SECTION 4. PROCEDURES FOR

FILING RETROACTIVE QEF ELECTION RULING REQUESTS

.01 General. This section sets forth certain procedures, rules, and guidelines relevant to filing a request for consent to make a retroactive QEF election. A checklist summarizing the requirements is provided in the Appendix.

.02 Procedures. (1) User fees. (a) General rules. All retroactive QEF election ruling requests must be accompanied by the appropriate user fee as determined from the fee schedule provided in Appendix A to Rev. Proc. 2026-1. See section 15.02 of Rev. Proc. 2026-1. If a request is not matched with full payment, the IRS will exercise discretion in deciding whether to immediately return the request. See section 15.09 of Rev. Proc. 2026-1.

In general, the user fee amount provided in paragraph (A)(3)(c)(ii) of Appendix A to Rev. Proc. 2026-1 (“[a]ll other letter ruling requests” not otherwise identified in paragraph (A)(3) of Appendix A) applies to a retroactive QEF election ruling request. See section 4.02(1)(b) of this revenue procedure for the availability of reduced user fees in certain cases. The user fee amount provided in paragraph (A)(3)(c)(i) of Appendix A to Rev. Proc. 2026-1 (user fee for ruling requests for relief under Treas. Reg. § 301.9100-3 or section 1362(b)(5)) does not apply to a retroactive QEF election ruling request.

A separate user fee is required for each PFIC for which a PFIC shareholder is seeking consent to make a retroactive QEF election. See Treas. Reg. § 1.1295-3(f) (4). For example, if a PFIC shareholder requests letter rulings for consent to make retroactive QEF elections with respect to three PFICs in a single submission, such submission must be accompanied by payment of three separate user fees as provided in Appendix A to Rev. Proc. 2026-1. As described in section 4.02(1)(b) of this revenue procedure, reduced user fees may be available to PFIC shareholders in some cases, and a PFIC shareholder may generally pay the lowest user fee available to such PFIC shareholder as provided in Appendix A to Rev. Proc. 2026-1.

(b) Reduced user fees . (i) Substantially identical letter ruling requests .

A PFIC shareholder requesting multiple retroactive QEF election rulings may qualify for reduced user fees as provided in paragraph (A)(5)(a) of Appendix A to Rev. Proc. 2026-1 if the requests are for substantially identical rulings. Cf. section 15.07 of Rev. Proc. 2026-1. To qualify for this reduced user fee, all information and underlying documents must be substantially identical and all letter ruling requests must be submitted at the same time in a single submission. In addition, the submission must state that the letter ruling requests, all information, and underlying documents are substantially identical, and must specifically identify the extent to which the letter ruling requests, information, and underlying documents are not identical. The IRS will generally treat additional retroactive QEF election ruling requests in a single

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submission regarding multiple PFICs as substantially identical rulings if the facts and circumstances that led to the failure to make the elections and the discovery of such failure are substantially similar, even though the stock of each PFIC may have been acquired by the PFIC shareholder in different years and the calculations of the PFIC shareholder’s potential QEF inclusion amounts under section 1293(a) for each PFIC may be different. For this purpose, the IRS generally will treat the fact that a tax advisor contemporaneously discovered the PFIC status of multiple foreign corporations owned by a PFIC shareholder as evidencing that the failures to make QEF elections and the discovery of such failures are based on substantially similar facts and circumstances.

Example . At different times, a taxpayer purchased stock in three foreign corporations that are PFICs (FC1, FC2, and FC3) and relied on a tax advisor who failed to identify the foreign corporations as PFICs. After the PFIC shareholder hired a new tax advisor, the new tax advisor discovered contemporaneously that each of FC1, FC2, and FC3 qualify as PFICs. Because the new tax advisor discovered that all three foreign corporations are PFICs contemporaneously, if (1) the PFIC shareholder otherwise meets the requirements to submit retroactive QEF election ruling requests and (2) the PFIC shareholder makes a single, simultaneous submission with respect to all three PFICs, then the PFIC shareholder must pay the full user fee for the first ruling with respect to

FC1 (to treat FC1 as a QEF) as provided in paragraph (A)(3)(ii) of Appendix A to Rev. Proc. 2026-1 (assuming paragraph (A)(4)(a) and (b) of Appendix A to Rev. Proc. 2026-1 do not apply; see section 4.02(1)(b)(ii) of this revenue procedure) and is eligible to pay the reduced user fees for substantially identical rulings with respect to each of FC2 and FC3.

