SECTION 15. WHAT ARE THE

USER FEE REQUIREMENTS FOR REQUESTS FOR LETTER RULINGS AND DETERMINATION LETTERS?

Legislation authorizing .01 Section 10511 of the Revenue Act of 1987, 1987–3 C.B. 1, 166, enacted December user fees 22, 1987, as amended by § 11319 of the Omnibus Budget Reconciliation Act of 1990, 1991–2 C.B. 481, 511, enacted November 5, 1990, by § 743 of the Uruguay Round Agreements Act, 1995–1 C.B. 230, 239, enacted December 8, 1994, and by § 2 of the Tax Benefits for Individuals Performing Services in Certain Hazardous Duty Areas, 1996–3 C.B. 1, enacted March 20, 1996 (hereafter the four laws are referred to together as the “Act”), provides that the Secretary of the Treasury or delegate (the “Secretary”) shall establish a program requiring the payment of user fees for requests to the Service for letter rulings, opinion letters, determination letters, and similar requests. The fees apply to requests made on or after February 1, 1988, and before October 1, 2003. The fees charged under Sec. 13.02 January 3, 2000 50 2000–1 I.R.B.

the program are to: (1) vary according to categories or subcategories established by the Secretary; (2) be determined after taking into account the average time for, and difficulty of, complying with requests in each category and subcategory; and (3) be payable in advance. The Secretary is to provide for exemptions and reduced fees under the program as the Secretary determines to be appropriate, but the average fee applicable to each category must not be less than the amount specified in the Act.

Requests to which .02 In general, user fees apply to all requests for— a user fee applies

(1) letter rulings, determination letters, and advance pricing agreements;

(2) closing agreements described in paragraph (A)(3)(d) of Appendix A of this revenue procedure;

(3) renewal of advance pricing agreements; and

(4) reconsideration of letter rulings or determination letters.

Requests to which a user fee applies must be accompanied by the appropriate fee as determined from the fee schedule provided in Appendix A of this revenue procedure. The fee may be refunded as provided in section 15.10 of this revenue procedure.

Requests to which a user .03 User fees do not apply to— fee does not apply

(1) elections made pursuant to § 301.9100–2, pertaining to automatic extensions of time ( see section 5.02 of this revenue procedure);

(2) late S corporation and related elections made pursuant to Rev. Proc. 98–55 or Rev. Proc. 97–48 ( see section 5.01(3) of this revenue procedure);

(3) requests for information letters; or

(4) requests for a change in accounting period or accounting method permitted to be made by a published automatic change revenue procedure ( see section 9.03 of this revenue procedure).

Exemptions from the user .04 The user fee requirements do not apply to— fee requirements

(1) departments, agencies, or instrumentalities of the United States that certify that they are seeking a letter ruling or determination letter on behalf of a program or activity funded by federal appropriations. The fact that a user fee is not charged does not have any bearing on whether an applicant is treated as an agency or instrumentality of the United States for purposes of any provision of the Code; or

(2) requests as to whether a worker is an employee for federal employment taxes and income tax withholding purposes (chapters 21, 22, 23, and 24 of subtitle C of the Code) submitted on Form SS-8, Information for Use in Determining Whether a Worker Is an Employee for Federal Employment Taxes and Income Tax Withholding, or its equivalent.

Fee schedule .05 The schedule of user fees is provided in Appendix A. For the user fee requirements applicable to—

(1) requests for advance pricing agreements or renewals of advance pricing agreements, see section 5.14 of Rev. Proc. 96–53, 1996–2 C.B. at 379; or

(2) requests for letter rulings, determination letters, etc., under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division, see Rev. Proc. 2000–8.

Sec. 15.04 2000–1 I.R.B. 51 January 3, 2000

Applicable user fee for a .06 request involving multiple offices, fee categories, issues, (1) Requests involving several offices. If a request dealing with only one transaction transactions, or entities involves more than one of the offices within the Service (for example, one issue is under the jurisdiction of the Associate Chief Counsel (Domestic) and another issue is under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division, only one fee applies, namely the highest fee that otherwise would apply to each of the offices involved. See Rev. Proc. 2000–8 for the user fees applicable to issues under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division.

