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IRS expands fast track for some corporate letter rulings

By Marc Countryman, CPA, J.D. San Francisco, and Steve Fattman, J.D., Irvine, Calif.

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Editor: Susan Minasian Grais, CPA, J.D., LL.M.

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

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 Rev. Proc. 2022-10. The IRS said it would strive to issue a ruling within 12 weeks after the request.

Notable changes

The permanent program formalizes the pilot program with “two notable changes.” First, fast-track processing is not available if the letter ruling requests 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 Rev. Proc. 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 substantial time for taxpayers that need a ruling for issues under the jurisdiction of Associate Chief Counsel (Corporate).

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 to continue with fast-track processing.

Editor Notes

Susan Minasian Grais, CPA, J.D., LL.M., is a managing director at Ernst & Young LLP in Washington, D.C.

For additional information about these items, contact Grais at susan.grais@ey.com.

Contributors are members of or associated with Ernst & Young LLP.