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IRS National Office Procedures — Rulings, Closing Agreements (Portfolio 621)

Tax Management Portfolio, IRS National Office Procedures — Rulings, Closing Agreements, No. 621-3rd, discusses the procedures for requesting rulings, determination letters, technical advice, closing agreements, and other types of guidance, from the Internal Revenue Service. The Portfolio also discusses the circumstances in which guidance is available and the effect of that guidance once it is issued. The retroactive effect of a revocation or modification of an IRS pronouncement is discussed in detail.

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DESCRIPTION

Tax Management Portfolio, IRS National Office Procedures — Rulings, Closing Agreements, No. 621-3rd, discusses the procedures for requesting rulings, determination letters, technical advice, closing agreements, and other types of guidance, from the Internal Revenue Service. The Portfolio also discusses the circumstances in which guidance is available and the effect of that guidance once it is issued. The retroactive effect of a revocation or modification of an IRS pronouncement is discussed in detail.


The procedures for obtaining IRS guidance are intended to minimize controversies, enhance tax planning, and improve relations between the IRS and taxpayers. However, these procedures are normally helpful to a taxpayer only if the taxpayer knows how to use them and is fully aware of their legal and practical effects.


Buy IRS National Office Procedures — Rulings, Closing Agreements (Portfolio 621) now


AUTHORS

LISA MARIE STARCZEWSKI
Lisa Marie Starczewski, Smith College, B.A. (magna cum laude, 1985); Villanova University, J.D. (summa cum laude, 1988); Editor-in-Chief, Villanova Law Review (1987-88); member of adjunct faculty, Villanova University School of Law; former associate, Morgan, Lewis & Bockius; Schnader, Harrison, Segal & Lewis; member, Philadelphia Bar Association Section of Taxation; author, 714 T.M., Partnerships — Allocation of Liabilities; Basis Rules, 752 T.M., Corporate Alternative Minimum Tax, 587 T.M., Noncorporate Alternative Minimum Tax, and 565 T.M., Installment Sales; co-author, 517 T.M., Scholarships and Educational Expenses, 503 T.M., Deductions: Overview and Conceptual Aspects, and 504 T.M., Deduction Limitations: General; author and co-author of numerous book chapters; contributor to various tax publications.

TABLE OF CONTENTS

Detailed Analysis

I. Introduction

A. In General

B. IRS Structure

C. Forms of IRS Guidance

D. Relevant Revenue Procedures

E. Disclosure of Written Determinations - § 6110

1. General Rule

2. Administrative Procedures to Be Followed

a. Technical Advice Memoranda

(1) Field or Area Office Action

(2) Associate Office Action

(3) Final IRS Conclusion

b. Rulings or Determination Letters

3. Third Party Contacts

4. Civil Remedies

F. User Fees

1. In General

2. Fee Schedule

a. In General

b. Reduced User Fees and Exemptions

3. Submissions Involving Multiple Offices, Fee Categories, Issues, Transactions, or Entities

4. Fee Submission Procedures

a. In General

b. Nonpayment or Payment of Incorrect Amount

c. Refunds and Reconsideration of Fees

G. Substantial Understatement Penalty

II. Letter Rulings

A. In General

B. Is a Ruling Available?

1. In General

a. Income Tax and Gift Tax

b. Estate Tax

c. Generation-Skipping Transfer Tax

d. Employment Tax and Excise Tax

e. Administrative Procedures

f. Indian Tribal Governments

g. Business Associations or Groups

h. Rulings Pending Adoption of Regulations

2. When Obtaining a Ruling Is Mandatory

a. Change in Accounting Method or Period

b. Taxable Year of Partnerships, S Corporations, and Personal Service Corporations

c. Section 1502

d. Regs. § 301.9100 Relief

(1) Automatic Extensions

(a) Automatic 12-Month Extensions

(b) Automatic Six-Month Extensions

(c) Filing Procedures

(2) Other Extensions

(a) Reasonable Action and Good Faith

(b) Prejudice to the Government's Interest

(c) Procedural Requirements

(3) Examples

(4) Denial of Extension

3. No-Ruling Areas

a. In General

b. Areas in Which the IRS Will Not Rule

c. Areas in Which the IRS Ordinarily Will Not Rule

d. Areas Under Extensive Study in Which Rulings Will Not Be Issued

e. Areas Covered by Automatic Approval Procedures

f. “Comfort Letter” Ruling Policy

4. Specific Areas in Which the IRS Will Issue Rulings

C. Whether a Ruling Should be Requested

D. How to Obtain a Ruling

1. Where to Apply

2. Form of Request

3. Number of Copies

4. Fax Communications

5. What Must be Included in Request

a. Complete Statement of Facts and Other Information

b. Underlying Documents

c. Statement Regarding Whether Same Issue Is in an Earlier Return

d. Statement Regarding Whether Same or Similar Issue Previously Ruled on or Requested or Currently Pending

e. Statement Regarding Interpretation of a Substantive Provision of an Income Tax or Estate Tax Treaty

