SECTION 10. HOW DOES THE

NATIONAL OFFICE HANDLE LETTER RULING REQUESTS?

Controls request and refers it to appropriate Assistant Chief Counsel or to the Office of Associate Chief Counsel (International)

Branch representative contacts taxpayer within 21 days

ply with the final regulations under § 263A; Rev. Proc. 94–49 generally applies to a taxpayer’s first taxable year beginning on or after January 1, 1994); Rev. Proc. 94–30, 1994–1 C.B. 621 (certain taxpayers seeking to change method for original issue discount for loans acquired before the applicable cut-off dates in Rev. Proc. 94–29 and Rev. Proc. 94–28); Rev. Proc. 94–29, 1994–1 C.B. 616 (certain taxpayers seeking to change to the principal-reduction method for loans acquired on or after a certain cutoff date); Rev. Proc. 94–28, 1994–1 C.B. 614 (certain taxpayers seeking to comply with the final regulations dealing with original issue discount for loans acquired on or after a certain cut-off date); Rev. Proc. 93–48, 1993–2 C.B. 580 (certain taxpayers required to change method of accounting for notional principal contracts entered into after December 12, 1993); Rev. Proc. 93–13, 1993–1 C.B. 482 (certain taxpayers required to change method for deducting amounts owed to related foreign persons in order to comply with § 267(a)(3)); Rev. Proc. 92–98, 1992–2 C.B. 512 (certain accrual method taxpayers selling multi-year service warranty contracts seeking to elect the service warranty income method); Rev. Proc. 92–75, 1992–2 C.B. 448 (certain taxpayers, other than those required to use inventories, seeking to change to an accrual method); Rev. Proc. 92–74, 1992–2 C.B. 442 (certain taxpayers, required to use inventories, seeking to change to an accrual method); Rev. Proc. 92–67, 1992–2 C.B. 429 (certain taxpayers with one or more market discount bonds seeking to make a constant interest rate election or seeking to make or revoke an election under § 1278(b)); Rev. Proc. 92–29, 1992–1 C.B. 748 (certain taxpayers seeking to use an alternative method under § 461(h) for the inclusion of common improvement costs in basis); Rev. Proc. 91–51, 1991–2 C.B. 779 (certain taxpayers that sell mortgages and retain rights to service the mortgages); Rev. Proc. 91–49, 1991–2 C.B. 777 (holders of certain mortgages that are stripped bonds); Rev. Proc. 91–31, 1991–1 C.B. 566 (certain utilities holding customer deposits); Rev. Proc. 90–63, 1990–2 C.B. 664 (certain taxpayers changing their accounting treatment of package design costs); Rev. Proc. 90–37, 1990–2 C.B. 361 (certain taxpayers with interest income from short-term loans); Rev. Proc. 89–46, 1989–2 C.B. 597 (cash basis taxpayers with certain United States savings bonds); Rev. Proc. 88–15, 1988–1 C.B. 683 (certain taxpayers seeking to discontinue LIFO inventory method); Rev. Proc. 85–8, 1985–1 C.B. 495 (certain taxpayers seeking to change from specific charge-off method to reserve method for bad debts); Rev. Proc. 84–76, 1984–2 C.B. 751 (taxpayers seeking to treat prepaid subscription income under the provisions of § 455); Rev. Proc. 84–30, 1984–1 C.B. 482 (taxpayers who used the Rule of 78’s for interest on consumer loans); Rev. Proc. 84–29, 1984–1 C.B. 480 (individual borrowers who reported interest deductions in accordance with the Rule of 78’s); and Rev. Proc. 74–11, 1974–1 C.B. 420 (taxpayers seeking to change their method of depreciation accounting for property subject to § 167).

The national office will issue letter rulings on the matters and under the circumstances explained in sections 3 and 5 of this revenue procedure and in the manner explained in this section.

.01 All requests for letter rulings will be controlled by the Technical Services Staff of the Assistant Chief Counsel (Corporate) (CC:DOM:CORP:T). That office will examine the incoming documents for completeness, process the user fee, and forward the file to the appropriate Assistant Chief Counsel or, for letter ruling requests under the jurisdiction of the Associate Chief Counsel (International), to the Office of Associate Chief Counsel (International). The Assistant Chief Counsel’s office or the Office of Associate Chief Counsel (International), as appropriate, will assign the letter ruling request to one of its branches.

