SECTION 17. HOW MAY

RETROACTIVE EFFECT BE LIMITED?

Taxpayer may request that retroactivity be limited

Examples of when the taxpayer may request to limit retroactivity

Form of request to limit retroactivity for a continuing transaction—before examination

Form of request to limit retroactivity—in all other cases

except in fraud cases, sets forth the grounds on which the modification or revocation is being made and the reason why the modification or revocation is being applied retroactively.

.01 Under § 7805(b), the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as the Commissioner’s delegate, may prescribe the extent, if any, to which a technical advice memorandum will be applied without retroactive effect.

A taxpayer for whom a technical advice memorandum was issued or for whom a technical advice request is pending may request that the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate, limit the retroactive effect of any holding in the technical advice memorandum or of any subsequent modification or revocation of the technical advice memorandum.

.02 For example, a taxpayer may request the national office to exercise the authority under § 7805(b) to limit retroactivity if—

(1) a technical advice memorandum that concerns a continuing transaction is modified or revoked by, for example, a subsequent revenue ruling or final regulations;

(2) during the course of an examination of the taxpayer’s return by the district director or during consideration by the chief, appeals office, a taxpayer is informed that the district director or the chief, appeals office, will recommend that a technical advice memorandum, letter ruling, or determination letter be modified or revoked; or

(3) a holding in a technical advice memorandum does not modify or revoke a prior technical advice memorandum. When germane to a pending technical advice request, a request to limit the retroactive effect of the holding should be made as part of that pending technical advice request, either initially or at any time before the technical advice memorandum is issued by the national office. The national office will consider a request to limit the retroactive effect of the holding even if the request is not made before the technical advice memorandum is issued. However, taxpayers are strongly encouraged to request the application of § 7805(b) early during the consideration of the technical advice request by the national office.

.03 A request to limit the retroactive effect of the modification or revocation of a technical advice memorandum that concerns a continuing transaction, as described in section 17.02(1) of this revenue procedure, must be made in the form of a request for a letter ruling if the request is submitted before examination of the return that contains the transaction that is the subject of the request for the letter ruling. The requirements for a letter ruling request are given in sections 8 and 11.11 of Rev. Proc. 96-1.

.04 In all other cases, a taxpayer’s request to limit retroactivity must be made in the form of a request for technical advice.

The request must meet the general requirements of a technical advice request, which are given in sections 6 through 8 of this revenue procedure. The request must also—

(1) state that it is being made under § 7805(b);

(2) state the relief sought;

(3) explain the reasons and arguments in support of the relief sought (including a discussion of the five items listed in section 16.06 of this revenue procedure and any other factors as they relate to the taxpayer’s particular situation); and

(4) include any documents bearing on the request.

The taxpayer’s request, including the statement that the request is being made under § 7805(b), must be submitted to the district director or the chief, appeals office, who must then forward the request to the national office for consideration.

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Taxpayer’s right to a conference .05 When a request for technical advice concerns only the application of § 7805(b), the taxpayer has the right to a conference in the national office in accordance with the provisions of section 12 of this revenue procedure. In accordance with section 12.02 of this revenue procedure, the examining officer or appeals officer will be offered the opportunity to attend the conference on the § 7805(b) issue. Section 12.02 of this revenue procedure also provides that other Service representatives are allowed to participate in the conference.

If the request for application of § 7805(b) is included in the request for technical advice on the substantive issues or is made before the conference of right on the substantive issues, the § 7805(b) issues will be discussed at the taxpayer’s one conference of right.

If the request for the application of § 7805(b) is made as part of a pending technical advice request after a conference has been held on the substantive issues and the Service determines that there is justification for having delayed the request, then the taxpayer will have the right to one conference of right concerning the application of § 7805(b), with the conference limited to discussion of this issue only.