IRS Written Determinations
Free IRS private letter rulings, technical advice memoranda, and Chief Counsel advice with plain-English summaries and the official IRS release on every page.
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Refundable credits produce a $1,000 penalty underpayment
Chief Counsel confirmed that a penalty calculator correctly produced a $1,000 underpayment for purposes of the IRC § 6662 accuracy-related penalty. Under the regulation's formula, refundable credits…
Valuation misstatement penalties require a value claimed on a return
Taxpayers overvalued property, but did not claim that property value on a return. The resulting underpayment instead arose from disallowed interest expense deductions. Chief Counsel advised that,…
Use partnership name from audited year's return on consent
Chief Counsel advised that a TEFRA proceeding operates for the partners, not the partnership, for the year of the partnership return. The partnership name shown on that return and the related…
Confirm eligible member-manager before identifying tax matters partner
Chief Counsel advised that the LLC's tax matters partner is the member-manager designated under the applicable regulations. The available facts did not establish which of two members met that…
No information-return penalties when withholding was reported correctly
Chief Counsel advised that penalties under IRC §§ 6721 and 6722 generally could apply to errors on Forms 1042-S. Here, however, the withholding agent correctly reported in Box 7 the amounts it…
IRS may process late telephone-excise claim despite EIN error
Chief Counsel advised that a telephone excise tax request and an amended request could be processed as timely under the IRS's administrative practice through July 27, 2012. The advice assumed that…
Multiple frivolous refund requests may trigger return penalties
Chief Counsel identified cases supporting an IRC § 6702(a) penalty when a taxpayer makes multiple refund requests for the same tax year using frivolous arguments. The cited decisions treat documents…
Partnership notices may go to disregarded entity's owner
Chief Counsel explained which name and address the IRS should use for partnership notices under IRC § 6223(c). The IRS generally uses the information shown on the partnership return, including the…
Taxpayer disclosure authorization must identify information and recipient
Chief Counsel said taxpayer authorizations to disclose return information are case-specific and offered suggested starting language. The authorization should identify the taxpayer, the designated…
IRS may obtain nonliable spouse's credit report in community-property state
Chief Counsel concluded that the IRS may generally obtain a nonliable spouse's credit report when collecting tax in a community-property state. Under the Fair Credit Reporting Act definition…
Disclosure of indirect partner keeps assessment period open
Chief Counsel addressed the assessment period for source-partnership income omitted from an indirect partner's return. If the IRS timely issued a final partnership administrative adjustment, IRC §…
Oil and gas infrastructure services produce qualifying partnership income
A limited partnership planning an initial public offering would own oil and gas gathering systems, a gas processing and fractionation plant, terminals, and crude-oil railcars. It would earn fees for…
Direct-reduced-iron income qualifies for publicly traded partnership
A publicly traded limited partnership planned to process or refine iron ore feedstocks into direct reduced iron and associated byproducts. Direct reduced iron turns finely processed iron ore into a…
Virginia law may impose personal liability after corporate termination
Chief Counsel advised that Virginia law appeared to impose personal liability on a business owner who continued operating beyond ordinary winding-up activities after the corporation was terminated.…
NOL carryback is directly assessable until passive-loss issues remain
Chief Counsel advised that a net operating loss carryback could be directly assessed when it was a purely computational result of partnership losses. NOL carryovers are generally computational…
Extended partnership limitations period keeps at-risk recapture open
Chief Counsel rejected a taxpayer's argument that the assessment period for IRC § 465(e) recapture had expired. The advice stated that IRC § 6229 keeps a partner's limitations period open for…
Recaptured fuel credits create interest-bearing income tax underpayments
A taxpayer claimed refundable fuel credits on its income tax returns under IRC § 34(a)(3), using part of each credit to reduce income tax and receiving the rest as refunds. The IRS planned to…
Late return may trigger three-year refund lookback
Chief Counsel tentatively agreed that a late-filed return could itself serve as a timely refund claim under IRC § 6511(a). Because the claim was filed within three years of the return, the advice…
One Form 872 is sufficient for the taxpayer's limitations extension
Chief Counsel addressed how to extend one taxpayer's assessment limitations period on the facts supplied by the requester. The advice stated that the taxpayer needed to complete only one Form 872.…
Exam must open tier-one TEFRA proceeding to dispute partnership items
Chief Counsel advised that Exam could not challenge tier-one partnership items reported on the Schedule K-1 that tier one issued to a tier-two partnership. Tier two had used those items to calculate…
Use a summons after noncompliance with a section 6333 demand
