUEST A PRE-SUBMISSION CONFERENCE IN WRITING OR BY TELEPHONE. A taxpayer may request a pre-submission conference in writing or by telephone. The request should identify the taxpayer and include a brief explanation of the primary issue so that an assignment to the appropriate branch can be made. If submitted in writing, the request should also identify the associate or assistant chief counsel office expected to have jurisdiction over the request for a letter ruling. A written request for a pre-submission conference should be sent to the appropriate address listed in section 8.03(1) of this revenue procedure.

To request a pre-submission conference by telephone, call:

(a) (202) 622-7700 (not a toll-free call) for matters under the jurisdiction of the Office of Associate Chief Counsel (Corporate);

(b) (202) 622-3900 (not a toll-free call) for matters under the jurisdiction of the Office of Associate Chief Counsel (Financial Institutions and Products);

(c) (202) 622-4800 (not a toll-free call) for matters under the jurisdiction of the Office of Associate Chief Counsel (Income Tax & Accounting);

(d) (202) 622-3800 (not a toll-free call) for matters under the jurisdiction of the Office of Associate Chief Counsel (International);

(e) (202) 622-3000 (not a toll-free call) for matters under the jurisdiction of the Office of Associate Chief Counsel (Passthroughs & Special Industries);

(f) (202) 622-3400 (not a toll-free call) for matters under the jurisdiction of the Office of Associate Chief Counsel (Procedure and Administration); or

(g) (202) 622-6000 (not a toll-free call) for matters under the jurisdiction of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities).

(2) PRE-SUBMISSION CONFERENCES GENERALLY HELD IN PERSON. Pre- submission conferences generally will be held in person at the national office. However, if the taxpayer is unable to attend the conference, the conference may be conducted by telephone.

(3) CERTAIN INFORMATION REQUIRED TO BE SUBMITTED TO THE NATIONAL OFFICE PRIOR TO THE PRE-SUBMISSION CONFERENCE. Generally, the taxpayer will be asked to provide, at least 3 business days before the scheduled pre-submission conference, a statement of whether the issue is an issue on which a letter ruling is ordinarily issued a draft of the letter ruling request or other detailed written statement of the proposed transaction, issue, and legal analysis and, if the taxpayer's authorized representative will attend the pre- submission conference, a power of attorney is required. It is preferred that Form 2848, Power of Attorney and Declaration of Representative, be used to provide the representative's authorization. If multiple taxpayers and/or their authorized representatives will attend the pre-submission conference, cross powers of attorney (or tax information authorizations) are required. As stated in section 11.07(1) of this revenue procedure, the identity of the taxpayer must be provided to the Service when the pre-submission conference is requested.

(4) DISCUSSION OF SUBSTANTIVE ISSUES IS NOT BINDING ON THE SERVICE. Any discussion of substantive issues at a pre-submission conference is advisory only, is not binding on the Service in general or on the Office of Chief Counsel in particular, and cannot be relied upon as a basis for obtaining retroactive relief under the provisions of section 7805(b).

Under limited circumstances, may schedule a conference to be held by

SECTION 12. WHAT EFFECT WILL A LETTER RULING HAVE?

May be relied on subject to limitations

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

Will not apply to another taxpayer

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

Will be used by a director in examining the taxpayer's return

.03 When determining a taxpayer's liability, the 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 revoked or modified, the findings and recommendations of the director will be forwarded to the national office for consideration before further action is taken by the director. Such a referral to the national office will be treated as a request for technical advice and the provisions of Rev. Proc. 2002-2 will be followed. Otherwise, the letter ruling is to be applied by the director in the 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.

May be revoked or modified if found to be in error

.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 revoked or modified. If a letter ruling is revoked or modified, the revocation or modification applies to all years open under the period 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.

Not generally revoked or modified retroactively

.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 or modifying 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 revocation or modification of a letter ruling previously issued to another client.

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

Retroactive effect of revocation or modification applied to a

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.

Retroactive effect of revocation or modification applied to a

(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 Federal Insurance Contributions 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.

Generally not retroactively revoked or modified if related to sale or

May be retroactively revoked or modified when transaction is entered

May be retroactively revoked or modified when transaction is entered into after a change in material facts

.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.

