IRS Updates “No-Rule” List

The IRS recently issued Revenue Procedure 2015-3, which updates Revenue Procedure 2014–3, and revises the list of those areas on which the IRS will not issue letter rulings or determination letters. Letter rulings and determination letters are answers to inquiries from individual taxpayers on their status for tax purposes and the tax effects of their acts or transactions.

With a determination letter, the IRS and taxpayer agree on the treatment of completed transactions prior to filing a return. It applies principles and precedents previously announced to a specific set of facts. In addition, it is not concluded with a closing agreement, so there is less finality, and it is not reviewed by National Office Chief Counsel.

Letter rulings, on the other hand, are issued from the National Office Chief Counsel, which applies the tax laws to the taxpayer’s specific set of facts. They are issued on proposed or completed transactions prior to the filing of the return and identical issues not on an earlier return that was examined in Appeals or in litigation.

The IRS ordinarily will not issue letter rulings or determination letters in certain areas because of the factual nature of the problem involved or because of other reasons. One of the latest issues added to the IRS’s “No Rule” list is whether under the low-income housing tax credit program a casualty loss has been restored by reconstruction or replacement within a reasonable period of time. The IRS said it may issue a determination letter in this case, simply not a letter ruling.