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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Send an estate's deficiency notice to authorized representatives as a safeguard
Chief Counsel advised that, when an estate has authorized one or more representatives to receive tax information, the safest practice is to send each representative a copy of the statutory notice of d…
Employee self-employment tax offsets employer FICA liability but not penalties
An employer had intentionally misclassified workers as nonemployees, making the reduced assessment rules of section 3509 unavailable. The workers reported the compensation as self-employment income an…
Disaster relief does not override mandatory overpayment offsets
Chief Counsel explained that section 6402 requires the IRS to credit an overpayment against other assessed federal tax liabilities before issuing a refund, and disaster-relief authority under section …
Entire administrative record is generally advisable with summary judgment motion
Chief Counsel advised that it is generally appropriate to submit the entire administrative record to the Tax Court with a motion for summary judgment, given the court's desire for information in the r…
Court-required debt write-offs do not trigger Forms 1099-C
A financial institution financed consumer purchases and sometimes pursued deficiency balances after defaults. A court found that its collection notices violated state law and barred collection from a …
Consultant faces section 6701 penalties for studies supporting excessive depreciation deductions
A tax consultant and engineer prepared written asset-classification studies that recharacterized components of 39-year property as property depreciable over 5, 7, or 15 years. The IRS determined that …
Return preparer must meet section 6694 refund-suit deadlines or fully pay the penalty
A return preparer sought to challenge a section 6694 penalty without first paying the full amount. Chief Counsel advised that the Flora full-payment rule applies if the preparer does not timely use th…
Oilfield support services generate qualifying partnership income
A company planned to form a publicly traded partnership that would supply fluids to oil and gas producers, treat and dispose of oilfield waste, wash equipment, recycle drilling mud, recover hydrocarbo…
Combat-zone disregarded days use the taxpayer's entry date
Chief Counsel advised how to compute the section 7508 period that is disregarded for tax deadlines when a taxpayer serves in a combat zone. The relevant date for measuring the filing-season days remai…
Moline Properties separate-entity doctrine applies to S corporations
Chief Counsel considered whether wholly owned or majority-owned S corporations could be combined with their shareholders and related entities as a unified business enterprise when determining deductio…
IRS contract interpreters should not sign taxpayer nondisclosure agreements
Chief Counsel considered whether a sign-language interpreter working under an IRS contract should sign a nondisclosure agreement supplied by a taxpayer. The interpreter's contract already subjected th…
The IRS can partially release a levy that includes an excessive assessment
The IRS had abated part of a deficiency assessment as excessive, but later issued a levy that still reflected the excessive amount. Counsel considered whether the levy remained effective up to the cor…
State law determines who may bind an entity tax matters partner
Counsel addressed who may sign for an entity serving as a tax matters partner. The answer depends on who has authority to bind that entity under the governing state law and the entity's organizational…
State disability-support payments qualified for the general welfare exclusion
A state agency funded services and items that helped people with intellectual or developmental disabilities remain at home while waiting for Medicaid waiver support. Eligible recipients had to be on t…
LLC member must be a manager to serve as tax matters partner
Chief Counsel advised that either of two timing tests can allow a person to qualify as a partnership's tax matters partner. The person must have been a general partner at some point during the taxable…
Partnership relationship may permit limited tax information disclosure
Chief Counsel considered whether information from a closing agreement could be disclosed for use in another taxpayer's examination. Section 6103(h)(4)(C) permits disclosure when the parties have a tra…
Section 6701 penalty is generally imposed per qualifying document
Chief Counsel explained that the section 6701 penalty for aiding or abetting a tax understatement is generally measured by each qualifying return, affidavit, claim, or other document. The IRS must ide…
Court-ordered deficiency write-offs require no Forms 1099-C
A financial institution was barred by a court from collecting consumer deficiency balances because its notices violated state law. A later class settlement required the institution to write off those …
Fertilizer and industrial-site income qualifies under section 7704
A limited liability company expected to produce and market a nitrogen-based fertilizer and to receive rent and service fees from an industrial-site tenant. The IRS held that income from producing, sto…
Disaster postponement suspends assessment deadline
Chief Counsel advised that section 7508A suspends the time for the IRS to make assessments during the postponement period that applies to a declared disaster. The short email pointed to examples in th…