Taxpayer may request that retroactivity be limited

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

A taxpayer to whom a letter ruling has been issued may request that the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions and Products), the Associate Chief Counsel (Income Tax & Accounting), the Associate Chief Counsel (International), the Associate Chief Counsel (Passthroughs & Special Industries), the Associate Chief Counsel (Procedure and Administration), or the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), as appropriate, limit the retroactive effect of any revocation or modification of the letter ruling.

Format of request

(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 12.05 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 director during an examination of the taxpayer's return or by the Area Director, Appeals LMSB, or Area Director, Appeals SB/SE-TE/GE, as appropriate, during consideration of the taxpayer's return before an area office, a request to limit retroactive effect must be made in the form of a request for technical advice as explained in section 18.03 of Rev. Proc. 2002-2.

When germane to a pending letter ruling request, a request to limit the retroactive effect of a revocation or modification 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 revoked or modified 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.

Request for conference

(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 11.02, 11.04, and 11.05 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 11.02 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 13. WHAT EFFECT WILL A DETERMINATION LETTER HAVE?

Has same effect as a letter ruling

.01 A determination letter issued by a director has the same effect as a letter ruling issued to a taxpayer under section 12 of this revenue procedure.

If a 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 director must refer the matter to the national office if the director desires to have the revocation or modification of the determination letter limited under section 7805(b).

Taxpayer may request that retroactive effect of revocation or

Format of request

(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 revocation or modification of the determination letter must be in the form of, and meet the general requirements for, a technical advice request. See section 18.03 of Rev. Proc. 2002-2. 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 12.05 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.

Request for conference

(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 13 and 18.04 of Rev. Proc. 2002-2.

SECTION 14. UNDER WHAT CIRCUMSTANCES ARE MATTERS REFERRED BETWEEN A

.01 Requests for determination letters received by directors that, under the provisions of this revenue procedure, may not be issued by a field office, will be forwarded to the national office for reply. The field office will notify the taxpayer that the matter has been referred.

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.

No-rule areas

.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 field 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.

Requests for letter rulings

.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 field 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 the Service decides 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 field office for association with the related return.

SECTION 15. WHAT ARE THE USER FEE REQUIREMENTS FOR REQUESTS FOR

.01 Section 10511 of the Revenue Act of 1987, 1987-3 C.B. 1, 166, 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, by section 743 of the Uruguay Round Agreements Act, 1995-1 C.B. 230, 239, enacted December 8, 1994, and by section 2 of the Tax Benefits for Individuals Performing Services in Certain Hazardous Duty Areas, 1996-3 C.B. 1, enacted March 20, 1996 (hereafter the four laws are referred to together as the "Act"), provides that the Secretary of the Treasury or delegate (the "Secretary") shall establish a program requiring the payment of user 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, 2003. The fees charged under the program are to: (1) vary according to categories or subcategories established by the Secretary; (2) be determined after taking into account the average time for, and difficulty of, complying with requests in each category and subcategory; and (3) 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.

Requests to which a user fee applies

.02 In general, user fees apply to all requests for --

(1) letter rulings, determination letters, and advance pricing agreements;

(2) closing agreements described in paragraph (A)(3)(d) of Appendix A of this revenue procedure;

(3) renewal of advance pricing agreements; and

(4) 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 15.10 of this revenue procedure.

Requests to which a user fee does not apply

.03 User fees do not apply to --

(1) elections made pursuant to section 301.9100-2, pertaining to automatic extensions of time (see section 5.02 of this revenue procedure);

(2) late S corporation and related elections made pursuant to Rev. Proc. 98-55 or Rev. Proc. 97-48 (see section 5.01(3) of this revenue procedure);

(3) requests for information letters; or

(4) 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).

Exemptions from the user fee requirements

.04 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.

Fee schedule

.05 The schedule of user fees is provided in Appendix A of this revenue procedure. For the user fee requirements applicable to --

(1) requests for advance pricing agreements or renewals of advance pricing agreements, see section 5.14 of Rev. Proc. 96-53, 1996-2 C.B. at 379; or

(2) requests for letter rulings, determination letters, etc., under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division, see Rev. Proc 2002-8.

