We Help Clients With IRS Private Letter Rulings

Private Letter Rulings

You probably found us by searching for a “private letter ruling attorney” or “IRS PLR attorney.” Regardless of how you found us, we are glad you did.

We are a tax law firm in Houston, Texas that helps request private letter rulings from the IRS.

What is an IRS Private Letter Ruling Request?

In certain instances, the IRS will make advance rulings for taxpayers with regard to how certain transactions are to be taxed. The private letter ruling request is one avenue for getting the IRS to make this type of advance ruling.

An IRS private letter ruling is an official written statement from the Internal Revenue Service that interprets and applies tax law to a set of facts.

Private letter rulings or PLRs can address all sorts of tax matters, such as whether a non-profit corporation is entitled to non-profit status, whether an IRA retirement contribution or account qualifies for tax deferral, whether a late S corporation election will be granted, whether a trust is exempt from generation-skipping transfer tax, and whether a taxpayer is entitled to deduct certain business expenses or entitled to claim certain tax credits.

There are three types of IRS private letter rulings:

1. A public letter ruling, which is published by the IRS for taxpayers to use in their tax return filing.

2. A confidential letter ruling, which the taxpayer should not share with anyone, including other taxpayers.

3. A private letter ruling, which is not published by the IRS and is only distributed to the taxpayer’s requesting representative(s).

Once issued, the IRS is bound by the private letter ruling (or PLR) with regard to the specific taxpayer and the specific transaction covered in the letter. The IRS is not bound by a private letter ruling if the facts or circumstances are not adequately represented in the ruling request.

This is different than IRS technical advice. Technical Advice refers to a letter ruling that explains how the IRS interprets an aspect of tax law applying to some set of facts. It is not binding on the taxpayer or the IRS. The IRS usually has to agree to consider issuing Technical Advice and it usually only does so if it thinks the advice will help make it easier for IRS auditors to resolve certain types of issues or audits.

Are IRS Private Letter Rulings Public?

Publication of IRS Private Letter Rulings is not mandated by statute or regulations.

Our tax laws do not mandate the publication of private letter rulings. There are, however, statutory provisions that require IRS to compile and publish specific information for taxpayers, including material relating to tax enforcement activity. Section 6110(i) states that “IRS shall maintain a compilation of . . . rulings applicable to the determination or collection of any tax imposed by this title which have been rendered by the Service since January 1, 1980.”

This is why most IRS PLR’s are made public. The IRS views them as a form of guidance that can be helpful to other taxpayers.

The IRS publishes the text of all PLRs in its Private Letter Rulings (PLR) database and updates it weekly. Anyone can access these rulings and view them for free online in PDF format on the IRS’s website.

Not all of the information you provide is made public. The IRS takes steps to remove facts that can disclose your identity. The IRS will send you the full version and ask you to agree or disagree with the redacted facts (i.e., the facts that the IRS removes). The redacted version is then made public.

How Long Does an IRS Private Letter Ruling Take?

The IRS does not have a set time limit for issuing letter rulings. The time it takes for the IRS to issue a letter varies depending on the complexity of the letter and other factors.

Generally, an IRS PLR takes about 6-12 months to process for review and approval if approved an additional 6-12 months can be necessary for the delivery of the PLR to you or your representative if you are not in possession of it already.

How Do I Submit an IRS Private Letter Ruling Request?

The IRS has not published a “private ruling form.” The method for submitting the request varies based on the type of request that is being asked for.

At a minimum, the PLR request will include an IRS form and a letter prepared by a tax attorney that is submitted to the IRS. These documents must describe the facts and circumstances that give rise to your request. These documents will provide the IRS with the following information:

1. A description of the taxpayer’s specific situation

2. The basis for determining that it is not likely to be one of a class of transactions previously ruled upon

3. A description of all material differences between the taxpayer’s situation and those considered in previous rulings

4. All pertinent law, regulations, rulings, administrative decisions, court decisions and other authorities with respect to the issue

The request will also usually include a copy of all pertinent legal documents related to your request.

The IRS may offer a pre-submission conference. The IRS pre-submission conference is a meeting with representatives of the IRS to clarify specific matters or an issue. The IRS may also issue pre-submission letters as part of the pre-submission conference or separate from the pre-submission conference. These letters can help taxpayers save time and money by advising them on how to address potential problems with their submission before being submitted to the IRS for review.

How Much Does it Cost to Get an IRS Private Letter Ruling?

There are two costs to obtaining a PLR from the IRS. The first is the user fees. The user fees vary based on the type of ruling requested. These fees have varied over time. You can find a list of the user fees for PLRs on the IRS website.

The second fee is the attorneys fees. These fees can vary from firm to firm, and from tax attorney to tax attorney. We offer a free initial consultation and after the consultation, can usually provide a quote or estimate of the fees.

Help Submitting a Private Letter Ruling Request

An experienced tax attorney can help submit these ruling requests and ensure that the request is submitted in a way that will bind the IRS by the ruling.

If you want to talk to a tax lawyer about submitting a PLR, we want to hear from you. Call us at (713) 909-4906 or contact our attorneys to get started on your private letter ruling request.

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