| Revenue Procedure 2005-68 |
October 11, 2005 |
Guidelines for Requesting Expedited Processing
of Letter Ruling Requests
This revenue procedure amplifies Rev. Proc. 2005-1, 2005-1 I.R.B. 1,
which explains how the Service provides advice to taxpayers on issues under
the jurisdiction of the Associate Chief Counsel (Corporate), the Associate
Chief Counsel (Financial Institutions and Products), the Associate Chief Counsel
(Income Tax and Accounting), the Associate Chief Counsel (International),
the Associate Chief Counsel (Passthroughs and Special Industries), the Associate
Chief Counsel (Procedure and Administration), and the Division Counsel/Associate
Chief Counsel (Tax Exempt and Government Entities).
This revenue procedure also amplifies Rev. Proc. 2005-3, 2005-1 I.R.B.
118, which sets forth the areas of the Internal Revenue Code under the jurisdiction
of the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial
Institutions and Products), the Associate Chief Counsel (Income Tax and Accounting),
the Associate Chief Counsel (Passthroughs and Special Industries), the Associate
Chief Counsel (Procedure and Administration), and the Division Counsel/Associate
Chief Counsel (Tax Exempt and Government Entities) relating to issues on which
the Internal Revenue Service will not issue letter rulings or determination
letters.
Section 7 of Rev. Proc. 2005-1 provides general instructions for requesting
letter rulings and determination letters. Section 7.02(4) of Rev. Proc. 2005-1
states that the Service ordinarily processes requests for letter rulings in
order of the date received, and that expedited handling is granted only in
rare and unusual cases.
Section 8.05(1) of Rev. Proc. 2005-1 provides that if a ruling request
lacks essential information, the branch representative will tell the taxpayer
that the request will be closed if the Associate does not receive the information
within 21 calendar days from the date the information is requested, unless
an extension of time is granted.
Section 3.01 of Rev. Proc. 2005-3 outlines specific questions and problems
on which the Internal Revenue Service will not issue rulings or determination
letters. Section 3.01(31) of Rev. Proc. 2005-3 provides that the Service
will not rule on whether a transaction qualifies under � 332, � 351
or � 1036 for nonrecognition treatment, or whether it constitutes
a corporate reorganization within the meaning of � 368(a)(1)(A)
(including a transaction that qualifies under � 368(a)(1)(A) by
reason of � 368(a)(2)(D) or � 368(a)(2)(E)), � 368(a)(1)(B),
� 368(a)(1)(C), � 368(a)(1)(E), or � 368(a)(1)(F),
and whether various consequences (such as nonrecognition and basis) result
from the application of that section, unless the Service determines that there
is a significant issue that must be resolved to decide those matters. If
the Service determines that there is a significant issue, and to the extent
the transaction is not described in another no-rule section, the Service will
rule on the entire transaction, and not just the significant issue. Requests
for rulings on whether a transaction constitutes an acquisitive corporate
reorganization within the meaning of � 368(a)(1)(D) or � 368(a)(1)(G)
or whether a transaction constitutes a corporate distribution under � 355
are not subject to the significant issue limitation.
Section 3.01(31) of Rev. Proc. 2005-3 further provides that a significant
issue is an issue of law that meets the following tests: (1) the issue is
not clearly and adequately addressed by a statute, regulation, decision of
a court, tax treaty, revenue ruling, revenue procedure, notice, or other authority
published in the Internal Revenue Bulletin; (2) the resolution of the issue
is not essentially free from doubt; and (3) the issue is legally significant
and germane to determining the major tax consequences of the transaction.
The significant issue limitation set forth above is designed to increase
the time available to the Service for processing letter rulings on transactions
that involve the most difficult issues. Despite this willingness to rule
on these transactions, the Service understands that taxpayers often execute
transactions intended to qualify as reorganizations under � 368
that involve significant issues and distributions intended to qualify under
� 355 without submitting letter ruling requests. Based on numerous
comments from taxpayers and their representatives, the Service has concluded
that this practice is attributable, in part, to the length of time typically
associated with the letter ruling process.
The Service believes that it can better serve taxpayers and more effectively
administer the internal revenue laws by resolving these issues through the
private letter ruling program. Accordingly, to encourage taxpayer participation
in this program, Section 7.02(4) of Rev. Proc. 2005-1 is amplified to provide
expedited treatment for letter rulings on transactions intended to meet the
requirements of either � 368 or � 355 for which such treatment
is requested pursuant to this revenue procedure, subject to the restrictions
of Section 3.01(31) of Rev. Proc. 2005-3. Instead of the typical processing
period, the Service will endeavor to complete and issue letter rulings on
these transactions within ten weeks from receipt of the request. It is the
intention of the Service to process on an expedited basis all letter ruling
requests on these transactions, provided the requirements of this revenue
procedure are met. If these requirements are not met, the Service will process
the letter ruling request in the usual manner. If the transaction involves
an issue or issues not entirely within the jurisdiction of the Associate Chief
Counsel (Corporate), the ruling request will be processed in the usual manner
unless each Associate Chief Counsel having jurisdiction over the transaction
agrees to process the ruling request on the expedited basis provided herein.
Section 8.05(1) of Rev. Proc. 2005-1 is amplified to provide that if
an expedited ruling request lacks essential information, the branch representative
will tell the taxpayer that the information must be submitted within 10 calendar
days from the date of the request for additional information, unless an extension
of time is granted. If the information is not submitted within 10 calendar
days (with any extension) but is submitted within 21 calendar days (with any
extension), the ruling request will be processed in the usual manner.
