The private letter ruling (PLR) is a fact-specific, written determination by the IRS responding to a written request by a particular taxpayer. Individuals, corporations, exempt organizations, all kinds of taxpayers get rulings on all kinds of tax issues. Here's what tax pros need to know about them.
While not precedential, private letter rulings (PLRs) are often an important element in one’s tax research for a particular client.
There are many issues that the IRS will not address in a private letter ruling. These are usually tax technical or factual in the nature. The taxpayer asking for the ruling needs to be identified to the IRS.
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As guidance to other taxpayers, PLRs do not have the importance of published rulings.
“A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer's specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of a particular transaction before the transaction is consummated or before the taxpayer's return is filed….” (.Understanding IRS Guidance – A Brief Primer,” IRS.gov, https://www.irs.gov/newsroom/understanding-irs-guidance-a-brief-primer).
The IRS goes on to explain the analysis is made public but in a manner that maintains confidentiality, and that it isn’t to be “relied on as precedent by other taxpayers or IRS personnel.”(Ibid)
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