SECTION 7. UNDER WHAT

CIRCUMSTANCES DOES THE SERVICE HAVE DISCRETION TO ISSUE LETTER RULINGS AND DETERMINATION LETTERS?

Ordinarily not in .01 The Service ordinarily will not issue letter rulings or determination letters in certain certain areas because areas because of the factual nature of the problem involved or because of other reasons. of factual nature of Rev. Proc. 98–3 and Rev. Proc. 98–7 provide a list of these areas. This list is not allthe problem inclusive because 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.

Instead of issuing a letter ruling or determination letter, the national office or a district director 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 .02 A letter ruling or a determination letter will not be issued on alternative plans of proplans or hypothetical posed transactions or on hypothetical situations. situations

Ordinarily not on .03 The national office ordinarily will not issue a letter ruling on only part of an part of an integrated integrated transaction. If, however, a part of a transaction falls under a no-rule area, a transaction letter uling on other parts of the transaction may be issued. Before preparing the letter ruling request, a taxpayer should call the branch having jurisdiction for the matters on which the taxpayer is seeking a letter ruling to discuss whether the national office will issue a letter ruling on part of the transaction.

If two or more items or sub-methods of accounting are interrelated, the national office ordinarily will not issue a letter ruling on a change in accounting method involving only one of the items or sub-methods.

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1998–1 I.R.B. 23 January 5, 1998

Ordinarily not on .04 A letter ruling or determination letter ordinarily will not be issued on questions inquestions involving volving the validity of the federal income tax and other taxes set forth in the Code, questhe validity of the tions on the authority or jurisdiction of the Service to enforce the Code or collect informa federal income tax or tion, or similar matters. siimilar matters

On constructive sales .05 The national office will issue letter rulings in all cases on the determination of a conprice under § 4216(b) structive sales price under § 4216(b) or § 4218(c) and in all other cases on prospective or § 4218(c) transactions if the law or regulations require a determination of the effect of a proposed transaction for tax purposes.

SECTION 8. WHAT ARE This section explains the general instructions for requesting letter rulings and determinaTHE GENERAL tion letters on all matters. Requests for letter rulings and determination letters require the INSTRUCTIONS FOR payment of the applicable user fee listed in Appendix A of this revenue procedure. For REQUESTING LETTER additional user fee requirements, see section 15 of this revenue procedure. RULINGS AND DETERMINATION Specific and additional instructions also apply to requests for letter rulings and determiLETTERS? nation letters on certain matters. Those matters are listed in section 9 of this revenue procedure followed by a reference (usually to another revenue procedure) where more information can be obtained.

Certain information .01 required in all requests

Facts (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—

(a) 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.);

(b) the annual accounting period, and the overall method of accounting (cash or accrual) for maintaining the accounting books and filing the federal income tax return, of all interested parties;

(c) the location of the district office that has or will have examination jurisdiction over the return (not the service center where the return is filed);

(d) a description of the taxpayer’s business operations;

(e) a complete statement of the business reasons for the transaction; and

(f) a detailed description of the transaction.

The Service will usually not rule on only one step of a larger integrated transaction. See section 7.03 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.

Documents and foreign (2) Copies of all contracts, wills, deeds, agreements, instruments, other documents, laws and foreign laws.

(a) Documents. True copies of all contracts, wills, deeds, agreements, instruments, trust documents, proposed disclaimers, and other documents pertinent to the transaction must be submitted with the request.

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January 5, 1998 24 1998–1 I.R.B.

If the request concerns a corporate distribution, reorganization, or similar transaction, the corporate balance sheet and profit and loss statement should also be submitted. If the request relates to a prospective transaction, the most recent balance sheet and profit and loss statement should be submitted.

If any document, including any balance sheet and profit and loss statement, is in a language other than English, the taxpayer must also submit a certified English translation of the document, along with a true copy of the document. For guidelines on the acceptability of such documents, see paragraph (c) of this section 8.01(2).

Each document, other than the request, should be labelled and attached to the request in alphabetical sequence. 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.

(b) Foreign laws. The taxpayer must also submit with the request a copy of all applicable foreign laws and, if English is not the official language of the foreign country involved, certified English translations of all applicable foreign laws. For guidelines on the acceptability of such documents, see paragraph (c) of this section 8.01(2).

(c) Standards for acceptability of submissions of foreign laws and documents in a language other than English. The following standards govern the acceptability of submissions of foreign laws and documents in a language other than English for purposes of this section 8.01(2).

(i) Foreign laws in cases where English is the official language of the foreign country involved. In cases involving foreign law where English is the official language of the foreign country involved, the document submitted must be in the English language and must be: (A) an official publication of the foreign government involved or of its designated official printer that contains, verbatim, the pertinent provisions of the foreign law as enacted; (B) a copy or reproduction of this official publication, or pertinent excerpts therefrom, properly attested to; (C) an accurate and complete reprint of the law as enacted, or pertinent excerpts therefrom, properly attested to; (D) a copy or reproduction of the reprint, or pertinent excerpts therefrom, properly attested to with respect to the copy or reproduction; (E) verbatim excerpts of the pertinent provisions of the foreign law as enacted, properly attested to by an official of the department or office of the foreign government that administers the law; (F) verbatim excerpts of the pertinent provisions of the foreign law as enacted, properly attested to by an accredited diplomatic representative of the foreign country involved; or (G) such other official documents, properly attested to, originating in the foreign country involved and containing matters that, in the opinion of the Service, are of sufficient scope and quality to enable it to make the determination in question.

Attestations referred to in this section 8.01(2)(c)(i) must: (H) establish that the material offered is an exact copy of the material as it appears in the document from which it was obtained; (I) contain a statement as to the period covered by the law presented; (J) contain the name and address of the person attesting; (K) contain the official title, if any, of the person attesting and a statement as to that person’s qualifications and knowledge regarding income tax matters; and (L) contain a statement as to whether or not the attestant has been admitted to practice before the Treasury Department of the United States Government.

In addition, the taxpayer or the taxpayer’s representative must represent that, to the best of the taxpayer’s or the representative’s knowledge, the document submitted is accurate and complete with respect to the pertinent provisions of the relevant foreign law or laws and that the taxpayer or the taxpayer’s representative knows of no judicial interpretation of the statutory provisions adverse to the letter ruling request.

(ii) Foreign laws in cases where English is not the official language of the foreign country involved. In cases involving foreign law where English is not the official language of the foreign country involved, the foreign laws submitted must be in the official language

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1998–1 I.R.B. 25 January 5, 1998

of the country involved and must be of the same scope and quality as listed in paragraphs (c)(i)(A) through (G) of this section 8.01(2). Attestation thereto, in the official language of the country involved, must contain the same information listed in paragraphs (c)(i)(H) through (L) of this section 8.01(2). All submissions of foreign laws in cases where English is not the official language of the country involved, as well as the attestations thereto, must be accompanied by certified English translations, as described in section 8.01(2)(c)(iii) below.