(ii) Reduced user fees based on gross income . Reduced user fees may apply if a PFIC shareholder’s “gross income” (as determined under paragraphs (B)(2), (3), (4), and (5) of Appendix A to Rev. Proc. 2026-1) as reported on the PFIC shareholder’s last Federal income tax return (as amended) filed for a full (12-month) taxable year ending before the date the request is filed is less than certain amounts. Two different reduced user fee amounts are available depending on the PFIC shareholder’s gross income. See paragraph (A)(4)(a) and (b) of Appendix A to Rev. Proc. 2026-1. PFIC shareholders seeking a reduced user fee based on their gross income must attach a certification as provided in paragraph (B) (1) of Appendix A to Rev. Proc. 2026-1.

(iii) Lowest available user fee . A PFIC shareholder may generally pay the lowest user fee available to the PFIC shareholder as provided in Appendix A to Rev. Proc. 2026-1. Example . On June 30, 2026, a PFIC shareholder requests letter rulings for consent to make retroactive QEF elections with respect to four PFICs in a single, simultaneous submission. The PFIC shareholder is eligible to pay reduced user fees either for

substantially identical letter rulings as provided in paragraph (A)(5)(a) of Appendix A to Rev. Proc. 2026-1 with respect to three PFICs or based on the PFIC shareholder’s gross income as provided in paragraph (A) (4)(a) of Appendix A to Rev. Proc. 2026-1 with respect to all four PFICs. On June 30, 2026, the PFIC shareholder’s total user fee amount for substantially identical letter ruling requests would be $16,560 (the reduced user fee of $3,450 based on gross income with respect to the first PFIC and the substantially identical letter ruling request user fee of $4,370 with respect to the remaining three PFICs). On June 30, 2026, the PFIC shareholder’s total user fee amount for four separate ruling requests based on the PFIC shareholder’s gross income would be $13,800 (the reduced user fee of $3,450 based on gross income with respect to all four PFICs). The PFIC shareholder can choose to treat the four ruling requests as separate, not substantially identical, and pay $13,800, the lowest user fee amount available to such PFIC shareholder. Nonetheless, only one submission that recites all the relevant facts and representations with respect to all four PFICs is necessary. See Appendix A to Rev. Proc. 2026-1.

(c) User fee rate codes . Separate user fee rate codes for retroactive QEF election ruling requests are available when PFIC shareholders are submitting the user fee payments through www.pay.gov . PFIC shareholders may select from the following user fee rate codes for their retroactive QEF election ruling requests.

A retroactive QEF election ruling request must include a statement indicating the relevant user fee rate codes on the first page of the submission. If the submission is accompanied by reduced user fees as provided in paragraph (A)(4)(a) or (b), or (5)(a) of Appendix A to Rev. Proc.

2026-1, the statement or certification must explain why the submission qualifies for the reduced user fees.

(2) Items to include with retroactive QEF election ruling submission. With respect to each PFIC in a retroactive QEF election ruling submission, a PFIC share

holder must include the following documents and information: (a) a statement listing the dates on which

the PFIC shareholder acquired each interest in the foreign corporation, the PFIC shareholder’s ownership percentage of the foreign corporation

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immediately after acquiring each interest, and the first taxable year of the foreign corporation ending with or within a taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect; (b) PFIC Annual Information Statements

(or Intermediary Statements or Combined Statements, as applicable) for each taxable year of the PFIC ending with or within a taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect, if available; (c) a detailed affidavit from the PFIC

shareholder, or a person authorized to sign a Federal income tax return on behalf of the PFIC shareholder, meeting the requirements of Treas. Reg. § 1.1295-3(f)(4)(ii); (d) detailed affidavits from other per sons prescribed by and meeting the requirements of Treas. Reg. § 1.12953(f)(4)(iii), including the qualified tax professional upon whose advice the PFIC shareholder relied, as well as any individual (including an employee of the PFIC shareholder) who made a substantial contribution to the return’s preparation, and any accountant or attorney, knowledgeable in tax matters, who advised the PFIC shareholder with regard to their ownership of the stock of the foreign corporation. The IRS may in its discretion deem the requirement to obtain such an affidavit satisfied in certain situations in which the PFIC shareholder has exhausted all reasonable means to obtain such affidavit and the affidavit is unavailable, such as a PFIC shareholder that is unable to obtain an affidavit from a qualified tax professional upon whose advice the PFIC shareholder relied because the qualified tax professional is deceased and their records are unavailable. A PFIC shareholder that is unable to obtain such an affidavit is strongly encouraged to seek informal consultation with the Office of Associate Chief Counsel (International) before filing the ruling request as described in section 3 of this revenue procedure. (e) a statement of facts (including any

supporting documentation) demon

strating that in preparing their income tax return for the taxable year with respect to which the PFIC shareholder is requesting consent to make a retroactive QEF election— (i) the PFIC shareholder reasonably

relied on a qualified tax professional (including a tax professional employed by the PFIC shareholder) and—

