IRS pilots program to fast-track private letter rulings

Accounting

The Internal Revenue Service is pilot-testing a program for the next year and a half to expedite requests for rulings and determination letters for corporate taxpayers.

The IRS issued a revenue procedure Friday establishing an 18-month pilot program to offer an opportunity for fast-track processing of certain requests for letter rulings solely or primarily under the jurisdiction of the Associate Chief Counsel on the corporate side.

The IRS typically processes requests for letter rulings and determination letters in order of the date when they’re received. A request for expedited handling needs to be made in writing to the IRS, “preferably in a separate letter included with the request for the letter ruling or provided soon after its filing, and to explain in detail the need for expedited handling,” said the IRS.

IRS headquarters in Washington, D.C.

Andrew Harrer/Bloomberg

There are only certain circumstances in which the IRS will grant expedited handling of a letter ruling request. It’s usually granted “only in rare and unusual cases, out of fairness to other taxpayers and because the Service seeks to process all requests as expeditiously as possible and to give appropriate deference to normal business exigencies in all cases,” said the IRS. The agency may decide to grant a request for expedited handling when there’s a factor outside a taxpayer’s control that creates an urgent business need to get a letter ruling or determination letter before a certain date to avoid “serious business consequences.”

The IRS and the Treasury are going to try to be more flexible after coming under pressure from companies that need the letter rulings faster, so they’re trying out the new pilot program for 18 months to see how it goes.

“The Department of the Treasury (Treasury Department) and the Service have received numerous informal comments from taxpayers and practitioners regarding the time required to process letter ruling requests,” said the new revenue procedure. “The Treasury Department and the Service have determined that faster processing of certain requests for letter rulings solely or primarily under the jurisdiction of the Associate Chief Counsel (Corporate) would improve service to taxpayers and enhance sound administration of the corporate tax provisions of the Internal Revenue Code (Code).”

The IRS will try to process the requests within 12 weeks of when they are received, unless a shorter or longer period of time is requested and if the taxpayer fits the eligibility requirements. Corporate taxpayers will need to provide a statement explaining the reasons for requesting fast-track processing, the length of the specified period the requested (if other than 12 weeks), any matters that could affect the feasibility of fast-track processing, and any other issues relevant to the transaction, including whether a ruling will be requested on each issue.

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