In addition, the taxpayer or the taxpayer’s representative must make the same representation stated in the last paragraph of section 8.01(2)(c)(i) of this revenue procedure.

(iii) Certified English translations. In cases involving contracts, wills, deeds, agreements, instruments, trust documents, proposed disclaimers, or other documents in a language other than English, or in cases involving foreign law where English is not the official language of the foreign country involved, an accurate and complete translation, in the English language, of the document or law submitted and the attestation thereto is required. This translation must be that of a qualified translator and must be attested to by the translator. The attestation must contain: (A) a statement that the translation submitted is a true and accurate translation of the document or law submitted in the foreign language; (B) a statement as to the attestant’s qualifications as a translator and as to that attestant’s qualifications and knowledge regarding income tax matters; (C) the attestant’s name and address; and (D) a statement as to whether or not the attestant has been admitted to practice before the Treasury Department of the United States Government.

(iv) Penalties of perjury statement is required. The taxpayer must make the same representation regarding the accuracy and completeness of the material submitted as is required for any letter ruling request. See section 8.01(13) of this revenue procedure.

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 a district director;

(b) has been examined, but the statutory period of limitations has not expired for either assessing tax or filing a claim for refund or credit of tax;

(c) has been examined, but a closing agreement covering the issue or liability has not been entered into by a district director;

(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, but the statutory period of limitations has not 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, but a closing agreement covering the issue or liability has not been entered into by an appeals office; or

(g) is pending in litigation in a case involving the taxpayer or a related taxpayer.

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January 5, 1998 26 1998–1 I.R.B.

Same or similar issue (5) Statement regarding whether same or similar issue was previously ruled on or previously submitted requested, or is currently pending. The request must also state whether, to the best of the or currently pending knowledge of both the taxpayer and the taxpayer’s representatives—

(a) the Service previously ruled on the same or a 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 a request (including an application for change in accounting method) involving the same or a 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 (including an application for change in accounting method) 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 (including an application for change in accounting method) involving the same or a similar issue to the Service.

If the statement is affirmative for (a), (b), (c), or (d) of this section 8.01(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 (6) Statement of supporting authorities. If the taxpayer advocates a particular conclusupporting taxpayer’s views sion, an explanation of the grounds for that conclusion and the relevant authorities to support it must 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 (7) Statement of contrary authorities. The taxpayer is also encouraged to inform the contrary to taxpayer’s views 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, notices, revenue rulings, revenue procedures, 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 (8) Statement identifying pending legislation. At the time of filing the request, the pending legislation taxpayer must identify any pending legislation that may affect the proposed transaction. In addition, if legislation is introduced after the request is filed but before a letter ruling or determination letter is issued, the taxpayer must notify the Service.

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1998–1 I.R.B. 27 January 5, 1998

Deletions statement (9) Statement identifying information to be deleted from copy of letter ruling or de- required by § 6110 termination letter for public inspection. The text of 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 21 calendar days. See section 10.06 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 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 in

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January 5, 1998 28 1998–1 I.R.B.

tention 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.

Signature on request (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. A stamped signature is not 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:

Attorney (a) An attorney who is a member in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or the District of Columbia and who is not currently under suspension or disbarment from practice before the Service. He or she must file a written declaration with the Service showing current qualification as an attorney and current authorization to represent the taxpayer;

Certified public accountant (b) A certified public accountant who is duly qualified to practice in any state, possession, territory, commonwealth, or the District of Columbia and who is not currently under suspension or disbarment from practice before the Service. He or she must file a written declaration with the Service showing current qualification as a certified public accountant and current authorization to represent the taxpayer;

Enrolled agent (c) An enrolled agent who is a person, other than an attorney or certified public accountant, that is currently enrolled to practice before the Service and is not currently under suspension or disbarment from practice before the Service. He or she must file a written declaration with the Service showing current enrollment and authorization to represent the taxpayer. Either the enrollment number or the expiration date of the enrollment card must be included in the declaration. For the rules on who may practice before the Service, see Treasury Department Circular No. 230 (31 C.F.R. part 10 (1997));

Enrolled actuary (d) An enrolled actuary who is a person, other than an attorney or certified public accountant, that is currently enrolled as an actuary by the Joint Board for the Enrollment of Actuaries pursuant to 29 U.S.C. § 1242 and who is not currently under suspension or disbarment from practice before the Service. He or she must file a written declaration with the Service showing current qualification as an enrolled actuary and current authorization to represent the taxpayer. Practice before the Service as an enrolled actuary is limited to representation with respect to issues involving §§ 401, 403(a), 404, 412, 413, 414, 4971, 6057, 6058, 6059, 6652(e), 6652(f), 6692, and 7805(b); former § 405; and 29 U.S.C. § 1083; or

A person with a (e) Any other person, including a foreign representative, who has received a “Letter of “Letter of Authorization” Authorization” from the Director of Practice under section 10.7(d) of Treasury Department Circular No. 230. A person may make a written request for a “Letter of Authorization” to: Office of Director of Practice, HR:DP, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, DC 20224. Section 10.7(d) of Circular No. 230 authorizes the Commissioner to allow an individual who is not otherwise eligible to practice before the Service to represent another person in a particular matter.

Employee, general partner, (f) The above requirements do not apply to a regular full-time employee representing his bona fide officer, or her employer; to a general partner representing his or her partnership; to a bona fide ofadministrator, trustee, etc. ficer representing his or her corporation, association, or organized group; to a trustee, receiver, guardian, personal representative, administrator, or executor representing a trust, receivership, guardianship, or estate; or to an individual representing his or her immediate family. A preparer of a return (other than a person referred to in paragraph (a), (b), (c), (d), or (e) of this section 8.01(11)) who is not a full-time employee, general partner, bona fide officer, an administrator, a trustee, etc., or an individual representing his or her immediate family may not represent a taxpayer in connection with a letter ruling or a determination letter. See section 10.7(c) of Treasury Department Circular No. 230.

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1998–1 I.R.B. 29 January 5, 1998

Foreign representative (g) A foreign representative (other than a person referred to in paragraph (a), (b), (c), (d), or (e) of this section 8.01(11)) is not authorized to practice before the Service and, therefore, must withdraw from representing a taxpayer in a request for a letter ruling or a determination letter. In this situation, the nonresident alien or foreign entity must submit the request for a letter ruling or a determination letter on the individual’s or the entity’s own behalf or through a person referred to in paragraph (a), (b), (c), (d), or (e) of this section 8.01(11).

