IRS Revenue Procedure
2002-1

 Code Sec. NONE

<<FULL TEXT>>

26 CFR 601.201: Rulings and determination letters.

REV. PROC. 2002-1

TABLE OF CONTENTS

SECTION 1. WHAT IS THE PURPOSE OF THIS REVENUE PROCEDURE?

SECTION 2. IN WHAT FORM IS GUIDANCE PROVIDED BY THE OFFICES OF ASSOCIATE
CHIEF COUNSEL (CORPORATE), ASSOCIATE CHIEF COUNSEL (FINANCIAL INSTITUTIONS
& PRODUCTS), ASSOCIATE CHIEF COUNSEL (INCOME TAX & ACCOUNTING), ASSOCIATE
CHIEF COUNSEL (INTERNATIONAL), ASSOCIATE CHIEF COUNSEL (PASSTHROUGHS &
SPECIAL INDUSTRIES), ASSOCIATE CHIEF COUNSEL (PROCEDURE AND
ADMINISTRATION), AND DIVISION COUNSEL/ASSOCIATE CHIEF COUNSEL (TAX EXEMPT
AND GOVERNMENT ENTITIES)?
.01 Letter ruling
.02 Closing agreement
.03 Determination letter
.04 Information letter
.05 Revenue ruling
.06 Oral guidance
(1) No oral rulings, and no written rulings in response to oral
requests
(2) Discussion possible on substantive issues

SECTION 3. ON WHAT ISSUES MAY TAXPAYERS REQUEST WRITTEN GUIDANCE UNDER
THIS PROCEDURE?
.01 Issues under the jurisdiction of the Associate Chief Counsel
(Corporate)
.02 Issues under the jurisdiction of the Associate Chief Counsel
(Financial Institutions & Products)
.03 Issues under the jurisdiction of the Associate Chief Counsel
(Income Tax & Accounting)
.04 Issues under the jurisdiction of the Associate Chief Counsel
(International)
.05 Issues under the jurisdiction of the Associate Chief Counsel
(Passthroughs & Special Industries)
.06 Issues under the jurisdiction of the Associate Chief Counsel
(Procedure and Administration)
.07 Issues under the jurisdiction of the Division Counsel/Associate
Chief Counsel (Tax Exempt and Government Entities)

SECTION 4. ON WHAT ISSUES MUST WRITTEN GUIDANCE BE REQUESTED UNDER
DIFFERENT PROCEDURES?
.01 Alcohol, tobacco, and firearms taxes
.02 Employee plans and exempt organizations

SECTION 5. UNDER WHAT CIRCUMSTANCES DOES THE NATIONAL OFFICE ISSUE LETTER
RULINGS?
.01 In income and gift tax matters
.02 A section 301.9100 request for extension of time for making an
election or for other relief
.03 Determinations under section 999(d) of the Internal Revenue Code
.04 In matters involving section 367
.05 In estate tax matters
.06 In matters involving additional estate tax under section 2032A(c)
.07 In matters involving qualified domestic trusts under section 2056A
.08 In generation-skipping transfer tax matters
.09 In employment and excise tax matters
.10 In administrative provisions matters
.11 In Indian tribal government matters
.12 Generally not to business associations or groups
.13 Generally not to foreign governments
.14 Generally not on federal tax consequences of proposed legislation
.15 Issuance of a letter ruling before the issuance of a regulation or
other published guidance

SECTION 6. UNDER WHAT CIRCUMSTANCES DO DIRECTORS ISSUE DETERMINATION
LETTERS?
.01 In income and gift tax matters
.02 In estate tax matters
.03 In generation-skipping transfer tax matters
.04 In employment and excise tax matters
.05 Circumstances under which determination letters are not issued by
a director
.06 Requests concerning income, estate, or gift tax returns
.07 Attach a copy of determination letter to taxpayer's return
.08 Review of determination letters

SECTION 7. UNDER WHAT CIRCUMSTANCES DOES THE SERVICE HAVE DISCRETION TO
ISSUE LETTER RULINGS AND DETERMINATION LETTERS?
.01 Ordinarily not in certain areas because of factual nature of the
problem
.02 Not on alternative plans or hypothetical situations
.03 Ordinarily not on part of an integrated transaction
.04 Not on frivolous issues
.05 On constructive sales price under section 4216(b) or section
4218(c)
.06 Ordinarily not on which of two entities is the common law employer

SECTION 8. WHAT ARE THE GENERAL INSTRUCTIONS FOR REQUESTING LETTER RULINGS
AND DETERMINATION LETTERS?
.01 Certain information required in all requests
(1) Complete statement of facts and other information
(2) Copies of all contracts, wills, deeds, agreements,
instruments, other documents, and foreign laws
(3) Analysis of material facts
(4) Statement regarding whether same issue is in an earlier return
(5) Statement regarding whether same or similar issue was
previously ruled on or requested, or is currently pending
(6) Statement regarding interpretation of a substantive provision
of an income or estate tax treaty
(7) Letter from Bureau of Indian Affairs relating to a letter
ruling request for recognition of Indian tribal government
status or status as a political subdivision of an Indian
tribal government
(8) Statement of supporting authorities
(9) Statement of contrary authorities
(10) Statement identifying pending legislation
(11) Statement identifying information to be deleted from copy of
letter ruling or determination letter for public inspection
(12) Signature by taxpayer or authorized representative
(13) Authorized representatives
(14) Power of attorney and declaration of representative
(15) Penalties of perjury statement
(16) Number of copies of request to be submitted
(17) Sample format for a letter ruling request
(18) Checklist for letter ruling requests
.02 Additional information required in certain circumstances
(1) To request separate letter rulings for multiple issues in a
single situation
(2) To designate recipient of original or copy of letter ruling or
determination letter
(3) To request a particular conclusion on a proposed transaction
(4) To request expedited handling
(5) To receive any document related to the letter ruling request
by facsimile transmission (fax)
(6) To submit a request for a letter ruling by fax
(7) To request a conference
(8) To obtain the applicable user fee for substantially identical
letter rulings or identical accounting method changes
.03 Address to send the request
(1) Requests for letter rulings
(2) Requests for determination letters
.04 Pending letter ruling requests
.05 When to attach letter ruling to return
.06 How to check on status of request
.07 Request may be withdrawn or national office may decline to issue
letter ruling
.08 Compliance with Treasury Department Circular No. 230

