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How Private Letter Rulings are Useful to Tax Pros

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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.

Oct 6th 2021
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While not precedential, private letter rulings (PLRs) are often an important element in one’s tax research for a particular client.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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