SECTION 18. WHAT IS THE

EFFECT OF A TAM?

Applies only to the taxpayer for whom TAM was requested

.06 If EP or EO Technical tells the EP or EO Examinations office or the EP or EO Determinations office or the Appeals Area Director that a copy of the TAM should not be given to the taxpayer and the taxpayer requests a copy, the EP or EO Examinations office or the EP or EO Determinations office or the Appeals Area Director will tell the taxpayer that no copy will be given.

.01 A taxpayer may not rely on a TAM issued by the Service for another taxpayer.

Usually applies retroactively .02 Except when stated otherwise, a holding in a TAM is applied retroactively, unless the Commissioner, Tax Exempt and Government Entities Division exercises discretionary authority under § 7805(b) to limit the retroactive effect of the holding. Section 19 of this revenue procedure explains the process for requesting and section 18.06 below lists the criteria for granting relief under § 7805(b) of the Code. Both sections 18 and 19 describe generally the effect of § 7805(b) relief.

Generally applied retroactively to modify or revoke prior TAM

Applies to continuing action or series of actions until specifically withdrawn, modified, or revoked

Applies to continuing action or series of actions until material facts change

Does not apply retroactively under certain conditions

.03 A holding that modifies or revokes a holding in a prior TAM is applied retroactively, with one exception. If the new holding is less favorable to the taxpayer than the earlier one, it generally is not applied to the period when the taxpayer relied on the prior holding in situations involving continuing transactions.

.04 If a TAM relates to a continuing action or a series of actions, ordinarily it is applied until specifically withdrawn or until the conclusion is modified or revoked by enactment of legislation, ratification of a tax treaty, a decision of the United States Supreme Court, or the issuance of regulations (temporary or final), 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.

.05 A taxpayer is not protected against retroactive modification or revocation of a TAM involving a continuing action or a series of actions occurring after the material facts on which the TAM is based have changed.

.06 Generally, a TAM that modifies or revokes a letter ruling or another TAM or a determination letter is not applied retroactively either to the taxpayer to whom or for whom the letter ruling or TAM or determination letter was originally issued, or to a taxpayer whose tax liability was directly involved in such letter ruling or TAM or determination letter if:

(1) there has been no misstatement or omission of material facts;

(2) the facts at the time of the transaction are not materially different from the facts on which the letter ruling or TAM or determination letter was based;

(3) there has been no change in the applicable law;

(4) in the case of a letter ruling, it was originally issued on a prospective or proposed transaction; and

(5) the taxpayer directly involved in the letter ruling or TAM or determination letter acted in good faith in relying on the letter ruling or TAM or determination letter, and the retroactive modification or revocation would be to the taxpayer’s detriment. For example, the tax liability of each employee covered by a letter ruling or TAM or determination letter relating to a pension plan of an employer is directly involved in the letter ruling or TAM or determination letter. However, the tax liability of members of an industry is not directly involved in a letter ruling or TAM or determination letter issued to one of the members, and the holding in a modification or revocation of a letter ruling or TAM or determination letter to one member of an industry may be retroactively applied to other members of the industry. By the same reasoning, a tax practitioner may not obtain the nonretroactive application to one client of a

Sec. 18.06 January 2, 2014 192 Bulletin No. 2014–1