Chief Counsel compared an IRC § 6333 demand for books and records with the IRS summons process. Unlike the summons provisions, § 6333 does not expressly provide a judicial enforcement mechanism.…
TSP will pay vested balance in response to IRS levy
Chief Counsel addressed a proposed levy on a Thrift Savings Plan account. New Federal Retirement Thrift Investment Board regulations provided that the plan would pay the vested account balance in…
LLC payments remain reportable absent a corporate election
A taxpayer argued that payments to limited liability companies were exempt from IRC § 6041 information reporting and therefore did not require backup withholding under IRC § 3406. Chief Counsel…
Tribal authority qualifies as a state political subdivision
A federally recognized tribe created an authority to promote economic development, operate enterprises, attract funding, and produce revenue for public health, safety, and welfare. The tribe…
Home price protection payment needs no information return
A nonprofit administered a state-created program that paid homeowners when local distress reduced the sale price of registered homes. A payment under the program became part of the homeowners'…
Limit SharePoint access to protected taxpayer information
Chief Counsel advised that training materials, legal advice, and white papers created by field attorneys and agents could be placed on SharePoint if the National Office had not reviewed them.…
Court filing removes section 6103 concern
Chief Counsel confirmed that IRC § 6103 would no longer present a concern once the document at issue was filed in court. The released email does not describe the document or the underlying matter.…
Purported partnership return triggers TEFRA procedures
Chief Counsel advised that TEFRA applies when a purported partnership return is filed even if no valid partnership exists. State law determines whether an unsigned trust instrument created a valid…
Supplemental assessment uses deficiency procedures for deficiency tax
Chief Counsel advised that deficiency procedures apply to a supplemental assessment when the tax at issue is a deficiency tax within the meaning of § 6211. The brief email pointed to the…
Tax lien does not attach to previously conveyed half interest
Chief Counsel advised that identified IRS guidance applied to a one-half interest conveyed before assessment. For that conveyed portion, the taxpayer no longer had a property interest. The federal…
Partnership rule extends but does not shorten assessment period
Chief Counsel explained that former IRC § 6229(a) supplied a minimum assessment period for tax attributable to partnership and affected items. It could extend a partner's otherwise applicable IRC §…
Section 6721 penalty is assessable without deficiency procedures
Chief Counsel advised that the penalty under section 6721 could be assessed without following deficiency procedures. A taxpayer generally would have to pay the penalty and bring a refund suit to…
Existing tax matters partner controls the 2012 statute extension
Chief Counsel advised that the partnership's tax matters partner for 2012 remained in that role under the regulations. Only that person could sign an agreement extending the limitations period for…
Tax reported on amended returns and partner adjustments may be assessed
Chief Counsel advised that the IRS may assess tax shown on a return, including an amended individual return. Amounts paid before or after a notice of deficiency also may be assessed. For a…
Unassessable interest may offset a refund after an NOL carryback
A net operating loss carryback reduced a taxpayer's liability for an earlier year, but section 6601(d)(1) preserved interest through the filing date for the loss year. Because the underlying tax had…
Form 872-P extension supports affected-item refund claims
Chief Counsel advised that Form 872-P extends a partner's section 6501 limitations period for partnership items and affected items. A partner generally may use the ordinary refund-claim period under…
Authorized aggregate payroll return with allocation starts limitations period
Chief Counsel examined when an employment tax return filed by a third-party payor starts the section 6501 assessment period for a common-law employer. An agent authorized through Form 2678 starts…
Medical faculty support corporation denied exemption
A nonprofit corporation supported a medical school department by receiving hospital fees and making salary-equity payments to faculty physicians, providing paid administrative services to unrelated…
Forfeited casino winnings are not reported or included in income
A state casino asked how federal tax rules apply when a gambler enrolled in the state's voluntary exclusion program wins but is barred from receiving the money. The IRS advised that the casino does…
Trust changing U.S. status files a dual-status return
Chief Counsel addressed a trust that changes from a U.S. trust to a foreign trust, or the reverse, during a tax year. The advice treats the conversion year like the dual-status year of an individual…
Converted partnership items must be assessed against the parent
Chief Counsel advised that a disregarded-entity partner and its parent are treated as the same taxpayer for income tax liability. The disregarded entity had no separate several liability because it…
Missing Form 5471 kept the assessment period open
Chief Counsel addressed the limitations period when a taxpayer failed to file Form 5471 before the HIRE Act amended § 6501(c)(8). The pre-HIRE rule had kept the limitations period open for the…
Parent bankruptcy did not convert subsidiary partnership items
