A letter ruling, also known as a private letter ruling, is a written statement provided by the IRS that outlines the impact of a specific transaction on a taxpayer’s taxes. It serves as guidance from the IRS on how to navigate a particular situation.
A letter ruling is a written statement from the IRS to a taxpayer who has inquired about a specific transaction. It clarifies the tax implications of the transaction and offers guidance on next steps. For instance, if a taxpayer is considering a complex financial transaction, they can request a letter ruling from the IRS to ensure compliance with tax laws. The IRS will review the transaction details and issue a letter ruling that outlines the tax consequences. Another example is seeking clarification on how a specific tax law applies to a particular situation. The IRS will review the request and provide a written response explaining the law’s application. Letter rulings are crucial as they provide taxpayers with guidance on tax compliance and offer certainty and predictability for important financial decisions.
A letter ruling is a written statement issued by the IRS in response to a taxpayer’s request for guidance on a specific tax issue.
To request a letter ruling, you must submit a written request to the IRS that includes all relevant facts and circumstances related to the tax issue in question.
Yes, a letter ruling is binding on the IRS with respect to the taxpayer who requested it, as long as the facts and circumstances remain the same.
Yes, you can rely on a letter ruling for your own tax situation, as long as the ruling applies to your specific facts and circumstances.
The time it takes to receive a letter ruling can vary, but the IRS generally aims to issue a ruling within 120 days of receiving a complete request.
Yes, you can appeal a letter ruling by following the IRS’s established appeals process.
Yes, there are user fees associated with requesting a letter ruling, which vary depending on the type of ruling requested.
No, the IRS requires that letter ruling requests include the taxpayer’s name and identification number.
Yes, a letter ruling can be revoked or modified by the IRS if there is a change in the law or if the ruling was based on incorrect or incomplete information.
No, letter rulings are issued by the IRS and only apply to federal tax issues. For state tax issues, you would need to contact the relevant state tax authority for guidance.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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