SECTION 9. WHAT OTHER CHECKLISTS, GUIDELINE REVENUE PROCEDURES, NOTICES,
SAFE HARBOR REVENUE PROCEDURES, AND AUTOMATIC CHANGE REVENUE PROCEDURES
APPLY TO CERTAIN REQUESTS?
.01 Checklists, guideline revenue procedures, and notices
.02 Safe harbor revenue procedures
.03 Automatic change revenue procedures

SECTION 10. HOW DOES THE NATIONAL OFFICE HANDLE LETTER RULING REQUESTS?
.01 Controls request and refers it to appropriate Associate Chief
Counsel's office or Assistant Chief Counsel's office
.02 Branch representative contacts taxpayer within 21 days
.03 Notifies taxpayer if any issues have been referred to another
branch or office
.04 Determines if transaction can be modified to obtain favorable
letter ruling
.05 Is not bound by informal opinion expressed
.06 Tells taxpayer if request lacks essential information during
initial contact
.07 Requires prompt submission of additional information requested
after initial contact
.08 Near the completion of the ruling process, advises the taxpayer of
conclusions and, if the Service will rule adversely, offers the
taxpayer the opportunity to withdraw the letter ruling request
.09 May request draft of proposed letter ruling near the completion of
the ruling process
.10 Issues separate letter rulings for substantially identical letter
rulings and generally issues a single letter ruling for identical
accounting method changes
.11 Sends a copy of the letter ruling to appropriate Service official

SECTION 11. HOW ARE CONFERENCES SCHEDULED?
.01 Schedules a conference if requested by taxpayer
.02 Permits taxpayer one conference of right
.03 Disallows verbatim recording of conferences
.04 Makes tentative recommendations on substantive issues
.05 May offer additional conferences
.06 Requires written confirmation of information presented at
conference
.07 May schedule a pre-submission conference
.08 Under limited circumstances, may schedule a conference to be held
by telephone

SECTION 12. WHAT EFFECT WILL A LETTER RULING HAVE?
.01 May be relied on subject to limitations
.02 Will not apply to another taxpayer
.03 Will be used by a director in examining the taxpayer's return
.04 May be revoked or modified if found to be in error
.05 Not generally revoked or modified retroactively
.06 Retroactive effect of revocation or modification applied to a
particular transaction
.07 Retroactive effect of revocation or modification applied to a
continuing action or series of actions
.08 Generally not retroactively revoked or modified if related to
sale or lease subject to excise tax
.09 May be retroactively revoked or modified when transaction is
entered into before the issuance of the letter ruling
.10 May be retroactively revoked or modified when transaction is
entered into after a change in material facts
.11 Taxpayer may request that retroactivity be limited
(1) Request for relief under section 7805(b) must be made in
required format
(2) Taxpayer may request a conference on application of section
7805(b)

SECTION 13. WHAT EFFECT WILL A DETERMINATION LETTER HAVE?
.01 Has same effect as a letter ruling
.02 Taxpayer may request that retroactive effect of revocation or
modification be limited
(1) Request for relief under section 7805(b) must be made in
required format
(2) Taxpayer may request a conference on application of section
7805(b)

SECTION 14. UNDER WHAT CIRCUMSTANCES ARE MATTERS REFERRED BETWEEN A FIELD
OFFICE AND THE NATIONAL OFFICE?
.01 Requests for determination letters
.02 No-rule areas
.03 Requests for letter rulings

SECTION 15. WHAT ARE THE USER FEE REQUIREMENTS FOR REQUESTS FOR LETTER
RULINGS AND DETERMINATION LETTERS?
.01 Legislation authorizing user fees
.02 Requests to which a user fee applies
.03 Requests to which a user fee does not apply
.04 Exemptions from the user fee requirements
.05 Fee schedule
.06 Applicable user fee for a request involving multiple offices, fee
categories, issues, transactions, or entities
.07 Applicable user fee for substantially identical letter rulings or
identical accounting method changes
.08 Method of payment
.09 Effect of nonpayment or payment of incorrect amount
.10 Refunds of user fee
.11 Request for reconsideration of user fee

SECTION 16. WHAT ARE THE GENERAL PROCEDURES APPLICABLE TO INFORMATION
LETTERS ISSUED BY THE NATIONAL OFFICE?
.01 Will be made available to the public
.02 Deletions made under the Freedom of Information Act
.03 Effect of information letters

SECTION 17. WHAT SIGNIFICANT CHANGES HAVE BEEN MADE TO REV. PROC. 2001-1?

SECTION 18. WHAT IS THE EFFECT OF THIS REVENUE PROCEDURE ON OTHER
DOCUMENTS?

SECTION 19. WHAT IS THE EFFECTIVE DATE OF THIS REVENUE PROCEDURE?

SECTION 20. PAPERWORK REDUCTION ACT

DRAFTING INFORMATION

INDEX

APPENDIX A -- SCHEDULE OF USER FEES

APPENDIX B -- SAMPLE FORMAT FOR A LETTER RULING REQUEST

APPENDIX C -- CHECKLIST FOR A LETTER RULING REQUEST

APPENDIX D -- LIST OF SMALL BUSINESS/SELF-EMPLOYED DIVISION (SB/SE)
COMPLIANCE AREA DIRECTORS FOR REQUESTING DETERMINATION LETTERS


SECTION 1. WHAT IS THE PURPOSE OF THIS REVENUE PROCEDURE?

This revenue procedure explains how the Service gives guidance to
taxpayers on issues under the jurisdiction of the Associate Chief Counsel
(Corporate), the Associate Chief Counsel (Financial Institutions &
Products), the Associate Chief Counsel (Income Tax & Accounting), the
Associate Chief Counsel (International), the Associate Chief Counsel
(Passthroughs & Special Industries), the Associate Chief Counsel
(Procedure and Administration), and the Division Counsel/Associate Chief
Counsel (Tax Exempt and Government Entities). It explains the kinds of
guidance and the manner in which guidance is requested by taxpayers and
provided by the Service. A sample format of a request for a letter ruling
is provided in Appendix B.