Section 7436 employment determinations cover individuals only
Chief Counsel agreed that an IRS employment-status determination under section 7436(a)(1) can be made only with respect to individuals. The email therefore advised that entities should not be placed o…
NOL rule does not reopen closed refund period
A taxpayer's overpayment was offset against outstanding tax liabilities, then the taxpayer filed amended returns after discovering a deduction that eliminated the original tax and generated a net oper…
Reconsideration allowed when refund grounds were overlooked
Chief Counsel explained that a supplemental refund claim generally cannot amend an original claim after the IRS has taken final action. A narrow exception applies when the IRS's disallowance did not f…
Valid overpayment credit creates a later payment date
Chief Counsel advised that when an overpayment is credited against another tax liability, section 7422(d) treats the credit as a payment for refund-suit purposes. Section 6407 dates that credit when t…
Taxpayer assistance order may expedite review but not compel refund
Chief Counsel advised the Taxpayer Advocate Service to continue communicating with the responsible IRS office or consider an operations assistance request before issuing a taxpayer assistance order. I…
Form 2848 must specifically authorize representation for international information return penalties
Chief Counsel addressed whether a power of attorney covering an income tax return also permits a representative to discuss civil penalties tied to an international information return. Counsel conclude…
Crude oil pipeline agreement income qualified under section 7704
A limited partnership owned an interest in an entity that transported crude oil through a lateral pipeline and a larger pipeline. The entity earned per-barrel transportation fees and could receive rep…
Governmental retiree benefit trust income was excluded and no annual return was required
A governmental employer created a trust to prefund medical and death benefits for certain retired employees and their eligible spouses and dependents. Trust assets could be used only for those benefit…
Reasonable-wage adjustment is not worker reclassification
Chief Counsel advised that an employment tax audit did not involve worker classification when a corporation had consistently treated its sole officer as an employee. In some years the corporation paid…
Governmental benefits trust has excluded income and no annual return
A county and another political subdivision created separate trusts to fund other post-employment benefits, then used a master trust to pool and invest their assets. The master trust was controlled by …
Small partnerships still must file Form 1065
Chief Counsel advised that Revenue Procedure 84-35 does not automatically exempt small partnerships from filing Form 1065. Sections 6031 and 6698 contain no exception to the filing requirement, althou…
Oilfield water services produced qualifying partnership income
A limited partnership planned to provide oil and gas producers with services for collecting, treating, recycling, disposing of, transporting, and storing water used or produced in drilling and hydraul…
Art foundation lost exemption after failing to verify its activities
A private foundation was recognized as tax-exempt based on plans to present art exhibitions and provide art to museums. The examination report said the foundation claimed only one domestic exhibition …
Information received in determining tax liability is return information
Chief Counsel considered whether information received by the IRS was return information under IRC § 6103. The advice states that return information includes information the IRS gathers, collects, or c…
Natural gas processing fees are qualifying PTP income
A publicly traded partnership indirectly owned a natural gas processing plant. The plant used cryogenic expansion to remove natural gas liquids so the remaining gas met interstate pipeline specificati…
Joint estimated tax payments follow the spouses' agreed allocation
Chief Counsel advised how to allocate payments associated with a joint account when spouses later file separate returns. An overpayment elected as a credit becomes an estimated tax payment for the nex…
Deficiency dividends generally trigger interest but not Chapter 68 penalties
Chief Counsel analyzed the consequences when a regulated investment company or real estate investment trust obtains a section 860 deficiency dividends deduction. Assuming the entity timely filed its o…
Foreign partner may serve as the tax matters partner in limited circumstances
Chief Counsel advised that an eligible foreign partner is not categorically barred from serving as a partnership's tax matters partner under the TEFRA rules. If an eligible U.S. partner exists, howeve…
Interest on tax restitution runs from the original tax due date
A court ordered a defendant to pay restitution to the IRS for a tax loss, and the defendant paid within the period set by the restitution order. Chief Counsel concluded that the amount was assessable …
Pipeline construction and operating reimbursements are qualifying income
A limited partnership gathered, processed, transported, stored, and marketed natural gas, natural gas liquids, crude oil, and refined petroleum products. It received fees and reimbursements for buildi…