Applicable user fee for a request involving multiple offices, fee

(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 (Passthroughs and Special Industries) and another issue is under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division), only one fee applies, namely the highest fee that otherwise would apply to each of the offices involved. See Rev. Proc. 2002-8 for the user fees applicable to issues under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division.

(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 transaction 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. An example of a request involving unrelated transactions is a request involving relief under section 301.9100-3 and the underlying issue.

(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. But see section 15.07 of this revenue procedure.

Applicable user fee for substantially identical letter rulings or

(1) IN GENERAL. The user fees provided in paragraph (A)(5) of Appendix A of this revenue procedure apply to the situations described in sections 15.07(2) and 15.07(3) of this revenue procedure. To assist in the processing of these user fee requests, all letter ruling requests submitted under this section 15.07 should --

(a) Type or print at the top of the letter ruling request: "REQUEST FOR USER FEE UNDER SECTION 15.07 OF REV. PROC. 2002-1";

(b) List on the first page of the submission all taxpayers and entities requesting a letter ruling (including the taxpayer identification number, and the amount of user fee submitted, for each taxpayer or entity); and

(c) Submit one check to cover all user fees.

If the Service determines that the letter ruling requests do not qualify for the user fee provided in paragraph (A)(5) of Appendix A of this revenue procedure, the Service will request the proper fee. See section 15.09 of this revenue procedure.

(2) SUBSTANTIALLY IDENTICAL LETTER RULINGS. The user fee provided in paragraph (A)(5)(a) of Appendix A of this revenue procedure applies to a taxpayer that requests substantially identical letter rulings (including accounting period, accounting method, and earnings and profits requests other than those submitted on Forms 1128, 2553, 3115, and 5452) for either multiple entities with a common member or sponsor, or multiple members of a common entity. To qualify for this user fee, all information and underlying documents must be substantially identical and all letter ruling requests must be submitted at the same time. In addition, the letter ruling requests must --

(a) State that the letter ruling requests, and all information and underlying documents, are substantially identical; and

(b) Specifically identify the extent to which the letter ruling requests, information, and underlying documents are not identical.

(3) IDENTICAL ACCOUNTING METHOD CHANGES AND RELATED SECTION 301.9100 LETTER RULINGS. The user fees provided in paragraphs (A)(5)(b) and (c) of Appendix A of this revenue procedure apply to a parent corporation that requests either the identical accounting method change on a single Form 3115 on behalf of more than one member of a consolidated group or an extension of time to file Form 3115 under section 301.9100-3 for the identical accounting method change on behalf of more than one member of a consolidated group. To qualify for this user fee, the taxpayers in the consolidated group must be members of the same affiliated group under section 1504(a) that join in the filing of a consolidated tax return and must be requesting to change from the identical present method of accounting to the identical proposed method of accounting. All aspects of the requested accounting method change, including the present and proposed methods, the underlying facts and the authority for the request, must be identical, except for the section 481(a) adjustment for the year of change.

In addition, a parent corporation must file a single Form 3115. Besides including all the information required on the Form 3115, the parent corporation must, for each member of a consolidated group for which the accounting method change is being requested, attach to the Form 3115 a schedule providing its name, employer identification number, and section 481(a) adjustment for the year of change. The Form 3115 must be signed by a duly authorized officer of the parent corporation.

In the case of a section 301.9100 request for an extension of time to file Form 3115, a parent corporation must submit the information required in the above paragraph in addition to the information required by section 5.02 of this revenue procedure.

Method of payment

.08 Each request to the Service for a letter ruling, determination letter, advance pricing agreement, closing agreement described in paragraph (A)(3)(d) 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 in U.S. dollars, 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.

Effect of nonpayment or payment of incorrect amount

.09 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 return immediately 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.

Refunds of user fee

.10 In general, the user 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 USER 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 perfect timely 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) The Service notifies the taxpayer that the Service will not issue the letter ruling and has closed the case as a result of the taxpayer's failure to submit timely the additional information requested by the Service. The failure to submit the additional information will be treated as a withdrawal for purposes of this revenue procedure. See section 10.07(5) of this revenue procedure.