OPERATING DIVISIONS OF THE SERVICE

The Service includes four operating divisions that are responsible for
meeting the needs of the taxpayers they serve. These operating divisions
are:

(1) Large and Mid-Size Business Division (LMSB), which generally serves
corporations, S corporations, and partnerships with assets in excess of
$10 million;

(2) Small Business/Self-Employed Division (SB/SE), which generally
serves corporations, S corporations, and partnerships with assets less
than or equal to $10 million; estates and trusts; individuals filing an
individual federal income tax return with accompanying Schedule C (Profit
or Loss from Business (Sole Proprietorship)), Schedule E (Supplemental
Income and Loss), Schedule F (Profit or Loss from Farming), Form 2106
(Employee Business Expenses) or Form 2106-EZ (Unreimbursed Employee
Business Expenses); and individuals with international tax returns;

(3) Wage and Investment Division (W&I), which generally serves
individuals with wage and investment income only (and with no
international tax returns) filing an individual federal income tax return
without accompanying Schedule C, E, or F, or Form 2106 or Form 2106-EZ;
and

(4) Tax Exempt and Government Entities Division (TE/GE), which serves
three distinct taxpayer segments: employee plans, exempt organizations,
and government entities.


DESCRIPTION OF TERMS USED IN THIS REVENUE PROCEDURE

For purposes of this revenue procedure--

(1) any reference to director or field office refers to the Director,
Field Operations, LMSB, the Area Director, Field Compliance, SB/SE, or the
Director, Compliance, W&I, as appropriate, and their respective offices
or, when appropriate, the Director, International, LMSB, the Director,
Employee Plans Examinations, the Director, Exempt Organizations
Examinations, the Director, Federal, State & Local Governments, the
Director, Tax Exempt Bonds, or the Director, Indian Tribal Governments,
and their respective offices;

(2) any reference to area office refers to Appeals LMSB Area Office or
Appeals SB/SE-TE/GE Area Office, as appropriate;

(3) the term "taxpayer" includes all persons subject to any provision
of the Internal Revenue Code (including issuers of section 103
obligations) and, when appropriate, their representatives; and

(4) the term "national office" refers to the Office of Associate Chief
Counsel (Corporate), the Office of Associate Chief Counsel (Financial
Institutions & Products), the Office of Associate Chief Counsel (Income
Tax & Accounting), the Office of Associate Chief Counsel (International),
the Office of Associate Chief Counsel (Passthroughs & Special Industries),
the Office of Associate Chief Counsel (Procedure and Administration), or
the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and
Government Entities), as appropriate.


UPDATED ANNUALLY

The revenue procedure is updated annually as the first revenue
procedure of the year, but may be modified or amplified during the year.


SECTION 2. IN WHAT FORM IS GUIDANCE PROVIDED BY THE OFFICES OF ASSOCIATE
CHIEF COUNSEL (CORPORATE), ASSOCIATE CHIEF COUNSEL (FINANCIAL INSTITUTIONS
& PRODUCTS), ASSOCIATE CHIEF COUNSEL (INCOME TAX & ACCOUNTING), ASSOCIATE
CHIEF COUNSEL (INTERNATIONAL), ASSOCIATE CHIEF COUNSEL (PASSTHROUGHS &
SPECIAL INDUSTRIES), ASSOCIATE CHIEF COUNSEL (PROCEDURE AND
ADMINISTRATION), AND DIVISION COUNSEL/ ASSOCIATE CHIEF COUNSEL (TAX EXEMPT
AND GOVERNMENT ENTITIES)?

The Service provides guidance in the form of letter rulings, closing
agreements, determination letters, information letters, revenue rulings,
and oral advice.


LETTER RULING

.01 A "letter ruling" is a written statement issued to a taxpayer by
the national office that interprets and applies the tax laws to the
taxpayer's specific set of facts. A letter ruling includes the written
permission or denial of permission by the national office to a request for
a change in a taxpayer's accounting method or accounting period. Once
issued, a letter ruling may be revoked or modified for any number of
reasons, as explained in section 12 of this revenue procedure, unless it
is accompanied by a "closing agreement."


CLOSING AGREEMENT

.02 A closing agreement is a final agreement between the Service and a
taxpayer on a specific issue or liability. It is entered into under the
authority in section 7121 and is final unless fraud, malfeasance, or
misrepresentation of a material fact can be shown.

A closing agreement may be entered into when it is advantageous to have
the matter permanently and conclusively closed or when a taxpayer can show
that there are good reasons for an agreement and that making the agreement
will not prejudice the interests of the Government. In appropriate cases,
a taxpayer may be asked to enter into a closing agreement as a condition
to the issuance of a letter ruling.

If, in a single case, a closing agreement is requested for each person
in a class of taxpayers, separate agreements are entered into only if the
class consists of 25 or fewer taxpayers. However, if the issue and holding
are identical for the class and there are more than 25 taxpayers in the
class, a "mass closing agreement" will be entered into with the taxpayer
who is authorized by the others to represent the class.


DETERMINATION LETTER

.03 A "determination letter" is a written statement issued by a
director that applies the principles and precedents previously announced
by the national office to a specific set of facts. It is issued only when
a determination can be made based on clearly established rules in the
statute, a tax treaty, or the regulations, or based on a conclusion in a
revenue ruling, opinion, or court decision published in the Internal
Revenue Bulletin that specifically answers the questions presented.

A determination letter does not include assistance provided by the U.S.
competent authority pursuant to the mutual agreement procedure in tax
treaties as set forth in Rev. Proc. 96-13, 1996-1 C.B. 616.


INFORMATION LETTER

.04 An "information letter" is a statement issued either by the
national office or by a director. It calls attention to a well-established
interpretation or principle of tax law (including a tax treaty) without
applying it to a specific set of facts. An information letter may be
issued if the taxpayer's inquiry indicates a need for general information
or if the taxpayer's request does not meet the requirements of this
revenue procedure and the Service thinks general information will help the
taxpayer. The taxpayer should provide a daytime telephone number with the
taxpayer's request for an information letter. An information letter is
advisory only and has no binding effect on the Service.


REVENUE RULING

.05 A "revenue ruling" is an interpretation by the Service that has
been published in the Internal Revenue Bulletin. It is the conclusion of
the Service on how the law is applied to a specific set of facts. Revenue
rulings are issued only by the national office and are published for the
information and guidance of taxpayers, Service personnel, and other
interested parties.

