SERVICE SPECIFIES PROCEDURES FOR RULING REQUESTS UNDER SECTIONS 103 AND 7478.

Rev. Proc. 88-32

SECTION 1. PURPOSE

The purpose of this revenue procedure is to set forth procedures for the submission of requests for rulings to the Internal Revenue Service under section 103 and 7478 of the Internal Revenue Code and to update the procedures described in Rev. Proc. 84-48, 1984-1 C.B. 547. References in this revenue procedure to section 103 of the Code also refer to sections 141-150 and 7871.

SEC. 2. BACKGROUND

01 Section 7478 of the Code provides that under the conditions specified therein, the issuer (and only the issuer) of prospective obligations may petition the United States Tax court for a declaratory judgment in a case of actual controversy involving a determination by the Service, or a failure by the Service to make a determination, with respect to whether prospective obligations are described in section 103(a).

02 The Tax Court may not issue a declaratory judgment or decree under section 7478 of the Code in any proceeding unless it determines that the issuer of the prospective obligations has exhausted all available administrative remedies within the Service.

03 Any ruling request that is made by an issuer with respect to prospective obligations is subject to section 7478 of the Code and, accordingly, must be made in full compliance with this revenue procedure. Procedures for the submission of ruling requests when the requestor of the ruling is not the issuer, or when the request relates to outstanding obligations, are set forth in Rev. Proc. 88- 33, page 48, this Bulletin.

04 Section 10511 of the Revenue Act of 1987, 1987-3 C.B. ___ provides that a user fee must be paid with respect to requests to the Service for rulings. Also see Rev. Proc. 88-8, 1988-4 I.R.B. 22.

SEC. 3. REQUESTS FOR RULINGS UNDER SECTIONS 103 AND 7478

01 A request for a ruling under sections 103 and 7478 of the Code is to be submitted and signed, under the penalty of perjury, (1) by an authorized officer of the issuer, or (2) in the case of a joint submission, by both an authorized officer of the issuer and a party with a material financial interest in the issuance of the prospective obligations.

02 In those instances in which an authorized representative is retained, the request for a ruling must be submitted with powers of attorney that are properly executed and that are signed (1) by an authorized officer of the issuer, or (2) in the case of a joint submission, by both an authorized office of the issuer and a party with a material financial interest in the issuance of the prospective obligations.

03 Each request for a ruling must contain a complete and detailed statement of all facts relating to the prospective obligations and must comply with the requirements of Rev. Proc. 88-1, 1988-1 I.R.B. 7 (or its successor), to the extent that revenue procedure is not inconsistent with this revenue procedure. Each request for a ruling must be submitted in duplicate and must be accompanied by two copies of all relevant documents, including copies of state statutes, appropriate bond resolutions adopted in accordance with state or local law authorizing the issuance of the bonds, bond indentures, leases, management contracts, output contracts, and other agreements. Relevant facts reflected in the documents submitted must be included in the body of the ruling request and not merely incorporated by reference and must be accompanied by an analysis of their bearing of the pertinent issues specifying pertinent provisions. In addition, in order to assist the Internal Revenue Service in making the deletions required by section 6110(c) of the Code, each request for a ruling must be accompanied by a deletion statement submitted in accordance with section 601.201 of the Statement of Procedural Rules (26 CFR Part 601).

04 Each request for a ruling must contain a statement of all reasons and legal authority that are perinent in determining whether the prospective obligations are described in section 103(a) of the Code. Thus, for example, a request for a ruling that interest on prospective obligations to provide for construction of a facility for the furnishing of water will be excludable from gross income under section 103(a) must contain a statement of facts, reasons, and legal authority that will enable the Service to determine whether the prospective obligations will be (1) issued by or on behalf of a state or political subdivision thereof, (2) private activity bonds within the meaning of section 141, (3) part of an issue 95 percent or more of the net proceeds of which will be used to provide facilities described in section 142(a)(4), (4) part of an issue that meets the volume cap requirement under section 146, (5) obligations not held by persons described in section 147(a)(1), (6) part of an issue that meets the maturity requirements of section 147(b), (7) part of an issue that meets the limitation on use for land acquisition of section 147(c), (8) part of an issue that meets the requirements concerning the acquisition of existing property in section 147(d), (9) part of an issue no portion of which is to be used to provide property described in section 147(e), (10) part of an issue that satisfies the public approval requirement of section 147(f), (11) part of an issue that satisfies the restrictions on issuance costs in section 147(g), (12) obligations that are not arbitrage bonds within the meaning of section 148, (13) obligations that are in registered form within the meaning of section 149(a), (14) obligations that are not federally guaranteed within the meaning of section 149(b), and (15) part of an issue that meets the information reporting requirements under section 149(e).