.02 Within 21 calendar days after a letter ruling request has been received in the branch having jurisdiction, a representative of the branch will discuss the procedural issues in the letter ruling request with the taxpayer or, if the request includes a properly executed power of attorney, with the authorized representative unless the power of attorney provides otherwise. If the case is complex or a number of issues are involved, it may not be possible for the branch representative to discuss the substantive issues during this initial contact. However, when possible, for each issue within the branch’s jurisdiction, the branch representative will tell the taxpayer—

(1) whether the branch representative will recommend that the Service rule as the taxpayer requested, rule adversely on the matter, or not rule;

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Notifies taxpayer if any issues have been referred to other branches

Determines if transaction can be modified to obtain favorable letter ruling

Is not bound by informal opinion expressed

Tells taxpayer if request lacks essential information during initial contact

Information must be submitted within 21 calendar days

21-day period will be extended if justified and approved

(2) whether the taxpayer should submit additional information to enable the Service to rule on the matter; or

(3) whether, because of the nature of the transaction or the issue presented, a tentative conclusion on the issue cannot be reached.

Except for cases involving a request for change in accounting method or accounting period, the 21 calendar day procedure applies to: all matters within the jurisdiction of the Assistant Chief Counsel (Corporate), the Assistant Chief Counsel (Income Tax and Accounting), the Assistant Chief Counsel (Passthroughs and Special Industries), the Associate Chief Counsel (Employee Benefits and Exempt Organiza- tions), the Associate Chief Counsel (Enforcement Litigation), and the Associate Chief Counsel (International); and all matters within the jurisdiction of the Assistant Chief Counsel (Financial Institutions and Products), except cases concerning insurance issues requiring actuarial computations.

.03 If the letter ruling request involves matters within the jurisdiction of more than one branch, a representative of the branch that received the request will tell the taxpayer within the initial 21 days—

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

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

.04 If a less than fully favorable letter ruling is indicated, the branch representative will tell the taxpayer whether minor changes in the transaction or adherence to certain published positions would bring about a favorable ruling. The branch representative may also tell the taxpayer the facts that must be furnished in a document to comply with Service requirements. However, the branch representative will not suggest precise changes that would materially alter the form of the proposed transaction or materially alter a taxpayer’s proposed accounting method or accounting period.

If, at the end of this discussion, the branch representative determines that a meeting in the national office would be more helpful to develop or exchange information, a meeting will be offered and an early meeting date arranged. When offered, this meeting is in addition to the taxpayer’s conference of right that is described in section 10.09 of this revenue procedure.

.05 The Service will not be bound by the informal opinion expressed by the branch representative or any other authorized Service representative, and such an opinion cannot be relied upon as a basis for obtaining retroactive relief under the provisions of § 7805(b).

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

(1) If the request lacks essential information, which may include additional information needed to satisfy the procedural requirements of this revenue procedure, as well as substantive changes to transactions or documents needed from the taxpayer, the branch representative will tell the taxpayer during the initial contact that the request will be closed if the Service does not receive the information within 21 calendar days unless an extension of time is granted. See sections 10.07(1) and (2) of this revenue procedure for instructions on submissions of additional information.

(2) An extension of the 21-day period will be granted only if justified in writing by the taxpayer and approved by the branch chief, senior technician reviewer (or senior technical reviewer), or assistant to the branch chief (or assistant branch chief) of the branch to which the case is assigned. A request for extension should be submitted before the end of the 21-day period. If unusual circumstances close to the end of the 21-day period make a written request impractical, the taxpayer should notify the national office within the 21-day period that there is a problem and that the written request for extension will be coming soon. The taxpayer will be told promptly, and later in writing, of the approval or denial of the requested extension. If the extension request is denied, there is no right of appeal.

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Letter ruling request closed if the taxpayer does not submit information

Letter ruling request mistakenly sent to district director

Requires prompt submission of additional information requested after initial contact

Address to send additional information

21-day period will be extended if justified and approved

(3) If the taxpayer does not submit the information requested during the initial contact within the time provided, the letter ruling request will be closed and the taxpayer will be notified in writing. If the information is received after the request is closed, the request will be reopened and treated as a new request as of the date the information is received. However, the taxpayer must pay another user fee before the case can be reopened.

