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Part 32. Published Guidance and Other Guidance to Taxpayers

Chapter 3. Letter Rulings, Information Letters, and Closing Agreements

Section 2. Letter Rulings

32.3.2  Letter Rulings

32.3.2.1  (08-11-2004)
Authority to Issue Letter Rulings

  1. The Associate Chief Counsel and Division Counsel/Associate Chief Counsel (TEGE) issue letter rulings as to the opinion of the Service that may be used as the basis for a determination of the tax consequences of specifically described transactions or other acts. The areas in which these offices have jurisdiction are specified in CCDM 30.3.5.

  2. Requests for letter rulings presenting two or more issues under the jurisdiction of different offices and those requests presenting issues that are dependent for solution upon the prior or contemporaneous determination of another issue or issues not presented in the request under the jurisdiction of another office require the coordination and joint action of the offices concerned. For procedures as to the coordination between the offices, see CCDM 32.3.2.5 Coordination with Other Offices.

32.3.2.2  (08-11-2004)
Refusal to Rule or Deferral of Letter Ruling Pending Issuance of Published Guidance

  1. Sometimes a request for a letter ruling makes apparent the need for published guidance on a particular issue. In these cases it is desirable to have the Service position on the issue made available concurrently to all similarly situated taxpayers and others concerned.

  2. In processing requests for letter rulings it is necessary to identify at the earliest possible date those requests containing technical issues on which the Service position should be published prior to (or concurrently with) the issuance of responses to such requests. In some cases, it may be necessary to refuse to rule until a matter is fully studied. In others, it may be necessary to delay the issuance of a letter ruling until the publication of a resulting revenue ruling in the Internal Revenue Bulletin or some other form of published guidance that sets forth Service position.

  3. When developing a Service position on a particular issue, the initiator must consider the possible effect of section 7805(b)(8), regarding retroactivity. Publication of the Service position prior to or concurrently with the issuance of an individual response may simplify the resolution of nonretroactivity questions.

  4. The following are examples of situations in which it is appropriate to publish the Service position as a revenue ruling prior to, concurrently with, or instead of the issuance of a letter ruling. Identification of other situations depends upon the judgment of those involved in considering requests for letter rulings.

    Example 1: A taxpayer requests a letter ruling on a situation the tax treatment of which obviously would be a matter of concern to other taxpayers. Uniform application of the Service position will be promoted by first publishing a revenue ruling. This is especially desirable in any situation in which competitive advantages or disadvantages would result from a lack of uniform application.

    Example 2: An inquiry is received from a person, who describes certain related situations with respect to which a statement of Service position is needed. This person, however, is not the taxpayer with respect to all of the situations involved. In this case, the initial effort should be directed toward processing a revenue ruling and issuing a response to the inquiry that simply refers to the published ruling (a copy of which could be enclosed) with any additional comments that are pertinent.

    Example 3: A trade association requests a letter ruling on an issue in which some or all of its members are interested. Since the Service’s established procedure is to issue a letter ruling only to a taxpayer or authorized representative, it is not appropriate to issue a letter ruling to the trade association, even though a need for Service guidance is recognized. Instead, a revenue ruling should be recommended. A letter should be sent to the trade association informing the association of the Service’s refusal to rule on the matter before a position of the Service is established.

32.3.2.3  (08-11-2004)
General Procedures for Handling Requests for Letter Rulings

  1. The following procedures apply to all requests for letter rulings, including those submitted by collectors of collected taxes. In general, requests for accounting method and accounting period change letters are processed in the same manner and are subject to the same general procedures as letter ruling requests.

32.3.2.3.1  (08-11-2004)
Acknowledgment

  1. Personnel from the Docket, Records & User Fee Branch generally prepare and mail an acknowledgment of each request for a letter ruling prior to forwarding the request to the appropriate office for action.

32.3.2.3.2  (08-11-2004)
Processing Letter Rulings

  1. The following procedures apply to letter rulings, except those involving accounting method and accounting period change letters.

  2. Upon receiving a request for a letter ruling, the initiator assigned the request should review the file for procedural and substantive completeness. The initiator should pay particular attention to whether:

    • The request has been submitted by an appropriate person

    • The requestor has properly designated a representative to handle the request

    • A conference of right is requested

    • Expeditious treatment is requested

    • Section 7805(b)(8) relief (regarding retroactivity) is requested

    • A complete statement of relevant facts and authorities is present

    • The request involves multiple issues or issues under the jurisdiction of other branches or offices

      Note:

      The checklist in the annual revenue procedure for letter rulings and determination letters provides a useful reference of items that must be addressed.

