private letter ruling

Private letter ruling

A ruling by the IRS in response to a request for interpretation of a tax law.

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Private letter ruling. A private letter ruling explains a position the Internal Revenue Service (IRS) has taken on a specific issue or action that affects the amount of income tax a taxpayer owes.

While these rulings are not the law, and there's no guarantee that they won't be overturned by new IRS opinions, they can provide guidance on how to handle financial decisions that have potential tax consequences. There is a fee when you request such a ruling.

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private letter ruling

An official IRS decision regarding how it will treat a transaction contemplated by the particular taxpayer who requested the private letter ruling.Private letter rulings are binding on the IRS for that one taxpayer, but other taxpayers are not entitled to rely on the position articulated in the ruling. Another taxpayer with an identical fact situation could find the IRS taking a completely different position.