SECTION 5. UNDER WHAT — Internal Revenue Bulletin 1996-1

CIRCUMSTANCES DOES THE NATIONAL OFFICE ISSUE LETTER RULINGS?

.03 Issues under the jurisdiction of the Associate Chief Counsel (Enforcement Litigation) include issues only under the jurisdiction of the Assistant Chief Counsel (General Litigation). Issues under the Assistant Chief Counsel (General Litigation) include those that involve collection.

.04 Issues under the jurisdiction of the Associate Chief Counsel (International) include the tax treatment of nonresident aliens and foreign corporations; withholding of tax on nonresident aliens and foreign corporations; foreign tax credit; determination of sources of income; income from sources without the United States; subpart F questions; domestic international sales corporations (DISCs); foreign sales corporations (FSCs); international boycott determinations; treatment of certain passive foreign investment companies; and income affected by treaty.

For the procedures to obtain advance pricing agreements under § 482, see Rev. Proc. 91–22, 1991–1 C.B. 526, as corrected by Rev. Proc. 91–22A, 1991–1 C.B. 534, and as modified by Rev. Proc. 96–1 (this revenue procedure) and Rev. Proc. 96–8, this Bulletin.

For the procedures concerning competent authority relief arising under the application and interpretation of tax treaties between the United States and other countries, see Rev. Proc. 91–23. However, competent authority consideration for an advance pricing agreement should be requested under Rev. Proc. 91–22.

.01 The procedures for obtaining letter rulings, etc., that apply to federal alcohol, tobacco, and firearms taxes under subtitle E of the Code are under the jurisdiction of the Bureau of Alcohol, Tobacco and Firearms. ( See 26 C.F.R. § 601.328 (1995)).

.02 The procedures for obtaining letter rulings, determination letters, etc., on employee plans and exempt organizations are under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations). See Rev. Proc. 96–4, this Bulletin. See also Rev. Proc. 96–6, this Bulletin, for the procedures for issuing determination letters on the qualified status of pension, profit-sharing, stock bonus, annuity, and employee stock ownership plans under §§ 401, 403(a), 409, and 4975(e)(7), and the status for exemption of any related trusts or custodial accounts under § 501(a).

For the user fee requirements applicable to requests for letter rulings, determination letters, etc., under the jurisdiction of the Assistant Commissioner (Employee Plans and Exempt Organizations), see Rev. Proc. 96–8.

In income and gift tax matters .01 In income and gift tax matters, the national office generally issues a letter ruling on a proposed transaction and on a completed transaction if the letter ruling request is submitted before the return is filed for the year in which the transaction that is the subject of the request was completed.

(1) Circumstances under which a letter ruling is not ordinarily issued. The national office ordinarily does not issue a letter ruling if, at the time the letter ruling is requested, the identical issue is involved in the taxpayer’s return for an earlier period and that issue—

(a) is being examined by a district director; (b) is being considered by an appeals office; (c) is pending in litigation in a case involving the taxpayer or a related taxpayer; (d) has been examined by a district director or considered by an appeals office and the statutory period of limitations has not expired for assessment or for filing a claim for refund or credit of tax; or

(e) has been examined by a district director or considered by an appeals office and a closing agreement covering the issue or liability has not been entered into by a district director or by an appeals office.

15 Sec.

Request for extension of time for making an election or for other relief under § 301.9100–1 of the Procedure and Administration Regulations

If a return dealing with an issue for a particular year is filed while a request for a letter ruling on that issue is pending, the national office will issue the letter ruling unless it is notified by the taxpayer or otherwise learns that an examination of that issue or the identical issue on an earlier year’s return has been started by a district director. See section 8.04 of this revenue procedure. However, even if an examination has begun, the national office ordinarily will issue the letter ruling if the district director agrees, by memorandum, to the issuance of the letter ruling.

(2) No letter ruling on a property conversion after return filed. The national office does not issue a letter ruling on the replacement of involuntarily converted property, whether or not the property has been replaced, if the taxpayer has already filed a return for the taxable year in which the property was converted. However, the district director may issue a determination letter in this case. See section 6.01 of this revenue procedure.

(3) Entity classifications. The national office generally does not issue a letter ruling on the classification of an organization if a return has been filed for the organization for an earlier period. However, the national office will consider letter ruling requests concerning the classification of—

(a) an existing organization as a partnership. See Rev. Proc. 92–35, 1992–1 C.B. 790, as amplified by Rev. Proc. 94–46, 1994–2 C.B. 688; Rev. Proc. 89–12, 1989–1 C.B. 798, as supplemented by Rev. Proc. 92–33, 1992–1 C.B. 782, as modified by Rev. Proc. 95–10, 1995–1 C.B. 501, and as amplified by Rev. Proc. 94–46 and Rev. Proc. 91–13, 1991–1 C.B. 477 (checklist questionnaire); and Rev. Proc. 86–12, 1986– 1 C.B. 534; or (b) a domestic or foreign limited liability company as a partnership for federal tax purposes. See Rev. Proc. 95–10.