(2) Requests involving several fee categories. If a request dealing with only one transaction involves more than one fee category, only one fee applies, namely the highest fee that otherwise would apply to each of the categories involved.

(3) Requests involving several issues. If a request dealing with only one transaction involves several issues, a request for a change in accounting method dealing with only one item or sub-method of accounting involves several issues, or a request for a change in accounting period dealing with only one item involves several issues, the request is treated as one request. Therefore, only one fee applies, namely the fee that applies to the particular category or subcategory involved. The addition of a new issue relating to the same transaction or item will not result in an additional fee, unless the issue places the transaction or item in a higher fee category.

(4) Requests involving several unrelated transactions. If a request involves several unrelated transactions, a request for a change in accounting method involves several unrelated items or sub-methods of accounting, or a request for a change in accounting period involves several unrelated items, each transaction or item is treated as a separate request. As a result, a separate fee will apply for each unrelated transaction or item. An additional fee will apply if the request is changed by the addition of an unrelated transaction or item not contained in the initial request. An example of a request involving unrelated transactions is a request involving relief under § 301.9100–3 and the underlying issue.

(5) Requests involving several entities. Each entity involved in a transaction (for example, a reorganization) that desires a separate letter ruling in its own name must pay a separate fee regardless of whether the transaction or transactions may be viewed as related. But see section 15.07 of this revenue procedure.

Applicable user fee for .07 substantially identical letter rulings or identical accounting (1) In general. The user fees provided in paragraph (A)(5) of Appendix A of this method changes revenue procedure apply to the situations described in sections 15.07(2) and 15.07(3) of this revenue procedure. To assist in the processing of these user fee requests, all letter ruling requests submitted under this section 15.07 should—

(a) Type or print at the top of the letter ruling request: “REQUEST FOR USER FEE UNDER SECTION 15.07 OF REV. PROC. 2000–1”;

(b) List on the first page of the submission all taxpayers and entities requesting a letter ruling (including the taxpayer identification number, and the amount of user fee submitted, for each taxpayer or entity); and

(c) Submit one check to cover all user fees.

If the Service determines that the letter ruling requests do not qualify for the user fee provided in paragraph (A)(5) of Appendix A of this revenue procedure, the Service will request the proper fee. See section 15.09 of this revenue procedure.

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(2) Substantially identical letter rulings. The user fee provided in paragraph (A)(5)(a) of Appendix A of this revenue procedure applies to a taxpayer that requests substantially identical letter rulings (including accounting period, accounting method, and earnings and profits requests other than those submitted on Forms 1128, 2553, 3115, and 5452) for either multiple entities with a common member or sponsor, or multiple members of a common entity. To qualify for this user fee, all information and underlying documents must be substantially identical and all letter ruling requests must be submitted at the same time. In addition, the letter ruling requests must—

(a) State that the letter ruling requests, and all information and underlying documents, are substantially identical; and

(b) Specifically identify the extent to which the letter ruling requests, information, and underlying documents are not identical.

(3) Identical accounting method changes and related § 301.9100 letter rulings. The user fees provided in paragraphs (A)(5)(b) and (c) of Appendix A of this revenue procedure apply to a parent corporation that requests either the identical accounting method change on a single Form 3115 on behalf of more than one member of a consolidated group or an extension of time to file Form 3115 under § 301.9100–3 for the identical accounting method change on behalf of more than one member of a consolidated group. To qualify for this user fee, the taxpayers in the consolidated group must be members of the same affiliated group under § 1504(a) that join in the filing of a consolidated tax return and must be requesting to change from the identical present method of accounting to the identical proposed method of accounting. All aspects of the requested accounting method change, including the present and proposed methods, the underlying facts and the authority for the request, must be identical, except for the § 481(a) adjustment for the year of change, and the number of years the present method has been used.