This revenue procedure also clarifies the term �significant issue,�
as defined in Section 3.01(31) of Rev. Proc. 2005-3, for all transactions
to which the significant issue requirement applies, including transactions
not being considered on an expedited basis.
This is a pilot program that applies to ruling requests postmarked or,
if not mailed, received after September 14, 2005. This pilot program will
be evaluated by the Service periodically.
SECTION 3. REQUEST FOR COMMENTS
The Service requests comments regarding the pilot program. Comments
should refer to Rev. Proc. 2005-68, and should be submitted to:
Internal
Revenue Service
P.O. Box 7604
Ben Franklin Station
Washington,
DC 20044
Attn: CC:PA:RU
Room 5226
or electronically via the Service internet site at:
[email protected] (the Service
comments e-mail address). All comments will be available for public inspection
and copying.
.01 Rev. Proc. 2005-1 is amplified by adding the following sentence
to the first paragraph of section 7.02(4):
Notwithstanding the previous sentence, expedited handling may be available
for certain transactions intended to qualify as reorganizations described
in � 368 or distributions described in � 355 as provided
in Rev. Proc. 2005-68, Section 4.02.
.02 Rev. Proc. 2005-1 is amplified by adding the following paragraphs
to section 7.02(4):
EXPEDITED LETTER RULING PROCESS FOR REORGANIZATIONS AND FOR DISTRIBUTIONS
UNDER SECTION 355: If a taxpayer requests a letter ruling on whether a transaction
constitutes a reorganization under � 368 or a distribution under
� 355 and asks for expedited handling pursuant to this provision,
the Service will grant expedited handling. If expedited handling is granted,
the Service will endeavor to complete and issue the letter ruling subject
to Section 3.01(3) of Rev. Proc. 2005-3 within ten weeks after receiving the
ruling request. If the transaction involves an issue or issues not entirely
within the jurisdiction of the Associate Chief Counsel (Corporate), the letter
ruling request will be processed in the usual manner, unless each Associate
Chief Counsel having jurisdiction over an issue in the transaction agrees
to process the letter ruling request on an expedited basis.
To initiate this process, the taxpayer must (i) state at the top of
the first page of the request letter: �Expedited Handling is Requested�
and (ii) provide the Associate Chief Counsel (Corporate) with a copy of the
request letter by facsimile transmission (fax), without attachments, when
the formal request is submitted. The fax copy should be sent to (202) 622-7707,
Attn: CC:CORP (Expedite). In due course, the taxpayer must also provide the
Associate Chief Counsel (Corporate) with a draft ruling letter setting forth
the relevant facts, applicable representations, and requested rulings in a
manner consistent with the format used by the Associate Chief Counsel (Corporate)
in similar cases. See section 7.02(3) of Rev. Proc. 2005-1. In addition,
the taxpayer must ensure that the formal submission of its letter ruling request
complies with all of the requirements of Rev. Proc. 2005-1 (including the
requirements of other applicable guidelines set forth in Appendix E of Rev.
Proc. 2005-1). See section 8.05(1) of Rev. Proc. 2005-1 for a modified requirement
regarding the submission of additional information. If the taxpayer does
not satisfy the requirements of this paragraph, the letter ruling request
will not be processed on an expedited basis, but instead will be processed
in the usual manner.
.03 Rev. Proc. 2005-1 is also amplified by adding the following paragraph
to section 8.05(1):
The Service will not endeavor to process a ruling request on the expedited
basis provided by Rev. Proc. 2005-68, Section 4.02, unless the branch representative
in Associate Chief Counsel (Corporate) receives all requested additional information
within 10 calendar days from the date of the request
for such additional information, unless an extension of time is granted.
If the information is not provided within 10 calendar days (with any extension)
but is provided within 21 calendar days (with any extension), the letter ruling
request will cease to be processed on an expedited basis and instead will
be processed in the usual manner.
.04 Rev. Proc. 2005-3 is amplified by adding the following sentence
as the last sentence in the paragraph entitled �Significant Issue�
in section 3.01(31):
An issue of law will be considered not clearly and adequately addressed
by the authorities above, and its resolution will not be essentially free
from doubt when, because of concern over a legal issue (as opposed to a factual
issue), taxpayer�s counsel is unable to render an unqualified opinion
on what the tax consequences of the transaction will be.
SECTION 5. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2005-1, 2005-1 I.R.B. 1 and Rev. Proc. 2005-3, 2005-1 I.R.B.
118 are amplified.
SECTION 6. EFFECTIVE DATE
This revenue procedure applies to all ruling requests postmarked or,
if not mailed, received after September 14, 2005.
SECTION 7. PAPERWORK REDUCTION ACT
The collections of information in this revenue procedure have been previously
reviewed and approved by the Office of Management and Budget (OMB) in accordance
with the Paperwork Reduction Act (44 U.S.C. 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 OMB control number.
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 tax law. Generally tax returns and tax return information
are confidential, as required by � 6103.
SECTION 8. DRAFTING INFORMATION
The principal author of this revenue procedure is Emidio J. Forlini,
Jr. of the Office of Associate Chief Counsel (Corporate). For further information
regarding this revenue procedure, contact Mr. Forlini at (202) 622-7930 (not
a toll-free call).
Internal Revenue Bulletin 2005-41
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