.02 The national office 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, a § 301.9100–1 request is a letter ruling request. Therefore, the § 301.9100–1 request should be submitted pursuant to this revenue procedure.

However, an election made pursuant to section 4 of Rev. Proc. 92–85, 1992–2 C.B. 490, as modified by Rev. Proc. 96–1 (this revenue procedure), and Rev. Proc. 93–28, 1993–2 C.B. 344, is not a letter ruling request and does not require payment of any user fee. See section 14.03(1) of this revenue procedure. Such an election pertains to an automatic extension of time under § 301.9100–1.

(1) Format of request. A § 301.9100–1 request (other than an election made pursuant to section 4 of Rev. Proc. 92–85) must be in the general form of, and meet the general requirements for, a letter ruling request. These requirements are given in section 8 of this revenue procedure. In addition, the § 301.9100–1 request must—

(a) include the information required by Rev. Proc. 92–85; and (b) state whether the taxpayer’s return covering the issue presented in the § 301.9100–1 request is being examined by a district director or whether the issues in the return are being considered by an appeals office.

(2) Statuate of limitations. The running of any applicable period of limitations is not suspended for the period during which a § 301.9100–1 request has been filed. If the period of limitations on assessment under § 6501(a) for the year for which a timely filed election would have been made or for any affected succeeding year will expire before receipt of a § 301.9100–1 letter ruling, the Service ordinarily will not issue a § 301.9100–1 ruling. See section 5.02(2) of Rev. Proc. 92–85. Therefore, the taxpayer must secure a consent under § 6501(c)(4) to extend the period of limitations on assessment. Note that the filing of a claim for refund under § 6511 does not extend the period of limitations on assessment. If § 301.9100–1 relief is granted, the Service may require the taxpayer to consent to an extension of the period of limitations on assessment. See section 8.02 of Rev. Proc. 92–85.

(3) Taxpayer must notify national office if examination of return begins while request is pending. If an examination of any return covering the issue presented in the § 301.9100–1 request is started while a § 301.9100–1 request is pending, the taxpayer must notify the national office. See section 8.04 of this revenue procedure.

Sec. 16

Determinations under § 999(d) of the Internal Revenue Code

(4) National office will notify district office or appeals office of § 301.9100–1 request if return is being examined or is being considered by an appeals office. If the taxpayer’s return covering the issue presented in the § 301.9100–1 request is being examined by a district director or considered by an appeals office, the national office will notify the appropriate district office or appeals office that a § 301.9100–1 request has been submitted to the national office. The examining officer or the appeals officer is not authorized to deny consideration of a § 301.9100–1 request. The letter ruling will be mailed to the taxpayer and a copy will be sent to the appropriate district office or appeals office.

.03 Under Rev. Proc. 77–9, 1977–1 C.B. 542, the Office of Associate Chief Counsel (International) issues determinations under § 999(d) that may deny certain benefits of the foreign tax credit, deferral of earnings of foreign subsidiaries and domestic international sales corporations (DISCs), and tax exemption for foreign trade income of a foreign sales corporation or a small foreign sales corporation (FSC or small FSC) to a person, if that person, a member of a controlled group (within the meaning of § 993(a)(3)) that includes the person, or a foreign corporation of which a member of the controlled group is a United States shareholder, agrees to participate in, or cooperate with, an international boycott. Requests for determinations under Rev. Proc. 77–9 are letter ruling requests and, therefore, should be submitted to the Associate Chief Counsel (International) pursuant to this revenue procedure.

In matters involving § 367 .04 Unless the issue is covered by section 7 of this revenue procedure, the Office of Associate Chief Counsel (International) may issue a letter ruling under § 367 even if the taxpayer does not request a letter ruling as to the characterization of the transaction under the reorganization provisions of the Code. The Office of Associate Chief Counsel (International) will determine the § 367 consequences of a transaction based on the taxpayer’s characterization of the transaction but will indicate in the letter ruling that it expresses no opinion as to the characterization of the transaction under the reorganization. However, the Office of Associate Chief Counsel (International) may decline to issue a § 367 ruling in situations in which the taxpayer inappropriately characterizes the transaction under the reorganization provisions.