State law determines who may sign for a terminated trust in a TEFRA case
A terminated trust was a notice partner in a TEFRA partnership, and the examining team asked who could sign Form 870-PT to agree to partnership-item adjustments. Chief Counsel advised first confirming…
Disaster relief does not suspend penalties on tax already overdue
Chief Counsel considered whether disaster relief under IRC § 7508A suspended failure-to-pay penalties and interest on tax that was due before the disaster postponement period began. The advice conclud…
IRS generally cannot abate interest on restitution-based assessments
Chief Counsel considered whether the IRS could abate interest accruing on a criminal restitution-based assessment made under IRC § 6201(a)(4). The advice concluded that § 6404(e) does not apply becaus…
Full interest-free treatment requires payment with the employment-tax agreement
Chief Counsel explained when an employer must pay an employment-tax underpayment to receive interest-free adjustment treatment after signing Form 2504-AD. Forms in the Form 2504 series count as adjust…
Tax Court discovery ruling does not require worker-return disclosure during audits
Chief Counsel addressed whether Mescalero v. Commissioner required the IRS to give employers worker tax-return information during employment-tax examinations or Appeals proceedings. The advice conclud…
Termination assessment does not require separate notice to the court
Chief Counsel advised that the jeopardy-assessment provisions do not require a court notification for a termination assessment. In a jeopardy assessment, notice alerts the court when an assessment mad…
Oilfield fluid management and waste disposal produce qualifying income
A publicly traded partnership planned to transport drilling and fracturing fluids, move fluids between well sites, and collect, treat, recycle, and dispose of flowback, produced water, and drilling wa…
Mailed levy occurs when the levy recipient receives the notice
Chief Counsel advised that a levy served by mail is made on the date the recipient receives the notice, not the date the IRS sends it. A certified-mail return receipt establishes that delivery date, a…
Restitution-based tax assessment bears interest from the original payment deadline
Chief Counsel advised how to calculate underpayment interest on a restitution-based assessment where the restitution order concerned unpaid tax. Under IRC § 6601(a), interest runs on the tax liability…
Nonmember cannot serve as an LLC partnership's tax matters partner
Chief Counsel advised that a tax matters partner designation on a partnership return was invalid because the named entity was not a partnership member. A person signing for an LLC must also have autho…
Wood pellet and wood chip operations produce qualifying income
A corporation planned to contribute its wood-pellet and wood-chipping operations to a publicly traded partnership. The activities included debarking, chipping, screening, drying, pressure-forming pell…
Proper partnership tax year is a partnership item
In a brief email response to a TEFRA question, Chief Counsel advised that the proper tax year is a partnership item. The message left it to the recipient to decide whether to include the point in an u…
Installment agreement rejection code should reverse with a 30-day effective date
Chief Counsel confirmed that the IRS may not levy while a proposed installment agreement is pending, for 30 days after rejection, or while a timely appeal is pending. The collection statute expiration…
Tax-exempt bond exam disclosures differ for intermediaries and bondholders
Chief Counsel advised the Office of Tax-Exempt Bonds on identifying and communicating with bondholders during an issuer examination. Information about whether the bonds are tax-exempt is return inform…
Training lesson revises collection limitation suspension guidance
Chief Counsel reported that a levy, seizure, and sale training lesson had been revised to correct legal inaccuracies in its discussion of IRC § 6503 suspensions. The revision expanded the explanation …
Cancellation payments for condensate facility are qualifying partnership income
A publicly traded partnership agreed to construct and operate a crude-oil-condensate splitter, storage capacity, and connecting pipelines for one customer. If the customer cancelled before the assets …
OVDP overpayments require a timely refund claim before crediting
Chief Counsel considered whether an overpayment from one year in an Offshore Voluntary Disclosure Program disclosure period could offset tax or the miscellaneous offshore penalty due for another year.…
Commodity-linked note ruling revoked prospectively
Two regulated investment company funds had obtained a 2006 ruling that income and gain from certain commodity-linked notes qualified under IRC § 851(b)(2). The IRS later concluded that issuing a priva…
Online platform is a third party settlement organization
An online platform contracted with more than 50 unrelated sellers, collected buyers' credit-card payments, deducted an administrative fee, and transferred consolidated payments to each seller. Assumin…
Commodity-linked-note income ruling was revoked retroactively
Two funds had received a 2009 private letter ruling that income and gain from certain commodity-linked notes counted as qualifying income under section 851(b)(2). The IRS later concluded that issuing …
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.