1. the tax professional failed to identify the foreign corporation as a PFIC or failed to advise the PFIC shareholder of the consequences of making, or failing to make, the QEF election; and
2. the PFIC shareholder did not know and did not have reason to know that the qualified tax professional was not competent to render tax advice with respect to the ownership of shares of a foreign corporation or did not have access to all relevant facts and circumstances; (ii) the PFIC shareholder did not

ignore the advice of a qualified tax professional that the foreign corporation was a PFIC and of the availability of the QEF election and related tax consequences; and (iii) the PFIC shareholder otherwise

did not know or have reason to know that the foreign corporation was a PFIC and of the availability of a QEF election; and (f) a representation that, as of the time of

the filing of the retroactive QEF election ruling request, a representative of the IRS has not raised on audit the PFIC status of the foreign corporation for any taxable year of the PFIC shareholder. (3) Post-submission process and preju- dice determination. Upon receipt of a PFIC shareholder’s retroactive QEF election ruling submission with the correct user fee ( see section 4.02(1) of this revenue procedure), the IRS will conduct a technical review to determine whether such PFIC shareholder satisfies the requirements of Treas. Reg. § 1.1295-3(f). An important determination in this review is whether granting consent would prejudice the inter

ests of the United States government under Treas. Reg. § 1.1295-3(f)(3).

Except as otherwise provided in Treas. Reg. § 1.1295-3(f)(3)(ii) (entry into a closing agreement to eliminate prejudice), consent for a retroactive QEF election will not be granted if it would prejudice the interests of the United States government. Under Treas. Reg. § 1.1295-3(f) (3)(i), the interests of the United States government are prejudiced if granting relief would result in the PFIC shareholder having a lower tax liability, taking into account applicable interest charges, in the aggregate for all years affected by the retroactive QEF election (other than by a de minimis amount) than the PFIC shareholder would have had if the PFIC shareholder had made a QEF election by the election due date. The time value of money is taken into account for purposes of this computation.

In determining whether a retroactive QEF election will prejudice the interests of the United States government, the IRS will generally rely on the PFIC Annual Information Statements (or Intermediary Statements or Combined Statements, as applicable) for each taxable year of the PFIC ending with or within a taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect that are provided by the PFIC shareholder with the submission. If PFIC Annual Information Statements (or Intermediary Statements or Combined Statements, as applicable) are not available or do not provide sufficient information for one or more taxable years of the PFIC ending with or within a taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect, the PFIC shareholder must provide other information (including any supporting documentation) sufficient to demonstrate that granting relief would not prejudice the interests of the United States government.

In all cases, regardless of whether PFIC Annual Information Statements (or Intermediary Statements or Combined Statements, as applicable) are available, the prejudice determination requires PFIC shareholders to provide information sufficient for the IRS to: (1) review the accuracy of the PFIC shareholder’s proposed QEF inclusion calculation under section

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1293(a) for all years that would be covered by the election; and (2) accurately compute the PFIC shareholder’s tax liability for such years if a QEF election had been timely made. In order to complete its determination, the IRS generally will issue one or more prejudice determination information requests to the PFIC shareholder setting forth information to be provided by the PFIC shareholder to the IRS.

(4) Prejudice determination informa- tion requests. Section 4.02(5) of this revenue procedure provides a sample information list containing items that the IRS will typically request to establish that a retroactive QEF election would not prejudice the interests of the United States government under Treas. Reg. § 1.1295-3(f)(3). Information requests may also include any other information the IRS requests pursuant to Treas. Reg. § 1.1295-3(f)(4)(iv).

PFIC shareholders should provide this information only upon IRS request and do not need to include such information with the submission of a retroactive QEF election ruling request because the information requested by the IRS may vary depending on the facts and circumstances of the ruling request. All information provided pursuant to such an IRS request must comply with the requirements of section 8.05 of Rev. Proc. 2026-1, including the requirement to submit such information within 21 days from the date of the request unless an extension of time is granted. Accordingly, the IRS strongly encourages PFIC shareholders to review the items in the sample information list prior to submitting a retroactive QEF election ruling request and be prepared to respond to similar requests.