Because each revenue ruling represents the conclusion of the Service
regarding the application of law to the entire statement of facts
involved, taxpayers, Service personnel, and other concerned parties are
cautioned against reaching the same conclusion in other cases unless the
facts and circumstances are substantially the same. They should consider
the effect of subsequent legislation, regulations, court decisions,
revenue rulings, notices, and announcements. See Rev. Proc. 89-14, 1989-1
C.B. 814, which states the objectives of, and standards for, the
publication of revenue rulings and revenue procedures in the Internal
Revenue Bulletin.


ORAL GUIDANCE

.06

(1) No oral rulings and no written rulings in response to oral
requests.

The Service does not orally issue letter rulings or determination
letters, nor does it issue letter rulings or determination letters in
response to oral requests from taxpayers. However, Service employees
ordinarily will discuss with taxpayers or their representatives inquiries
regarding whether the Service will rule on particular issues and questions
relating to procedural matters about submitting requests for letter
rulings or determination letters for a particular case.


(2) Discussion possible on substantive issues.

At the discretion of the Service and as time permits, substantive
issues also may be discussed. However, such a discussion will not be
binding on the Service in general or on the Office of Chief Counsel in
particular and cannot be relied upon as a basis for obtaining retroactive
relief under the provisions of section 7805(b).

Substantive tax issues involving the taxpayer that are under
examination, in appeals, or in litigation will not be discussed by Service
employees not directly involved in the examination, appeal, or litigation
of the issues unless the discussion is coordinated with those Service
employees who are directly involved in the examination, appeal, or
litigation of the issues. The taxpayer or the taxpayer's representative
ordinarily will be asked whether the oral request for guidance or
information relates to a matter pending before another office of the
Service or before a federal court.

If a tax issue is not under examination, in appeals, or in litigation,
the tax issue may be discussed even though the issue is affected by a
nontax issue pending in litigation.

A taxpayer may seek oral technical guidance from a taxpayer service
representative in a field office or service center when preparing a return
or report. Oral guidance is advisory only, and the Service is not bound to
recognize it, for example, in the examination of the taxpayer's return.

The Service does not respond to letters seeking to confirm the
substance of oral discussions and the absence of a response to such a
letter is not confirmation of the substance of the letter.

<<END RULING>>



SECTION 3. ON WHAT ISSUES MAY TAXPAYERS REQUEST WRITTEN GUIDANCE UNDER
THIS PROCEDURE?

Taxpayers may request letter rulings, information letters, and closing
agreements under this revenue procedure on issues within the jurisdiction
of the Associate Chief Counsel (Corporate), the Associate Chief Counsel
(Financial Institutions & Products), the Associate Chief Counsel (Income
Tax & Accounting), the Associate Chief Counsel (International), the
Associate Chief Counsel (Passthroughs & Special Industries), the Associate
Chief Counsel (Procedure and Administration), or the Division
Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). The
national office issues letter rulings to answer written inquiries of
individuals and organizations about their status for tax purposes and the
tax effects of their acts or transactions when appropriate in the interest
of sound tax administration.

Taxpayers also may request determination letters within the
jurisdiction of the appropriate director offices that relate to the Code
sections under the jurisdiction of the Associate Chief Counsel
(Corporate), the Associate Chief Counsel (Financial Institutions &
Products), the Associate Chief Counsel (Income Tax & Accounting), the
Associate Chief Counsel (International), the Associate Chief Counsel
(Passthroughs & Special Industries), the Associate Chief Counsel
(Procedure and Administration), or the Division Counsel/ Associate Chief
Counsel (Tax Exempt and Government Entities).


ISSUES UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL
(CORPORATE)

.01 Issues under the jurisdiction of the Associate Chief Counsel
(Corporate) include those that involve consolidated returns, corporate
acquisitions, reorganizations, liquidations, redemptions, spinoffs,
transfers to controlled corporations, distributions to shareholders,
corporate bankruptcies, the effect of certain ownership changes on net
operating loss carryovers and other tax attributes, debt vs. equity
determinations, allocation of income and deductions among taxpayers,
acquisitions made to evade or avoid income tax, and certain earnings and
profits questions.


ISSUES UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL (FINANCIAL
INSTITUTIONS & PRODUCTS)

.02 Issues under the jurisdiction of the Associate Chief Counsel
(Financial Institutions & Products) include those that involve income
taxes and accounting method changes of banks, savings and loan
associations, real estate investment trusts (REITs), regulated investment
companies (RICs), real estate mortgage investment conduits (REMICs),
insurance companies and products, and financial products.


ISSUES UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL (INCOME
TAX & ACCOUNTING)

.03 Issues under the jurisdiction of the Associate Chief Counsel
(Income Tax & Accounting) include those that involve recognition and
timing of income and deductions of individuals and corporations, sales and
exchanges, capital gains and losses, installment sales, equipment leasing,
long-term contracts, inventories, the alternative minimum tax, accounting
method changes for these and other miscellaneous issues, and accounting
periods.


ISSUES UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL
(INTERNATIONAL)

.04 Issues under the jurisdiction of the Associate Chief Counsel
(International) include the tax treatment of nonresident aliens and
foreign corporations, withholding of tax on nonresident aliens and foreign
corporations, foreign tax credit, determination of sources of income,
income from sources without the United States, subpart F questions,
domestic international sales corporations (DISCs), foreign sales
corporations (FSCs), international boycott determinations, treatment of
certain passive foreign investment companies, income affected by treaty,
and other matters relating to the activities of non-U.S. persons within
the United States or activities of U.S. or U.S.-related persons outside
the United States.

For the procedures to obtain advance pricing agreements under section
482, see Rev. Proc. 96-53, 1996-2 C.B. 375, as modified by Notice 98-65,
1998-2 C.B. 803.

For the procedures concerning competent authority relief arising under
the application and interpretation of tax treaties between the United
States and other countries, see Rev. Proc. 96-13. However, competent
authority consideration for an advance pricing agreement should be
requested under Rev. Proc. 96-53.


