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COVID Crisis Prompting the Need for a Private Letter Ruling in a Flash? No Problem.

By Anthony P. Daddino on September 17, 2020
Is COVID to blame for you missing a tax election, inadvertently terminating an election, or making the wrong election? Do you need immediate IRS attention… during a global pandemic when most IRS offices are closed? Don’t you worry – the IRS is urging taxpayers to take advantage of expedited handling for private letter ruling requests to give you the tax certainty you need, when you need it.

In a previous blog post linked here, I outlined the IRS private letter ruling process, including the mechanics of making a request and tips for presenting your ruling request to the IRS. As a brief refresher, a private letter ruling is a written decision by the IRS in response to a taxpayer’ request for request or guidance. The IRS will interpret and apply the tax laws to certain assumed facts and issue a letter to the taxpayer upon which they can rely in reporting their taxes.

Normally the IRS will process PLR requests in the order in which they are received. But if you read the rules carefully, taxpayers have the opportunity to request expedited handling of their PLR request. Expedited handling, simply put, means that a request is processed ahead of requests received before it – i.e., the PLR request is put on top of the proverbial stack.

Whether a request for expedited handling will be granted is within the Service’s discretion. The IRS may grant the request when a factor outside a taxpayer’s control creates a real business need to obtain a letter ruling or determination letter before a certain date to avoid serious business consequences. To qualify for expedited handling in such situations, the taxpayer must also demonstrate that the taxpayer submitted the request as promptly as possible after becoming aware of the deadline or emergency. The extent to which the letter ruling or determination letter request complies with all of the applicable requirements of this revenue procedure, and fully and clearly presents the issues, is a factor in determining whether expedited treatment will be granted. When the IRS agrees to process a request out of order, it carefully caveats that the IRS cannot give assurance that any letter ruling or determination letter will be processed by the date requested.

While the IRS further notes that expedited handling is granted in rare and unusual cases, a global pandemic, civil unrest, and everything “2020” provides much fodder for taxpayers to argue this threshold has been crossed. And in fact, the IRS publicly announced yesterday that the “COVID-19 pandemic is a factor outside of the taxpayer’s control that can support a request for expedited handling” and urged taxpayers affected by the virus to take advantage of the faster process. The IRS announcement is linked here. Further information on how to make a request for expedited handling with your PLR request is linked here.

If you have any questions about the PLR process or any other tax-related topic, please do not hesitate to contact me at (214) 749-2464 or adaddino@meadowscollier.com.