05 If a request for a ruling under this revenue procedure requires the approval of a state designation of a geographic area as an "area of chronic economic distress" as required by section 143(j)(3)(A)(ii) of the Code, the requirements set forth in Rev. Proc. 88-31, page 45, this Bulletin, also must be satisfied along with the requirements in this revenue procedure.

SEC. 4. ISSUING RULING LETTERS

01 The 180-day period referred to in section 7478(b)(2) of the Code generally will be considered to begin on the date that a ruling request that complies with section 3 of this revenue procedure is received by the National Office of the Internal Revenue Service. Upon receipt of a request for a ruling, the Service will send a written acknowledgment to the requester. If a request for a ruling does not comply with all the requirements of section 3, it will not be, processed further and the requester will be sent a letter that will point out the requirements that have not been met. The 180-day period will not be considered as starting until the date an amended request for ruling containing the additional information requested by the Service is received by the National Office of the Internal Revenue Service.

02 Although the Service may initially determine that a request for a ruling complies with section 3 of this revenue procedure and thus begins the 180-day period described above, the Service may, nevertheless, request additional information in support of a request for ruling. A failure to timely submit additional information requested by the Service will be considered a failure to exhaust administrative remedies within the meaning of section 7478(b)(2) of the Code. Additional information or statements of legal authority will be considered timely submitted to the National Office of the Internal Revenue Service if the letter containing such information is sent within 30 days after the date the additional information is requested. The additional information or statements of legal authority must be signed and submitted in the manner set forth in section 3.01 of this revenue procedure.

03 Any oral representation of additional facts or modification of the facts as represented or alleged in the request for ruling must be confirmed by letter to the National Office of the Internal Revenue Service, under the penalty of perjury, within 7 days after the oral representation or modification by the issuer and, in the case of a joint submission, by a party with a material financial interest and the issuer. Failure to submit a written statement of the oral representation of additional facts or modification of the facts within the time set forth in this subsection will be considered a failure to exhaust administrative remedies within the meaning of section 7478(b)(2) of the Code.

04 Requests for rulings will be considered to be sent to the National Office of the Internal Revenue Service if addressed to the Internal Revenue Service, Associate Chief Counsel (Technical and International), Attention: CC:IND:D:C, SECTION 103 REQUEST, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. Requests may be hand delivered to Room 6561, 1111 Constitution Avenue, N.W. Washington, D.C. 20224.

05 Additional correspondence or documents (including withdrawals of requests for rulings) submitted with respect to requests for rulings will considered to be sent to the National Office of the Internal Revenue Service if addressed as follows: ADDITIONAL INFORMATION, Attorney/Tax Law Specialist, CC:IND:2, Room 5314, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.

SEC. 5. WITHDRAWALS OF REQUESTS FOR RULINGS

01 All withdrawals of requests for rulings must be sent in writing to the National Office of the Internal Revenue Service by the issuer or its authorized representative. The withdrawal is not a failure to make a determination within the meaning of section 7478(a)(2) of the Code or an exhaustion of administrative remedies within the meaning of section 7478(b)(2).

SEC. 6. EXHAUSTION OF ADMINISTRATIVE REMEDIES

01 Section 7478 of the Code requires that an issuer must exhaust its administrative remedies by taking, in a timely manner, all reasonable steps to secure a determination. Those steps and administrative remedies required to be exhausted within the Service are:

(1) The filing of a request for ruling that complies with section 3 of this revenue procedure; and

(2) the timely submission, in writing, of all additional information or representation of additional facts or modification of facts requested by the Service to process the request for ruling.

02 An issuer will in no event be deemed to have exhausted its administrative remedies prior to the earlier of:

(1) the date that the Internal Revenue Service sends by certified or registered mail notice of a determination that the prospective obligations are not described in section 103(a) of the Code; or

(2) The expiration of the 180-day period described in section 7478(b)(2) of the Code in a case in which the Service has not made a determination whether the prospective obligations are described in section 103(a), and the issuer has completed the steps in section 6.01 of this revenue procedure.

SEC. 7. NOTICE OF DETERMINATION

01 A notice of determination to which section 7478 of the Code applies is a ruling letter, sent by certified or registered mail, that holds that prospective obligations are not described in section 103(a) of the Code.

SEC. 8. INQUIRIES

01 Inquiries with respect to this revenue procedure should refer to its number and should be addressed to the Internal Revenue Service, Association Chief Counsel (Technical and International), Attention: CC:IND:2, 1111 Constitution Avenue, N.W., Washington, D.C. 20224.

SEC. 9. EFFECT ON OTHER DOCUMENTS

This revenue procedure supplements Rev. Proc. 88-1 and supersedes Rev. Proc. 84-48.

DRAFTING INFORMATION

The principal author of this revenue procedure is Gene Overton of the Individual Tax Division. For further information regarding this revenue procedure contact. Mr. Overton on (202) 566-3650 (not a toll- free call).