ISSUES UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL
(PASSTHROUGHS & SPECIAL INDUSTRIES)

.05 Issues under the jurisdiction of the Associate Chief Counsel
(Passthroughs & Special Industries) include those that involve income
taxes of S corporations (except accounting periods and methods) and
certain noncorporate taxpayers (including partnerships, common trust
funds, and trusts), entity classification, estate, gift,
generation-skipping transfer, and certain excise taxes, amortization,
depreciation, depletion, and other engineering issues, accounting method
changes for depreciation and amortization, cooperative housing
corporations, farmers' cooperatives (under section 521), the low-income
housing, disabled access, and qualified electric vehicle credits, research
and experimental expenditures, shipowners' protection and indemnity
associations (under section 526), and certain homeowners associations
(under section 528).


ISSUES UNDER THE JURISDICTION OF THE ASSOCIATE CHIEF COUNSEL (PROCEDURE
AND ADMINISTRATION)

.06 Issues under the jurisdiction of the Associate Chief Counsel
(Procedure and Administration) include only those that involve federal tax
procedure and administration, disclosure and privacy law, reporting and
paying taxes, assessing and collecting taxes (including interest and
penalties), abating, crediting, or refunding overassessments or
overpayments of tax, and filing information returns.


ISSUES UNDER THE JURISDICTION OF THE DIVISION COUNSEL/ASSOCIATE CHIEF
COUNSEL (TAX EXEMPT AND GOVERNMENT ENTITIES)

.07 Issues under the jurisdiction of the Division Counsel/Associate
Chief Counsel (Tax Exempt and Government Entities) include those that
involve income tax and other tax aspects of executive compensation and
employee benefit programs (other than those within the jurisdiction of the
Commissioner, Tax Exempt and Government Entities Division), employment
taxes, taxes on self-employment income, tax-exempt obligations, mortgage
credit certificates, Qualified Zone Academy Bonds (QZADS), and federal,
state, local, and Indian tribal governments.


SECTION 4. ON WHAT ISSUES MUST WRITTEN GUIDANCE BE REQUESTED UNDER
DIFFERENT PROCEDURES?

ALCOHOL, TOBACCO, AND FIREARMS TAXES

.01 The procedures for obtaining letter rulings, etc., that apply to
federal alcohol, tobacco, and firearms taxes under subtitle E of the Code
are under the jurisdiction of the Bureau of Alcohol, Tobacco and Firearms.


EMPLOYEE PLANS AND EXEMPT ORGANIZATIONS

.02 The procedures for obtaining letter rulings, determination letters,
etc., on employee plans and exempt organizations are under the
jurisdiction of the Commissioner, Tax Exempt and Government Entities
Division. See Rev. Proc. 2002-4, this Bulletin. See also Rev. Proc.
2002-6, this Bulletin, for the procedures for issuing determination
letters on the qualified status of pension, profit-sharing, stock bonus,
annuity, and employee stock ownership plans under sections 401, 403(a),
409, and 4975(e)(7), and the status for exemption of any related trusts or
custodial accounts under section 501(a).

For the user fee requirements applicable to requests for letter
rulings, determination letters, etc., under the jurisdiction of the
Commissioner, Tax Exempt and Government Entities Division, see Rev. Proc.
2002-8, this Bulletin.


SECTION 5. UNDER WHAT CIRCUMSTANCES DOES THE NATIONAL OFFICE ISSUE LETTER
RULINGS?

IN INCOME AND GIFT TAX MATTERS

.01 In income and gift tax matters, the national office generally
issues a letter ruling on a proposed transaction and on a completed
transaction if the letter ruling request is submitted before the return is
filed for the year in which the transaction that is the subject of the
request was completed.

(1) CIRCUMSTANCES UNDER WHICH A LETTER RULING IS NOT ORDINARILY ISSUED.
The national office ordinarily does not issue a letter ruling if, at the
time the letter ruling is requested, the identical issue is involved in
the taxpayer's return for an earlier period and that issue--

(a) is being examined by a director;

(b) is being considered by an area office;

(c) is pending in litigation in a case involving the taxpayer or a
related taxpayer;

(d) has been examined by a director or considered by an area office and
the statutory period of limitations on assessment or on filing a claim for
refund or credit of tax has not expired; or

(e) has been examined by a director or considered by an area office and
a closing agreement covering the issue or liability has not been entered
into by a director or by an area office.


If a return dealing with an issue for a particular year is filed while
a request for a letter ruling on that issue is pending, the national
office will issue the letter ruling unless it is notified by the taxpayer
or otherwise learns that an examination of that issue or the identical
issue on an earlier year's return has been started by a director. See
section 8.04 of this revenue procedure. However, even if an examination
has begun, the national office ordinarily will issue the letter ruling if
the director agrees, by memorandum, to the issuance of the letter ruling.

(2) NO LETTER RULING ON A PROPERTY CONVERSION AFTER RETURN FILED. The
national office does not issue a letter ruling on the replacement of
involuntarily converted property, whether or not the property has been
replaced, if the taxpayer has already filed a return for the taxable year
in which the property was converted. However, the director may issue a
determination letter in this case. See section 6.01 of this revenue
procedure.

(3) CERTAIN LATE S CORPORATION AND RELATED ELECTIONS. In lieu of
requesting a letter ruling under this revenue procedure, a taxpayer may
obtain relief for certain late S corporation and related elections by
following the procedures in Rev. Proc. 98-55, 1998-2 C.B. 643, or Rev.
Proc. 97-48, 1997-2 C.B. 521. A request made pursuant to Rev. Proc. 98-55
or Rev. Proc. 97-48 does not require payment of any user fee. See section
3.05 of Rev. Proc. 98-55, section 3 of Rev. Proc. 97-48, and section
15.03(2) of this revenue procedure.


A SECTION 301.9100 REQUEST FOR EXTENSION OF TIME FOR MAKING AN ELECTION
OR FOR OTHER RELIEF

.02 The national office will consider a request for an extension of
time for making an election or other application for relief under section
301.9100-3 of the Procedure and Administration Regulations. Even if
submitted after the return covering the issue presented in the section
301.9100 request has been filed and even if submitted after an examination
of the return has begun or after the issues in the return are being
considered by an area office or a federal court, a section 301.9100
request is a letter ruling request. Therefore, the section 301.9100
request should be submitted pursuant to this revenue procedure.

