| Revenue Procedure 2006-04 |
January 3, 2006 |
Rulings and Information Letters; Issuance Procedures
SECTION 1. WHAT IS THE PURPOSE OF THIS REVENUE
PROCEDURE?
This revenue procedure explains how the Internal Revenue Service gives
guidance to taxpayers on issues under the jurisdiction of the Commissioner,
Tax Exempt and Government Entities Division. 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 A.
SECTION 2. WHAT CHANGES HAVE BEEN MADE TO
REV.
PROC. 2005-4?
.01 This revenue procedure is a general update of Rev. Proc. 2005-4,
2005-1 I.R.B. 128, which contains the Service’s general procedures for
employee plans and exempt organizations letter ruling requests. Most of the
changes to Rev. Proc. 2005-4 involve minor revisions, such as updating citations
to other revenue procedures.
.02 Section 6.12 and section 6.13 are added to reflect two additional
no rule areas for EO Technical, i.e., generally not with
respect to an EO joint venture with a for-profit organization and not on the
status of state run programs under § 529 of the Code.
.03 Section 7.04 is expanded to include certain set-asides described
in § 4942(g)(2) where EO Determinations issues a determination letter.
.04 Section 8 is revised to clarify that neither EP Technical nor EO
Technical issues “comfort” letter rulings.
SECTION 3. IN WHAT FORM IS GUIDANCE PROVIDED
BY THE COMMISSIONER, TAX EXEMPT AND GOVERNMENT ENTITIES DIVISION?
.01 The Service provides guidance in the form of letter rulings, closing
agreements, compliance statements, determination letters, opinion letters,
advisory letters, information letters, revenue rulings, and oral advice.
.02 A “letter ruling” is a written statement issued to a
taxpayer by the Service’s Employee Plans Technical office or Exempt
Organizations Technical office that interprets and applies the tax laws or
any nontax laws applicable to employee benefit plans and exempt organizations
to the taxpayer’s specific set of facts. Once issued, a letter ruling
may be revoked or modified for any number of reasons, as explained in section
13 of this revenue procedure, unless it is accompanied by a “closing
agreement.”
.03 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 § 7121 and is final unless fraud, malfeasance, or misrepresentation
of a material fact can be shown.
A closing agreement prepared in an office under the responsibility of
the Commissioner, TE/GE, may be based on a ruling that has been signed by
the Commissioner, TE/GE, or the Commissioner, TE/GE’s, delegate that
says that a closing agreement will be entered into on the basis of the ruling
letter.
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,
taxpayers 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.
In appropriate cases, a closing agreement may be made with sponsors
of master and prototype plans.
A closing agreement may also be entered into with respect to retirement
plan failures corrected under the Audit Closing Agreement Program of the Employee
Plans Compliance Resolution System (EPCRS), as set forth in Rev. Proc. 2003-44,
2003-1 C.B. 1051.
.04 A “determination letter” is a written statement issued
by the Manager, EP Determinations, or the Manager, EO Determinations that
applies the principles and precedents previously announced 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.
The Manager, EP Determinations, issues determination letters involving
§§ 401, 403(a), 409, and 4975(e)(7) as provided in Rev. Proc.
2006-6, page , this Bulletin.
.05 An “opinion letter” is a written statement issued by
Employee Plans Rulings and Agreements to a sponsor as to the acceptability
(for purposes of §§ 401 and 501(a)) of the form of a master
or prototype plan and any related trust or custodial account under §§ 401,
403(a), and 501(a), or as to the conformance of a prototype trust, custodial
account, or individual annuity with the requirements of § 408(a),
(b), or (k), as applicable. See Rev. Proc. 2005-16, 2005-10
I.R.B. 674. See also Rev. Proc. 91-44, 1991-2 C.B. 733,
and Rev. Proc. 92-38, 1992-1 C.B. 859.
.06 An “information letter” is a statement issued either
by the Director, Employee Plans Rulings and Agreements or the Director, Exempt
Organizations Rulings and Agreements. 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. To the extent resources permit, 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. Requests for
information letters should be sent to the address stated in section 9.04(2)
of this revenue procedure. The requirements of section 9.02 of this revenue
procedure are not applicable to information letters. An information letter
is advisory only and has no binding effect on the Service.