  3. The initiator should carefully analyze the request to determine whether sufficient information is furnished on which to base the ruling requested and whether the matter is one that may properly be made the subject of a letter ruling by the Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE). In each case, the facts should be developed to the fullest extent necessary before preparing the letter ruling. If essential information is lacking, the initiator must request the necessary information. If the case is one in which a letter ruling is not to be issued because the question falls within a no rule area, the facts will not be restated in the no-ruling letter. Generally, it should suffice to briefly state the question involved and cite the authority or reason for not ruling.

  4. A branch representative generally will call the taxpayer, or authorized representative if the request includes a properly executed power of attorney, within 21 calendar days after receiving the letter ruling request to discuss the procedural and, to the extent possible, substantive issues in the request.

  5. If the request lacks essential information, the branch representative will tell the taxpayer during the initial or subsequent contact that the request will be closed if the Service does not receive the information within 21 calendar days from the date of the request for additional information, unless an extension of time is granted. An extension of the 21-day period for providing additional information will be granted only if justified in writing by the taxpayer and approved by the branch reviewer. The taxpayer will be told promptly, and later in writing, of the approval or denial of the requested extension. If the extension request is denied, there is no right of appeal.

  6. If the taxpayer does not submit the information requested during the initial or subsequent contact within the time provided, the letter ruling request will be closed and the taxpayer will be notified in writing. If the information is received after the request is closed, the request will be reopened and treated as a new request as of the date the information is received. The taxpayer must pay another user fee before the case can be reopened.

  7. When the request for a letter ruling is being handled by the taxpayer’s representative, the initiator is responsible for determining whether the representative has complied with the conference and practice requirements. See CCDM 32.3.2.8 Representation of Taxpayers concerning the conference and practice requirements, including the furnishing of power of attorney, authorization, and declaration, evidence of enrollment to practice, and other matters.

    Note:

    Taxpayers who ask in the letter ruling request that a copy of the reply be sent to an unauthorized person should be informed that the Service will not send a copy to a person who has not met the conference and practice requirements. A copy of the ruling may be furnished, however, to the taxpayer for the taxpayer to give to the unauthorized person.

  8. A letter ruling should:

    1. Fully resolve all issues presented in the request

    2. Be written in language as nontechnical as the circumstances will permit

    3. Be technically accurate, legally sound, and as concise as possible without sacrificing clarity

    4. Contain an appropriate explanation of the reasons for the conclusions reached

    5. Distinguish any contrary authority cited by the taxpayer if necessary to do so in support of the Service’s conclusion in the letter ruling

    Note:

    This is particularly true of revenue rulings, regulations, and court decisions in which the Service has acquiesced or otherwise announced it will follow that appear to bear closely on the issue. Normally only those authorities bearing most directly on the issue need be distinguished. If helpful, any published guidance available may be enclosed.

  9. Unless the power of attorney provides otherwise, the Service will send the original of the letter ruling or determination letter to the taxpayer and a copy of the letter ruling or determination letter to the taxpayer’s representative. In this case, the letter ruling or determination letter is addressed to the taxpayer. When a taxpayer has more than one representative, the Service will send the copy of the letter ruling or determination letter to the first representative named on the most recent power of attorney. If the taxpayer wants an additional copy of the letter ruling or determination letter sent to the second representative listed in the power of attorney, the taxpayer must check the appropriate box on Form 2848. Copies of the letter ruling or determination letter will be sent to no more than two representatives. The taxpayer may check the appropriate box on Form 2848 or indicate in a power of attorney that the taxpayer does not want a copy of the letter ruling or determination letter to be sent to the taxpayer’s representative. The taxpayer may check the appropriate box on Form 2848 or indicate in a power of attorney that the taxpayer requests that the original of the letter ruling or determination letter be sent to the taxpayer’s representative. In this case, a copy of the letter ruling or determination letter will be sent to the taxpayer. Copies of the letter ruling are transmitted using Letter 1690, Exhibit 32.3.2-1, and copies of an accounting method change letter are transmitted using Letter 1690 (Version 2), Exhibit 32.3.2-2.

  10. On letter rulings addressed to the taxpayer, the identifying number, and the legend should be typed below the taxpayer’s address. See Exhibit 32.3.2-3. On letter rulings addressed to the taxpayer’s representative, the taxpayer’s name (numbered, if two or more taxpayers), address, and identifying number should be typed below the address of the representative. See Exhibit 32.3.2-4.

  11. A letter ruling is prepared for the signature of the official having authority to act in the matter. The complimentary close for all letter rulings is "sincerely."

  12. A copy of the letter ruling, whether favorable or adverse, is sent to the appropriate Service official in the operating division having examination jurisdiction of the taxpayer’s return. See CCDM 32.3.2.7, Referral of Copies of Letter Rulings to the Appropriate Service Official.

  13. After a letter ruling has been prepared and the file is assembled, the approval of the initiator is indicated on the official file copy of the letter (Form 1937), and the file is forwarded for review and signature or transmittal to the next official in the chain of review.