However, an election made pursuant to section 301.9100-2 is not a
letter ruling request and does not require payment of any user fee. See
section 301.9100-2(d) and section 15.03(1) of this revenue procedure. Such
an election pertains to an automatic extension of time.

(1) FORMAT OF REQUEST. A section 301.9100 request (other than an
election made pursuant to section 301.9100-2) must be in the general form
of, and meet the general requirements for, a letter ruling request. These
requirements are given in section 8 of this revenue procedure. In
addition, the section 301.9100 request must include the information
required by section 301.9100-3(e).

(2) PERIOD OF LIMITATIONS. The running of any applicable period of
limitations is not suspended for the period during which a section
301.9100 request has been filed. See section 301.9100-3(d)(2). If the
period of limitation on assessment under section 6501(a) for the taxable
year in which an election should have been made or any taxable year that
would have been affected by the election had it been timely made will
expire before receipt of a section 301.9100 letter ruling, the Service
ordinarily will not issue a section 301.9100 ruling. See section
301.9100-3(c)(1)(ii). Therefore, the taxpayer must secure a consent under
section 6501(c)(4) to extend the period of limitation on assessment. Note
that the filing of a claim for refund under section 6511 does not extend
the period of limitation on assessment. If section 301.9100 relief is
granted, the Service may require the taxpayer to consent to an extension
of the period of limitation on assessment. See section 301.9100-3(d)(2).

(3) TAXPAYER MUST NOTIFY NATIONAL OFFICE IF EXAMINATION OF RETURN
BEGINS WHILE REQUEST IS PENDING. If the Service starts an examination of
the taxpayer's return for the taxable year in which an election should
have been made or any taxable year that would have been affected by the
election had it been timely made while a section 301.9100 request is
pending, the taxpayer must notify the national office. See section
301.9100-3(e)(4)(i) and section 8.04(1)(b) of this revenue procedure.

(4) NATIONAL OFFICE WILL NOTIFY THE DIRECTOR, APPEALS OFFICER, OR
GOVERNMENT COUNSEL OF A SECTION 301.9100 REQUEST IF RETURN IS BEING
EXAMINED BY A FIELD OFFICE OR IS BEING CONSIDERED BY AN AREA OFFICE OR A
FEDERAL COURT. If the taxpayer's return for the taxable year in which an
election should have been made or any taxable year that would have been
affected by the election had it been timely made is being examined by a
field office or considered by an area office or a federal court, the
national office will notify the appropriate director, appeals officer, or
government counsel that a section 301.9100 request has been submitted to
the national office. The examining officer, appeals officer, or government
counsel is not authorized to deny consideration of a section 301.9100
request. The letter ruling will be mailed to the taxpayer and a copy will
be sent to the appropriate Service official in the operating division that
has examination jurisdiction of the taxpayer's tax return, appeals
officer, or government counsel.


DETERMINATIONS UNDER SECTION 999(d) OF THE INTERNAL REVENUE CODE

.03 Under Rev. Proc. 77-9, 1977-1 C.B. 542, the Office of Associate
Chief Counsel (International) issues determinations under section 999(d)
that may deny certain benefits of the foreign tax credit, deferral of
earnings of foreign subsidiaries and domestic international sales
corporations (DISCs), and tax exemption for foreign trade income of a
foreign sales corporation or a small foreign sales corporation (FSC or
small FSC) to a person, if that person, a member of a controlled group
(within the meaning of section 993(a)(3)) that includes the person, or a
foreign corporation of which a member of the controlled group is a United
States shareholder, agrees to participate in, or cooperate with, an
international boycott. Requests for determinations under Rev. Proc. 77-9
are letter ruling requests and, therefore, should be submitted to the
Associate Chief Counsel (International) pursuant to this revenue
procedure.


IN MATTERS INVOLVING SECTION 367

.04 Unless the issue is covered by section 7 of this revenue procedure,
the Office of Associate Chief Counsel (International) may issue a letter
ruling under section 367 even if the taxpayer does not request a letter
ruling as to the characterization of the transaction under the
reorganization provisions of the Code. The Office of Associate Chief
Counsel (International) will determine the section 367 consequences of a
transaction based on the taxpayer's characterization of the transaction
but will indicate in the letter ruling that it expresses no opinion as to
the characterization of the transaction under the reorganization. However,
the Office of Associate Chief Counsel (International) may decline to issue
a section 367 ruling in situations in which the taxpayer inappropriately
characterizes the transaction under the reorganization provisions.


IN ESTATE TAX MATTERS

.05 In general, the national office issues prospective letter rulings
on transactions affecting the estate tax on the prospective estate of a
living person and affecting the estate tax on the estate of a decedent
before the decedent's estate tax return is filed. The national office will
not issue letter rulings for prospective estates on computations of tax,
actuarial factors, and factual matters.

If the taxpayer is requesting a letter ruling regarding a decedent's
estate tax and the estate tax return is due to be filed before the letter
ruling is expected to be issued, the taxpayer should obtain an extension
of time for filing the return and should notify the national office branch
considering the letter ruling request that an extension has been obtained.

In limited circumstances, the national office will consider a request
for an estate tax letter ruling after the return is filed but before the
return is examined. In such a case, the taxpayer must disclose on the
return that a letter ruling has been requested, attach a copy of the
pending letter ruling request to the return, and notify the national
office that the return has been filed. See section 8.04 of this revenue
procedure. The national office will make every effort to issue the letter
ruling within 3 months of the date the return was filed.

In limited circumstances, the taxpayer requests a letter ruling after
the return is filed but before the return is examined. In such a case, the
taxpayer must state in the letter ruling request that the return has been
filed but has not been examined, and must also notify the director having
jurisdiction over this return that a letter ruling has been requested and
provide a copy of the letter ruling request to the director. If the
director agrees to the consideration of the letter ruling request by the
national office, the national office will make every effort to issue the
letter ruling within 3 months of the date the letter ruling request was
filed.

If the letter ruling cannot be issued within the 3-month period, the
national office will notify the director having jurisdiction over the
return, who may, by memorandum to the national office, grant an additional
period for the issuance of the letter ruling.


