SECTION 12. USE OF THE

TECHNICAL ADVICE

Service generally applies advice in processing the taxpayer’s case

SECTION 13. RETROACTIVITY AND RELIANCE

.01 After a TAM is issued, the director must process the taxpayer’s case on the basis of the conclusions in the TAM. Specifically, if a TAM provides conclusions involving a § 103 obligation and the issuer of this obligation, the director must apply the conclusions to the issuer and any holder of the obligation, unless the holder also initiates a request for a TAM on the same issue addressed in the TAM involving the issuer, and the Associate office issues a TAM involving that issue and that holder. The Appeals Area Director may settle the issue under its existing settlement authority.

Usually applies retroactively .01 The holdings in a TAM are applied retroactively, whether they are initial holdings or they are later holdings that modify or revoke holdings in a prior TAM. The Associate Chief Counsel with jurisdiction over the TAM, however, may exercise the discretionary authority under § 7805(b) to limit the retroactive effect of any holding. This authority is exercised in rare and unusual circumstances.

Sec. 13.01 2008–1 I.R.B. 105 January 7, 2008

Revocation or modification of an earlier letter ruling or TAM

Continuing action or series of actions

.02 Generally, a TAM that revokes or modifies a letter ruling or an earlier TAM will not be applied retroactively if: (1) the applicable law has not changed; (2) the taxpayer directly involved in the letter ruling or earlier TAM relied in good faith on it; and (3) revocation or modification would be detrimental to the taxpayer. The new TAM will be applied retroactively to the taxpayer whose tax liability was directly involved in the letter ruling or TAM if: (1) controlling facts have been misstated or omitted; or (2) the facts at the time of the transaction are materially different from the controlling facts on which the letter ruling or earlier TAM was based. If a letter ruling or a TAM is modified or revoked with retroactive effect, the notice to the taxpayer, except in fraud cases, should set forth the grounds on which the modification or revocation is being made and the reason why the modification or revocation is being applied retroactively.

.03 If an issue addressed in the TAM relates to a continuing action or a series of actions, it is generally applied until it is withdrawn or until the conclusion is modified or revoked by a final decision in favor of the taxpayer with respect to that issue, the enactment of legislation, the ratification of a tax treaty, a decision of the United States Supreme Court, or the issuance of temporary regulations, final regulations, a revenue ruling, or other statement published in the Internal Revenue Bulletin. Publication of a notice of proposed rulemaking does not affect the application of a TAM. If a new holding in a TAM is less favorable to the taxpayer than the holding in an earlier TAM, the new holding is generally not applied to the period when the taxpayer relied on the earlier holding. It will be applied to that period, however, if material facts on which the earlier TAM was based have changed.

Other taxpayers .04 Under § 6110(k)(3), a taxpayer may not rely on a TAM issued by the Service for another taxpayer. In addition, retroactive or non-retroactive treatment to one member of an industry directly involved in a letter ruling or TAM does not extend to another member of that same industry, and retroactive or non-retroactive treatment to one client of a tax practitioner does not extend to another client of that same practitioner.