Chief Counsel advised that a parent's bankruptcy does not convert the partnership items of a nonbankrupt subsidiary that is the actual partner. The IRS could assess the subsidiary after the TEFRA…
IRS could send preparer information requests through the CPA's lawyer
An examining agent sought records from a CPA who had prepared amended returns reporting previously undisclosed foreign bank accounts. After initially cooperating, the CPA and an attorney claiming to…
Dissolved TEFRA entities could not perform every procedural act
Chief Counsel advised that a TEFRA proceeding could continue despite dissolution of the partnership because the proceeding operated for the partners and did not depend on the entity's continued…
Structured settlement reorganization received tax-free transfer rulings
An insurance group proposed moving structured-settlement obligations, related annuity contracts, and cash from one subsidiary to another before merging the transferor into an affiliated insurer. The…
Sentencing court's restitution interest waiver did not stop tax interest
Chief Counsel advised that a sentencing court's waiver of interest on restitution under 18 U.S.C. section 3612 did not affect interest on the IRS assessment of that restitution. Interest would…
Bank fee credits had different reporting results based on how customers used them
A bank offered commercial customers credits based on their deposit balances that could offset banking-service fees, with some programs also covering third-party services or paying interest on unused…
Preparer penalty examination could begin before the underlying return examination ended
Chief Counsel considered when the IRS could begin examining return-preparer penalties under sections 6694 and 6695 while the underlying taxpayer's return remained under examination. The three-year…
Improperly signed partnership return was invalid but did not control a partner's assessment period
A limited liability company's Form 1065 was signed with the name of a foreign entity, apparently by someone other than a partner or member manager. Chief Counsel advised that the form was not a…
Marital trust ownership can trigger TEFRA partnership procedures
Chief Counsel addressed whether the TEFRA partnership audit rules applied to an otherwise small partnership after a partner's death. TEFRA did not apply for years when the deceased partner was alive…
Large-corporate interest rate applies to Form 1042 withholding tax
Chief Counsel considered whether the higher interest rate for large corporate underpayments applies to withholding taxes reported on Form 1042 after the IRS issues a notice of deficiency. The advice…
Review rights differ for rescinded offers and installment agreements
Chief Counsel advised that a taxpayer has no direct administrative appeal when the IRS rescinds, terminates, or modifies a previously accepted offer in compromise, including a rescission for fraud.…
Diesel used in particulate filters qualifies as a nontaxable use
Chief Counsel advised that diesel fuel consumed by a tractor's diesel particulate filter qualifies as a nontaxable use under IRC § 6427(l). The filter uses a separate injector and fuel line, and its…
Cooperative's retail-sales reporting exemption requires scrutiny
Chief Counsel advised how to evaluate a consumer cooperative's application for exemption from information-reporting requirements under IRC § 6044(c). The exemption is limited to cooperatives…
Section 6229 extends, but does not shorten, a partner's assessment period
Chief Counsel explained the relationship between the general tax-assessment period in IRC § 6501 and the TEFRA partnership rule in former § 6229. A partner's § 6501 period runs from the filing of…
Oilfield-services partnership receives mixed qualifying-income ruling
A company planned to contribute oilfield-services operations to a limited partnership and offer partnership interests to public investors. The partnership would provide well-site services used in…
Partnership items must be resolved before assessment
Chief Counsel advised that a partnership item claimed on a partner's return could be assessed after the item was disallowed in a partnership-level FPAA. Sections 6221 and 6225 require partnership…
Confirm pass-through status in partnership analysis
Chief Counsel agreed with a memorandum subject to several edits. It advised calling Form 1065 an information return or partnership return, not a partnership tax return. It also advised confirming…
State law identified the LLC tax matters partner representative
Chief Counsel advised that state law determines who may act for an LLC serving as tax matters partner. The representative must be a current officer or manager under state law, so a former officer or…
What these documents are
- Private letter rulings (PLRs): A taxpayer asked the IRS to rule on a planned transaction before doing it. The ruling shows exactly how the IRS applied the Code to those facts.
- Technical advice memoranda (TAMs): The IRS National Office answering a question raised during an audit or other proceeding.
- Chief Counsel advice (CCAs): IRS lawyers advising their own field staff on how to apply the law.
- Determination letters: Rulings on exempt-organization matters, such as whether an organization qualifies under § 501(c)(3) or a foundation's grant procedures pass § 4945.
- Not precedent, still useful: Under 26 U.S.C. § 6110(k)(3) none of these can be cited as precedent. They remain the best public window into how the IRS actually rules on facts like yours, and practitioners read them for exactly that.