An IRS private letter ruling is a request to the IRS to rule on a tax issue before a taxpayer takes certain action. The IRS private letter ruling is applicable to that tax situation and that taxpayer only. Most taxpayers will never need such an IRS private letter ruling, but if there is a large dollar amount of tax at stake and a tax issue that is unclear, you should consider requesting an IRS private letter ruling to reduce your risk.
The procedure for requesting a letter ruling varies depending upon whether the taxpayer is currently underexamination by the IRS. The procedure for requesting a private letter ruling is updated annually. It is always the first revenue procedure in the first Internal Revenue Bulletin of the year.