.07 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 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.
(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, determination letters, and requests
for recognition of exempt status for a particular organization.
(2) Discussion possible on substantive issues.
At the discretion of the Service, and as time permits, substantive issues
may also be discussed. However, such a discussion will not be binding on the
Service, and cannot be relied on as a basis for obtaining retroactive relief
under the provisions of § 7805(b).
Substantive tax issues involving the taxpayer that are under examination,
in appeals, or in litigation will not be discussed by Service employees not
directly involved in the examination, appeal, or litigation of the issues
unless the discussion is coordinated with those Service employees who are
directly involved in the examination, appeal, or litigation of the issues.
The taxpayer or the taxpayer’s representative ordinarily will be asked
whether the oral request for guidance or information relates to a matter pending
before another office of the Service.
If a tax issue is not under examination, in appeals, or in litigation,
the tax issue may be discussed even though the issue is affected by a nontax
issue pending in litigation.
A taxpayer may seek oral technical guidance from a taxpayer service
representative in TE/GE Customer Account Services 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.
.09 In order to receive approval to act as a nonbank custodian of plans
qualified under § 401(a) or accounts described in § 403(b)(7),
and as a nonbank trustee or nonbank custodian for individual retirement arrangements
(IRAs) established under § 408(a), (b), or (h), or for a Coverdell
educational savings account established under § 530 or an Archer
medical savings account established under § 220, or a Health Savings
Account under § 223, a written application must be filed that demonstrates
how the applicant complies with the requirements of § 1.408-2(e)(2)
through (5) of the Income Tax Regulations.
The Service must have clear and convincing proof in its files that the
requirements of the regulations are met. If there is a requirement that the
applicant feels is not applicable, the application must provide clear and
convincing proof that such requirement is not germane to the manner in which
the applicant will administer any trust or custodial account. See,
§ 1.408-2(e)(6).
The completed application should be sent to:
Internal Revenue Service
Commissioner, TE/GE
Attention:
SE:T:EP:RA
P.O. Box 27063
McPherson Station
Washington,
DC 20038
Section 6.01(6) of Rev. Proc. 2006-8, page , this Bulletin, imposes
a user’s fee for anyone applying for approval to become a nonbank trustee
or custodian.
.10 A compliance statement is a binding written agreement between the
Service and a taxpayer with respect to certain retirement plan failures identified
by a taxpayer in a voluntary submission under the Voluntary Correction Program
of the EPCRS (see Rev. Proc. 2003-44). The compliance statement addresses
the failures identified in the VCP submission, the terms of correction, including
any revision of administrative procedures, and the time period within which
proposed corrections must be implemented. A compliance statement is conditioned
on (i) there being no misstatement or omission of material facts in connection
with the submission, and (ii) the implementation of the specific corrections
and satisfaction of any other conditions in the compliance statement.
SECTION 4. ON WHAT ISSUES MAY TAXPAYERS REQUEST
WRITTEN GUIDANCE UNDER THIS PROCEDURE?
Taxpayers may request letter rulings, information letters and closing
agreements on issues within the jurisdiction of the Commissioner, Tax Exempt
and Government Entities Division under this revenue procedure. The Service
issues letter rulings to answer written inquiries of individuals and organizations
about their status for tax purposes and the tax effects of their acts or transactions
when appropriate in the interest of sound tax administration.
Taxpayers also may request determination letters that relate to Code
sections under the jurisdiction of the Commissioner, Tax Exempt and Government
Entities Division. See Rev. Proc. 2006-6, this Bulletin.
SECTION 5. ON WHAT ISSUES MUST WRITTEN GUIDANCE
BE REQUESTED UNDER DIFFERENT PROCEDURES?
.01 The procedures for obtaining determination letters involving §§ 401,
403(a), 409, and 4975(e)(7), and the status for exemption of any related trusts
or custodial accounts under § 501(a) are contained in Rev. Proc.
2006-6, this Bulletin.
