A private letter ruling (PLR) is a written decision by the IRS to taxpayers regarding complex and specific tax situations. This letter applies only to the personal content of the individual. The taxpayer must explain the specific situation, facts, and questions and then present it to the IRS.
A PLR is issued to individual taxpayers, businesses, trusts, and other entities. The IRS does not have a set time limit for issuing letter rulings. Ideally, it takes 6-12 months to process and review. PLR is generally made public after removing all the personal information about the taxpayer. The purpose of PLR is to remove uncertainty and to advise the tax payer usually a business regarding the tax pay they expect.
PLR is an invaluable tool for taxpayers seeking clarity on the complex world of taxation. There are several advantages PLR offers to the taxpayer. The primary benefit of PLR is the legal certainty. By obtaining PLR you can reduce the risk of unexpected tax liabilities or disputes. In some cases, taxpayers use PLR as a negotiating tool with other parties involved in transactions like mergers and acquisitions.
Generally, there are three types of IRS private letter ruling:
- A PLR is published by the IRS for the taxpayer to use in the tax return filing.
- A confidential letter ruling that the taxpayer should not share with anyone including another taxpayer.
- A private letter ruling which is not published by the IRS and is only distributed to the taxpayer requesting representative.
Understanding when and how to seek a PLR is a key strategy in managing tax risks and optimizing financial decisions. Know more about PLR requests and when to seek help from the attorneys of Mitchell Tax Law. The attorneys of the firm can resolve all kinds of tax issues.
Many of our private letter ruling attorneys have worked for the IRS before joining our firm. The attorneys are experienced in submitting the PLR and ensure the request is submitted in a way that will bind the IRS by ruling. You get full assistance in ensuring compliance with tax codes, especially when dealing with complex transactions or novel situations. Our expert will guide you on each step and advise you to manage tax risk and optimize financial decisions.
Schedule a meeting today and get started on your PLR request today!
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