(d) 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.

(e) 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.

(f) 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.

(g) The situation is the same as described in paragraph (f) of this section 15.10(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.

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

(i) 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 USER FEE WILL BE REFUNDED:

(a) In a situation to which section 15.10(1)(i) 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 15.10(1)(i) of this revenue procedure 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.

(d) In a situation to which section 15.10(1)(e) of this revenue procedure applies the taxpayer requests reconsideration of the Service's decision not to rule on an issue. Once the Service agrees to rule on the issue, the fee accompanying the request for reconsideration will be refunded.

(e) The letter ruling is not issued and taking into account all the facts and circumstances, including the Service's resources devoted to the request, the associate or assistant chief counsel, as appropriate in his or her sole discretion decides a refund is appropriate.

Request for reconsideration of user fee

.11 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 inapplicable or incorrect and wishes to receive a refund of all or part of the amount paid (see section 15.10 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 appropriate 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:

.01 Information letters that are issued by the national office to members of the public will be made available to the public. These documents provide general statements of well-defined law without applying them to a specific set of facts. See section 2.04 of this revenue procedure. Information letters that are issued by the field or a director, however, will not be made available to the public.

The following documents also will not be available for public inspection as part of this process:

(1) letters that merely transmit Service publications or other publicly available material, without significant legal discussion;

(2) responses to taxpayer or third party contacts that are inquiries with respect to a pending request for a letter ruling, technical advice memorandum, or Chief Counsel Advice (whose public inspection is subject to section 6110); and

(3) responses to taxpayer or third party communications with respect to any investigation, audit, litigation, or other enforcement action.

Deletions made under the Freedom of Information Act

.02 Before any information letter is made available to the public, the national office will delete any name, address, and other identifying information as appropriate under the Freedom of Information Act ("FOIA") (for example, FOIA personal privacy exemption of 5 U.S.C. section 552(b)(6) and tax details exempt pursuant to section 6103, as incorporated into FOIA by 5 U.S.C. section 552(b)(3)). Because information letters do not constitute written determinations (including Chief Counsel Advice) as defined in section 6110, these documents are not subject to public inspection under section 6110.

Effect of information letters

.03 Information letters are advisory only and have no binding effect on the Service. See section 2.04 of this revenue procedure. If the national office issues an information letter in response to a request for a letter ruling that does not meet the requirements of this revenue procedure, the information letter is not a substitute for a letter ruling.

SECTION 17. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC.

.02 Section 5.05 has been updated to provide that, in limited circumstances, the national office will consider a request for an estate tax letter ruling after the return has been filed but before it has been examined.

.03 Section 7.04 has been amended to provide that the Service will not rule on frivolous issues.

.04 Section 8.03(1)(b) is amended to reflect the current operating hours of the courier's desk.

.05 Section 8.03(2)(b) is amended to reflect the change in procedure for W&I taxpayers requesting determination letters.

.06 Section 9 is updated to reflect the revenue procedures and notices effective on December 31, 2001.

.07 Section 11.07 is amended to clarify that a pre-submission conference is held only if the identity of the taxpayer is provided to the national office at the time the conference is requested.

SECTION 18. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER

.02 Notice 97-19, 1997-1 C.B. 394, is modified by deleting all references to Rev. Proc. 97-1 and replacing them with references to this revenue procedure.

.03 Rev. Proc. 96-13, 1996-1 C.B. 616, is modified by deleting all references to Rev. Proc. 96-1 and replacing them with references to this revenue procedure.

.04 Rev. Proc. 84-37, 1984-1 C.B. 513, is modified by deleting all references to Rev. Proc. 84-1 and replacing them with references to this revenue procedure. Section 3.04 is modified by deleting the address contained therein and replacing it with the addresses in section 8.03(1) of this revenue procedure.

SECTION 19. WHAT IS THE EFFECTIVE DATE OF THIS REVENUE PROCEDURE?

This revenue procedure is effective January 7, 2002.