Master and prototype plans
and
volume
submitter plans
.02 The procedures for obtaining opinion letters for master and prototype
plans and any related trusts or custodial accounts under §§ 401(a),
403(a) and 501(a) and advisory letters for volume submitter plans are contained
in Rev. Proc. 2005-16. The procedures for obtaining opinion letters for prototype
trusts, custodial accounts or annuities under § 408(a) or (b) are
contained in Rev. Proc. 87-50, as modified by Rev. Proc. 92-38 and Rev. Proc.
2002-10, 2002-1 C.B. 401. The procedures for obtaining opinion letters for
prototype trusts under § 408(k) are contained in Rev. Proc. 87-50,
as modified by Rev. Proc. 91-44 (as modified by Rev. Proc. 2006-8) and Rev.
Proc. 2002-10. The procedures for obtaining opinion letters for SIMPLE IRAs
under § 408(p) are contained in Rev. Proc. 97-29, 1997-1 C.B. 698.
The procedures for obtaining opinion letters for ROTH IRAs under § 408A
are contained in Rev. Proc. 98-59, 1998-2 C.B. 727.
Closing agreement program for defined contribution
plans that purchased GICs or GACs
.03 Rev. Proc. 95-52, 1995-1 C.B. 439, restates and extends for an indefinite
period the closing agreement program for defined contribution plans that purchased
guaranteed investment contracts (GICs) or group annuity contracts (GACs) from
troubled life insurance companies.
Employee Plans Compliance Resolution System
.04 The procedures for obtaining compliance statements, etc., for certain
failures of plans qualified under § 401(a), § 403(b) plans,
SEPs and § 457 plans under the Employee Plans Compliance Resolution
System (EPCRS) are contained in Rev. Proc. 2003-44, 2003-1 C.B. 1051.
.05 The procedures for obtaining rulings, closing agreements, and information
letters on issues within the jurisdiction of the Chief Counsel are contained
in Rev. Proc. 2006-1, page , this Bulletin, including tax issues involving
interpreting or applying the federal tax laws and income tax treaties relating
to international transactions.
Alcohol, tobacco, and firearms taxes
.06 The procedures for obtaining letter rulings, etc., that apply to
federal alcohol, tobacco, and firearms taxes under subtitle E of the Internal
Revenue Code are under the jurisdiction of the Alcohol and Tobacco Tax and
Trade Bureau within the Treasury Department.
SECTION 6. UNDER WHAT CIRCUMSTANCES DOES TE/GE
ISSUE LETTER RULINGS?
In exempt organizations matters
.01 In exempt organizations matters, the Exempt Organizations Technical
Office issues letter rulings on proposed transactions and on completed transactions
if the request is submitted before the return is filed for the year in which
the transaction that is the subject of the request was completed. Exempt Organizations
Technical issues letter rulings involving:
-
Organizations exempt from tax under § 501, including private
foundations;
-
Organizations described in § 170(b)(1)(A) (except clause (v));
-
Political organizations described in § 527;
-
Qualified tuition programs described in § 529 other than state
run programs;
-
Trusts described in § 4947(a);
-
Welfare benefit plans described in § 4976; and
-
Other matters including issues under §§ 501 through 514,
4911, 4912, 4940 through 4948, 4955, 4958, 6033, 6104, 6113, and 6115.
In employee plans matters
.02 In employee plans matters, the Employee Plans Technical Office issues
letter rulings on proposed transactions and on completed transactions either
before or after the return is filed. Employee Plans Technical issues letter
rulings involving:
-
§§ 72, 101(d), 219, 381(c)(11), 402, 403(b), 404, 408,
408A, 412, 414(d), 414(e), 419, 419A, 511 through 514, 4971, 4972, 4973, 4974,
4978, 4979, and 4980;
-
Waiver of the minimum funding standard (See Rev.
Proc. 2004-15, 2004-1 C.B. 490), and changes in funding methods and actuarial
assumptions under § 412(c)(5);
-
Waiver of the liquidity shortfall (as that term is defined in § 412(m)(5))
excise tax under § 4971(f)(4);
-
Waiver under § 4980F(c)(4) of all or part of the excise tax
imposed for failure to satisfy the notice requirements described in § 4980F(e);
-
Whether a plan amendment is reasonable and provides for only de
minimis increases in plan liabilities in accordance with §§ 401(a)(33)
and 412(f)(2)(A) of the Code (See Rev. Proc. 79-62, 1979-2
C.B. 576);
-
A change in the plan year of an employee retirement plan and the trust
year of a tax-exempt employees’ trust (See Rev.