(4) A request for a letter ruling sent to the district director that does not comply with the provisions of this revenue procedure will be returned by the district director so that the taxpayer can make corrections before sending it to the national office.

.07 (1) Material facts furnished to the Service by telephone or fax, or orally at a conference, must be promptly confirmed by letter to the Service with a declaration that the information is provided under penalties of perjury in the form described in section 8.01(13) of this revenue procedure. This confirmation and any additional information requested by the Service that is not part of the information requested during the initial contact must be furnished within 21 calendar days to be considered part of the request.

To facilitate prompt action on letter ruling requests, taxpayers are encouraged to submit additional information by fax as soon as the information is available. The Service representative who requests additional information can provide a telephone number to which the information can be faxed. A copy of this information and a signed perjury statement, however, must be mailed or delivered to the Service.

(2) Additional information should be sent to:

Internal Revenue Service ADDITIONAL INFORMATION Attn: [Name, office symbols, and room number of the Service representative who requested the information] P.O. Box 7604 Ben Franklin Station Washington, DC 20044

However, for cases involving a request for change in accounting method or period under the jurisdiction of the Assistant Chief Counsel (Income Tax and Accounting), and a request for an extension of time under § 301.9100–1 on such cases, the additional information should be sent to:

Internal Revenue Service ADDITIONAL INFORMATION Attn: [Name, office symbols, and room number of the Service representative who requested the information] P.O. Box 14095 Ben Franklin Station Washington, DC 20044

For all cases, the additional information should include the name, office symbols, and room number of the Service representative who requested the information, and the taxpayer’s name and the case control number, which the Service representative can provide.

(3) An extension of the 21-day period will be granted only if justified in writing by the taxpayer and approved by the branch chief, senior technician reviewer (or senior technical reviewer), or assistant to the branch chief (or assistant branch chief) of the branch to which the case is assigned. A request for extension should be submitted before the end of the 21-day period. If unusual circumstances close to the end of the 21-day period make a written request impractical, the taxpayer should notify the national office within the 21-day period that there is a problem and that the written request for extension will be coming soon. The taxpayer will be told promptly, and

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If taxpayer does not submit additional information

Schedules a conference if requested by taxpayer

Permits taxpayer one conference of right

Disallows verbatim recording of conferences

Makes tentative recommendations on substantive issues

later in writing, of the approval or denial of the requested extension. If the extension request is denied, there is no right of appeal.

(4) If the taxpayer does not follow the instructions for submitting additional information or requesting an extension within the time provided, a letter ruling will be issued on the basis of the information on hand or, if appropriate, no letter ruling will be issued. When the Service decides not to issue a letter ruling because essential information is lacking, the case will be closed and the taxpayer notified in writing. If the Service receives the information after the letter ruling request is closed, the request may be reopened and treated as a new request. However, the taxpayer must pay another user fee before the case can be reopened.

.08 A taxpayer may request a conference regarding a letter ruling request. Normally, a conference is scheduled only when the national office considers it to be helpful in deciding the case or when an adverse decision is indicated. If conferences are being arranged for more than one request for a letter ruling involving the same taxpayer, they will be scheduled so as to cause the least inconvenience to the taxpayer. As stated in section 8.02(6) of this revenue procedure, a taxpayer who wants to have a conference on the issue or issues involved should indicate this in writing when, or soon after, filing the request.

If a conference has been requested, the taxpayer will be notified by telephone, if possible, of the time and place of the conference, which must then be held within 21 calendar days after this contact. Instructions for requesting an extension of the 21-day period and notifying the taxpayer or the taxpayer’s representative of the Service’s approval or denial of the request for extension are the same as those explained in section 10.07(3) of this revenue procedure regarding providing additional information.

.09 A taxpayer is entitled, as a matter of right, to only one conference in the national office, except as explained under section 10.12 of this revenue procedure. This conference normally will be held at the branch level and will be attended by a person who, at the time of the conference, has the authority to sign the letter ruling in his or her own name or for the branch chief.

When more than one branch has taken an adverse position on an issue in a letter ruling request or when the position ultimately adopted by one branch will affect that adopted by another, a representative from each branch with the authority to sign in his or her own name or for the branch chief will attend the conference. If more than one subject is to be discussed at the conference, the discussion will constitute a conference on each subject.