SECTION 20. PAPERWORK REDUCTION ACT

The collections of information contained in this revenue procedure have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. section 3507) under control number 1545-1522.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

The collections of information in this revenue procedure are in sections 5.05, 6.07, 8.01, 8.02, 8.03, 8.04, 8.05, 8.07, 9.01 (subject matter -- rate orders; regulatory agency; normalization), 10.06, 10.07, 10.09, 11.01, 11.06, 11.07, 12.11, 13.02, 15.02, 15.07, 15.08, 15.09, and 15.11, paragraph (B)(1) of Appendix A, and Appendix C. This information is required to evaluate and process the request for a letter ruling or determination letter. In addition, this information will be used to help the Service delete certain information from the text of the letter ruling or determination letter before it is made available for public inspection, as required by section 6110. The collections of information are required to obtain a letter ruling or determination letter. The likely respondents are business or other for-profit institutions.

The estimated total annual reporting and/or recordkeeping burden is 305,140 hours.

The estimated annual burden per respondent/recordkeeper varies from 1 to 200 hours, depending on individual circumstances, with an estimated average burden of 80.3 hours. The estimated number of respondents and/or recordkeepers is 3,800.

The estimated annual frequency of responses is on occasion.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by section 6103.

DRAFTING INFORMATION

The principal author of this revenue procedure is Lydia Taylor 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 (Corporate), the Associate Chief Counsel (Financial Institutions & Products), the Associate Chief Counsel (Income Tax & Accounting), the Associate Chief Counsel (Passthroughs & Special Industries), or the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), contact George Bowden or Henry Schneiderman at (202) 622-3400 (not a toll-free call);

(2) the Associate Chief Counsel (International), contact Gerard Traficanti at (202) 622-3619 (not a toll-free call).

For further information regarding user fees, contact the Chief, Technical Services Staff, at (202) 622-7560 (not a toll-free call).

                                 INDEX

(1) REQUIRED CERTIFICATION. A person seeking a reduced user fee under paragraph (A)(4) 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)(4)(a) of this appendix, the person must certify in the request that his, her, or its gross income, as defined under paragraphs (B)(2) and (4) of this appendix, is less than $250,000 for the last full (12 months) taxable year ending before the date the request is filed.

(b) If a person is seeking a reduced user fee under paragraph (A)(4)(b) of this appendix, the person must certify in the request that his, her, or its gross income, as defined under paragraph (B)(3) and (4) of this appendix, is less than $1 million for the last full (12 months) taxable year ending before the date the request is filed.

(2) GROSS INCOME FOR A REQUEST INVOLVING A PERSONAL TAX ISSUE. For purposes of the reduced user fee provided in paragraph (A)(4)(a) of this appendix of --

(a) 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 2001 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 22.

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)(4)(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)(a), is less than $250,000. 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.

(b) 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 1999 Form 1040NR, 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 23.

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)(4)(a) 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)(a) of this appendix or in this paragraph (B)(2)(b), is less than $250,000. 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 FOR A REQUEST INVOLVING A BUSINESS-RELATED TAX ISSUE. For purposes of the reduced user fee provided in paragraph (A)(4)(b) of this appendix of --

(a) U.S. CITIZENS AND RESIDENT ALIEN INDIVIDUALS, DOMESTIC TRUSTS, AND DOMESTIC ESTATES, "gross income" is equal to gross income as defined under paragraph (B)(2)(a) of this appendix, plus "cost of goods sold" as reported on the same federal income tax return.

(b) NONRESIDENT ALIEN INDIVIDUALS, FOREIGN TRUSTS, AND FOREIGN ESTATES, "gross income" is equal to gross income as defined under paragraph (B)(2)(b) of this appendix, plus "cost of goods sold" as reported on the same federal income tax return.

(c) 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. If a domestic partnership or corporation is not subject to tax, "total income" and "cost of goods sold" are the amounts that the domestic partnership or corporation would have reported on the federal income tax return if the domestic partnership or corporation were subject to tax.

"Cost of goods sold" and "total income" are line items on federal tax returns. For example, if the 2000 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 2000 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.

If, at the time the request is filed, a domestic partnership or corporation subject to tax has not filed a federal income tax return for a full taxable year, the reduced user fee in paragraph (A)(4)(b) of this appendix will apply if, in the aggregate, the partners' or the shareholders' gross income (as defined in paragraph (B)(3)(a), (b), (c), or (d) of this appendix, as applicable) is less than $1 million 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.