Power of attorney and (12) Power of attorney and declaration of representative. Any authorized repredeclaration of representative sentative, whether or not enrolled to practice, must also comply with the conference and practice requirements of the Statement of Procedural Rules (26 C.F.R. § 601.501–601.509 (1997)), which provide the rules for representing a taxpayer before the Service. It is preferred that Form 2848, Power of Attorney and Declaration of Representative, be used to provide the representative’s authorization (Part I of Form 2848, Power of Attorney) and the representative’s qualification (Part II of Form 2848, Declaration of Representative). The name of the person signing Part I of Form 2848 should also be typed or printed on this form. A stamped signature is not permitted. For additional information regarding the power of attorney form, see section 8.02(2) of this revenue procedure.

For the requirement regarding compliance with Treasury Department Circular No. 230, see section 8.08 of this revenue procedure.

Penalties of perjury statement (13) Penalties of perjury statement.

(a) Format of penalties of perjury statement. A request for a letter ruling or determination letter and any change in the request submitted at a later time must be accompanied by the following declaration: “Under penalties of perjury, I declare that I have examined

[Insert, as appropriate: this request or this modification to the request], including accompanying documents, and, to the best of my knowledge and belief, [Insert, as appropriate: the request or the modification] contains all the relevant facts relating to the request, and such facts are true, correct, and complete.”

See section 10.07(1) of this revenue procedure for the penalties of perjury statement applicable for submissions of additional information.

(b) Signature by taxpayer. The declaration must be signed and dated by the taxpayer, not the taxpayer’s representative. A stamped signature is not permitted.

The person who signs for a corporate taxpayer must be an officer of the corporate taxpayer who has personal knowledge of the facts and whose duties are not limited to obtaining a letter ruling or determination letter from the Service. If the corporate taxpayer is a member of an affiliated group filing consolidated returns, a penalties of perjury statement must also be signed and submitted by an officer of the common parent of the group.

The person signing for a trust, a state law partnership, or a limited liability company must be, respectively, a trustee, general partner, or member-manager who has personal knowledge of the facts.

Number of copies of request (14) Number of copies of request to be submitted. Generally, a taxpayer needs only to to be submitted submit one copy of the request for a letter ruling or determination letter. If, however, more than one issue is presented in the letter ruling request, the taxpayer is encouraged to submit additional copies of the request.

Further, two copies of the request for a letter ruling or determination letter are required if—

(a) the taxpayer is requesting separate letter rulings or determination letters on different issues as explained later under section 8.02(1) of this revenue procedure;

(b) the taxpayer is requesting deletions other than names, addresses, and identifying numbers, as explained in section 8.01(9)(a) of this revenue procedure. (One copy is the re Sec. 8.01(11)

January 5, 1998 30 1998–1 I.R.B.

quest for the letter ruling or determination letter and the second copy is the deleted version of such request.); or

(c) a closing agreement (as defined in section 2.02 of this revenue procedure) is being requested on the issue presented.

Sample of a letter (15) Sample format for a letter ruling request. To assist a taxpayer or the taxpayer’s ruling request representative in preparing a letter ruling request, a sample format for a letter ruling request is provided in Appendix B. This format is not required to be used by the taxpayer or the taxpayer’s representative. If the letter ruling request is not identical or similar to the format in Appendix B, the different format will not defer consideration of the letter ruling request.

Checklist (16) Checklist for letter ruling requests. The Service will be able to respond more quickly to a taxpayer’s letter ruling request if the request is carefully prepared and complete. The checklist in Appendix C of this revenue procedure is designed to assist taxpayers in preparing a request by reminding them of the essential information and documents to be furnished with the request. The checklist in Appendix C must be completed to the extent required by the instructions in the checklist, signed and dated by the taxpayer or the taxpayer’s representative, and placed on top of the letter ruling request. If the checklist in Appendix C is not received, a branch representative will ask the taxpayer or the taxpayer’s representative to submit the checklist, which may delay action on the letter ruling request.

For letter ruling requests on certain matters, specific checklists supplement the checklist in Appendix C. These checklists are listed in section 9.01 of this revenue procedure and must also be completed and placed on top of the letter ruling request along with the checklist in Appendix C.

Copies of the checklist in Appendix C can be obtained by calling (202) 622-7560 (not a toll-free call). A photocopy of this checklist may be used.

Additional information .02 required in certain circumstances

Multiple issues (1) To request separate letter rulings for multiple issues in a single situation. If more than one issue is presented in a request for a letter ruling, the Service generally will issue a single letter ruling covering all the issues. However, if the taxpayer requests separate letter rulings on any of the issues (because, for example, one letter ruling is needed sooner than another), the Service will usually comply with the request unless it is not feasible or not in the best interests of the Service to do so. A taxpayer who wants separate letter rulings on multiple issues should make this clear in the request and submit two copies of the request.

In issuing each letter ruling, the Service will state that it has issued separate letter rulings or that requests for other letter rulings are pending.

Power of attorney (2) To designate recipient of original or copy of letter ruling or determination letter. Unless the power of attorney provides otherwise, the Service will send the original of the letter ruling or determination letter to the taxpayer and a copy of the letter ruling or determination letter to the taxpayer’s representative. In this case, the letter ruling or determination letter is addressed to the taxpayer. It is preferred that Form 2848, Power of Attorney and Declaration of Representative, be used to provide the representative’s authorization. See section 8.01(12) of this revenue procedure.

Copies of letter ruling (a) To have copies sent to multiple representatives. When a taxpayer has more than or determination letter one representative, the Service will send the copy of the letter ruling or determination sent to multiple letter to the first representative named on the most recent power of attorney. If the representatives taxpayer wants an additional copy of the letter ruling or determination letter sent to the

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1998–1 I.R.B. 31 January 5, 1998

second representative listed in the power of attorney, the taxpayer must check the appropriate box on Form 2848. If this form is not used, the taxpayer must state in the power of attorney that a copy of the letter ruling or determination letter is to be sent to the second representative listed in the power of attorney. Copies of the letter ruling or determination letter, however, will be sent to no more than two representatives.

Original of letter ruling (b) To have original sent to taxpayer’s representative. A taxpayer may request that or determination letter the original of the letter ruling or determination letter be sent to the taxpayer’s representasent to taxpayer’s tive. In this case, a copy of the letter ruling or determination letter will be sent to the taxrepresentative payer. The letter ruling or determination letter is addressed to the taxpayer’s representative to whom the original is sent.

If the taxpayer wants the original of the letter ruling or determination letter sent to the taxpayer’s representative, the taxpayer must check the appropriate box on Form 2848. If this form is not used, the taxpayer must state in the power of attorney that the original of the letter ruling or determination letter is to be sent to the taxpayer’s representative. When a taxpayer has more than one representative, the Service will send the original of the letter ruling or determination letter to the first representative named in the most recent power of attorney.

No copy of letter ruling (c) To have no copy sent to taxpayer’s representative. If a taxpayer does not want a or determination letter sent copy of the letter ruling or determination letter sent to any representative, the taxpayer to taxpayer’s representative must check the appropriate box on Form 2848. If this form is not used, the taxpayer must state in the power of attorney that a copy of the letter ruling or determination letter is not to be sent to any representative.