IN MATTERS INVOLVING ADDITIONAL ESTATE TAX UNDER SECTION 2032A(c)

.06 In matters involving additional estate tax under section 2032A(c),
the national office issues letter rulings on proposed transactions and on
completed transactions that occurred before the return is filed.


IN MATTERS INVOLVING QUALIFIED DOMESTIC TRUSTS UNDER SECTION 2056A

.07 In matters involving qualified domestic trusts under section 2056A,
the national office issues letter rulings on proposed transactions and on
completed transactions that occurred before the return is filed.


IN GENERATION-SKIPPING TRANSFER TAX MATTERS

.08 In general, the national office issues letter rulings on proposed
transactions that affect the generation-skipping transfer tax and on
completed transactions that occurred before the return is filed. In the
case of a generation-skipping trust or trust equivalent, letter rulings
are issued either before or after the trust or trust equivalent has been
established. The national office will issue letter rulings on the
application of the effective date rules for generation-skipping transfer
tax (section 1433 of the Tax Reform Act of 1986, 1986-3 (Vol. 1) C.B. 1,
648) to wills, trusts, and trust equivalents in existence on October 22,
1986, and to generation-skipping transfers taking place on or before
October 22, 1986.


IN EMPLOYMENT AND EXCISE TAX MATTERS

.09 In employment and excise tax matters, the national office issues
letter rulings on proposed transactions and on completed transactions
either before or after the return is filed for those transactions.

Requests regarding employment status (employer/employee relationship)
from federal agencies and instrumentalities should be submitted directly
to the national office. Requests regarding employment status from other
taxpayers must first be submitted to the appropriate Service office listed
on the current Form SS-8 (Rev. January 2001). See section 6.04 of this
revenue procedure. Generally, the employer is the taxpayer and requests
the letter ruling. However, if the worker asks for the letter ruling, both
the worker and the employer are considered to be the taxpayer and both are
entitled to the letter ruling.

The national office usually will not issue a letter ruling if, at the
time the letter ruling is requested, the identical issue is involved in
the taxpayer's return for an earlier period and that issue--

(1) is being examined by a director;

(2) is being considered by an area office;

(3) is pending in litigation in a case involving the taxpayer or a
related taxpayer;

(4) has been examined by a director or considered by an area office and
the statutory period of limitations on assessment or on filing a claim for
refund or credit of tax has not expired; or

(5) has been examined by a director or considered by an area office and
a closing agreement covering the issue or liability has not been entered
into by a director or by an area office.


If a return involving an issue for a particular year is filed while a
request for a letter ruling on that issue is pending, the national office
will issue the letter ruling unless it is notified by the taxpayer or
otherwise learns that an examination of that issue or an examination of
the identical issue on an earlier year's return has been started by a
director. See section 8.04 of this revenue procedure. However, even if an
examination has begun, the national office ordinarily will issue the
letter ruling if the director agrees, by memorandum, to the issuance of
the letter ruling.


IN ADMINISTRATIVE PROVISIONS MATTERS

.10

(1) IN GENERAL. The national office issues letter rulings on matters
arising under the Code and related statutes and regulations that involve--

(a) the time, place, manner, and procedures for reporting and paying
taxes;

(b) the assessment and collection of taxes (including interest and
penalties);

(c) the abatement, credit, or refund of an overassessment or
overpayment of tax; or

(d) the filing of information returns.


(2) CIRCUMSTANCES UNDER WHICH A LETTER RULING IS NOT ORDINARILY ISSUED.
The national office ordinarily does not issue a letter ruling if, at the
time the letter ruling is requested, the identical issue is involved in
the taxpayer's return for an earlier period and that issue--

(a) is being examined by a director;

(b) is being considered by an area office;

(c) is pending in litigation in a case involving the taxpayer or a
related taxpayer;

(d) has been examined by a director or considered by an area office and
the statutory period of limitations on assessment or on filing a claim for
refund or credit of tax has not expired; or

(e) has been examined by a director or considered by an area office and
a closing agreement covering the issue or liability has not been entered
into by a director or area office.


If a return involving an issue for a particular year is filed while a
request for a letter ruling on that issue is pending, the national office
will issue the letter ruling unless it is notified by the taxpayer or
otherwise learns that an examination of that issue or an examination of
the identical issue on an earlier year's return has been started by a
director. See section 8.04 of this revenue procedure. But, even if an
examination has begun, the national office ordinarily will issue the
letter ruling if the director agrees, by memorandum, to the issuance of
the letter ruling.


IN INDIAN TRIBAL GOVERNMENT MATTERS

.11 Pursuant to Rev. Proc. 84-37, 1984-1 C.B. 513, as modified by Rev.
Proc. 86-17, 1986-1 C.B. 550, and Rev. Proc. 2002-1 (this revenue
procedure), the Office of Division Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities) issues determinations recognizing a tribal
entity as an Indian tribal government within the meaning of section
7701(a)(40) or as a political subdivision of an Indian tribal government
under section 7871(d) if it determines, after consultation with the
Secretary of the Interior, that the entity satisfies the statutory
definition of an Indian tribal government or has been delegated
governmental functions of an Indian tribal government. Requests for
determinations under Rev. Proc. 84-37 are letter ruling requests, and,
therefore, should be submitted to the Office of Division Counsel/Associate
Chief Counsel (Tax Exempt and Government Entities) pursuant to this
revenue procedure.

(1) DEFINITION OF INDIAN TRIBAL GOVERNMENT. The term "Indian tribal
government" is defined under section 7701(a)(40) to mean the governing
body of any tribe, band, community, village or group of Indians, or (if
applicable) Alaska Natives, that is determined by the Secretary of the
Treasury, after consultation with the Secretary of the Interior, to
exercise governmental functions. Section 7871(d) provides that, for
purposes of section 7871, a subdivision of an Indian tribal government
shall be treated as a political subdivision of a state if the Secretary of
the Treasury determines, after consultation with the Secretary of the
Interior, that the subdivision has been delegated the right to exercise
one or more of the substantial governmental functions of the Indian tribal
government.

