Executive summary
Effective immediately, IRS has initiated under Rev. Proc. 2022-10 a pilot program providing for “fast-track” processing of private letter rulings (PLR) relating to corporate transactions.1 This pilot program was created to reduce the time it takes for taxpayers to receive a PLR. Under this program, IRS is aiming to process corporate PLR requests in 12 weeks’ time, roughly half the time heretofore required to receive a PLR. The pilot program will run for 18 months and then presumably will be reevaluated.
In general
Rev. Proc. 2022-1 provides general instructions and procedures for requesting PLRs. Rev. Proc. 2022-10 amplifies Rev. Proc. 2022-1 by permitting taxpayers to “fast-track” their corporate PLR requests. Generally, to participate in this program, the taxpayer must first request a pre-submission conference and, at the conference, explain to IRS the substance of the PLR request and the reasons for requesting fast-track processing. Next, the taxpayer would draft its PLR request, generally fulfilling normal PLR request requirements. While taxpayers must explain the reasons for requesting fast-track processing, IRS has indicated informally that this inquiry should not be read as implying that there is a requirement of a special need or compelling case.2
Fast-track processing
In general, under Rev. Proc. 2022-1, IRS processes PLRs on a first-come first-served basis in order of the date the request is received; only in “rare and unusual cases” will IRS grant a request for expedited handling of a PLR request. In the case of corporate PLR requests, however, Rev. Proc. 2022-10 overrides this somewhat rigid standard and generally permits a fast-track processing of such PLRs in 12 weeks, much faster than the traditional six-month process.3
Pre-submission conference required
As stated above, in order to qualify for fast-track processing, the taxpayer must request a pre-submission conference where the taxpayer will be expected to highlight the substantive issues of the request as well as to discuss the taxpayer's reasons for fast-track processing. Prior to the pre-submission conference with IRS, the taxpayer will generally need to provide a memorandum covering the same.
Fast-track PLR request
After the pre-submission conference, the taxpayer would then submit its PLR request pursuant to Rev. Proc. 2022-1 (and any other applicable revenue procedure, e.g., Rev. Proc. 2017-53, relating to spin-offs). As with the pre-submission conference, the taxpayer would again include its reasons for requesting fast-track processing. The taxpayer must agree to provide any additional information requested within seven business days of such request, as well as a draft of the actual PLR being sought (a so-called “two-part.”)
Considerations for fast-track requests
In determining whether the fast-track process is feasible for a particular PLR, IRS will consider the complexity of the proposed transaction, issues presented and other obligations of the attorneys assigned to process the request. IRS also will look to see whether the PLR request adequately describes and analyzes the relevant issues. Additionally, while there may be opportunities for reconsideration, a taxpayer generally does not have the right to appeal.4 That said, IRS has indicated that it expects such requests generally will be granted, subject to compliance with the revenue procedures.5
Key deadlines
The pilot program under Rev. Proc. 2022-10 is effective immediately.
Key takeaway
IRS has created this pilot fast-track program to allow most corporate PLR requests to be processed in approximately 12 weeks. Taxpayers can qualify for this program so long as they and their advisors work with IRS in an expeditious manner, providing any additional requested information promptly and by analyzing the issues presented in a thorough manner.
1The PLR request must be solely or primarily under the Associate Chief Counsel (Corporate), e.g., spin-offs, tax-free reorganizations, consolidated return matters, etc.)
2IRS informal comments at NYSBA annual meeting on Jan. 19th, 2022. See 174 Tax Notes Federal 549 (Jan. 24, 2022).
3Exceptions may be made for requests for extension of time to make elections or other applications for relief under section 301.9100 of the Procedure and Administration Regulations.
4See section 10.02 of Rev. Proc. 2022-1.
5See 174 Tax Notes Federal 531 (Jan. 24, 2022).
