Key Takeaways
- Revenue Rulings apply the law to specific factual situations.
- Revenue Procedures dictate internal IRS practices (e.g., how to file, when to file).
- Both are binding on the IRS (IRS cannot argue against its own ruling).
- Private Letter Rulings (PLRs) are issued to a specific taxpayer for a fee.
- Technical Advice Memoranda (TAMs) are issued during an audit.
- PLRs and TAMs cannot be cited as precedent by other taxpayers.
Revenue Rulings & Procedures: IRS Guidance
Why This Matters for the Exam
Revenue Rulings and Procedures are the IRS's official positions on tax issues. Understanding the difference between public guidance (rulings) and private guidance (PLRs) is critical for Part 3.
The exam tests whether you know when taxpayers can rely on IRS guidance and whether that guidance can be cited against other taxpayers.
Expect at least 2-3 questions on the types of IRS guidance and their precedential value.
Revenue Rulings
Revenue Rulings are official IRS interpretations of the tax law applied to a specific set of facts. They are published in the Internal Revenue Bulletin (IRB) and Cumulative Bulletin (CB).
Key Characteristics:
| Factor | Revenue Ruling |
|---|---|
| Purpose | Apply law to specific facts |
| Published? | Yes (IRB / CB) |
| Binding on IRS? | Yes |
| Can taxpayers rely on? | Yes |
| Precedential for courts? | Persuasive, but less than regulations |
| Citation format | Rev. Rul. 2024-01 |
How to Use Revenue Rulings:
- If your client's facts match the ruling, you can rely on the IRS's conclusion.
- Revenue Rulings are considered "substantial authority" for penalty protection.
- The IRS cannot contradict its own published rulings (though it can revoke or modify them prospectively).
Revenue Procedures
Revenue Procedures are official statements of IRS practice and procedure. They tell taxpayers and practitioners how to do things, not what the law means.
Key Characteristics:
| Factor | Revenue Procedure |
|---|---|
| Purpose | Explain IRS procedures |
| Published? | Yes (IRB / CB) |
| Binding on IRS? | Yes |
| Examples | Standard mileage rates, depreciation tables, change in accounting method procedures |
| Citation format | Rev. Proc. 2024-01 |
Common Revenue Procedures:
- Rev. Proc. 2024-XX: Standard mileage rates for the year.
- Rev. Proc. 2015-13: Automatic changes in accounting method.
- Rev. Proc. 2024-XX: Annual inflation adjustments.
Comparison: Rulings vs. Procedures
| Factor | Revenue Ruling | Revenue Procedure |
|---|---|---|
| Content | Legal interpretation | How-to guidance |
| Question Answered | "What is the tax treatment?" | "How do I comply?" |
| Example | "Is expense X deductible?" | "How do I file Form ABC?" |
Private Letter Rulings (PLRs)
Private Letter Rulings are written responses from the IRS National Office to a specific taxpayer's request for guidance on a proposed transaction.
Key Characteristics:
| Factor | Private Letter Ruling |
|---|---|
| Requested by | Taxpayer (must pay fee) |
| Binding on IRS? | Yes, but only for that taxpayer |
| Can others rely on? | No—cannot be cited as precedent |
| Public? | Yes (redacted), but only the taxpayer can rely |
| Citation format | PLR 202401001 |
Why PLRs Are Not Precedent: IRC §6110(k)(3) explicitly states that PLRs "may not be used or cited as precedent." The ruling applies only to the taxpayer who requested it.
Exam Trap: A question may ask if Taxpayer B can rely on a PLR issued to Taxpayer A. The answer is always no.
Technical Advice Memoranda (TAMs)
Technical Advice Memoranda are issued by the IRS National Office during an audit or appeal to resolve a specific technical question.
Key Characteristics:
| Factor | Technical Advice Memorandum |
|---|---|
| Requested by | IRS examiner or Appeals officer (taxpayer can request) |
| Binding on IRS? | Yes, for that case |
| Can others rely on? | No—cannot be cited as precedent |
| When issued | During an audit or appeal |
| Citation format | TAM 202401001 |
Chief Counsel Advice (CCAs)
Chief Counsel Advice includes various forms of legal advice from IRS Chief Counsel to IRS employees. This includes Field Service Advice (FSAs) and other memoranda.
- Made public after redaction.
- Cannot be cited as precedent by taxpayers.
- Useful for understanding IRS litigation positions.
Summary Table: Types of IRS Guidance
| Guidance Type | Published? | Binding on IRS? | Precedent for Others? |
|---|---|---|---|
| Revenue Ruling | Yes | Yes | Yes (persuasive) |
| Revenue Procedure | Yes | Yes | Yes (for procedures) |
| Private Letter Ruling (PLR) | Yes (redacted) | Yes (that taxpayer only) | No |
| Technical Advice Memo (TAM) | Yes (redacted) | Yes (that case only) | No |
| Chief Counsel Advice (CCA) | Yes (redacted) | No | No |
| IRS Publication | Yes | No | No (not legal authority) |
Real-World Scenario
Scenario: Your client is considering a complex transaction. They want certainty about the tax treatment before proceeding.
- Option 1: Research Revenue Rulings to see if the IRS has addressed similar facts.
- Option 2: Request a Private Letter Ruling from the IRS (fee required, 6-12 month wait).
- Benefit of PLR: If granted, the IRS is bound to the conclusion for your client's transaction.
- Limitation: The PLR only protects your client—other taxpayers cannot cite it.
On the Exam
Expect 2-3 questions on IRS guidance, typically:
- Type Questions: "What is the primary content of a Revenue Procedure?"
- Precedent Questions: "Can a taxpayer cite a PLR issued to another taxpayer?"
- Binding Questions: "Is a Revenue Ruling binding on the IRS?"
The key is to remember: Rulings = law interpretation, Procedures = how-to, PLRs = binding only on requesting taxpayer, not citable by others.
Which guidance is binding on the IRS and can be cited as precedent by all taxpayers?
What is the primary content of a Revenue Procedure?
Can Taxpayer B rely on a Private Letter Ruling issued to Taxpayer A?