SECTION 23. WHAT — Internal Revenue Bulletin 2023-1

EFFECT WILL A DETERMINATION LETTER HAVE?

May be relied on subject to limitations

Scope of reliance on determination letter

Effect of subsequent publication of revenue ruling, etc.

(2) The expiration of the 270–day period described in § 7476(b)(3), which period shall be extended in a case in which there has not been a completion of all the steps referred to in section 22.02 of this revenue procedure, and the Service has proceeded with due diligence in processing the application for determination.

.06 The step described in section 22.02(3) of this revenue procedure will not be considered completed until the Service has had a reasonable time to act upon the appeal.

.07 If the applicant has requested relief under § 7805(b), the applicant’s administrative remedies with respect to the § 7805(b) request will not be considered exhausted unless the procedures for making a § 7805(b) request as set forth in section 23.08 of this revenue procedure have been followed and the Service has had a reasonable time to act upon the request.

.01 A taxpayer ordinarily may rely on a determination letter received from EP Determinations subject to the conditions and limitations described in this section.

.02

(1) A determination letter issued pursuant to this revenue procedure contains only the opinion of EP Determinations as to the qualification of the particular plan involving the provisions of §§ 401 and 403(a) and the status of a related trust, if any, under § 501(a) or a plan’s meeting the requirements of § 403(b). Such a determination letter is based on the facts and information presented to EP Determinations in connection with the application for the determination letter and may not be relied upon after a change in material fact or the effective date of a change in law, except as provided below. EP Determinations may determine, based on the application form, the extent of review of the plan document. Failure to disclose a material fact or misrepresentation of a material fact adversely affects the reliance that would otherwise be obtained through the issuance by EP Determinations of a favorable determination letter. Similarly, failure to accurately provide any of the information called for on any form required by this revenue procedure may result in no reliance. Applicants are advised to retain copies of all supporting data submitted with their applications. Failure to do so may limit the scope of reliance.

(2) While a favorable determination letter may serve as a basis for determining deductions for employer contributions thereunder, it is not to be taken as an indication that contributions are necessarily deductible as made. This latter determination can be made only upon an examination of the employer’s tax return in accordance with the limitations, and subject to the conditions, of § 404.

.03 The prior qualification of a plan as adopted by an employer will not be considered to be adversely affected by the publication of a revenue ruling, a revenue procedure, or an administrative pronouncement within the meaning of § 1.6661–3(b)(2) in cases in which:

(1) The plan was the subject of a favorable determination letter and the request for that letter contained no misstatement or omission of material facts;

(2) The facts subsequently developed are not materially different from the facts on which the determination letter was based;

January 3, 2023 226 Bulletin No. 2023–1

Effect of subsequent amendment by employer

Revocation or modification of a determination letter

Determination letter revoked or modified based on material change in facts applied retroactively

Not otherwise generally revoked or modified retroactively

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

(4) The employer that established the plan acted in good faith in reliance on the determination letter.

However, all such plans must be amended to comply with the published guidance for subsequent years, in accordance with the rules set forth in Rev. Proc. 2022-40.

.04 In general, a plan sponsor that maintains a plan for which a favorable determination letter has been issued and that is otherwise entitled to rely on the determination letter may not continue to rely on the determination letter with respect to a plan provision that is subsequently amended or that is subsequently affected by a change in law. However, a plan sponsor may continue to rely on a determination letter with respect to plan provisions that are not amended (or affected by an amendment) and plan provisions that are not affected by a change in qualification requirements or § 403(b) requirements. In addition, a plan sponsor that adopts a sample or model amendment issued by the Service on a word-for-word basis (or adopts an amendment that is substantially similar to a sample or model amendment in all material respects) may continue to rely on a previously issued determination letter.

An adopting employer of a pre-approved plan amending any provision of a pre-approved plan, including its adoption agreement (other than certain amendments that will not cause a plan to fail to be identical to a pre-approved plan, as described in section 8.03 of Rev. Proc. 2017-41 and section 9.05 of Rev. Proc. 2021-37), will lose reliance on the opinion letter.

.05 If the Director, Employee Plans reaches a conclusion contrary to that expressed in a determination letter, he or she has the authority to revoke or modify a determination letter in any manner.

.06 The revocation or modification of a determination letter will be applied retroactively to the taxpayer for whom the determination letter was issued or to a taxpayer whose tax liability was directly involved in the determination letter if—

(1) there was a misstatement or omission of controlling facts;

(2) the facts at the time of the transaction are materially different from the controlling facts on which the determination letter was based; or

(3) the transaction involves a continuing action or series of actions and the controlling facts change during the course of the transaction.

.07 If the revocation or modification of a determination letter occurs, for reasons other than a change in facts as described in section 23.06 of this revenue procedure, the revocation or modification will generally not be applied retroactively to the taxpayer for whom the determination letter was issued or to a taxpayer whose tax liability was directly involved in the determination letter provided that—

(1) there was no change in the applicable law;

(2) the determination letter was originally issued for a proposed transaction; and

Bulletin No. 2023–1 227 January 3, 2023

Taxpayer may request that retroactive effect of revocation or modification be limited under § 7805(b)

SECTION 24. UNDER WHAT CIRCUMSTANCES DOES EMPLOYEE PLANS RULINGS AND AGREEMENTS ISSUE LETTER RULINGS?

(3) the taxpayer directly involved in the determination letter acted in good faith in relying on the determination letter, and revoking or modifying the determination letter retroactively would be to the taxpayer’s detriment.

.08 A taxpayer may seek relief from retroactive revocation or modification of a determination letter under § 7805(b). A request for relief under § 7805(b) must be in writing and must be submitted to the agent or specialist assigned to the case. The request for relief under § 7805(b) must be submitted before issuance of the final adverse determination letter.

(1) Form of request for relief . A taxpayer’s request to limit the retroactive effect of the revocation or modification of the determination letter must-

(a) state that it is being made under § 7805(b);

(b) state the relief sought;

(d) include any documents bearing on the request.

(2) Notice of denial of request for relief. If the request for relief under § 7805(b) is denied, the applicant will be notified in writing of the denial.

(3) Taxpayer must exhaust its administrative remedies . If a taxpayer seeks declaratory judgment under § 7476 with respect to a qualified plan in response to a retroactive revocation or modification, to preserve judicial review of a claim for relief under § 7805(b), the taxpayer must follow the steps in this revenue procedure in order to have exhausted its administrative remedies with respect to its request under § 7805(b). If the taxpayer does not complete the applicable steps, the taxpayer will not have exhausted its administrative remedies as required by § 7476(b)(3) with respect to its request for § 7805(b) relief, and will thus be precluded from obtaining § 7805(b) relief in any declaratory judgment it seeks under § 7476.

If a taxpayer has requested § 7805(b) relief, the taxpayer’s administrative remedies with respect to its § 7805(b) request will not be considered exhausted until the Service has had a reasonable amount of time to act upon the request.