Proc. 87-27, 1987-1 C.B. 769);
-
The tax consequences of prohibited transactions under §§503
and 4975;
-
Whether individual retirement accounts established by employers or associations
of employees meet the requirements of § 408(c). (See Rev.
Proc. 87-50, as modified by Rev. Proc. 91-44 (as modified by Rev. Proc. 2006-8)
and Rev. Proc. 92-38);
-
With respect to employee stock ownership plans and tax credit employee
stock ownership plans, §§ 409(l), 409(m), and 4975(d)(3). Other
subsections of §§ 409 and 4975(e)(7) involve qualification
issues within the jurisdiction of EP Determinations.
-
Where the Commissioner, Tax Exempt and Government Entities Division
has authority to grant extensions of certain periods of time within which
the taxpayer must perform certain transactions (for example, the 90-day period
for reinvesting in employer securities under § 1.46-8(e)(10) of
the regulations), the taxpayer’s request for an extension of such time
period must be postmarked (or received, if hand delivered to the headquarters
office) no later than the expiration of the original time period. Thus, for
example, a request for an extension of the 90-day period under § 1.46-8(e)(10)
must be made before the expiration of this period. However, see section 6.04
below with respect to elections under § 301.9100-1 of the Procedure
and Administration Regulations.
In qualifications matters
.03 The Employee Plans Technical office ordinarily will not issue letter
rulings on matters involving a plan’s qualified status under §§ 401
through 420 and § 4975(e)(7). These matters are generally handled
by the Employee Plans Determinations program as provided in Rev. Proc. 2006-6,
this Bulletin, Rev. Proc. 93-10 and Rev. Proc. 93-12. Although the Employee
Plans Technical office will not ordinarily issue rulings on matters involving
plan qualification, a ruling may be issued where, (1) the taxpayer has demonstrated
to the Service’s satisfaction that the qualification issue involved
is unique and requires immediate guidance, (2) as a practical matter, it is
not likely that such issue will be addressed through the determination letter
process, and (3) the Service determines that it is in the interest of good
tax administration to provide guidance to the taxpayer with respect to such
qualification issue.
Request for extension of time for making an
election or for other relief under § 301.9100-1 of the Procedure
and Administration Regulations
.04 Employee Plans Technical or Exempt Organizations Technical will
consider a request for an extension of time for making an election or other
application for relief under § 301.9100-1 of the Procedure and Administration
Regulations even if submitted after the return covering the issue presented
in the § 301.9100-1 request has been filed and even if submitted
after an examination of the return has begun or after the issues in the return
are being considered by an appeals office or a federal court. In such a case,
EP or EO Technical will notify the Director, EP or EO Examinations.
Except for those requests pertaining to applications for recognition
of exemption, § 301.9100-1 requests, even those submitted after
the examination of the taxpayer’s return has begun, are letter ruling
requests and therefore should be submitted pursuant to this revenue procedure,
and require payment of the applicable user fee, referenced in section 9.02(14)
of this revenue procedure. In addition, the taxpayer must include the information
required by § 301.9100-3(e).
However, an election made pursuant to § 301.9100-2 is not
a letter ruling and does not require payment of any user fee. See § 301.9100-2(d).
Such an election pertains to an automatic extension of time under § 301.9100-1.
Issuance of a letter ruling before the issuance
of a regulation or other published guidance
.05 Unless the issue is covered by section 8 of this procedure, a letter
ruling may be issued before the issuance of a temporary or final regulation
or other published guidance that interprets the provisions of any act under
the following conditions:
(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 interest 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.