  14. When the letter ruling is completed, the attorney should complete Form 9818, Case Processing Form, which includes the Written Determination Checklist. See Exhibit 32.3.2-5.

32.3.2.3.2.1  (08-11-2004)
Processing Accounting Method and Accounting Period Change Letters

  1. [RESERVED]

32.3.2.3.2.2  (08-11-2004)
Caveats to be Included in Letter Rulings, Technical Advice Memoranda, and Accounting Method and Period Change Letters

  1. All letter rulings, technical advice memoranda, and accounting method and period change letters issued after the adoption of temporary or final regulations will contain one of the following caveats:

    1. Letter rulings: "This letter ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent."

    2. Accounting method change letters: "The accounting method change granted in this letter ruling is directed only to the taxpayer who requested it and may not be used or cited as precedent."

    3. Accounting period approval action letters: "The accounting period approval granted in this letter ruling is directed only to the taxpayer who requested it and may not be used or cited as precedent."

  2. All letter rulings, technical advice memoranda, and accounting method and period change letters issued before the adoption of temporary or final regulations will contain one of the following caveats:

    1. Letter rulings: "This letter ruling is directed only to the taxpayer who requested it. Section 6110(k)(3) of the Internal Revenue Code provides that it may not be used or cited as precedent. Temporary or final regulations pertaining to one or more of the issues addressed in this letter ruling have not yet been adopted. Therefore, this letter ruling will be modified or revoked by the adoption of temporary or final regulations to the extent the regulations are inconsistent with any conclusion in the letter ruling. See [add reference to appropriate section of annual revenue procedure]. If the taxpayer can demonstrate that the criteria in [add appropriate section of annual revenue procedure] are satisfied, a letter ruling is not revoked or modified retroactively except in rare or unusual circumstances."

    2. Accounting method change letters: "The accounting method change granted in this letter is directed only to the taxpayer who requested it and may not be used or cited as precedent. Temporary or final regulations pertaining to one or more of the issues addressed in this letter have not yet been adopted. Therefore, should final or temporary regulations be adopted with positions that are inconsistent with the conclusions reached in this grant letter, the method of accounting utilized as a result of the grant letter will no longer be regarded as a proper method of accounting, and would be subject to change within the framework of sections 446 and 481 of the Code."

    3. Accounting period approval action letters for change or adoption of accounting periods: "The accounting period approval granted in this letter is directed only to the taxpayer who requested it and may not be used or cited as precedent. Temporary or final regulations pertaining to one or more of the issues addressed in this letter have not yet been adopted. Therefore, should final or temporary regulations be adopted with positions that are inconsistent with the conclusions reached in this grant letter, the annual accounting period of utilized as a result of the grant letter will no longer be regarded as a proper period of accounting, and would be subject to change within the framework of the applicable sections of the Code, regulations, or other administrative guidance.

    Caution:

    In cases in which regulations have not been adopted and for which either the answer seems reasonably certain (but not entirely free from doubt) or the answer does not seem reasonably certain, a higher level of review, which may include consultation with Treasury, may be appropriate before issuing a response. During this review, consideration will be given to whether a letter ruling is the proper form of guidance in the particular situation. For example, it could be decided that another form of guidance, such as a revenue ruling or a notice, would be more appropriate.

  3. Attach copy to relevant tax returns. To remind taxpayers to attach a copy of the letter ruling to their returns, a paragraph substantially in the following language should be inserted in each letter ruling if it is anticipated that the taxpayer will receive the letter ruling before filing any return to which the transaction is relevant: "You must attach a copy of this letter ruling to any tax return to which it is relevant." See also CCDM 32.3.1.14 Requirements with Respect to Submission of Requests for Letter Rulings.

  4. Based on particular circumstances. It may be necessary to create a caveat to address the particular facts and circumstances of a request for letter ruling or technical advice. For example, if a letter ruling or a technical advice memorandum relies on a translation of a foreign statute to arrive at a conclusion, pertinent portions of the translation should be incorporated in the body of the ruling or technical advice or attached as an exhibit with a caveat, as follows: "This letter ruling [technical advice memorandum] is based on a translation of a foreign statute supplied by the taxpayer and its application is conditional on the accuracy of such translation. The Internal Revenue Service has not independently verified the accuracy of the translation supplied by the taxpayer."

32.3.2.3.2.2.1  (08-11-2004)
Other Potential Caveats

  1. The following caveats may be used as appropriate.

    1. The information contained in the letter ruling is based on the information and representations submitted by the taxpayer and accompanied by a penalties of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for ruling, it is subject to verification on examination.

    2. Except as specifically set forth above, no opinion is expressed or implied concerning the federal tax consequences of the proposed transaction under any other provision of the Code or regulations.

    3. Enclosed is a copy of the letter ruling showing the deletions proposed to be made when the letter is disclosed under section 6110 of the Code.