(2) INCLUSION IN LIST OF TRIBAL GOVERNMENTS. Rev. Proc. 2001-15, 2001-5
I.R.B. 465, provides a list of Indian tribal governments that are treated
similarly to states for certain federal tax purposes. Rev. Proc. 84-36,
1984-1 C.B. 510, as modified by Rev. Proc. 86-17, provides a list of
political subdivisions of Indian tribal governments that are treated as
political subdivisions of states for certain federal tax purposes. Under
Rev. Proc. 84-37, tribal governments or subdivisions recognized under
section 7701(a)(40) or section 7871(d) will be included on the list of
recognized tribal government entities in revised versions of Rev. Proc.
2001-15 or Rev. Proc. 84-36.



GENERALLY NOT TO BUSINESS ASSOCIATIONS OR GROUPS

.12 The national office does not issue letter rulings to business,
trade, or industrial associations or to similar groups concerning the
application of the tax laws to members of the group. But groups and
associations may submit suggestions of generic issues that would be
appropriately addressed in revenue rulings. See Rev. Proc. 89-14, which
states the objectives of, and standards for, the publication of revenue
rulings and revenue procedures in the Internal Revenue Bulletin.

The national office, however, may issue letter rulings to groups or
associations on their own tax status or liability if the request meets the
requirements of this revenue procedure.


GENERALLY NOT TO FOREIGN GOVERNMENTS

.13 The national office does not issue letter rulings to foreign
governments or their political subdivisions about the U.S. tax effects of
their laws. The national office also does not issue letter rulings on the
effect of a tax treaty on the tax laws of a treaty country for purposes of
determining the tax of the treaty country. See section 13.02 of Rev. Proc.
96-13, 1996-1 C.B. at 626. However, treaty partners can continue to
address matters such as these under the provisions of the applicable tax
treaty. In addition, the national office may issue letter rulings to
foreign governments or their political subdivisions on their own tax
status or liability under U.S. law if the request meets the requirements
of this revenue procedure.


GENERALLY NOT ON FEDERAL TAX CONSEQUENCES OF PROPOSED LEGISLATION

.14 The national office ordinarily does not issue letter rulings on a
matter involving the federal tax consequences of any proposed federal,
state, local, municipal, or foreign legislation. However, the Office of
Division Counsel/Associate Chief Counsel (Tax Exempt and Government
Entities) may issue letter rulings regarding the effect of proposed state,
local, or municipal legislation upon an eligible deferred compensation
plan under section 457(b) provided that the letter ruling request relating
to the plan complies with the other requirements of this revenue
procedure. The national office also may provide general information in
response to an inquiry.


ISSUANCE OF A LETTER RULING BEFORE THE ISSUANCE OF A REGULATION OR
OTHER PUBLISHED GUIDANCE

.15 Unless the issue is covered by section 7 of this revenue procedure,
Rev. Proc. 2002-3, this Bulletin, or Rev. Proc. 2002-7, this Bulletin, a
letter ruling may be issued before the issuance of a temporary or final
regulation or other published guidance that interprets the provisions of
any act under the following conditions:

(1) ANSWER IS CLEAR OR IS REASONABLY CERTAIN. If the letter ruling
request presents an issue for which the answer seems clear by applying the
statute to the facts or for which the answer seems reasonably certain but
not entirely free from doubt, a letter ruling will be issued.

(2) ANSWER IS NOT REASONABLY CERTAIN. The Service will consider all
letter ruling requests and use its best efforts to issue a letter ruling
even if the answer does not seem reasonably certain where the issuance of
a letter ruling is in the best interests of tax administration.

(3) ISSUE CANNOT BE READILY RESOLVED BEFORE A REGULATION OR ANY OTHER
PUBLISHED GUIDANCE IS ISSUED. A letter ruling will not be issued if the
letter ruling request presents an issue that cannot be readily resolved
before a regulation or any other published guidance is issued. However,
when the Service has closed a regulation project or any other published
guidance project that might have answered the issue or decides not to open
a regulation project or any other published guidance project, the
appropriate branch will consider all letter ruling requests unless the
issue is covered by section 7 of this revenue procedure, Rev. Proc.
2002-3, or Rev. Proc. 2002-7.


SECTION 6. UNDER WHAT CIRCUMSTANCES DO DIRECTORS ISSUE DETERMINATION
LETTERS?

IN INCOME AND GIFT TAX MATTERS

.01 In income and gift tax matters, directors issue determination
letters in response to taxpayers' written requests on completed
transactions that affect returns over which they have examination
jurisdiction. A determination letter usually is not issued for a question
concerning a return to be filed by the taxpayer if the same question is
involved in a return already filed.

Normally, directors do not issue determination letters on the tax
consequences of proposed transactions. However, a director may issue a
determination letter on the replacement, even though not yet made, of
involuntarily converted property under section 1033, if the taxpayer has
filed an income tax return for the year in which the property was
involuntarily converted.


IN ESTATE TAX MATTERS

.02 In estate tax matters, directors issue determination letters in
response to written requests affecting the estate tax returns over which
the directors have examination jurisdiction. They do not issue
determination letters on matters concerning the application of the estate
tax to the prospective estate of a living person.


IN GENERATION-SKIPPING TRANSFER TAX MATTERS

.03 In generation-skipping transfer tax matters, directors issue
determination letters in response to written requests affecting the
generation-skipping transfer tax returns over which the directors have
examination jurisdiction. They do not issue determination letters on
matters concerning the application of the generation-skipping transfer tax
before the distribution or termination takes place.


IN EMPLOYMENT AND EXCISE TAX MATTERS

.04 In employment and excise tax matters, directors issue determination
letters in response to written requests from taxpayers on completed
transactions over which they have examination jurisdiction.

Requests for a determination of employment status (Form SS-8) from
taxpayers (other than federal agencies and instrumentalities) must be
submitted to the appropriate Service office listed on the current Form
SS-8 (Rev. January 2001) and not directly to the national office. See also
section 5.09 of this revenue procedure.


CIRCUMSTANCES UNDER WHICH DETERMINATION LETTERS ARE NOT ISSUED BY A
DIRECTOR

.05 A director will not issue a determination letter in response to any
request if--

(1) it appears that the taxpayer has directed a similar inquiry to the
national office;

(2) the same issue involving the same taxpayer or a related taxpayer is
pending in a case in litigation or before an area office;

(3) the determination letter is requested by an industry, trade
association, or similar group;

(4) the request involves an industry-wide problem.