Private letter ruling

Also found in: Dictionary, Thesaurus, Legal, Acronyms, Encyclopedia, Wikipedia.

Private letter ruling

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


An official opinion by the IRS on how it interprets U.S. tax law. The IRS may make a ruling, for example, after seeing taxpayers apply a deduction or credit to an unusual, but still relevant situation. The IRS determines whether or not it will accept the situation, and, afterward, applies the ruling to all comparable situations. It is also called a revenue ruling, a letter ruling, or a private letter ruling.

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.

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.

References in periodicals archive ?
Although, as illustrated by the last example, the recipient taxpayer of a private letter ruling may rely on it, other taxpayers cannot.
Not all organizations will be able to justify the full cost of obtaining a private letter ruling and may wish to operate under a legal opinion from tax counsel.
Alternatively, they could have allowed firms to request a private letter ruling in cases where it is unclear whether a transaction has economic substance.
A major difference between the two rulings is that in Private Letter Ruling 201245004 the spouse would still receive beneficial enjoyment from the IRA after the disclaimer.
In some instances, private letter rulings lead to the IRS publishing a Revenue Ruling for common usage: "a Revenue Ruling often results from a specific taxpayer's request for a letter ruling .
The regulation says private letter rulings and GCMs are not authoritative.
According to the revenue procedure, which was released on June 23, 2003, the IRS will continue to issue private letter rulings concluding that transactions qualify under section 355, but will base those rulings on the taxpayer's representations that the foregoing three core requirements are satisfied.
A recently issued private letter ruling (unnumbered at press time but scheduled for release about Dec.
In private letter ruling 9721036, a taxpayer over age 591/2 qualified for an in-service distribution of cash and employer stock from a qualified 401(k) plan.
The revocation of a portion of a 1989 private letter ruling, however, may mean that the separate Sec.
In private letter ruling 9711001, the Internal Revenue Service ruled that since tenure is granted based on a faculty member's past performance, any payments to a retiring employee to give up tenure are wages for FICA tax purposes.