    4. In accordance with the power of attorney on file with this office, a copy of this letter is being sent to the taxpayer [taxpayer’s representative].

32.3.2.3.3  (08-11-2004)
Use of Citations

  1. Attorneys should use citations that are consistent with the Chief Counsel style requirements.

32.3.2.3.4  (08-11-2004)
Changes in Position

  1. If in connection with the preparation of a letter ruling, a change in Service position or in a prior interpretation is involved, see the procedures set out in CCDM 32.1.

32.3.2.3.5  (08-11-2004)
Nonretroactivity under Section 7805(b)(8)

  1. Pursuant to section 7805(b)(8), it is within the discretion of the Commissioner or the Commissioner’s delegate to prescribe the extent, if any, to which any letter ruling (or determination letter) will be applied without retroactive effect.

  2. A request for letter ruling may contain a request for relief under section 7805(b)(8) in the event the Service proposes to issue a letter ruling adverse to the taxpayer’s request. See CCDM 32.3.2.3.5.1 General.

  3. Relief under section 7805(b)(8) may also be requested when the Service revokes or modifies a previously issued letter ruling. See CCDM 32.3.2.3.5.2 Means of Revoking or Modifying a Previously Issued Letter Ruling.

  4. Special procedures apply when section 7805(b)(8) relief is requested in connection with the modification or revocation of a determination letter. See CCDM 32.3.2.3.5.3 Processing Section 7805(b) Requests Involving Determination Letters.

32.3.2.3.5.1  (08-11-2004)
General

  1. If a letter ruling is revoked or modified, the revocation or modification applies to all open years unless the Commissioner or the Commissioner’s delegate exercises the discretionary authority under section 7805(b) to limit the retroactive effect of the revocation or modification.

    Note:

    In Delegation Order No. 96, IRM 1.2.53.3 (as revised), the Commissioner authorized the Associate Chief Counsel and Division Counsel/Associate Chief Counsel (TEGE) to prescribe the extent, if any, to which any letter ruling issued under their respective jurisdiction is applied without retroactive effect.

  2. A request to limit the retroactive effect of a letter ruling must be in the general form of, and meet the requirements for, a letter ruling request and comply with the annual revenue procedure for letter rulings. A request for relief under section 7805(b)(8) may be made either at the time a request is submitted or at any time before the letter ruling is issued.

  3. A taxpayer may request a conference on the application of section 7805(b)(8) in accordance with the provisions of the annual revenue procedure for letter rulings.

  4. Whenever the question of nonretroactive application under section 7805(b)(8) is considered, the following additional procedures apply.

    1. When recommending the nonretroactive application of any letter ruling, the initiating branch shall prepare a memorandum explaining the basis for the recommendation and requesting the approval of the appropriate Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE). If there has been any question whether the extent of the nonretroactive application should be different from that recommended, the memorandum shall identify the alternatives considered and explain the reasons for not recommending the alternatives. The memorandum includes a recommendation and date line for the branch, a concurrence and date line for the Assistant Chief Counsel (when appropriate), and an approval and date line for the appropriate Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE).

    2. If it is recommended that section 7805(b) relief should not be granted, the initiating branch will prepare a memorandum to that effect. The memorandum includes a recommendation and date line for the branch, a concurrence and date line for the Assistant Chief Counsel or Deputy Assistant Chief Counsel (when appropriate), and an approval and date line for the appropriate Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE).

    3. These memoranda are prepared in the format shown in Exhibit 32.3.2-6 and forwarded to the appropriate Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE) for approval or rejection.

  5. The letter rulings involving cases where the application of section 7805(b)(8) is considered are generally prepared for the signature of the initiating office.

32.3.2.3.5.2  (08-11-2004)
Means of Revoking or Modifying a Previously Issued Letter Ruling

  1. Unless it was part of a closing agreement, a letter ruling found to be in error or not in accord with the current views of the Service may be revoked or modified. If a letter ruling is revoked or modified, the revocation or modification applies to all open years unless the Commissioner or the Commissioner’s delegate exercises the discretionary authority under section 7805(b)(8) to limit the retroactive effect of the revocation or modification.

  2. Revocation or modification of a letter ruling may be made by any of the events specified in CCDM 32.3.1.6.1 May be Revoked or Modified if Found to be in Error. Consistent with these provisions, if a letter ruling relates to a continuing action or a series of actions, the ruling will ordinarily be applied until any one of the events described in CCDM 32.3.1.6.1 occurs or until it is specifically withdrawn. Publication of a notice of proposed rulemaking will not affect the application of any letter ruling under these procedures.

    Caution:

    When a letter ruling that concerns a continuing transaction is modified or revoked by, for example, a subsequent revenue ruling, a letter ruling request to limit the retroactive effect of the modification or revocation of the letter ruling must be made before the examination of the return that contains the transaction that is the subject of the letter ruling request.

