SECTION 20. PAPERWORK p. 58

REDUCTION ACT

DRAFTING INFORMATION p. 58

INDEX p. 59

APPENDIX A—SCHEDULE p. 62 OF USER FEES

APPENDIX B—SAMPLE p. 66 FORMAT FOR A LETTER RULING REQUEST

APPENDIX C—CHECKLIST p. 69 FOR A LETTER RULING REQUEST

SECTION 1. WHAT IS THE This revenue procedure explains how the Internal Revenue Service gives guidance to PURPOSE OF THIS REVENUE taxpayers on issues under the jurisdiction of the Associate Chief Counsel (Domestic), PROCEDURE? the Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), and the Associate Chief Counsel (International). It explains the kinds of guidance and the manner in which guidance is requested by taxpayers and provided by the Service. A sample format of a request for a letter ruling is provided in Appendix B.

Description of terms used in For purposes of this revenue procedure— this revenue procedure

(1) any reference to district director or district office includes their respective offices or, when appropriate, the Assistant Commissioner (International);

(2) the term “taxpayer” includes all persons subject to any provision of the Internal Revenue Code (including issuers of § 103 obligations) and, when appropriate, their representatives; and

(3) the term “national office” refers to the Office of Associate Chief Counsel (Domestic), the Office of Associate Chief Counsel (Employee Benefits and Exempt Organizations), the Office of Associate Chief Counsel (Enforcement Litigation), or the Office of Associate Chief Counsel (International), as appropriate.

The offices and titles in this revenue procedure are based on the current organization of the Service. We anticipate that these offices and titles will change as the reorganization of the Service is implemented.

Updated annually The revenue procedure is updated annually as the first revenue procedure of the year, but may be modified or amplified during the year.

SECTION 2. IN WHAT FORM The Service provides guidance in the form of letter rulings, closing agreements, deterIS GUIDANCE PROVIDED BY mination letters, information letters, revenue rulings, and oral advice. THE OFFICES OF ASSOCIATE CHIEF COUNSEL (DOMESTIC), ASSOCIATE CHIEF COUNSEL

Sec. 1 January 3, 2000 10 2000–1 I.R.B.

(EMPLOYEE BENEFITS AND EXEMPT ORGANIZATIONS), ASSOCIATE CHIEF COUNSEL (ENFORCEMENT LITIGATION), AND ASSOCIATE CHIEF COUNSEL (INTERNATIONAL)? The Service provides guidance in the form of letter rulings, closing agreements, determination letters, information letters, revenue rulings, and oral advice

Letter ruling .01 A “letter ruling” is a written statement issued to a taxpayer by the national office that interprets and applies the tax laws to the taxpayer’s specific set of facts. A letter ruling includes the written permission or denial of permission by the national office to a request for a change in a taxpayer’s accounting method or accounting period. Once issued, a letter ruling may be revoked or modified for any number of reasons, as explained in section 12 of this revenue procedure, unless it is accompanied by a “closing agreement.”

Closing agreement .02 A closing agreement is a final agreement between the Service and a taxpayer on a specific issue or liability. It is entered into under the authority in § 7121 and is final unless fraud, malfeasance, or misrepresentation of a material fact can be shown.

A closing agreement may be entered into when it is advantageous to have the matter permanently and conclusively closed or when a taxpayer can show that there are good reasons for an agreement and that making the agreement will not prejudice the interests of the Government. In appropriate cases, a taxpayer may be asked to enter into a closing agreement as a condition to the issuance of a letter ruling.

If, in a single case, a closing agreement is requested for each person in a class of taxpayers, separate agreements are entered into only if the class consists of 25 or fewer taxpayers. However, if the issue and holding are identical for the class and there are more than 25 taxpayers in the class, a “mass closing agreement” will be entered into with the taxpayer who is authorized by the others to represent the class.