.06 The Service ordinarily does not issue rulings if, at the time the
ruling is requested, the identical issue is involved in the taxpayer’s
return for an earlier period, and that issue—
-
is being examined by the Director, EP or EO Examinations,
-
is being considered by an appeals office,
-
is pending in litigation in a case involving the taxpayer or related
taxpayer, or
-
has been examined by the Director, EP or EO Examinations or considered
by an appeals office, and the statutory period of limitation has not expired
for either assessment or filing a claim for a refund or a closing agreement
covering the issue of liability has not been entered into by the Director,
EP or EO Rulings and Agreements or by an appeals office.
If a return dealing with an issue for a particular year is filed while
a request for a ruling on that issue is pending, EP or EO Technical will issue
the ruling unless it is notified by the taxpayer that an examination of that
issue or the identical issue on an earlier year’s return has been started
by the Director, EP or EO Examinations. See section 9.05.
However, even if an examination has begun, EP or EO Technical ordinarily will
issue the letter ruling if the Director, EP or EO Examinations agrees, by
memorandum, to permit the ruling to be issued.
Generally not to business associations or groups
.07 EP or EO Technical 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 objectives
of, and standards for, the publication of revenue rulings and revenue procedures
in the Internal Revenue Bulletin.
EP or EO Technical, 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
.08 EP or EO Technical does not issue letter rulings to foreign governments
or their political subdivisions about the U.S. tax effects of their laws.
However, EP or EO Technical 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
.09 EP or EO Technical does not issue letter rulings on a matter involving
the federal tax consequences of any proposed federal, state, local, municipal,
or foreign legislation. EP or EO Technical, however, may provide general information
in response to an inquiry.
Not on certain matters under § 53.4958-6
of the Foundation and Similar Excise Taxes Regulations
.10 EO Technical does not issue letter rulings as to whether a compensation
or property transaction satisfies the rebuttable presumption that the transaction
is not an excess benefit transaction as described in § 53.4958-6
of the Foundation and Similar Excise Taxes Regulations.
.11 EP Technical does not issue letter rulings on the income tax (including
unrelated business income tax) or excise tax consequences of the contribution
of stock options to, or their subsequent exercise from, plans described in
Part I of Subchapter D of Subtitle A of the Code.
Generally not on EO joint venture with a for-profit
organization
.12 With the exception of when the issue is present in an initial application
for recognition of exemption, EO Technical does not issue letter rulings as
to whether a joint venture with a for-profit organization affects an organization’s
exempt status or results in unrelated business income.
Not on qualification of state run programs under
§ 529
.13 EO Technical will not issue letter rulings as to whether a state
run tuition program qualifies under § 529.
SECTION 7. UNDER WHAT CIRCUMSTANCES DOES EP
OR EO DETERMINATIONS ISSUE DETERMINATION LETTERS?
Circumstances under which determination letters
are issued
.01 Employee Plans or Exempt Organizations Determinations issues determination
letters only if the question presented is specifically answered by a statute,
tax treaty, or regulation, or by a conclusion stated in a revenue ruling,
opinion, or court decision published in the Internal Revenue Bulletin.
.02 In employee plans and exempt organizations matters, the EP or EO
Determinations office issues determination letters in response to taxpayers’
written requests on completed transactions. However, see section 13.08 of
this revenue procedure. 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 under examination.
In situations involving continuing transactions, such as whether an
ongoing activity is an unrelated trade or business, EP or EO Technical would
issue a ruling covering future tax periods and periods for which a return
had not yet been filed.
EP or EO Determinations does not issue determination letters on the
tax consequences of proposed transactions, except as provided in sections
7.03 and 7.04 below.
Under no circumstances will EP or EO Determinations 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.
In employee plans matters
.03 In employee plans matters, the Employee Plans Determinations office
issues determination letters on the qualified status of employee plans under
§§ 401, 403(a), 409 and 4975(e)(7), and the exempt status of
any related trust under § 501. See Rev. Proc.
2006-6, this Bulletin, Rev. Proc. 93-10 and Rev. Proc. 93-12.
In exempt organizations matters
.04 In exempt organizations matters, the Exempt Organizations Determinations
office issues determination letters involving:
-
Qualification for exempt status of organizations described in §§ 501
and 521 to the extent provided in Rev. Proc. 90-27, 1990-1 C.B. 514, as modified
by Rev. Proc. 2006-8;
-
Updated exempt status letter to reflect changes to an organization’s
name or address, or to replace a lost exempt status letter;
-
Classification of private foundation status as provided in Rev. Proc.