“Two-Part” letter (3) To request a particular conclusion on a proposed transaction. A taxpayer who is ruling requests requesting a particular conclusion on a proposed transaction may make the request for a letter ruling in two parts. This type of request is referred to as a “two-part” letter ruling request. The first part must include the complete statement of facts and related documents described in section 8.01 of this revenue procedure. The second part must include a summary statement of the facts the taxpayer believes to be controlling in reaching the conclusion requested.

If the Service accepts the taxpayer’s statement of controlling facts, it will base its letter ruling on these facts. Ordinarily, this statement will be incorporated into the letter ruling. However, the Service reserves the right to rule on the basis of a more complete statement of the facts and to seek more information in developing the facts and restating them.

A taxpayer who chooses this two-part procedure has all the rights and responsibilities provided in this revenue procedure.

Taxpayers may not use the two-part procedure if it is inconsistent with other procedures, such as those dealing with requests for permission to change accounting methods or periods, applications for recognition of exempt status under § 521, or rulings on employment tax status.

After the Service has resolved the issues presented by a letter ruling request, the Service representative may request that the taxpayer submit a proposed draft of the letter ruling to expedite the issuance of the ruling. See section 10.09 of this revenue procedure.

Expeditious handling (4) To request expeditious handling. The Service processes requests for letter rulings and determination letters in order of the date received and as expeditiously as possible. A taxpayer who has a compelling need to have a request processed ahead of the regular order must request expeditious handling. This request must explain the need for expeditious handling.

The request for expeditious handling must be made in writing, preferably in a separate letter with, or soon after filing, the request for the letter ruling or determination letter. If the request for expeditious handling is not made in a separate letter, then the letter in which

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January 5, 1998 32 1998–1 I.R.B.

the letter ruling or determination letter request is made should say, at the top of the first page: “Expeditious Handling Is Requested. See page ___ of this letter.”

A request for expeditious handling will not be forwarded to a rulings branch for action until the check for the user fee is received.

The Service cannot give assurance that any letter ruling or determination letter will be processed by the time requested. For example, the scheduling of a closing date for a transaction or a meeting of the board of directors or shareholders of a corporation, without regard for the time it may take to obtain a letter ruling or determination letter, will not be considered a sufficient reason to process a request ahead of its regular order. Also, the possible effect of fluctuation in the market price of stocks on a transaction will not be considered a sufficient reason to process a request out of order. Accordingly, the Service urges taxpayers to submit their requests well in advance of the contemplated transaction.

Facsimile (5) To receive a letter ruling or submit a request for a letter ruling by facsimile transmission (fax) transmission (fax).

(a) To receive a letter ruling by fax. A letter ruling ordinarily is not sent by fax. However, if the taxpayer requests, a copy of a letter ruling may be faxed to the taxpayer or the taxpayer’s authorized representative. A letter ruling, however, is not issued until the ruling is mailed. See § 301.6110–2(h).

A request to fax a copy of the letter ruling to the taxpayer or the taxpayer’s authorized representative must be made in writing, either as part of the original letter ruling request or prior to the approval of the letter ruling. The request must contain the fax number of the taxpayer or the taxpayer’s authorized representative to whom the letter ruling is to be faxed.

In addition, because of the nature of a fax transmission, a statement containing a waiver of any disclosure violations resulting from the fax transmission must accompany the request. Nevertheless, the national office will take certain precautions to protect confidential information. For example, the national office will use a cover sheet that identifies the intended recipient of the fax and the number of pages transmitted and that contains a statement prohibiting unauthorized disclosure of the letter ruling if a recipient of the faxed letter ruling is not the intended recipient of the fax. The letter ruling will be faxed by the Communications Unit of the Technical Services Staff (CC:DOM:CORP:T:C).

(b) To submit a request for a letter ruling by fax. Original letter ruling requests by fax are discouraged because such requests must be treated in the same manner as requests by letter. For example, the faxed letter ruling request will not be forwarded to the rulings branch for action until the check for the user fee is received.

Requests for a change in accounting method or a change in accounting period must not be submitted by fax.

Requesting a conference (6) To request a conference. A taxpayer who wants to have a conference on the issues involved should indicate this in writing when, or soon after, filing the request. See also sections 11.01, 11.02, and 12.11(2) of this revenue procedure.

Substantially identical (7) To obtain the applicable user fee for substantially identical letter rulings or letter rulings or identical identical accounting method changes. A taxpayer seeking the user fee provided in accounting method changes paragraph (A)(5) of Appendix A of this revenue procedure for substantially identical letter rulings or identical accounting method changes must provide the information required in section 15.07 of this revenue procedure.

Address to send the request .03

Requests for letter rulings (1) Requests for letter rulings should be sent to the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the As

Sec. 8.03(1)

1998–1 I.R.B. 33 January 5, 1998

sociate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International), as appropriate. The package should be marked: RULING REQUEST SUBMISSION.

(a) Requests for letter rulings should be sent to the following address:

Internal Revenue Service Attn: CC:DOM:CORP:T P.O. Box 7604 Ben Franklin Station Washington, DC 20044

However, if a private delivery service is used, the address is:

Internal Revenue Service Attn: CC:DOM:CORP:T 1111 Constitution Avenue, N.W. Washington, DC 20224

(b) Requests for letter rulings may also be hand delivered:

(i) To the drop box at the 12th Street entrance of 1111 Constitution Avenue, N.W., Washington, DC. No receipt will be given at the drop box; or

(ii) Between the hours of 8:15 a.m. and 5:00 p.m. to:

Courier’s Desk Internal Revenue Service Attn: CC:DOM:CORP:T 1111 Constitution Avenue, N.W. Washington, DC

A receipt will be given at the courier’s desk.

Requests for (2) Requests for determination letters should be sent to the district director whose ofdetermination letters fice has or will have examination jurisdiction over the taxpayer’s return. For fees required with determination letter requests, see section 15 and Appendix A of this revenue procedure.

Pending letter ruling requests .04

(1) Circumstances under which the taxpayer must notify the national office. The taxpayer must notify the national office if, after the letter ruling request is filed but before a letter ruling is issued, the taxpayer knows that—

(a) an examination of the issue or the identical issue on an earlier year’s return has been started by a district director;

(b) in the case of a § 301.9100 request, an examination of the return for the taxable year in which an election should have been made or any taxable year that would have been affected by the election had it been timely made has been started by a district director. See § 301.9100–3(e)(4)(i) and section 5.02(3) of this revenue procedure;

(c) legislation that may affect the transaction has been introduced. See section 8.01(8) of this revenue procedure; or

(d) another letter ruling request (including an application for change in accounting method) has been submitted by the taxpayer (or a related party within the meaning of § 267

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January 5, 1998 34 1998–1 I.R.B.

or a member of an affiliated group of which the taxpayer is also a member within the meaning of § 1504) involving the same or similar issue that is currently pending with the Service.