In addition, a parent corporation must file a single Form 3115. Besides including all the information required on the Form 3115, the parent corporation must, for each member of a consolidated group for which the accounting method change is being requested, attach to the Form 3115 a schedule providing its name, employer identification number, § 481(a) adjustment for the year of change, and the number of years the present method has been used. The Form 3115 must be signed by a duly authorized officer of the parent corporation.

In the case of a § 301.9100 request for an extension of time to file Form 3115, a parent corporation must submit the information required in the above paragraph in addition to the information required by section 5.02 of this revenue procedure.

Method of payment .08 Each request to the Service for a letter ruling, determination letter, advance pricing agreement, closing agreement described in paragraph (A)(3)(d) of Appendix A of this revenue procedure, or reconsideration of a letter ruling or determination letter must be accompanied by a check or money order, payable to the Internal Revenue Service, in the appropriate amount. (However, the user fee check or money order should not be attached to the Form 2553, Election by a Small Business Corporation, when it is filed at the Service Center. If on the Form 2553 the corporation requests a ruling that it be permitted to use a fiscal year under section 6.03 of Rev. Proc. 87–32, the Service Center will forward the request to the national office. When the national office receives the Form 2553 from the Service Center, it will notify the taxpayer that the fee is due.) Taxpayers should not send cash.

Effect of nonpayment or .09 If a request is not accompanied by a properly completed check or money order or payment of incorrect amount is accompanied by a check or money order for less than the correct amount, the respective office within the Service that is responsible for issuing the letter ruling, determination letter, advance pricing agreement, closing agreement, or reconsideration of a letter ruling or determination letter generally will exercise discretion in deciding whether to return immediately the request. If a request is not immediately returned, the taxpayer will be contacted

Sec. 15.08 2000–1 I.R.B. 53 January 3, 2000

and given a reasonable amount of time to submit the proper fee. If the proper fee is not received within a reasonable amount of time, the entire request will then be returned. However, the Service will usually defer substantive consideration of a request until proper payment has been received. The return of a request to the taxpayer may adversely affect substantive rights if the request is not perfected and resubmitted to the Service within 30 days of the date of the cover letter returning the request.

If a request is accompanied by a check or money order for more than the correct amount, the request will be accepted and the amount of the excess payment will be returned to the taxpayer.

Refunds of user fee .10 In general, the user fee will not be refunded unless the Service declines to rule on all issues for which a ruling is requested.

(1) The following situations are examples of situations in which the user fee will not be refunded:

(a) The request for a letter ruling, determination letter, etc., is withdrawn at any time subsequent to its receipt by the Service, unless the only reason for withdrawal is that the Service has advised the taxpayer that a higher user fee than was sent with the request is applicable and the taxpayer is unwilling to pay the higher fee.

(b) The request is procedurally deficient, although accompanied by the proper fee or an overpayment, and is not timely perfected by the requester. When there is a failure to perfect timely the request, the case will be considered closed and the failure to perfect will be treated as a withdrawal for purposes of this revenue procedure. See section 10.06(3) of this revenue procedure.

(c) The Service notifies the taxpayer that the Service will not issue the letter ruling and has closed the case as a result of the taxpayer’s failure to submit timely the additional information requested by the Service. The failure to submit the additional information will be treated as a withdrawal for purposes of this revenue procedure. See section 10.07(5) of this revenue procedure.

(d) A letter ruling, determination letter, etc., is revoked in whole or in part at the initiative of the Service. The fee paid at the time the original letter ruling, determination letter, etc., was requested will not be refunded.

(e) The request contains several issues, and the Service rules on some, but not all, of the issues. The highest fee applicable to the issues on which the Service rules will not be refunded.

(f) The taxpayer asserts that a letter ruling the taxpayer received covering a single issue is erroneous or not responsive (other than an issue on which the Service has declined to rule) and requests reconsideration. The Service, upon reconsideration, does not agree that the letter ruling is erroneous or is not responsive. The fee accompanying the request for reconsideration will not be refunded.