76-34, 1976-2 C.B. 656;
-
Reclassification of private foundation status, including update of private
foundation status at the end of an organization’s advance ruling period;
-
Recognition of unusual grants to certain organizations under §§ 170(b)(1)(A)(vi)
and 509(a)(2);
-
Requests for relief under § 301.9100-1 of the Procedure and
Administration Regulations in connection with applications for recognition
of exemption;
-
Whether certain organizations qualify as exempt operating foundations
described in § 4940(d);
-
Advance approval of certain set-asides described in § 4942(g)(2);
-
Advance approval under § 4945 of organizations’ grant
making procedures;
-
Advance approval of voter registration activities described in § 4945(f);
and
-
Whether an organization is exempt from filing annual information returns
under § 6033 as provided in Rev. Procs. 83-23, 1983-1 C.B. 687,
95-48, 1995-2 C.B. 418, and 96-10, 1996-1 C.B. 577;
Circumstances under which determination letters
are not issued
.05 EP or EO Determinations will not issue a determination letter in
response to any request if—
(1) it appears that the taxpayer has directed a similar inquiry to
EP or EO Technical;
(2) the same issue involving the same taxpayer or a related taxpayer
is pending in a case in litigation or before an appeals office;
(3) the determination letter is requested by an industry, trade association,
or similar group on behalf of individual taxpayers within the group (other
than subordinate organizations covered by a group exemption letter); or
(4) the request involves an industry-wide problem.
Requests involving returns already filed
.06 A request received by the Service on a question concerning a return
that is under examination, will be, in general, considered in connection with
the examination of the return. If a response is made to the request before
the return is examined, it will be considered a tentative finding in any later
examination of that return.
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 7.02 through 7.04 of
this revenue procedure are not reviewed by EP or EO Technical before they
are issued. If a taxpayer believes that a determination letter of this type
is in error, the taxpayer may ask EP or EO Determinations to reconsider the
matter or to request technical advice from EP or EO Technical as explained
in Rev. Proc. 2006-5, page , this Bulletin.
(1) In employee plans matters, the procedures for review of determination
letters relating to the qualification of employee plans involving §§ 401
and 403(a) are provided in Rev. Proc. 2006-6, Rev. Proc. 93-10 and Rev. Proc.
93-12.
(2) In exempt organizations matters, the procedures for the review of
determination letters relating to the exemption from federal income tax of
certain organizations under §§ 501 and 521 are provided in
Rev. Proc. 90-27, as modified by Rev. Proc. 2006-8.
SECTION 8. UNDER WHAT CIRCUMSTANCES DOES THE
SERVICE HAVE DISCRETION TO ISSUE LETTER RULINGS AND DETERMINATION LETTERS?
Ordinarily not in certain areas because of factual
nature of the problem
.01 The Service ordinarily will not issue a letter ruling or determination
letter in certain areas because of the factual nature of the problem involved
or because of other reasons. The Service may decline to issue a letter ruling
or a determination letter when appropriate in the interest of sound tax administration
or on other grounds whenever warranted by the facts or circumstances of a
particular case.
No “comfort” letter rulings
.02 No letter ruling will be issued with respect to an issue that is
clearly and adequately addressed by statute, regulations, decision of a court
of appropriate jurisdiction, revenue ruling, revenue procedure, notice or
other authority published in the Internal Revenue Bulletin. Instead of issuing
a letter ruling, the Service 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
.03 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
.04 The Service 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 office having jurisdiction for the matters on which the taxpayer is seeking
a letter ruling to discuss whether the Service will issue a letter ruling
on part of the transaction.
Not on partial terminations of employee plans
.05 The Service will not issue a letter ruling on the partial termination
of an employee plan. Determination letters involving the partial termination
of an employee plan may be issued.
Law requires ruling letter
.06 The Service will issue rulings on prospective or future transactions
if the law or regulations require a determination of the effect of a proposed
transaction for tax purposes.
