The IRS has established in Revenue Procedure 2023-26 a permanent program for fast-tracking corporate letter rulings that meet certain guidelines. This program replaces the pilot program under Revenue Procedure 2022-10 (see Tax Alert 2022-0144), with two notable changes, and applies to ruling requests received by the IRS after July 26, 2023.

The permanent program, which is very similar to the pilot program, clarifies that (1) fast-track processing is not available for letter rulings that include a closing agreement and (2) a business need for the ruling must only be stated for rulings requested with less than a 12-week timeline, although it is still necessary to state the reasons fast-track processing is being requested.

Background

In January 2022, the IRS announced that it was conducting an 18-month pilot program allowing taxpayers to request fast-track processing of corporate letter rulings if they met the guidelines in Revenue Procedure 2022-10. The IRS said it would strive to issue a ruling within 12 weeks after the request.

Revenue Procedure 2023-26

The permanent program formalizes the pilot program with "two notable changes."

First, fast-track processing is not available for a request for Section 9100 relief, or letter ruling requests that include a closing agreement (either before or during the process) for an issue under the jurisdiction of the Associate Chief Counsel (Corporate) or another Associate office. Expedited handling under Section 7.02(4) of Revenue Procedure 2023-1, however, remains available for such requests.

Second, the IRS clarified that taxpayers are not required to demonstrate a business need for the fast-track processing unless they are requesting a ruling in less than 12 weeks. Taxpayers, however, must state their reasons for requesting fast-track processing; those reasons are a factor in determining whether fast-track processing is granted.

Implications

Similar to the pilot program, this permanent program will save taxpayers that need a ruling for issues under the jurisdiction of Associate Chief Counsel (Corporate) substantial time. Taxpayers must be prepared with the necessary materials requested once they begin the process, and generally must respond to requests for additional information within seven business days in order to continue with fast-track processing.

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Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor