A private letter ruling (“PLR”) is a written public decision by the Internal Revenue Service (“IRS”) in response to taxpayer requests for tax guidance regarding a transaction.  The PLR provides interpretation of statute or administrative rules and their application to a particular set of facts or circumstances as set forth in the transaction.  The PLR addresses unusual or complex questions pertaining to a particular taxpayer or transaction.  The purpose of the PLR is to provide guidance to the taxpayer regarding the tax treatment he or she can expect from the IRS in the circumstances specified by the ruling.   

A PLR is often been called “audit insurance.”  For example, if a taxpayer has a tax issue and has not been audited or paid taxes, the taxpayer can request the IRS to issue a PLR and rule on that tax issue.  The PLR issued to the taxpayer explains the tax rulings and the rational for the decision, which relates to the taxpayer’s tax issue.  The PLR is   applicable only to the taxpayer’s specific tax matter.  PLRs  cannot be relied upon by other taxpayers as precedence and PLRs do not bind the IRS in dealing with other taxpayers.  Notwithstanding, if the taxpayer in the above example is later audited by the IRS with respect to the tax issue, the taxpayer can waive his audit insurance as protection against any tax liability.  

The procedures for obtaining a letter ruling are published annually in the first Revenue Procedure of each calendar year. The current procedures are outlined in Internal Revenue Bulletin 2008-01, which can be found in Internal Revenue Bulletin 2008-1.  

A request for a letter ruling including the applicable user fee should be submitted to:  

Ruling Request Submission
Internal Revenue Service
Attn: CC: PA:LPD:DRU
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044 

During my 20 year tenure at the IRS (Office of Chief Counsel), Washington, D.C., I drafted hundreds of PLRs, including other forms of IRS guidance.  My experience has shown that the do-it-yourself PLR request or reliance upon the verbal comments of IRS personnel do not rise to the level of audit insurance in the form of a favorable PLR.   In spite of current discussions about “fair tax” and "Internal Revenue Code  simplicity,” the fact remains the Code and its interpretative authorities remain substantively and procedurally complex requiring the assistance of a tax professional to navigate the tortuous path of the Code.  

My firm will assist you in the drafting, review, or submission of your PLR request or other IRS guidance request.  We will submit the request on your behalf as counsel or assist you in the preparation of the PLR or other guidance request if you are not interested in representation.  As a former IRS attorney, I handled a number of guidance requests in which the representation or counsel of a tax professional would have made the difference in receiving a favorable IRS ruling. 

For more information or questions about your specific tax matter, please contact the office or click CONTACT US.

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