Issues under consideration by PBGC or DOL
.07 A letter ruling or determination letter relating to an issue that
is being considered by the Pension Benefit Guaranty Corporation (PBGC) or
the Department of Labor (DOL), and involves the same taxpayer, shall be issued
at the discretion of the Service.
.08 The Service does not issue letter rulings or determination letters
on whether a cafeteria plan satisfies the requirements of § 125. See
also Rev. Proc. 2006-3, also in this Bulletin, for areas under
the jurisdiction of the Division Counsel/ Associate Chief Counsel (Tax Exempt
and Government Entities) involving cafeteria plans in which advance rulings
or determination letters will not be issued.
.09 See section 3.02 of Rev. Proc. 2006-6 for employee
plans matters on which determination letters will not be issued.
Domicile in a foreign jurisdiction
.10
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The Service is ordinarily unwilling to rule in situations where a taxpayer
or a related party is domiciled or organized in a foreign jurisdiction with
which the United States does not have an effective mechanism for obtaining
tax information with respect to civil tax examinations and criminal investigations,
which would preclude the Service from obtaining information located in such
jurisdiction that is relevant to the analysis or examination of the tax issues
involved in the ruling request.
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The provisions of subsection 8.10(1) above shall not apply if the taxpayer
or affected related party (a) consents to the disclosure of all relevant information
requested by the Service in processing the ruling request or in the course
of an examination to verify the accuracy of the representations made and to
otherwise analyze or examine the tax issues involved in the ruling request,
and (b) waives all claims to protection of bank and commercial secrecy laws
in the foreign jurisdiction with respect to the information requested by
the Service. In the event the taxpayer’s or related party’s consent
to disclose relevant information or to waive protection of bank or commercial
secrecy is determined by the Service to be ineffective or of no force and
effect, then the Service may retroactively rescind any ruling rendered in
reliance on such consent.
Employee Stock Ownership Plans
.11
(1) The Service does not issue a letter ruling on whether or not the
renewal, extension or refinancing of an exempt loan satisfies the requirements
of § 4975(d)(3) of the Internal Revenue Code.
(2) The Service does not issue a letter ruling on whether the pre-payment
of ESOP loans satisfies the requirements of § 4975(d)(3) other
than with respect to plan termination.
Indian Tribal Governments
.12 The Service does not issue letter rulings or determination letters
on whether or not an Indian tribal government satisfies the requirements of
§ 414(d).
SECTION 9. WHAT ARE THE GENERAL INSTRUCTIONS
FOR REQUESTING LETTER RULINGS AND DETERMINATION LETTERS?
.01 This section explains the general instructions for requesting letter
rulings and determination letters on all matters. Requests for letter rulings
and determination letters require the payment of the applicable user fee discussed
in section 9.02(14) of this revenue procedure.
Specific and additional instructions also apply to requests for letter
rulings and determination letters on certain matters. Those matters are listed
in section 10 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
.02
(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—
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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.);
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a complete statement of the business reasons for the transaction; and
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a detailed description of the transaction.
The Service will usually not rule on only one step of a larger integrated
transaction. See section 8.04 of this revenue procedure.
However, if such a letter ruling is requested, the facts, circumstances,
true copies of relevant documents, etc., relating to the entire transaction
must be submitted.
(2) Copies of all contracts, wills, deeds, agreements,
instruments, plan documents, and other documents. True copies
of all contracts, wills, deeds, agreements, instruments, plan documents, trust
documents, proposed disclaimers, and other documents pertinent to the transaction
must be submitted with the request.
Each document, other than the request, should be labelled alphabetically
and attached to the request in alphabetical order. 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.
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 § 267, or
of a member of an affiliated group of which the taxpayer is also a member
within the meaning of § 1504).
