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February 16, 2009

Private letter ruling (PLR)

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Definition

A written statement issued by the IRS to a  taxpayer in response to the taxpayer’s requests  to  interpret and apply tax laws to the taxpayer’s specific set of facts and circumstances.

A PLR is issued to establish with certainty the federal tax consequences of a particular transaction, typically before the transaction is consummated or before the taxpayer’s return is filed.

A PLR is  binding on the IRS if the taxpayer fully and accurately described the proposed transaction in the request and carries out the transaction as described.

A PLR may not be relied on as precedent by other taxpayers or IRS personnel.

Referring Cite

IRC § 6110(k)(3), Revenue Procedure 2003-4, Revenue Procedure  2006-4

Additional Helpful Information

  • PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued.
  • While PLRs cannot be cited or used as legal reference, they give good insight on how the IRS may respond to situations with similar facts and circumstances
  • The procedure for obtaining a letter ruling are published annually in the first revenue procedure of each calendar year. The current procedures are in Internal Revenue Bulletin 2007-01, which can be found in Internal Revenue Bulletin 2007-1. The Revenue Procedure and the Internal Revenue Bulletin can be downloaded from the electronic reading room on the IRS Freedom of Information website.

A request for a letter ruling including the applicable user fee, should be submitted to:

Ruling Request Submission
Internal Revenue Service
Attn: CC: PA:LPD:DRU
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

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