(2) Taxpayer must notify national office if return is filed and must attach request to return. If the taxpayer files a return before a letter ruling is received from the national office concerning the issue, the taxpayer must notify the national office that the return has been filed. The taxpayer must also attach a copy of the letter ruling request to the return to alert the district office and thereby avoid premature district action on the issue.

This section 8.04 also applies to pending requests for a closing agreement on a transaction for which a letter ruling is not requested or issued, and for an advance pricing agreement.

When to attach letter .05 ruling to return

A taxpayer who receives a letter ruling before filing a return about any transaction that is relevant to the return being filed must attach a copy of the letter ruling to the return when it is filed.

How to check on .06 status of request

The taxpayer or the taxpayer’s authorized representative may obtain information regarding the status of a request by calling the person whose name and telephone number are shown on the acknowledgement of receipt of the request or the appropriate branch representative who contacts the taxpayer as explained in section 10.02 of this revenue procedure.

Request may be withdrawn .07 or national office may decline to issue letter ruling (1) In general. A taxpayer may withdraw a request for a letter ruling or determination letter at any time before the letter ruling or determination letter is signed by the Service. Correspondence and exhibits related to a request that is withdrawn or related to a letter ruling request for which the national office declines to issue a letter ruling will not be returned to the taxpayer. See section 8.01(2) of this revenue procedure. In appropriate cases, the Service may publish its conclusions in a revenue ruling or revenue procedure.

(2) Notification of district director.

(a) Request to change an accounting method. If a taxpayer withdraws or the national office declines to grant (for any reason) a request to change from or to adopt an improper method of accounting, the national office will notify the appropriate district director and the Change in Method Issue Specialist, and may give its views on the issues in the request to the appropriate district director to consider in any later examination of the return.

(b) All other letter ruling requests. If a taxpayer withdraws a letter ruling request (other than a request to change from or to adopt an improper method of accounting) or if the national office declines to issue a letter ruling (other than a letter ruling pertaining to a request to change from or to adopt an improper method of accounting), the national office generally will notify the appropriate district director and may give its views on the issues in the request to the appropriate district director to consider in any later examination of the return. This section 8.07(2)(b) generally does not apply if the taxpayer withdraws the letter ruling request and submits a written statement that the transaction has been, or is being, abandoned and if the national office has not formed an adverse opinion.

(3) Refunds of user fee. The user fee will not be returned for a letter ruling request that is withdrawn. If the national office declines to issue a letter ruling on all of the issues in the request, the user fee will be returned. If the national office, however, issues a letter ruling on some, but not all, of the issues, the user fee will not be returned. See section 15.10 of this revenue procedure for additional information regarding refunds of user fees.

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1998–1 I.R.B. 35 January 5, 1998

Compliance with .08 Treasury Department Circular No. 230 The taxpayer’s authorized representative, whether or not enrolled, must comply with Treasury Department Circular No. 230, which provides the rules for practice before the Service. In those situations when the national office believes that the taxpayer’s representative is not in compliance with Circular No. 230, the national office will bring the matter to the attention of the Director of Practice.

For the requirement regarding compliance with the conference and practice requirements, see section 8.01(12) of this revenue procedure.

SECTION 9. WHAT OTHER Specific revenue procedures and notices supplement the general instructions for requests CHECKLISTS, GUIDELINE explained in section 8 of this revenue procedure and apply to requests for letter rulings or REVENUE PROCEDURES, determination letters regarding the Code sections and matters listed in this section. NOTICES, SAFE HARBOR REVENUE PROCEDURES, AND AUTOMATIC CHANGE REVENUE PROCEDURES APPLY TO CERTAIN REQUESTS?

Checklists and .01 For requests relating to the following Code sections and subject matters, see the folguideline revenue lowing checklists and guideline revenue procedures and notices. procedures and notices

CODE OR REGULATION SECTION REVENUE PROCEDURE AND NOTICE

103, 141-150, 7478, and 7871 Rev. Proc. 96–16, 1996–1 C.B. 630 (for a reviewable ruling under § 7478 and a nonreview Issuance of state or local obligations able ruling); Rev. Proc. 88–31, 1988–1 C.B. 832 (for approval of areas of chronic economic distress); and Rev. Proc. 82–26, 1982–1 C.B. 476 (for “on behalf of” and similar issuers). For approval of areas of chronic economic distress, Rev. Proc. 88–31 explains how this approval must be submitted to the Assistant Secretary for Housing/Federal Housing Commissioner of the Department of Housing and Urban Development.

1.166–2(d)(3) Rev. Proc. 92–84, 1992–2 C.B. 489. Uniform express determination letter for making election

Subchapter C— Rev. Proc. 77–37, 1977–2 C.B. 568, as modified by Rev. Proc. 89-30, 1989-1 C.B. 895, and Corporate Distributions and as amplified by Rev. Proc. 77–41, 1977–2 C.B. 574, Rev. Proc. 83–81, 1983–2 C.B. 598 Adjustments ( see also Rev. Proc. 98–3), Rev. Proc. 84–42, 1984–1 C.B. 521 (superseded as to no-rule areas by Rev. Proc. 85–22, 1985-1 C.B. 550), Rev. Proc. 86–42, 1986–2 C.B. 722, and Rev. Proc. 89–50, 1989–2 C.B. 631. But see Rev. Proc. 98–3, section 3.01(23) (certain combining reorganizations under § 368), section 3.01(24) (mergers or consolidations under § 368(a)(1)(A)), section 3.01(25) (stock acquisitions under § 368(a)(1)(B)), and section 3.01(28) (corporate changes under § 368(a)(1)(F)), which describe certain corporate reorganizations where the Service will not issue advance letter rulings or determination letters.

301 Rev. Proc. 87–22, 1987–1 C.B. 718. Nonapplicability on sales of stock of employer to defined contribution plan

302, 311 Rev. Proc. 86–18, 1986–1 C.B. 551; and Rev. Proc. 77–41, 1977–2 C.B. 574. Checklist questionnaire

302(b)(4) Rev. Proc. 81–42, 1981–2 C.B. 611. Checklist questionnaire

Sec. 8.07(3)

January 5, 1998 36 1998–1 I.R.B.

331 Rev. Proc. 86–16, 1986–1 C.B. 546. Checklist questionnaire

332 Rev. Proc. 90–52, 1990–2 C.B. 626. Checklist questionnaire

351 Rev. Proc. 83–59, 1983–2 C.B. 575. But see section 3.01(22) of Rev. Proc. 98–3, which Checklist questionnaire describes certain transfers to controlled corporations where the Service will not issue advance letter rulings or determination letters.