If the statement is affirmative, it must specify whether the issue—
(a) is being examined by the Service;
(b) has been examined and if so, whether or not the statutory period
of limitations has expired for either assessing tax or filing a claim for
refund or credit of tax;
(c) has been examined and if so, whether or not a closing agreement
covering the issue or liability has been entered into by the Service;
(d) is being considered by an appeals office in connection with a return
from an earlier period;
(e) has been considered by an appeals office in connection with a return
from an earlier period and if so, whether or not the statutory period of limitations
has expired for either assessing tax or filing a claim for refund or credit
of tax;
(f) has been considered by an appeals office in connection with a return
from an earlier period and whether or not a closing agreement covering the
issue or liability has been entered into by an appeals office;
(g) is pending in litigation in a case involving the taxpayer or a related
taxpayer; or
(h) in employee plans matters, is being considered by the Pension Benefit
Guaranty Corporation or the Department of Labor.
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 similar issue for the
taxpayer (or a related taxpayer within the meaning of § 267, or
a member of an affiliated group of which the taxpayer is also a member within
the meaning of § 1504) or a predecessor;
(b) the taxpayer, a related taxpayer, a predecessor, or any representatives
previously submitted the same or similar issue to the Service but withdrew
the request before a letter ruling or determination letter was issued;
(c) the taxpayer, a related taxpayer, or a predecessor previously submitted
a request involving the same or a similar issue that is currently pending
with the Service; or
(d) at the same time as this request, the taxpayer or a related taxpayer
is presently submitting another request involving the same or a similar issue
to the Service.
If the statement is affirmative for (a), (b), (c), or (d) of this section
9.02(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.
Statement of authorities supporting taxpayer’s
views
(6) Statement of supporting authorities. If
the taxpayer advocates a particular conclusion, an explanation of the grounds
for that conclusion and the relevant authorities to support it must also 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
view
(7) Statement of contrary authorities. The
taxpayer is also encouraged to inform the Service about, and discuss the implications
of, any authority believed to be contrary to the position advanced, such as
legislation (or pending legislation), tax treaties, court decisions, regulations,
revenue rulings, revenue procedures, notices 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
(8) Statement identifying pending legislation. At
the time of filing the request, the taxpayer must identify any pending legislation
that may affect the proposed transaction. In addition, if applicable 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 § 6110
(9) Statement identifying information to be deleted
from copy of letter ruling or determination letter for public inspection. The
text of certain letter rulings and determination letters is open to public
inspection under § 6110. The Service makes deletions from the text
before it is made available for inspection. To help the Service make the
deletions required by § 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 30 calendar days. See section 11.03
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
§ 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 or faxed 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 § 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 § 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 § 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 § 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 § 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 § 6110(g)(3)
must contain the date on which it is expected that the underlying transaction
will be completed. The request for delay under § 6110(g)(4) must
contain a statement from which the Commissioner of Internal Revenue may determine
that there are good reasons for the delay.
Section 6110(l)(1) states that § 6110 disclosure provisions
do not apply to any matter to which § 6104 applies. Therefore, letter
rulings, determination letters, technical advice memoranda, and related background
file documents dealing with the following matters (covered by § 6104)
are not subject to § 6110 disclosure provisions—
(i) An approved application for exemption under § 501(a) as
an organization described in § 501(c) or (d), or notice of status
as a political organization under § 527, together with any papers
submitted in support of such application or notice;
(ii) An application for exemption under § 501(a) with respect
to the qualification of a pension, profit-sharing or stock bonus plan, or
an individual retirement account described in § 408 or § 408A
, whether the plan or account has more than 25 or less than 26 participants,
or any application for exemption under § 501(a) by an organization
forming part of such a plan or an account;
(iii) Any document issued by the Internal Revenue Service in which the
qualification or exempt status of a plan or account is granted, denied, or
revoked or the portion of any document in which technical advice with respect
thereto is given;
(iv) Any application filed and any document issued by the Internal Revenue
Service with respect to the qualification or status of EP master and prototype
plans; and
(v) The portion of any document issued by the Internal Revenue Service
with respect to the qualification or exempt status of a plan or account of
a proposed transaction by such plan, or account.
(10) Signature by taxpayer or authorized representative. The
request for a letter ruling or determination letter must be signed and dated
by the taxpayer or the taxpayer’s authorized representative. Neither
a stamped signature nor a faxed signature is permitted.
Authorized representatives
(11) Authorized representatives. To
sign the request or to appear before the Service in connection with the request,
the representative must be:
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