  3. When the Service reconsiders a favorable letter ruling previously issued to a taxpayer that will not require a change to a revenue ruling or a temporary or final regulation, the taxpayer must be notified in writing that the letter ruling is being reconsidered and, therefore, is withdrawn. The written notification may be preceded by a telephone call to the taxpayer or the taxpayer’s representative (so long as the power of attorney is still valid), or both, to alert them to the withdrawal of the letter ruling. If the final decision is adverse, the taxpayer will be permitted to request relief under section 7805(b)(8).

    Note:

    If a letter ruling is revoked by letter with retroactive effect, the letter will, except in fraud cases, state the grounds upon which the revocation is being made and the reasons why the revocation is being applied retroactively.

    Caution:

    Any case containing unusual circumstances that suggest that the letter ruling is not to be withdrawn immediately is to be brought to the attention of the appropriate Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE). See CCDM 32.3.1.14.3 Effect of Section 6110 on Letter Rulings for section 6110 considerations.

  4. Except in rare or unusual circumstances, the revocation or modification of a letter ruling will not be applied retroactively to the taxpayer for whom the letter ruling was issued or to a taxpayer whose tax liability was directly involved in the letter ruling if the conditions specified in CCDM 32.3.1.6.3 Not Otherwise Generally Revoked or Modified Retroactively are met.

  5. When a revenue ruling has the effect of modifying or revoking a letter ruling previously issued to the taxpayer or when the Service notifies the taxpayer of a change in position that will have the effect of revoking or modifying a prior letter ruling, the taxpayer may request relief under section 7805(b)(8) in the form of a separate request for letter ruling. When such notice is given during the course of an examination of the taxpayer’s return or during the consideration of the return by an appeals office, a request to limit the retroactive effect of the modification or revocation of a letter ruling must be made in the form of a request for technical advice. See CCDM 33.2.

  6. See CCDM 32.3.1.6.3 Not Otherwise Generally Revoked or Modified for the nonretroactive application of a revocation or modification of a letter ruling issued on a particular transaction.

  7. See CCDM 32.3.1.6.4 Retroactive Revocation to a Continuing Transaction for the nonretroactive application of a revocation or modification of a letter ruling covering a continuing action or a series of actions.

  8. A letter ruling holding that the sale or lease of a particular article is subject to the manufacturer’s excise tax or the retailer’s excise tax may not retroactively revoke or modify an earlier letter ruling holding that the sale or lease of the article was not taxable, if the taxpayer to whom the letter ruling was issued, in reliance upon the earlier letter ruling, parted with possession or ownership of the article without passing the tax on to the customer. Section 1108(b), Revenue Act of 1926. See also CCDM 32.3.1.6.5, Generally not Retroactively Revoked or Modified if Related to Sale or Lease Subject to Excise Tax.

  9. A taxpayer is not protected against the retroactive revocation or modification of a letter ruling under the circumstances described in CCDM 32.3.1.6.6 May be Revoked or Modified When Transaction is Entered into Before the Issuance of the Letter Ruling.

32.3.2.3.5.3  (08-11-2004)
Processing Section 7805(b)(8) Requests Involving Determination Letters

  1. Determination letters are written statements issued by a director that apply the previously announced principles and precedents to specific sets of facts. In the case of a determination letter that a director proposes to modify or revoke, the taxpayer to whom the determination letter has been issued may request that the appropriate Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE) exercise the discretionary authority under section 7805(b)(8) to limit the retroactive effect of any revocation or modification of the determination letter.

    Note:

    A director has not been delegated authority under Section 7805(b)(8) to limit the modification or revocation of a determination letter. See IRM 1.2.2.46.

  2. The taxpayer’s request must be in the form of, and meet the general requirements for a technical advice request.

  3. The taxpayer has a right to a conference to the same extent as does any taxpayer who is the subject of a technical advice request. See CCDM 33.2.

32.3.2.3.6  (08-11-2004)
File Memoranda

  1. When a request for a letter ruling presents a particularly difficult question of law a memorandum may be prepared for reviewing officials that discusses the authorities (including court cases and previous determinations by the Service) and the reasoning supporting the initiator’s conclusion that are not included in the proposed reply to the request. These memoranda may be appropriate in borderline cases where there does not appear to be any clear precedent.

  2. If a tentative conclusion is reached in a current letter ruling case that conflicts with a prior conclusion reached on the same issue, a file memorandum explaining the different interpretation should be prepared, and the conflict should be brought to the attention of the appropriate Associate Chief Counsel or Division Counsel/Associate Chief Counsel (TEGE) for resolution. A copy of the memorandum should be retained for the letter ruling file.

  3. The memorandum in both (1) and (2) above should include a discussion of whether it may be more appropriate to use a different form of guidance. See Caution at paragraph 2 of CCDM 32.3.2.3.5.2 Means of Revoking or Modifying a Previously Issued Letter Ruling.