355 Rev. Proc. 96–30, 1996–1 C.B. 696. Checklist questionnaire

368(a)(1)(E) Rev. Proc. 81–60, 1981–2 C.B. 680. But see section 3.01(27) of Rev. Proc. 98–3, which deChecklist questionnaire scribes circumstances under which the Service will not issue advance letter rulings or determination letters as to whether a transaction constitutes a corporate recapitalization within the meaning of § 368(a)(1)(E) (or a transaction that also qualifies under § 1036).

461(h) Rev. Proc. 92–29, 1992–1 C.B. 748. Alternative method for the inclusion of common improvement costs in basis

482 Rev. Proc. 96–53, 1996–2 C.B. 375 Advance pricing agreements

521 Rev. Proc. 90–27, 1990–1 C.B. 514. Appeal procedure with regard to adverse determination letters and revocation or modification of exemption letter rulings and determination letters

1.817-5(a)(2) Rev. Proc. 92–25, 1992–1 C.B. 741 Issuer of a variable contract requesting relief

877, 2107, and 2501(a)(3) Notice 97–19, 1997–1 C.B. 394. Individuals who lose U.S. citizenship or cease to be taxed as long-term U.S. residents with a principal purpose to avoid U.S. taxes

1362(b)(5) Rev. Proc. 97–48, 1997–43 I.R.B. 19; Rev. Proc. 97–40, 1997–33 I.R.B. 50. Relief for late S corporation election under certain circumstances

1.1502-13(e)(3) Rev. Proc. 97–49, 1997–43 I.R.B. 22. Consent to treat intercompany transactions on a separate entity basis and revocation of this consent

1.1502-76(a)(1) Rev. Proc. 89-56, 1989-2 C.B. 643. Consent to file a consolidated return where member(s) of the affiliated group use a 52-53 week taxable year

Sec. 9.01

1998–1 I.R.B. 37 January 5, 1998

1504(a)(3)(A) and (B) Rev. Proc. 91–71, 1991–2 C.B. 900. Waiver of application of § 1504(a)(3)(A) for certain corporations

1552 Rev. Proc. 90–39, 1990–2 C.B. 365, as clarified by Rev. Proc. 90–39A, 1990–2 C.B. 367. Consent to elect or change method of allocating affiliated group’s consolidated federal income tax liability

4980B Rev. Proc. 87–28, 1987–1 C.B. 770 (treating references to former § 162(k) as if they were references to § 4980B).

SUBJECT MATTERS REVENUE PROCEDURE

Accounting methods Rev. Proc. 97–27, 1997–1 C.B. 680; and Rev. Proc. 98–1 (this revenue procedure) for which sections 1, 2.01, 2.02, 2.06, 3.01(2), 3.01(3), 3.01(4), 5.02, 5.12, 5.14, 7.01, 7.02, 7.03, 8.01(1), 8.01(2), 8.01(3), 8.01(4), 8.01(5), 8.01(6), 8.01(7), 8.01(8), 8.01(11), 8.01(12), 8.01(13), 8.01(14), 8.02(2), 8.02(4), 8.02(5)(a), 8.02(6), 8.02(7), 8.03(1), 8.04, 8.05, 8.06, 8.07, 8.08, 9, 10.01, 10.04, 10.05, 10.07, 10.08, 10.10(2), 10.11, 11, 12.01, 12.02, 12.06–12.11, 15, and Appendix A are applicable.

Accounting periods; adopt, Rev. Proc. 87–32, 1987–2 C.B. 396, as modified by T.D. 8680, 1996–2 C.B. 194; and Rev. retain or change for partnership, Proc. 98-1 (this revenue procedure) for which sections 1, 2.01, 2.02, 2.06, 3.01(3), 5.02, S corporation, and personal 5.12, 5.14, 7.01, 7.02, 7.03, 8.01(1), 8.01(2), 8.01(3), 8.01(4), 8.01(5), 8.01(6), 8.01(7), service corporation 8.01(8), 8.01(11), 8.01(12), 8.01(13), 8.01(14), 8.02(2), 8.02(4), 8.02(5)(a), 8.02(6), 8.03(1) (only for Forms 1128 filed under section 6.01 of Rev. Proc. 87-32), 8.04, 8.05, 8.06, 8.07, 8.08, 9, 10.01, 10.04, 10.05, 10.07, 10.08, 11, 12, 15, and Appendix A are applicable.

Accounting periods; Rev. Proc. 92–13, 1992–1 C.B. 665, as modified and amplified by Rev. Proc. 92–13A, changes in period 1992–1 C.B. 668, and as modified by Rev. Proc. 94–12, 1994–1 C.B. 565; and Rev. Proc. 98–1 (this revenue procedure) for which sections 1, 2.01, 2.02, 2.06, 3.01(3), 5.02, 5.12, 5.14, 7.01, 7.02, 7.03, 8.01(1), 8.01(2), 8.01(3), 8.01(4), 8.01(5), 8.01(6), 8.01(7), 8.01(8), 8.01(11), 8.01(12), 8.01(13), 8.01(14), 8.02(2), 8.02(4), 8.02(5)(a), 8.02(6), 8.03(1), 8.04, 8.05, 8.06, 8.07, 8.08, 9, 10.01, 10.04, 10.05, 10.07, 10.08, 11, 12, 15, and Appendix A are applicable.

Classification of liquidating trusts Rev. Proc. 82–58, 1982–2 C.B. 847, as modified and amplified by Rev. Proc. 94–45, 1994–2 C.B. 684, and as amplified by Rev. Proc. 91–15, 1991–1 C.B. 484 (checklist questionnaire), as modified and amplified by Rev. Proc. 94–45.

Earnings and profits determinations Rev. Proc. 75–17, 1975–1 C.B. 677; and Rev. Proc. 98–1 (this revenue procedure) for which sections 2.06, 3.01(3), 8, 10.04, 10.06, and 11.05 are applicable.

Estate, gift, and generation- Rev. Proc. 91–14, 1991–1 C.B. 482 (checklist questionnaire). skipping transfer tax issues

Deferred intercompany Rev. Proc. 82–36, 1982–1 C.B. 490. transactions; election not to defer gain or loss

Leveraged leasing Rev. Proc. 75–21, 1975–1 C.B. 715, as modified by Rev. Proc. 76–30, 1976–2 C.B. 647, Rev. Proc. 79–48, 1979–2 C.B. 529, and Rev. Proc. 81–71, 1981–2 C.B. 731; and Rev. Proc. 75–28, 1975–1 C.B. 752, as modified by Rev. Proc. 79–48 and Rev. Proc. 81–71.

Rate orders; regulatory A letter ruling request that involves a question of whether a rate order that is proposed or agency; normalization issued by a regulatory agency will meet the normalization requirements of § 168(f)(2) (pre

Sec. 9.01

January 5, 1998 38 1998–1 I.R.B.

