In this episode of our podcast, Parental Advisory, we discuss the advantages and disadvantages of the curious tax procedure know as an IRS private letter ruling.
What is a private letter ruling?
A taxpayer requested private letter ruling (PLR), per the IRS, is "a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer’s represented set of facts. A PLR is issued in response to a written request submitted by a taxpayer." A private letter ruling binds only the IRS and the requesting taxpayer. A private ruling may not be cited or relied upon as precedent by other taxpayers.
If a problem is common enough, the IRS can redact the personal content of a private ruling and instead issue it as a revenue ruling, which becomes binding for all taxpayers and for the IRS. Click here to view all PLRs ever issued !
Cost of a Private Letter Ruling
The IRS fees for a PLR range from $250-$50,000, depending on which program is used. Legal fees experience a similar variance. Some issues are entirely straight-forward, while others may include all the moving parts of both the proposed transaction and tax laws, regulations, and revenue rulings.
If you have a tax issue that you need assistance with, contact us here. Whether it's a state or federal tax issue, foreign or domestic – we can help.