32.3.2.3.7  (08-11-2004)
Case History, Form 9718

  1. See CCDM 30.9 for the use of the case history form.

32.3.2.4  (08-11-2004)
Conferences

  1. The following applies to all conferences (including pre-submission conferences) held in Chief Counsel in connection with requests for letter rulings and technical advice memoranda.

  2. A taxpayer may request a conference regarding a letter ruling request. The taxpayer is entitled, as a matter of right, to only one conference except as provided.

  3. The Associate office will offer the taxpayer an additional conference if, after the conference of right, an adverse holding is proposed, but on a new issue, or on the same issue but on different grounds from those discussed at the first conference. There is no right to another conference when a proposed holding is reversed at a higher level with a result less favorable to the taxpayer, if the grounds or arguments on which the reversal is based were discussed at the conference of right.

  4. The limit on the number of conferences to which a taxpayer is entitled does not prevent the Associate office from offering additional conferences, including conferences with an official higher than the branch level, if the Associate office decides they are needed. These conferences are not offered as a matter of course simply because the branch has reached an adverse decision. In general, conferences with higher level officials are offered only if the Associate office determines that the case presents significant issues of tax policy or tax administration and that the consideration of these issues would be enhanced by additional conferences with the taxpayer.

32.3.2.4.1  (08-11-2004)
Scheduling and Conducting a Conference

  1. A taxpayer may request a conference regarding a letter ruling request. Normally, a conference is scheduled only when the Associate office considers it to be helpful in deciding the case or when an adverse decision is indicated. If conferences are being arranged for more than one request for a letter ruling involving the same taxpayer, they will be scheduled so as to cause the least inconvenience to the taxpayer. A taxpayer who wants to have a conference on the issue or issues involved should indicate this in writing when, or soon after, filing the request.

  2. The conference is normally held at the branch level and is attended by a person who has the authority to sign the letter ruling in his or her own name or for the branch chief. When more than one branch has taken an adverse position on an issue in a letter ruling request or when the position ultimately adopted by one branch will affect that adopted by another, a representative from each branch with the authority to sign in his or her own name or for the branch chief will attend the conference. If more than one subject is to be discussed at the conference, the discussion will constitute a conference on each subject.

  3. To have a thorough and informed discussion of the issues, the conference usually will be held after the branch has had an opportunity to study the case. At the request of the taxpayer, the conference of right may be held earlier.

  4. Because conference procedures are informal, no tape, stenographic, or other verbatim recording of a conference may be made by any party.

  5. The senior Associate office representative present at the conference ensures that the taxpayer has the opportunity to present views on all the issues in question. An Associate office representative explains the Associate office’s tentative decision on the substantive issues and the reasons for that decision. If the taxpayer asks the Associate office to limit the retroactive effect of any letter ruling or limit the revocation or modification of a prior letter ruling, an Associate office representative will discuss the recommendation concerning this issue and the reasons for the recommendation. The Associate office representatives will not make a commitment regarding the conclusion that the Associate office will finally adopt.

  6. Depending on the circumstances, conferences, including conferences of right and pre-submission conferences may be held by telephone. This may occur, for example, when a taxpayer wants a conference of right but believes that the issue involved does not warrant incurring the expense of traveling to Washington, D.C., or if it is believed that scheduling an in person conference of right will substantially delay the ruling process. If a taxpayer makes such a request, the branch reviewer will decide if it is appropriate in the particular case to hold a conference by telephone. If the request is approved, the taxpayer will be advised when to call the Associate office representatives (not a toll-free call).

32.3.2.4.2  (08-11-2004)
Pre-Submission Conferences

  1. Sometimes it will be advantageous to both the Associate office and the taxpayer to hold a conference before the taxpayer submits the letter ruling request to discuss substantive or procedural issues relating to a proposed transaction. These conferences are held only if the identity of the taxpayer is provided to the Associate office, only if the taxpayer actually intends to make a request, only if the request involves a matter on which a letter ruling is ordinarily issued, and only at the discretion of the Associate office and as time permits.

  2. A letter ruling request submitted following a pre-submission conference will not necessarily be assigned to the branch that held the pre-submission conference. Also, when a letter ruling request is not submitted following a pre-submission conference, the Associate office may notify, by memorandum, the appropriate Service official in the operating division that has examination jurisdiction of the taxpayer’s tax return and may give its views on the issues raised during the pre-submission conference. This memorandum may constitute Chief Counsel Advice, as defined in section 6110(i), subject to disclosure under section 6110.

  3. A taxpayer may request a pre-submission conference in writing or by telephone. The request should identify the taxpayer and include a brief explanation of the primary issue so that an assignment to the appropriate branch can be made

  4. Depending on the circumstances, pre-submission conferences may be held in person at the Associate office or may be conducted by telephone.