Tax Reform Act of 1986, § 168(e)(3)) and former §§ 46(f) and 167(l) ordinarily will not be considered unless the taxpayer states in the letter ruling request whether—

(1) the regulatory authority responsible for establishing or approving the taxpayer’s rates has reviewed the request and believes that the request is adequate and complete; and

(2) the taxpayer will permit the regulatory authority to participate in any national office conference concerning the request.

If the taxpayer or the regulatory authority informs a consumer advocate of the request for a letter ruling and the advocate wishes to communicate with the Service regarding the request, any such communication should be sent to: Internal Revenue Service, Associate Chief Counsel (Domestic), Attention CC:DOM:CORP:T, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044 (or, if a private delivery service is used: Internal Revenue Service, Associate Chief Counsel (Domestic), Attention CC:DOM:CORP:T, 1111 Constitution Avenue, N.W., Washington, DC 20224). These communications will be treated as third party contacts for purposes of § 6110.

Unfunded deferred compensation Rev. Proc. 71–19, 1971–1 C.B. 698, as amplified by Rev. Proc. 92–65, 1992–2 C.B. 428. See Rev. Proc. 92–64, 1992–2 C.B. 422, for the model trust for use in Rabbi Trust Arrangements.

Safe harbor revenue .02 For requests relating to the following Code sections and subject matters, see the procedures following safe harbor revenue procedures.

CODE OR REGULATION SECTION REVENUE PROCEDURE

103 and 141–150 Rev. Proc. 93–17, 1993–1 C.B. 507 (changes of use of proceeds); and Rev. Proc. 93–19, Issuance of state or local obligations 1993–1 C.B. 526 (management contracts).

280B Rev. Proc. 95–27, 1995–1 C.B. 704. Certain structural modifications to a building not treated as a demolition

355(a)(1)(B) Section 4.05(1)(b) of Rev. Proc. 96–30, 1996–1 C.B. at 705. Transaction not violating the device test

584(a) Rev. Proc. 92–51, 1992–1 C.B. 988. Qualification of a proposed common trust fund plan

642(c)(5) Rev. Proc. 88–53, 1988–2 C.B. 712. Qualification of trusts as pooled income funds

664(d)(1) Rev. Proc. 89–21, 1989–1 C.B. 842, as amplified by Rev. Proc. 90–32, 1990–1 C.B. 546. Qualification of trusts as charitable remainder annuity trusts

664(d)(2) Rev. Proc. 89–20, 1989–1 C.B. 841, as amplified by Rev. Proc. 90–30, 1990–1 C.B. 534. Qualification of trusts as charitable remainder unitrusts

664(d)(2) and (3) Rev. Proc. 90–31, 1990–1 C.B. 539. Qualification of trusts as charitable remainder unitrusts

Sec. 9.02

1998–1 I.R.B. 39 January 5, 1998

1286 Rev. Proc. 91–50, 1991–2 C.B. 778. Determination of reasonable compensation under mortgage service contracts

1362(f) Rev. Proc. 94–23, 1994–1 C.B. 609. Automatic inadvertent termination relief to certain corporations

20.2056A–2(d)(1)(i) and (d)(1)(ii) Rev. Proc. 96–54, 1996–2 C.B. 386. Sample trust language

1.7704–2(d) Rev. Proc. 92–101, 1992–2 C.B. 579. New business activity of existing partnership is closely related to pre-existing business

S UBJECT MATTERS REVENUE PROCEDURE

Certain rent-to-own Rev. Proc. 95–38, 1995–2 C.B. 397. contracts treated as leases

Automatic change .03 For requests to change an accounting period or accounting method, see the following revenue procedures automatic change revenue procedures published and in effect as of December 31, 1997. A taxpayer complying timely with an automatic change revenue procedure will be deemed to have obtained the consent of the Commissioner to change the taxpayer’s accounting period or accounting method, as applicable.

CODE SECTION REVENUE PROCEDURE

442 The automatic change revenue procedures for obtaining a change in annual accounting Changes in accounting periods period include: Rev. Proc. 92–13, 1992–1 C.B. 665, as modified by Rev. Proc. 94–12, 1994–1 C.B. 565, and as modified and amplified by Rev. Proc. 92–13A, 1992–1 C.B. 668 (certain corporations that have not changed their accounting period within the prior 6 calendar years or other specified time); Rev. Proc. 87–32, 1987–2 C.B. 396, as modified by T.D. 8680, 1996–33 I.R.B. 5 (partnership, S corporation, or personal service corporation seeking a natural business year or an ownership taxable year); Rev. Proc. 68–41, 1968–2 C.B. 943, as modified by Rev. Proc. 81–40, 1981–2 C.B. 605 (trusts held by certain fiduciaries needing a workload spread); and Rev. Proc. 66–50, 1966–2 C.B. 1260, as modified by Rev. Proc. 81–40 (individual seeking a calendar year).

446 The automatic change revenue procedures for obtaining a change in method of accounting Changes in accounting methods include: Rev. Proc. 97–37, 1997-33 I.R.B. 18 (applies to the changes in methods of accounting that are described in the Appendix of Rev. Proc. 97–37 involving §§ 162, 167, 168, 197, 263, 263A, 446, 454, 455, 461, 471, 472, 585, 1273, and 1281); Rev. Proc. 97–50, 1997–45 I.R.B. 8 (taxpayers seeking to change their method of accounting for costs incurred to ensure that computer systems are year 2000 compliant); Rev. Proc. 97–43, 1997–39 I.R.B. 12 (certain taxpayers required to change their methods of accounting to comply with elections out of certain exemptions from dealer status for purposes of § 475); Rev. Proc. 97–30, 1997–1 C.B. 702 (taxpayers seeking to elect general asset accounts under § 168(i)(4) for depreciable property placed in service after December 31, 1986, in any taxable year ending before October 11, 1994; election available only for a taxpayer’s taxable year ending in 1996 or 1997); Rev. Proc. 97–18, 1997–1 C.B. 642 (certain banks seeking to change from the § 585 reserve method to the § 166 specific charge-off method for bad debts so that they may elect S corporation status for the first taxable year beginning after December 31, 1996); Rev. Proc. 97–10, 1997–1 C.B. 628 (taxpayers seeking to elect 15-year property treatment under § 168 for a retail motor fuels outlet placed in service before August 20, 1996; procedure available only for a taxpayer’s taxable year that includes August 20, 1996); Rev. Proc. 95–25, 1995–1 C.B. 701 (certain taxpayers seeking to elect a

Sec. 9.02

January 5, 1998 40 1998–1 I.R.B.

historic absorption ratio under § 263A for their first, second, or third taxable year beginning on or after January 1, 1994); Rev. Proc. 92–67, 1992–2 C.B. 429 (certain taxpayers with one or more market discount bonds seeking to make a § 1278(b) election or a constant interest rate election); Rev. Proc. 92–29, 1992–1 C.B. 748 (certain taxpayers seeking to use an alternative method under § 461(h) for including common improvement costs in basis); and Rev. Proc. 91–51, 1991–2 C.B. 779 (certain taxpayers under examination that sell mortgages and retain rights to service the mortgages).

