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Philadelphia Tax Attorney Available to Prepare Requests for IRS Private Letter Rulings

Despite the vast accumulation of published Regulations interpreting the Internal Revenue Code, there are inevitably numerous "gray areas" on which no amount of legal research can shed sufficient light to enable a tax lawyer to offer a "bullet-proof" opinion. When this situation arises, it may be possible to secure an advance advisory opinion from the IRS itself which, if favorable, will enable the taxpayer to proceed with his or her planned decision or venture without the threat of adverse IRS action.

What is a Private Letter Ruling from the IRS?

A private letter ruling is a written statement issued to a specific taxpayer or his or her authorized representative by the IRS National Office that interprets and applies the federal tax laws to a specific set of facts. A letter ruling’s conclusions as to the tax consequences arising from a particular set of facts must be honored by the district office in the determination of tax liability of the taxpayer who requested the ruling, provided that

  1. the representations on which the ruling was based reflect an accurate statement of the material facts; and
  2. the transaction was carried out substantially as represented in the request for the ruling.

Are There Downsides to Requesting a Private Letter Ruling?

Unfortunately, certainty carries with it a significant "price tag" – obtaining a private ruling is expensive both in terms of IRS charges and in attorney’s fees for preparing the request. The process is also somewhat slow and can potentially delay implementation of the desired course of action for an unacceptable period of time. In addition, an unfavorable ruling as to a proposed course of action may "flag" the taxpayer for a subsequent IRS audit. The ruling request process may also result in confidential or proprietary business information being disclosed to third parties. The risks must be weighed against the benefits before undertaking this process.

It should also be noted that the IRS will only issue private letter rulings as to certain categories of tax issues, and retains significant discretion to decline to make rulings for its own policy reasons.

If you need written guidance from the IRS on a tax issue for which an advance ruling may be available, contact Philadelphia tax attorney Joseph R. Viola for an appointment to discuss your proposal. Mr. Viola has the requisite knowledge and proven experience and expertise in federal tax law generally – and in the effective preparation and advancement of requests for Private Letter Rulings in particular – needed to obtain the federal tax law safe harbor you require in order to proceed with confidence.

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