  5. Generally, the taxpayer will be asked to provide, at least three business days before the scheduled pre-submission conference, a statement of whether the issue is an issue on which a letter ruling is ordinarily issued, a draft of the letter ruling request or other detailed written statement of the proposed transaction, issue, and legal analysis. If the taxpayer’s authorized representative will attend or participate in the pre-submission conference, a power of attorney is required. If multiple taxpayers and/or their authorized representatives will attend or participate in the pre-submission conference, cross powers of attorney (or tax information authorizations) are required.

  6. Any discussion of substantive issues at a pre-submission conference is advisory only, is not binding on the Service in general or on the Office of Chief Counsel in particular, and cannot be relied upon as a basis for obtaining retroactive relief under the provisions of section 7805(b).

32.3.2.4.3  (08-11-2004)
Conference Procedures

  1. If the taxpayer designates a representative to handle the request for a letter ruling, the initiator must be sure that the person representing the taxpayer has met all necessary conference and practice requirements. See CCDM 32.3.2.8 Representation of Taxpayers.

  2. Conferences are generally conducted in an informal manner for the purpose of discussing the issue, the background, and the arguments for and against the proposed ruling.

  3. All pertinent facts should be stated in the original request for a letter ruling (or in information subsequently submitted). Occasionally, however, some fact is identified or developed in the conference or an authority is cited that was not mentioned or fully presented in the request for letter ruling. In these cases, the taxpayer is responsible for furnishing in writing any additional data, lines of reasoning, or precedents that were discussed at the conference in accordance with the requirements to submit additional information in CCDM 32.3.1.14 Requirements with Respect to Submission of Requests for Letter Rulings.

  4. A conference report should be prepared. See Exhibit 32.3.2-7. After approval by the conference leader attending the conference, the original of the report is associated with the case file and copies are distributed to Service personnel who attended.

32.3.2.5  (08-11-2004)
Coordination with Other Offices

  1. The general procedures for coordination are set out in CCDM 31.1.4.

  2. A request for a letter ruling may contain issues coming under the jurisdiction of two or more offices in Chief Counsel. The preparation of a reply in these cases requires coordination between the offices involved. The coordination should be done early and at the lowest supervisory level in order to ensure timely and adequate responses.

  3. A single reply ordinarily should be made to each request for a letter ruling that presents two or more issues. If the reply is to be for signature above the branch level, a single reply is preferable and should be made whenever feasible.

  4. In some cases it may be preferable to reply to each issue separately if the issues are under the jurisdiction of different offices, and those offices agree that separate replies are in the best interests of the Service. Disagreements concerning whether separate replies are preferred will be referred promptly to succeeding levels of authority until resolved. See CCDM 32.3.2.5.2 Resolving Differences.

  5. If more than one branch or office is involved, the branch chief having responsibility for the principal issue in a request is responsible for recognizing the need for coordination and for instituting appropriate action.

32.3.2.5.1  (08-11-2004)
Processing Requests Containing Two or More Issues (Multi-Issue Requests)

  1. On initial receipt of a multi-issue request for a letter ruling, the Docket, Record & User Fee Branch refers the request to the branch having jurisdiction over the principal issue.

  2. If the need for assistance is apparent, it should generally be requested within the first 15 days after receipt in the branch having jurisdiction over the principal issue. If the need for assistance is not apparent upon receipt of the case, assistance should be requested as soon as the need is recognized.

  3. The assistance request should state whether the issues are interdependent or capable of concurrent consideration; if interdependent, the request should state how the requesting branch proposes to rule on its issue.

  4. The assistance request should clearly identify the issue that is the subject of the request either by stating the issue or by clear reference to the issue number, page number, etc., in the underlying request for letter ruling.

  5. The assistance should be written in such form that it can be used in the letter ruling without rewording.

  6. The office receiving assistance should prepare the letter ruling using the signature principles that would be appropriate if no other office were concerned. See CCDM 31.1.3.

32.3.2.5.1.1  (08-11-2004)
Processing Multi-Issue Requests in One Office

  1. When a subsidiary issue is repetitious or routine, the state of the law on that issue is well established, and there is no risk of inconsistent positions, the office that has jurisdiction over the primary issue should also answer the subsidiary issue.

  2. The offices involved will agree on whether the subsidiary issue should be handled by the office having jurisdiction over the primary issue and on the extent to which the office with jurisdiction over the subsidiary issue should review, or be informed of, the proposed reply to the subsidiary issue.

32.3.2.5.1.2  (08-11-2004)
Severance of Issues

  1. Severance of issues is never done unilaterally. The reviewers in the offices involved must agree that severance is the most appropriate way of processing a case, within the context of providing the best service possible and making the most efficient use of available resources.

