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The IRS is conducting an 18-month pilot program that allows taxpayers to request fast-track processing of corporate letter rulings if they meet the guidelines set out in Revenue Procedure 2022-10. The IRS will strive to issue a ruling within 12 weeks after the request.

The program, which began on January 14, 2022, applies to both new and pending requests under the jurisdiction of the Associate Chief Counsel (Corporate). The program is not available, however, for requests to extend the time to make elections under Treas. Reg. 301.9100 (Section 9100 relief), but taxpayers can request expedited handling under the procedures in Revenue Procedure 2022-1.

The fast-track process replaces expedited handling for most requests under the jurisdiction of the Associate Chief Counsel (Corporate) and will generally be granted. According to an article in Tax Notes Today, an IRS official clarified at a January 19, 2022 meeting of the New York State Bar Association's Tax Section that fast-track processing is not "need-based."¹ This contrasts with expedited handling, which is only granted under Revenue Procedure 2022-1 in "rare and unusual cases," when something outside a taxpayer's control creates a real business need to obtain a letter ruling or determination letter before a certain date to avoid serious business consequences.

Fast-track process

To request fast-track processing, a taxpayer must first request a pre-submission conference by providing (1) the reasons for requesting fast-track processing, (2) the time by which the ruling is needed (if other than 12 weeks), (3) anything that may make fast-track processing unfeasible, and (4) any issues that are not under the jurisdiction of the Associate Chief Counsel (Corporate) and whether a ruling will be requested on those issues. In the pre-submission conference, the taxpayer should address the substantive issues and the fast-track processing request.

The taxpayer must also submit a letter ruling request that (1) complies with the requirements in Revenue Procedure 2022-1, (2) states that fast-track processing is requested, (3) provides the same information required for the pre-submission conference, and (4) includes a draft letter ruling that includes "a legend of defined terms, a description of relevant facts, representations, requested rulings, and administrative matters."

In deciding whether fast-track processing is feasible and the appropriate time period for resolving the request, the IRS representative will consider (1) the facts, complexity of the transactions and the obligations of the relevant IRS attorneys; (2) whether the letter ruling request clearly describes and analyzes the facts and issues; (3) whether the draft letter ruling complies with the requirements in this revenue procedure; (4) the taxpayer's need for fast-track processing; and (5) any concerns from another Associate office.

The IRS "strongly" recommends submitting the request by encrypted email. If the request is submitted by a different method, the draft letter ruling must still be submitted by an encrypted email attachment.

IRS response

The IRS representative will notify the taxpayer within seven days of receiving the request as to whether the request is granted, modified (allowing for more than 12 weeks), denied or pending. If the request is denied, the taxpayer may respond either orally or in writing to discuss the denial. If the IRS representative affirms the denial, there is no right of appeal, and the ruling request will be processed under the regular procedures.

The IRS might agree to make a ruling in less than 12 weeks if the IRS representative determines there is a "real business need" and the shorter processing time is feasible.

If the IRS representative asks for more information, the taxpayer must submit it within seven days or the fast-track processing could be terminated and the request processed under the regular procedures. The taxpayer can request an extension of the response time either orally or in writing.

Implications

This pilot program will save taxpayers that need a ruling substantial time for issues under the jurisdiction of Associate Chief Counsel (Corporate). It will also allow those taxpayers to get certainty much more expediently than under the usual ruling program. Taxpayers must be prepared with the materials requested once they begin the process, however, in order to meet the tight timelines.

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ENDNOTE

¹ Chandra Wallace, Corporate Letter Ruling Requests Don't Have to Show Need for Speed, Tax Notes Today (Jan. 20, 2022).