(5) Sample information list. Information that the IRS typically requests for each PFIC for which a retroactive QEF election ruling request is made to establish whether granting consent would prejudice the interests of the United States government includes the items listed in paragraphs (a) through (e) of this section 4.02(5). Responses should generally be accompanied by supporting documentation demonstrating that the information provided is true, correct, and complete in all respects, which documentation may include audited financial statements of the PFIC for each taxable year of the PFIC ending with or within a taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect.

(a) Ownership and PFIC status. For each

taxable year of the foreign corporation ending with or within a taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect, confirmation (including supporting computations) whether the foreign corporation qualified or did not qualify as a PFIC under section 1297(a). (b) Computations in absence of PFIC

taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect, the amount of cash and the fair market value of any property distributed or

deemed distributed by the foreign corporation to the shareholder. (d) Income inclusions.

Annual Information Statement (or Intermediary Statement or Combined Statement, as applicable). For each taxable year of the PFIC ending with or within a taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect and for which a PFIC Annual Information Statement (or Intermediary Statement or Combined Statement, as applicable) either is not available or does not provide sufficient information to calculate the PFIC shareholder’s pro rata share of the PFIC’s ordinary earnings and net capital gain: (i) Earnings and profits computa tions of the PFIC as described in section 1293(e)(3) that include any amounts that, when distributed, can be excluded from the PFIC shareholder’s gross income under section 1293(c). If these amounts have not been calculated by the PFIC, the IRS may in its discretion permit reliance on a PFIC shareholder’s computations of these amounts based on the PFIC’s audited financial statements. An example of the general process to compute earnings and profits of a foreign corporation using audited financial statements is the current year earnings and profits calculation for foreign corporations on Schedule H of Form 5471. (ii) Net capital gain computations of

(i) A detailed description of any

income with respect to the PFIC previously reported on the PFIC shareholder’s tax returns, whether recognized under section 1291 or otherwise. The description should include details such as: the taxable year of the income inclusion, the amount of the income inclusion, the character of the income inclusion, a general accounting description of the type of income, and confirmation whether such income was recognized under section 1291(a). (ii) A detailed description of any

the PFIC. (c) Distributions from the PFIC. For each

income with respect to the PFIC that was not previously reported on the PFIC shareholder’s tax returns. The description should include details such as: the taxable year in which the income was realized, the amount of the income, character of the income, a general accounting description of the type of income, and an explanation of why the income was not reported. (e) Computations of the PFIC share holder’s potential QEF income inclusions under section 1293(a) or draft amended tax returns reflecting the potential QEF income inclusions and associated tax liability with respect to the PFIC for each taxable year of the PFIC shareholder for which the retroactive QEF election is requested to be in effect in which the PFIC shareholder would have QEF inclusions under section 1293(a) if the request were granted. Examples. Example 1 . Sufficient financial state- ment data . A PFIC and a PFIC shareholder both have calendar taxable years. The PFIC shareholder acquired stock of the PFIC in tax year 1 and did not make a timely QEF election with respect to the PFIC. In tax year 4, after the PFIC shareholder has already filed their return for tax year 3, the PFIC shareholder submits a ruling request to make a retroactive QEF election pursuant to Treas.

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Reg. § 1.1295-3(f), effective in tax year

1. The PFIC shareholder includes a PFIC Annual Information Statement from the PFIC for tax year 3 with its submission and the PFIC Annual Information Statement provides sufficient information to calculate the PFIC shareholder’s pro rata share of the PFIC’s ordinary earnings and net capital gain for tax year 3. However, PFIC Annual Information Statements are not available for each of tax years 1 and
2. In response to a subsequent IRS prejudice determination information request, the PFIC shareholder provides the PFIC’s audited financial statements for each of tax years 1 and 2 that are sufficient to calculate the PFIC shareholder’s pro rata share of the PFIC’s ordinary earnings and net capital gain. The unavailability of PFIC Annual Information Statements for each of tax years 1 and 2 will not cause the PFIC shareholder to be ineligible to make a retroactive QEF election effective in tax year 1.

Example 2 . Insufficient financial state- ment data. The facts are the same as example 1, except that the PFIC’s audited financial statements for each of tax years 1 and 2 are not sufficient to calculate the PFIC shareholder’s pro rata share of the PFIC’s ordinary earnings and net capital gain for

each of tax years 1 and 2. Therefore, the PFIC shareholder is not eligible to make a retroactive QEF election effective in tax year 1 or tax year 2. The PFIC shareholder may be eligible to make a retroactive QEF election effective in tax year 3, though such an election would result in an unpedigreed QEF unless accompanied by a deemed sale or deemed dividend election pursuant to Treas. Reg. §§ 1.1291-9 or 1.1291-10.