  2. Taxpayers will not be invited to sever the issues in a case. If a taxpayer asks that the issues in the case be severed, or submits multiple requests for the purpose of separating the issues, and the issues are interrelated, the offices concerned will consult to determine whether assistance or severance is the best method of processing the request. If the issues are so interrelated that they are most efficiently considered in tandem, the issues should not be severed and assistance should be requested by the office with the primary issue.

  3. If a determination is made to sever the issues, the severance should be made as early as possible; i.e., as soon as it is mutually determined that the issues are not interdependent and that severance is in the best interests of the taxpayer and of the Service.

  4. In any case that the supervisors decide to sever an issue, the initiator of the original request should provide a copy of the request and any relevant material to the other office using a buck slip or short memorandum signed by the branch chief or other reviewer stating that the case is being severed and the response to the issue is to be prepared separately.

  5. The receiving office should ask the Docket, Record & User Fee Branch to create a new TECHMIS number for the severed issue and to cross-reference the initial request.

  6. Each of the separate replies is prepared for the appropriate signature and contains a statement that the issue not answered is being considered separately.

32.3.2.5.2  (08-11-2004)
Resolving Differences

  1. When assigning, preparing, or reviewing letter rulings, whether or not more than one issue is involved, each initiator should be alert to the possibility that the issue or issues in the request may involve two or more Code sections that are under the jurisdiction of more than one office. In any case where a conflicting interpretation appears to be developing or to have occurred, every effort should be made to resolve the matter at the earliest stage of consideration and at the lowest managerial level. Matters that cannot be resolved at the lowest managerial level should be referred promptly to succeeding levels of authority until resolved. The matter is to be handled expeditiously and each level of authority will attempt to resolve the matter informally, but as a matter proceeds to higher levels of review certain memoranda may need to be prepared.

  2. The resolution of a difference at any level of authority should be evidenced by endorsement of the official file copy, Form 1937, by the offices involved.

  3. In any case where appropriate, a memorandum of agreement signed by both offices, indicating the basis upon which the differences were resolved, is also made part of the case file.

  4. For additional procedures to be followed in resolving disagreements between two offices see CCDM 31.1.4.

32.3.2.6  (08-11-2004)
Coordination with Other Federal Departments and Agencies

  1. The following covers coordination with other federal departments and agencies.

  2. As the need arises initiators confer with members of other departments or agencies of the Government on specific matters requiring coordination.

  3. The Service is responsible for the Federal Insurance Contributions Act (FICA) tax and the Self-Employment Contributions Act (SECA) tax provisions of the Code. The Social Security Administration administers the social security medicare coverage provisions under the Social Security Act. Coordination procedures were originally adopted in December 1937. A Presidential directive dated February 24, 1949, requires the two agencies to join in submitting to the Attorney General for advice any case in which the two agencies have divergent views.

  4. The Service is responsible for the Railroad Retirement Tax Act provisions of the Code. The Railroad Retirement Board administers the retirement and benefit coverage provisions under the Railroad Retirement and Railroad Unemployment Insurance Acts. Coordination procedures were revised in a written agreement dated December 3, 1973, between the Service and the Board.

32.3.2.6.1  (08-11-2004)
Employment Tax Coordination with Social Security Administration

  1. The Division Counsel/Associate Chief Counsel (TEGE) has responsibility for all coordination procedures between the Service and the Social Security Administration (SSA) with respect to cases involving technical questions referred to the Associate offices. Such procedures include the following:

    1. Making available to the SSA legal opinions of Chief Counsel and of the General Counsel for the Department of the Treasury concerning tax liability under the Federal Insurance Contributions Act and the Self-Employment Contributions Act.

    2. Receiving inquiries from the SSA and initiate action in novel cases of sufficient importance to justify joint consideration.

    3. Receiving inquiries from the SSA in those cases in which the coverage status of the individuals involved is being considered by both agencies.

    4. Exchanging views in any matter of substantial importance to the operations of the other, or if one of the respective agencies contemplates making a decision in a specific case that is contrary to a prior decision of the other agency or to the views expressed by it.

    5. Affording the SSA an opportunity to express its views with respect to the publication of any letter ruling if, because of its broad scope or application, coordination is deemed desirable or there is doubt whether the SSA agrees with the views of the Service.

  2. Any matter regarding the Federal Insurance Contributions Act (FICA) tax and the Self-Employment Contributions Act (SECA) tax provisions of the Code that arises directly or indirectly in a case in another Associate Office should be coordinated with the Office of the Division Counsel/Associate Chief Counsel (TEGE) as soon as the matter arises.

32.3.2.6.2  (08-11-2004)
Employment Tax Coordination with Railroad Retirement Board

  1. The Division Counsel/Associate Chief Counsel (TEGE) has responsibility for all coordination procedures between the Service and the Railroad Retirement Board with respect to cases involving technical questions. Such coordination shall be with the Chief Executive Officer and the General Counsel of the Railroad Retirement Board and shall include the following procedures:

    1. Making avail