To have a thorough and informed discussion of the issues, the conference usually will be held after the branch has had an opportunity to study the case. However, at the request of the taxpayer, the conference of right may be held earlier.

No taxpayer has a right to appeal the action of a branch to an assistant chief counsel or to any other official of the Service. But see section 10.12 of this revenue procedure for situations in which the Service may offer additional conferences.

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

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

.11 The senior Service representative present at the conference ensures that the taxpayer has the opportunity to present views on all the issues in question. A Service representative explains the Service’s tentative decision on the substantive issues and the reasons for that decision. If the taxpayer asks the Service to limit the retroactive effect of any letter ruling or limit the revocation or modification of a prior letter ruling, a Service representative will discuss the recommendation concerning this issue and the reasons for the recommendation. The Service representatives will not make a commitment regarding the conclusion that the Service will finally adopt.

May offer additional conferences .12 The Service will offer the taxpayer an additional conference if, after the conference of right, an adverse holding is proposed, but on a new issue, or on the same issue but on different grounds from those discussed at the first conference. There is no right to another conference when a proposed holding is reversed at a higher level

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Requires written confirmation of information presented at conference

May schedule pre-submission conference

May, under limited circumstances, schedule a conference to be held by telephone

May request draft of proposed letter ruling near the completion of the ruling process

Taxpayer may also submit draft on a word processing disk

with a result less favorable to the taxpayer, if the grounds or arguments on which the reversal is based were discussed at the conference of right.

The limit on the number of conferences to which a taxpayer is entitled does not prevent the Service from offering additional conferences, including conferences with an official higher than the branch level, if the Service decides they are needed. Such conferences are not offered as a matter of course simply because the branch has reached an adverse decision. In general, conferences with higher level officials are offered only if the Service determines that the case presents significant issues of tax policy or tax administration and that the consideration of these issues would be enhanced by additional conferences with the taxpayer.

.13 The taxpayer should furnish to the national office any additional data, reasoning, precedents, etc., that were proposed by the taxpayer and discussed at the conference but not previously or adequately presented in writing. The taxpayer must furnish the additional information within 21 calendar days from the date of the conference. See section 10.07 of this revenue procedure for instructions on submission of additional information. If the additional information is not received within that time, a letter ruling will be issued on the basis of the information on hand or, if appropriate, no ruling will be issued.

Procedures for requesting an extension of the 21-day period and notifying the taxpayer or the taxpayer’s representative of the Service’s approval or denial of the requested extension are the same as those stated in section 10.07(3) of this revenue procedure regarding submitting additional information.

.14 Sometimes it will be advantageous to both the Service and the taxpayer to hold a conference before the taxpayer submits the letter ruling request to discuss substantive or procedural issues relating to a proposed transaction. Such conferences are held only when the taxpayer actually intends to make a request and only on a time-available basis. Generally, the taxpayer will be asked to provide a draft of the letter ruling request or other detailed written description of the proposed transaction before the pre-submission conference.

Any discussion of substantive issues at a pre-submission conference is advisory only, is not binding on the Service, and cannot be relied upon as a basis for obtaining retroactive relief under the provisions of § 7805(b). A letter ruling request submitted following a pre-submission conference will not necessarily be assigned to the branch that held the pre-submission conference.

.15 Infrequently, taxpayers request that their conference of right be held by telephone. This may occur, for example, when a taxpayer wants a conference of right but believes that the issue involved does not warrant incurring the expense of traveling to Washington, DC. If a taxpayer makes such a request, the branch chief, senior technician reviewer (or senior technical reviewer), or assistant to the branch chief (or assistant branch chief) of the branch to which the case is assigned will decide if it is appropriate in the particular case to hold the conference of right by telephone. If the request is approved, the taxpayer will be advised when to call the Service representatives (not a toll-free call).

.16 To accelerate issuance of letter rulings, in appropriate cases near the completion of the ruling process, the Service representative may request that the taxpayer or the taxpayer’s representative submit a proposed draft of the letter ruling on the basis of discussions of the issues. The taxpayer, however, is not required to prepare a draft letter ruling to receive a letter ruling.

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

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

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Advises the taxpayer of conclusions and, if the Service will rule adversely, offers the taxpayer the opportunity to withdraw the letter ruling request