In estate tax matters .05 In general, the national office issues prospective letter rulings on transactions affecting the estate tax on the prospective estate of a living person and affecting the estate tax on the estate of a decedent before the decedent’s estate tax return is filed. The national office will not issue letter rulings for prospective estates on computations of tax, actuarial factors, and factual matters.

If the taxpayer is requesting a letter ruling regarding a decedent’s estate tax and the estate tax return is due to be filed before the letter ruling is expected to be issued, the taxpayer should obtain an extension of time for filing the return and should notify the national office branch considering the letter ruling request that an extension has been obtained.

If the return is filed before the letter ruling is received from the national office, the taxpayer must disclose on the return that a letter ruling has been requested, attach a copy of the pending letter ruling request to the return, and notify the national office that the return has been filed. See section 8.04 of this revenue procedure. The national office will make every effort to issue the letter ruling within 3 months of the date the return was filed.

If the letter ruling cannot be issued within that 3-month period, the national office will notify the district director having jurisdiction over the return, who may, by memorandum to the national office, grant an additional period for the issuance of the letter ruling.

In matters involving additional estate tax under § 2032A(c)

In matters involving qualified domestic trusts under § 2056A

In generation-skipping transfer tax matters

.06 In matters involving additional estate tax under § 2032A(c), the national office issues letter rulings on proposed transactions and on completed transactions that occurred before the return is filed.

.07 In matters involving qualified domestic trusts under § 2056A, the national office issues letter rulings on proposed transactions and on completed transactions that occurred before the return is filed.

.08 In general, the national office issues letter rulings on proposed transactions that affect the generation-skipping transfer tax and on completed transactions that occurred before the return is filed. In the case of a generation-skipping trust or trust equivalent,

17 Sec.

In employment and excise tax matters

In administrative provisions matters

letter rulings are issued either before or after the trust or trust equivalent has been established. The national office will issue letter rulings on the application of the effective date rules for generation-skipping transfer tax (§ 1433 of the Tax Reform Act of 1986, 1986–3 (Vol. 1) C.B. 1, 648) to wills, trusts, and trust equivalents in existence on October 22, 1986, and to generation-skipping transfers taking place on or before October 22, 1986.

.09 In employment and excise tax matters, the national office issues letter rulings on proposed transactions and on completed transactions either before or after the return is filed for those transactions. Requests regarding employment status (employer/ employee relationship) from federal agencies and instrumentalities should be submitted directly to the national office. Requests from other taxpayers must first be submitted to the taxpayer’s district office. See section 6.04 of this revenue procedure. Generally, the employer is the taxpayer and requests the letter ruling. However, if the worker asks for the letter ruling, both the worker and the employer are considered to be the taxpayer and both are entitled to the letter ruling.

The national office usually will not issue a letter ruling if, at the time the letter ruling is requested, the identical issue is involved in the taxpayer’s return for an earlier period and that issue—

(1) is being examined by a district director;

(2) is being considered by an appeals office;

(3) is pending in litigation in a case involving the taxpayer or a related taxpayer;

(4) has been examined by a district director or considered by an appeals office and the statutory period of limitations has not expired for assessment or for filing a claim for refund or credit of tax; or

(5) has been examined by a district director or considered by an appeals office and a closing agreement covering the issue or liability has not been entered into by a district director or by an appeals office.

If a return involving an issue for a particular year is filed while a request for a letter ruling on that issue is pending, the national office will issue the letter ruling unless it is notified by the taxpayer or otherwise learns that an examination of that issue or an examination of the identical issue on an earlier year’s return has been started by a district director. See section 8.04 of this revenue procedure. However, even if an examination has begun, the national office ordinarily will issue the letter ruling if the district director agrees, by memorandum, to the issuance of the letter ruling.

.10

(1) In general. The national office issues letter rulings on matters arising under the Code and related statutes and regulations that involve—

(a) the time, place, manner, and procedures for reporting and paying taxes;

(b) the assessment and collection of taxes (including interest and penalties);

(d) the filing of information returns.

(2) Circumstances under which a letter ruling is not ordinarily issued. The national office ordinarily does not issue a letter ruling if, at the time the letter ruling is requested, the identical issue is involved in the taxpayer’s return for an earlier period and that issue—

(a) is being examined by a district director;

(b) is being considered by an appeals office;

(d) has been examined by a district director or considered by an appeals office and the statutory period of limitations has not expired for assessment or for filing a claim for refund or credit of tax; or

Sec. 18

Generally not to business associations or groups

Generally not to foreign governments

Generally not on federal tax consequences of proposed legislation

Issuance of a letter ruling before the adoption of regulations