Determination letter .03 A “determination letter” is a written statement issued by a district director that applies the principles and precedents previously announced by the national office to a specific set of facts. It is issued only when a determination can be made based on clearly established rules in the statute, a tax treaty, or the regulations, or based on a conclusion in a revenue ruling, opinion, or court decision published in the Internal Revenue Bulletin that specifically answers the questions presented.

A determination letter does not include assistance provided by the U.S. competent authority pursuant to the mutual agreement procedure in tax treaties as set forth in Rev. Proc. 96–13, 1996–1 C.B. 616.

Information letter .04 An “information letter” is a statement issued either by the national office or by a district director. It calls attention to a well-established interpretation or principle of tax law (including a tax treaty) without applying it to a specific set of facts. An information letter may be issued if the taxpayer’s inquiry indicates a need for general information or if the taxpayer’s request does not meet the requirements of this revenue procedure and the Service thinks general information will help the taxpayer. The taxpayer should provide a daytime telephone number with the taxpayer’s request for an information letter. An information letter is advisory only and has no binding effect on the Service.

Revenue ruling .05 A “revenue ruling” is an interpretation by the Service that has been published in the Internal Revenue Bulletin. It is the conclusion of the Service on how the law is applied to a specific set of facts. Revenue rulings are issued only by the national office and are published for the information and guidance of taxpayers, Service personnel, and other interested parties.

Sec. 2.05 2000–1 I.R.B. 11 January 3, 2000

Because each revenue ruling represents the conclusion of the Service regarding the application of law to the entire statement of facts involved, taxpayers, Service personnel, and other concerned parties are cautioned against reaching the same conclusion in other cases unless the facts and circumstances are substantially the same. They should consider the effect of subsequent legislation, regulations, court decisions, revenue rulings, notices, and announcements. See Rev. Proc. 89–14, 1989–1 C.B. 814, which states the objectives of, and standards for, the publication of revenue rulings and revenue procedures in the Internal Revenue Bulletin.

Oral guidance .06

(1) No oral rulings, and no written rulings in response to oral requests.

The Service does not orally issue letter rulings or determination letters, nor does it issue letter rulings or determination letters in response to oral requests from taxpayers. However, Service employees ordinarily will discuss with taxpayers or their representatives inquiries regarding whether the Service will rule on particular issues and questions relating to procedural matters about submitting requests for letter rulings or determination letters for a particular case.

(2) Discussion possible on substantive issues.

At the discretion of the Service and as time permits, substantive issues also may be discussed. However, such a discussion will not be binding on the Service in general or on the Office of Chief Counsel in particular and cannot be relied upon as a basis for obtaining retroactive relief under the provisions of § 7805(b).

Substantive tax issues involving the taxpayer that are under examination, in appeals, or in litigation will not be discussed by Service employees not directly involved in the examination, appeal, or litigation of the issues unless the discussion is coordinated with those Service employees who are directly involved in the examination, appeal, or litigation of the issues. The taxpayer or the taxpayer’s representative ordinarily will be asked whether the oral request for guidance or information relates to a matter pending before another office of the Service .

If a tax issue is not under examination, in appeals, or in litigation, the tax issue may be discussed even though the issue is affected by a nontax issue pending in litigation.

A taxpayer may seek oral technical guidance from a taxpayer service representative in a district office or service center when preparing a return or report. Oral guidance is advisory only, and the Service is not bound to recognize it, for example, in the examination of the taxpayer’s return .

The Service does not respond to letters seeking to confirm the substance of oral discussions, and the absence of a response to such a letter is not confirmation of the substance of the letter.

SECTION 3. ON WHAT Taxpayers may request letter rulings, information letters, and closing agreements under ISSUES MAY TAXPAYERS this revenue procedure on issues within the jurisdiction of the Associate Chief Counsel REQUEST WRITTEN (Domestic), the Associate Chief Counsel (Employee Benefits and Exempt Organizations), GUIDANCE UNDER THIS the Associate Chief Counsel (Enforcement Litigation), and the Associate Chief Counsel PROCEDURE? (International). The national office issues letter rulings to answer written inquiries of individuals and organizations about their status for tax purposes and the tax effects of their acts or transactions when appropriate in the interest of sound tax administration.

