A previous IRS program that lets taxpayers request private letter rulings on “significant issues” in certain corporate transactions, rather than requiring a ruling on the entire transaction, is being revived by the tax agency.
The IRS issued Revenue Procedure 2026-21 earlier this month to reinstate a significant issue ruling program after years of taking varying positions on whether and to what extent it would issue letter rulings addressing corporate transactions.
According to top 10 accounting firm BDO USA, prior programs alternated between significant issue rulings and rulings addressing entire transactions. In recent years, the IRS moved away from issuing significant issue rulings and instead allowed comfort rulings and broader transactional rulings in some corporate contexts—especially those involving Section 355, Distribution of stock and securities of a controlled corporation, of the Internal Revenue Code.
The new program allows corporate taxpayers to request letter rulings on one or more issues that:
- Are solely under the jurisdiction of the associate chief counsel (corporate);
- Are significant; and
- Involve the tax consequences or characterization of a transaction (or part of a transaction) that is described in sections 332, 351, 355, 368, or 1036 of the tax code.
The IRS noted in Rev. Proc. 2026-21 that a significant issue is “a germane and specific issue of law, provided that a ruling on the issue would not be a comfort ruling or the conclusion in such a ruling otherwise would not be essentially free from doubt. An issue is germane if resolution of the issue is necessary to determine an element of the tax treatment of the transaction. An issue is specific if it is the narrowest articulation of the germane issue. A change of circumstances arising after a transaction ordinarily does not present a significant issue with respect to the transaction.”
All requests for a ruling must contain the following, according to the IRS:
- A narrative description of the transaction that puts the significant issue in context;
- A statement identifying the issue;
- An analysis of the relevant law that sets forth the authorities most closely related to the issue, explains why these authorities didn’t resolve the issue, and explains why the issue is significant;
- Applicable information and representations from relevant revenue procedures with respect to the significant issue (see Appendix F of the revenue procedure) and as otherwise may be required by the Office of Associate Chief Counsel (corporate) depending on the facts and circumstances;
- If the taxpayer is requesting a ruling on the tax treatment of part of an integrated transaction, a representation regarding the relevant tax consequences of the integrated transaction (to the best knowledge and belief of the taxpayer), assuming that the IRS issues the requested ruling;
- The precise ruling(s) being requested; and
- A statement that no rulings outside the jurisdiction of the associate chief counsel (corporate) are requested.
The revived program applies to all eligible letter ruling requests postmarked or otherwise received by the IRS after May 5, 2026.
Sign in to get access to this free resource, and all of our whitepapers and reports.
Download this content today!
Register Now Already registered? Click here to Log In