(d) ORGANIZATIONS EXEMPT FROM INCOME TAX UNDER "SUBCHAPTER F -- EXEMPT ORGANIZATIONS" OF THE CODE, "gross income" is equal to 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.

(4) SPECIAL RULES FOR DETERMINING GROSS INCOME. For purposes of paragraphs (B)(2) and (3) of this appendix, the following rules apply for determining gross income.

(a) GROSS INCOME OF INDIVIDUALS, TRUSTS, AND ESTATES.

(1) 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

(2) 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.

(b) GROSS INCOME OF DOMESTIC PARTNERSHIPS AND CORPORATIONS.

(1) In the case of a request from a domestic corporation, the gross income (as defined in paragraph (B)(3) of this appendix) 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

(2) In the case of a request from a domestic partnership, the gross income (as defined in paragraph (B)(3) of this appendix) 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.

(C) GROSS INCOME OF EXEMPT ORGANIZATIONS. If there are two or more organizations exempt from income tax under Subchapter F filing the request, the gross receipts (as defined in paragraph (B)(3)(d) of this appendix) of the applicants must be combined.

* * * * *

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)

(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 expedited handling, a statement to that effect must be attached to, or contained in, the letter ruling request. The statement must explain the need for expedited handling. See section 8.02(4) of Rev. Proc. 2002-1, 2002-1 I.R.B. 1. Hereafter, all references are to Rev. Proc 2002-1 unless otherwise noted.]

A. STATEMENT OF FACTS

1. Taxpayer Information

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

2. Description of Taxpayer's Business Operations

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

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)(d), 8.01(1)(e), 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(8), and 8.01(9), and 8.01(10).]

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(8), 8.01(9), and 8.01(10).]

E. CONCLUSION

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

F. PROCEDURAL MATTERS

1. Revenue Procedure 2002-1 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 (including an application for change in accounting method) involving the same or similar issue but withdrew the request before a 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 (including an application for change in accounting method) 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 (including an application for change in accounting method) involving the same or similar issue to the Service.]

f. [If the letter ruling request involves the interpretation of a substantive provision of an income or estate tax treaty, provide the statement required by section 8.01(6) regarding whether the tax authority of the treaty jurisdiction has issued a ruling on the same or similar issue for the taxpayer, a related taxpayer, or a predecessor; whether the same or similar issue is being examined, or has been settled, by the tax authority of the treaty jurisdiction or is otherwise the subject of a closing agreement in that jurisdiction; and whether the same or similar issue is being considered by the competent authority of the treaty jurisdiction.]

g. [Provide the statement required by section 8.01(8) regarding whether the law in connection with the letter ruling request is uncertain and whether the issue is adequately addressed by relevant authorities.]

h. [If the taxpayer determines that there are no contrary authorities, a statement to that effect would be helpful. See section 8.01(9).]

i. [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(7).]

j. [If the taxpayer is requesting a copy of any document related to the letter ruling request to be sent by facsimile (fax) transmission, the ruling request should contain a statement to that effect. See section 8.02(5).]

k. [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).]

l. [If the taxpayer is seeking to obtain the user fee provided in paragraph (A)(5)(a) of Appendix A for substantially identical letter rulings, the letter ruling request must contain the statements required by section 15.07.]

2. Administrative

a. [The ruling request should state: "The deletions statement and checklist required by Rev. Proc. 2002-1 are enclosed." See sections 8.01(11) and 8.01(18).]

b. [The ruling request should state: "The required user fee of $(Insert the amount of the fee) is enclosed." Please note that the check or money order must be in U.S. dollars and made payable to the Internal Revenue Service. See section 15 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(13), 8.01(14), 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 request contains all the relevant facts relating to the request, and such facts are true, correct, and complete.

 (Insert the name of the taxpayer)

                              * * * * *

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 YOUR 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. ________________________________________________

ATTORNEY/P.O.A. ____________________________________________________

PRIMARY CODE SECTION _______________________________________________

 CIRCLE ONE                              ITEM

                             APPENDIX D

- Area 1, Area Director, Boston