SECTION 10. HOW DOES The national office will issue letter rulings on the matters and under the circumstances exTHE NATIONAL OFFICE plained in sections 3 and 5 of this revenue procedure and in the manner explained in this HANDLE LETTER RULING section and section 11 of this revenue procedure. REQUESTS?

Controls request and .01 All requests for letter rulings will be controlled by the Technical Services Staff of the refers it to appropriate Assistant Chief Counsel (Corporate) (CC:DOM:CORP:T). That office will examine the Assistant Chief Counsel or to incoming documents for completeness, process the user fee, and forward the file to the apthe Office of Associate Chief propriate Assistant Chief Counsel or, for letter ruling requests under the jurisdiction of the Counsel (International) 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.

Branch representative .02 Within 21 calendar days after a letter ruling request has been received in the branch contacts taxpayer within having jurisdiction, a representative of the branch will discuss the procedural issues in the 21 days 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;

(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 Organizations), 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.

Notifies taxpayer if any .03 If the letter ruling request involves matters within the jurisdiction of more than one issues have been referred to branch or office, a representative of the branch that received the original request will tell the another branch or office taxpayer within the initial 21 days—

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

(2) that a representative of that branch or office 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.

Sec. 10.03

1998–1 I.R.B. 41 January 5, 1998

Determines if transaction .04 If a less than fully favorable letter ruling is indicated, the branch representative will can be modified to obtain tell the taxpayer whether minor changes in the transaction or adherence to certain published favorable letter ruling 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 11.02 of this revenue procedure.

Is not bound by informal .05 The Service will not be bound by the informal opinion expressed by the branch repreopinion expressed sentative 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).

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

Information must be submitted (1) If the request lacks essential information, which may include additional information within 21 calendar days 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), (2), and (3) of this revenue procedure for instructions on submissions of additional information.

21-day period will be (2) An extension of the 21-day period will be granted only if justified in writing by the extended if justified and taxpayer and approved by the branch chief, senior technician reviewer (or senior technical approved 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 21day 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.

Letter ruling request (3) If the taxpayer does not submit the information requested during the initial contact closed if the taxpayer does within the time provided, the letter ruling request will be closed and the taxpayer will be not submit information 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.

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

Requires prompt submission .07 of additional information requested after initial contact (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. 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.

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January 5, 1998 42 1998–1 I.R.B.

Additional information submitted to the Service must be accompanied by the following declaration: “Under penalties of perjury, I declare that I have examined this informa- tion, including accompanying documents, and, to the best of my knowledge and be- lief, the information contains all the relevant facts relating to the request for the infor- mation, and such facts are true, correct, and complete.” This declaration must be signed in accordance with the requirements in section 8.01(13)(b) of this revenue procedure. A taxpayer who submits additional factual information on several occasions may provide one declaration subsequent to all submissions that refers to all submissions.

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.

Address to send (2)(a) If a private delivery service is not used, the additional information should be sent additional information 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 20 044

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 § 301.9100 request for an extension of time 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

(b) If a private delivery service is used, the additional information for all cases should be sent to:

Internal Revenue Service ADDITIONAL INFORMATION Attn: [Name, office symbols, and room number of the Service representative who requested the information] 1111 Constitution Avenue, N.W. Washington, DC 20224

(c) 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.

Sec. 10.07

1998–1 I.R.B. 43 January 5, 1998

Number of copies of additional (3) Generally, a taxpayer needs only to submit one copy of the additional informainformation to be submitted tion. However, in appropriate cases, the national office may request additional copies of the information.

21-day period will be extended (4) An extension of the 21-day period will be granted only if justified in writing by if justified and approved 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.

If taxpayer does not submit (5) If the taxpayer does not follow the instructions for submitting additional informaadditional information tion 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 additional information was not timely submitted, 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.

Near the completion of the .08 Generally, after the conference of right is held but before the letter ruling is issued, ruling process, advises the the branch representative will inform the taxpayer or the taxpayer’s representative of the taxpayer of conclusions and, Service’s conclusions. If the Service is going to rule adversely, the taxpayer will be offered if the Service will rule the opportunity to withdraw the letter ruling request. If the taxpayer or the taxpayer’s repadversely, offers the resentative does not promptly notify the branch representative of a decision to withdraw taxpayer the opportunity the ruling request, the adverse letter ruling will be issued. The user fee will not be reto withdraw the letter funded for a letter ruling request that is withdrawn. See section 8.07 of this revenue ruling request procedure.

May request draft of .09 To accelerate issuance of letter rulings, in appropriate cases near the completion of proposed letter ruling near the ruling process, the Service representative may request that the taxpayer or the taxthe completion of the payer’s representative submit a proposed draft of the letter ruling on the basis of ruling process 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 be included.

Taxpayer may also submit In addition to a typed draft, taxpayers are encouraged to submit this draft on a disk in a draft on a word processing disk 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 202-622-4015 (not toll-free calls).

The proposed letter ruling (both typed draft and word processing disk) should be sent to the same address as any additional information and contain in the transmittal the information that should be included with any additional information (for example, a penalties of perjury statement is required). See section 10.07 of this revenue procedure.

Issues separate letter rulings .10 for substantially identical letter rulings and generally issues (1) Substantially identical letter rulings. For letter ruling requests qualifying for the single letter ruling for user fee provided in paragraph (A)(5)(a) of Appendix A of this revenue procedure for sub

Sec. 10.07

January 5, 1998 44 1998–1 I.R.B.

identical accounting stantially identical letter rulings, a separate letter ruling will be issued for each entity method changes with a common member or sponsor, or for each member of a common entity.

(2) Identical accounting method changes and related § 301.9100 letter rulings. For letter ruling requests qualifying for the user fee provided in paragraphs (A)(5)(b) and (c) of Appendix A of this revenue procedure for identical accounting method changes and related § 301.9100 letter rulings, a single letter ruling generally will be issued on behalf of all members of a consolidated group that file a Form 3115, Application for Change in Accounting Method, or that file a § 301.9100 request for an extension of time to file a Form 3115. If, however, different spread periods for the § 481(a) adjustment or different terms and conditions are required, separate letter rulings may be issued for certain members or groups of members within a consolidated group. Each letter ruling will include an attachment listing the § 481(a) adjustment for each member to which the letter ruling applies.

Sends copy of letter ruling .11 The national office will send a copy of the letter ruling, whether favorable or adverse, to district director to the district director who has examination jurisdiction of the taxpayer’s tax return.