(g) The situation is the same as described in paragraph (e) of this section 15.10(1) except that the letter ruling covered several unrelated transactions. The Service, upon reconsideration, does not agree with the taxpayer that the letter ruling is erroneous or is not responsive for all of the transactions, but does agree that it is erroneous as to one transaction. The fee accompanying the request for reconsideration will not be refunded except to the extent applicable to the transaction for which the Service agrees the letter ruling was in error.

(h) The request is for a supplemental letter ruling, determination letter, etc., concerning a

Sec. 15.08 January 3, 2000 54 2000–1 I.R.B.

change in facts (whether significant or not) relating to the transaction on which the Service ruled.

(i) The request is for reconsideration of an adverse or partially adverse letter ruling or a final adverse determination letter, and the taxpayer submits arguments and authorities not submitted before the original letter ruling or determination letter was issued.

(2) The following situations are examples of situations in which the user fee will be refunded:

(a) In a situation to which section 15.10(1)(h) of this revenue procedure does not apply, the taxpayer asserts that a letter ruling the taxpayer received covering a single issue is erroneous or is not responsive (other than an issue on which the Service declined to rule) and requests reconsideration. The Service agrees, upon reconsideration, that the letter ruling is erroneous or is not responsive. The fee accompanying the taxpayer’s request for reconsideration will be refunded.

(b) In a situation to which section 15.10(1)(h) of this revenue procedure does not apply, the taxpayer requests a supplemental letter ruling, determination letter, etc., to correct a mistake that the Service agrees it made in the original letter ruling, determination letter, etc., such as a mistake in the statement of facts or in the citation of a Code section. Once the Service agrees that it made a mistake, the fee accompanying the request for the supplemental letter ruling, determination letter, etc., will be refunded.

(c) The taxpayer requests and is granted relief under § 7805(b) in connection with the revocation in whole or in part, of a previously issued letter ruling, determination letter, etc. The fee accompanying the request for relief will be refunded.

(d) In a situation to which section 15.10(1)(d) of this revenue procedure applied, the taxpayer requests reconsideration of the Service’s decision not to rule on an issue. Once the Service agrees to rule on the issue, the fee accompanying the request for reconsideration will be refunded.

(e) The letter ruling is not issued and taking into account all the facts and circumstances, including the Service’s resources devoted to the request, the assistant chief counsel in his or her sole discretion decides a refund is appropriate.

Request for reconsideration .11 A taxpayer that believes the user fee charged by the Service for its request for a letter of user fee ruling, determination letter, advance pricing agreement, or closing agreement is either inapplicable or incorrect and wishes to receive a refund of all or part of the amount paid ( see section 15.10 of this revenue procedure) may request reconsideration and, if desired, the opportunity for an oral discussion by sending a letter to the Service at the address given in section 8.03 in this revenue procedure. Both the incoming envelope and the letter requesting such reconsideration should be prominently marked “USER FEE RECONSIDERATION REQUEST.” No user fee is required for these requests. The request should be marked for the attention of:

If the matter involves primarily Mark for the attention of:

Associate Chief Counsel Assistant Chief Counsel ( ) (Domestic) letter ruling requests (Complete by using whichever of the following designations applies.)

(Corporate) (Financial Institutions and Products) (Income Tax and Accounting) (Passthroughs and Special Industries)

Sec. 15.11 2000–1 I.R.B. 55 January 3, 2000

Associate Chief Counsel Assistant Chief Counsel (Employee Benefits & Exempt Organizations) (Employee Benefits & Exempt Organizations) letter ruling requests

Associate Chief Counsel Assistant Chief Counsel (General Litigation) (Enforcement Litigation) letter ruling requests

Associate Chief Counsel Assistant Chief Counsel (International) (International) letter ruling and advance pricing agreement requests

Determination letter requests Chief, Examination Division, submitted pursuant to this ________________________ revenue procedure District Office (Add name of district office handling the request.)