SECTION 19. HOW MAY

RETROACTIVE EFFECT BE LIMITED?

Commissioner has discretionary authority under § 7805(b)

Taxpayer may request Commissioner to exercise authority

Form of request to limit retroactivity—before an examination

Form of request to limit retroactivity—during course of an examination

Form of request to limit retroactivity—technical advice that does not modify or revoke prior memorandum

modification or revocation of a letter ruling or TAM or determination letter previously issued to another client.

When a letter ruling or determination letter to a taxpayer or a TAM involving a taxpayer is modified or revoked with retroactive effect, the notice to the taxpayer, except in fraud cases, sets forth the grounds on which the modification or revocation is being made and the reason why the modification or revocation is being applied retroactively.

In order for a TAM that modifies or revokes a letter ruling or another TAM or a determination letter not to be applied retroactively either to the taxpayer to whom or for whom the letter ruling, TAM or determination letter was originally issued, or to a taxpayer whose tax liability was directly involved in such letter ruling, TAM or determination letter, such taxpayer generally must request relief under § 7805(b) in the manner described in section 19 below.

.01 Under § 7805(b) the Commissioner or the Commissioner’s delegate has the discretion to prescribe the extent, if any, to which a TAM will be applied without retroactive effect.

.02 A taxpayer who has received a TAM or for whom a TAM request is pending may request that the Commissioner, Tax Exempt and Government Entities Division, the Commissioner of Internal Revenue’s delegate, exercise the discretionary authority under § 7805(b) to limit the retroactive effect of any holding stated in the TAM, which may still be pending, which must have been issued, or to limit the retroactive effect of any subsequent modification or revocation of a TAM.

.03 When a TAM that concerns a continuing transaction is modified or revoked by, for example, a subsequent revenue ruling or final regulations, a request to limit the retroactive effect of the modification or revocation of the TAM must be made in the form of a request for a letter ruling if submitted before examination of the return that contains the transaction that is the subject of the request for the letter ruling. See Rev. Proc. 2014–4.

.04 When, during the course of an examination of a taxpayer’s return by EP or EO Examinations or consideration by the Appeals Area Director, a taxpayer is informed that EP or EO Examinations or the Appeals Area Director recommends that a TAM be modified or revoked, a request to limit the retroactive application of the modification or revocation of the TAM must itself be made in the form of a request for a TAM. See sections 7, 8 and 10 of this revenue procedure and sections 19.07 and 19.08 below.

The taxpayer must also submit a statement that the request is being made pursuant to § 7805(b). This statement must also indicate the relief requested and give the reasons and arguments in support of the relief requested. It must also be accompanied by any documents bearing on the request. The explanation should discuss the five items listed in section 18.06 of this revenue procedure as they relate to the taxpayer’s situation.

The taxpayer’s request, including the statement that the request is being made pursuant to § 7805(b), must be forwarded by EP or EO Examinations or the Appeals Area Director to EP or EO Technical for consideration.

.05 A request to limit the retroactive effect of a holding in a TAM that does not modify or revoke a TAM may be made as part of that TAM request, either initially, or at any time before the TAM is issued by EP or EO Technical. In such a case, the taxpayer must also submit a statement in support of the application of § 7805(b), as described in section 19.04 above.

Taxpayer’s right to a conference .06 When a request for a TAM concerns only the application of § 7805(b), the taxpayer has the right to a conference in EP or EO Technical in accordance with the provisions of section 14 of this revenue procedure.

Sec. 19.06 Bulletin No. 2014–1 193 January 2, 2014

Exhaustion of administrative remedies — employee plans determination letter requests

Exhaustion of administrative remedies — exempt organization matters