Taxpayers also may request determination letters within the jurisdiction of the appropriate district director offices that relate to the Code sections under the jurisdiction of the Associate Chief Counsel (Domestic), the Associate Chief Counsel (Employee Benefits and

Sec. 2.05 January 3, 2000 12 2000–1 I.R.B.

Exempt Organizations), the Associate Chief Counsel (Enforcement Litigation), or the Associate Chief Counsel (International).

Issues under the jurisdiction .01 Issues under the jurisdiction of the Associate Chief Counsel (Domestic) include of the Associate Chief Counsel all issues under the jurisdiction of the various Assistant Chief Counsels as explained (Domestic) below.

Issues under the Assistant (1) Issues under the Assistant Chief Counsel (Corporate) include those that involve conChief Counsel (Corporate) solidated returns, corporate acquisitions, reorganizations, liquidations, redemptions, spinoffs, transfers to controlled corporations, distributions to shareholders, corporate bankruptcies, the effect of certain ownership changes on net operating loss carryovers and other tax attributes, debt vs. equity determinations, allocation of income and deductions among taxpayers, acquisitions made to evade or avoid income tax, and certain earnings and profits questions.

Issues under the Assistant Chief (2) Issues under the Assistant Chief Counsel (Financial Institutions and Products) inCounsel (Financial Institutions clude those that involve income taxes and accounting method changes of banks, savings and Products) and loan associations, real estate investment trusts (REITs), regulated investment companies (RICs), real estate mortgage investment conduits (REMICs), tax-exempt obligations, mortgage credit certificates (MCCs), insurance companies and products, and financial products.

Issues under the Assistant (3) Issues under the Assistant Chief Counsel (Income Tax and Accounting) include Chief Counsel (Income Tax those that involve recognition and timing of income and deductions of individuals and and Accounting) corporations, sales and exchanges, capital gains and losses, installment sales, equipment leasing, inventories, the alternative minimum tax, accounting method changes for these and other miscellaneous issues, various administrative provisions, and accounting periods.

Issues under the Assistant (4) Issues under the Assistant Chief Counsel (Passthroughs and Special Industries) inChief Counsel (Passthroughs clude those that involve income taxes of S corporations (except accounting periods and and Special Industries) methods) and certain noncorporate taxpayers (including partnerships, common trust funds, and trusts); entity classification; estate, gift, generation-skipping transfer, and certain excise taxes; amortization, depreciation, depletion, and other engineering issues; accounting method changes for depreciation and amortization; cooperative housing corporations; farmers’ cooperatives (under § 521); the low-income housing, disabled access, and qualified electric vehicle credits; research and experimental expenditures; shipowners’ protection and indemnity associations (under § 526); and certain homeowners associations (under § 528).

Issues under the jurisdiction .02 Issues under the jurisdiction of the Associate Chief Counsel (Employee Benefits of the Associate Chief Counsel and Exempt Organizations) include those that involve income tax and other tax aspects of (Employee Benefits and Exempt executive compensation and employee benefit programs (other than those within the juOrganizations) risdiction of the Commissioner (Tax Exempt and Government Entities Division), employment taxes, and taxes on self-employment income.

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

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

Sec. 3.04 2000–1 I.R.B. 13 January 3, 2000

For the procedures to obtain advance pricing agreements under § 482, see Rev. Proc. 96–53, 1996–2 C.B. 375, as modified by Notice 98–65, 1998–2 C.B. 803.

For the procedures concerning competent authority relief arising under the application and interpretation of tax treaties between the United States and other countries, see Rev. Proc. 96–13. However, competent authority consideration for an advance pricing agreement should be requested under Rev. Proc. 96–53.