f. Statement of Authorities

g. Statement Identifying Pending Legislation

h. Deletions Statement

i. Signature of Taxpayer or Authorized Representative

j. Penalties of Perjury Statement

k. Request for Conference

l. Checklist

m. Special Cases

E. How Is the Request Processed by the IRS?

1. Initial Review

2. Contact Within 21 Days

3. Conferences with the IRS

a. Preliminary Conferences

b. Conference of Right

c. Additional Conference

4. Following Up on Status of the Request

5. Expeditious Handling

6. Receipt of the Letter Ruling

F. The Effect of a Ruling

1. Taxpayer Reliance

2. Modification or Revocation of a Ruling

3. Retroactive Modification or Revocation of a Ruling

4. Compliance by the IRS with a Ruling

5. Precedential Effect of Rulings

G. Withdrawing a Request for Ruling

1. How to Withdraw a Request

2. When to Withdraw a Request

3. Effects of a Withdrawal

III. Determination Letters

A. In General

B. Availability of Determination Letters

1. Income Tax and Gift Tax Matters

2. Estate Tax Matters

3. Generation-Skipping Transfer Tax Matters

4. Employment Tax and Excise Tax Matters

C. Circumstances Under Which Determination Letters Will Not Be Issued

D. Requests for Determination Letters

1. In General

2. Where to Apply

E. IRS Processing of Determination Letters

F. Withdrawal of Request

G. Effect of a Determination Letter

H. Modification or Revocation of a Determination Letter

IV. Technical Advice

A. In General

1. Overview

2. Technical Expedited Advice

B. Requesting Technical Advice

1. In General

2. Requests by the IRS

3. Requests by Taxpayers

4. Appeal of IRS Decision Not to Seek Technical Advice

5. Pre-Submission Conferences

C. Conference in the Associate Office

D. Advice by the Associate Office

E. Effect of Technical Advice

1. Taxpayer Reliance

2. Modification or Revocation of Technical Advice

3. Precedential Effect of Technical Advice

V. Revenue Rulings and Revenue Procedures

A. Revenue Rulings

1. In General

2. Format

3. Official Procedure

4. Taxpayer Reliance on a Revenue Ruling

5. Retroactive Application and Revocation of Revenue Rulings

6. IRS Changes to Published Revenue Rulings

B. Revenue Procedures

1. In General

2. Taxpayer Reliance on Revenue Procedures

VI. Other IRS Pronouncements

A. Information Letters

B. Actions on Decisions

1. In General

2. Effect of Acquiescence and Nonacquiescence

3. Revocation of Acquiescence and Nonacquiescence

C. General Counsel Memoranda

D. Internal Revenue Manual

E. Internal Revenue Bulletin

F. Announcements and Notices

G. Tax Return Publications

H. Chief Counsel Advice

VII. Closing Agreements

A. In General

B. “Compromise” Distinguished

C. Use of Closing Agreement

D. IRS Policy Regarding Use of Closing Agreement

E. Subjects of Closing Agreement

1. In General

2. Agreements Determining Tax Liability

3. Agreements Regarding Specific Matters

F. Form of Agreement

G. Content of Agreement

H. Interpretation of Closing Agreement

I. Where to Apply

J. Deadline for Applying

K. Execution of Agreement

1. Taxpayer Signature

a. In General

b. Corporate Taxpayer

c. Partnership

2. IRS Signature

L. Specialized Closing Agreements

1. Pre-Filing Agreements (PFAs)

2. Accelerated Issue Resolution (AIR) Agreements

3. Early Referral Issues

4. Alternative-Timing Settlements

5. IRS-Initiated Accounting Method Changes

M. Revocation of Closing Agreement


WORKING PAPERS

Working Papers

Table of Worksheets

Related Practice Aids in Other Tax Management Portfolios:

Worksheet 1 IRM 1.2.1 - Policies of the IRS (Excerpts - Technical Policies)

Worksheet 2 First Annual Revenue Procedure - Ruling and Determination Letters, Information Letters, Closing Agreements

Worksheet 3 Sample Request for Private Letter Ruling

Worksheet 4 Rev. Proc. 86–18, 1986–1 C.B. 551 - Sections 302, 311 Checklist Questionnaire

Worksheet 5 Rev. Proc. 90–27, 1990–1 C.B. 514 - Procedures Relating to Application for § § 501 and 521 Tax-Exempt Status

Worksheet 6 Notice 441 - Notice of Intention to Disclose Under § 6110

Worksheet 7 Second Annual Revenue Procedure - Technical Advice

Worksheet 8 Third Annual Revenue Procedure - List of No Ruling Areas

Worksheet 9 Fourth Annual Revenue Procedure - Rulings and Determination Letters, Information Letters, Closing Agreements for Employee Plans and Exempt Organizations

Worksheet 10 Objectives and Standards for Publication of Revenue Rulings and Procedures: Rev. Proc. 89–14, 1989–1 C.B. 814

Worksheet 11 Terminology Used in Revenue Rulings and Revenue Procedures

Worksheet 12 Rev. Proc. 68–16, 1968–1 C.B. 770 - Closing Agreements Under § 7121

Worksheet 13 Delegation Order No. 97 - Closing Agreements Concerning Internal Revenue Tax Liability (§ 7121; Regs. § 301.7121-1)

Bibliography

OFFICIAL:

Internal Revenue Code

Committee Reports:

Revenue Rulings and Procedures:

Cases:

UNOFFICIAL

Periodicals:

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