IRS Revises Requirements for Reduced User Fee for Some Rulings

Part III -- Administrative, Procedural, and Miscellaneous

SECTION 1: PURPOSE

This notice advises of revisions to the requirements for the reduced user fee for substantially identical letter rulings set forth in section 15.07(2) of Rev. Proc. 2016-1, 2016-1 I.R.B. 1, and further described in paragraph (A)(5)(a) of Appendix A of Rev. Proc. 2016-1. This notice also corrects the amount of the user fee for Foreign Insurance Excise Tax Waiver Agreements stated in paragraph (A)(3)(e) of Appendix A of Rev. Proc. 2016-1.

SECTION 2: BACKGROUND

Section 7528 was added to the Internal Revenue Code by section 202 of the Extension of the Temporary Assistance for Needy Families Block Grant Program, Pub. L. No. 108-89, amended by section 891(a) of the American Jobs Creation Act of 2004, Pub. L. 108-357, and was made permanent by section 8244 of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, Pub. L. No. 110-28.

Section 7528 provides that the Secretary of the Treasury or delegate (the "Secretary") shall establish a program requiring the payment of user fees for requests to the Internal Revenue Service (the "Service") for letter rulings, opinion letters, determination letters, and other similar requests. The fees charged under the program are to: (1) vary according to categories or subcategories established by the Secretary; (2) be determined after taking into account the average time for, and difficulty of, complying with requests in each category and subcategory; and (3) be payable in advance. The Secretary is to provide for exemptions and reduced fees under the program as the Secretary determines to be appropriate, but the average fee applicable to each category or subcategory must not be less than the amount specified in section 7528(b)(3).

Rev. Proc. 2016-1 contains the current schedule of user fees and provides guidance for administering the user fee requirements for requests for letter rulings under the jurisdiction of the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions and Products), the Associate Chief Counsel (Income Tax and Accounting), the Associate Chief Counsel (International), the Associate Chief Counsel (Passthroughs and Special Industries), the Associate Chief Counsel (Procedure and Administration), and the Associate Chief Counsel (Tax Exempt and Government Entities).

Section 15.07(2) of Rev. Proc. 2016-1 sets forth the requirements for a reduced user fee for certain substantially identical letter rulings requested for multiple entities with a common member or sponsor, or multiple members of a common entity. If the requirements of section 15.07(2) of Rev. Proc. 2016-1 are satisfied, paragraph (A)(5)(a) of Appendix A of Rev. Proc. 2016-1 provides that the user fee for each additional substantially identical letter ruling, after the $28,300 fee or reduced fee, as applicable, has been paid for the first letter ruling request, is $2,700 for requests received after February 1, 2015. The Service has recently determined that the requirements for this reduced user fee should be revised to include substantially identical letter rulings requested by taxpayers who are parties engaged together in the same transaction affecting all requesting taxpayers. The Service will include this additional basis for qualifying for a reduced user fee in Rev. Proc. 2017-1 that is published in January 2017. In addition, the Service has determined that this change is effective immediately to reflect more properly the Service's actual costs in preparing letter rulings. Accordingly, pending publication of Rev. Proc. 2017-1, taxpayers may rely on this notice for purposes of requesting a reduced user fee. Section 3 of this notice sets forth the revised requirements for this reduced user fee.

Paragraph (A)(3)(e) of Appendix A of Rev. Proc. 2016-1 provides that the user fee for a request for a Foreign Insurance Excise Tax Waiver Agreement received on or after February 2, 2015 is $8,000. Effective for requests received on or after February 4, 2016, this user fee was decreased to $7,200; however, this decrease was inadvertently omitted from Rev. Proc. 2016-1. Section 4 of this notice corrects this discrepancy.

SECTION 3: REDUCED USER FEE FOR SUBSTANTIALLY IDENTICAL LETTER RULINGS

.01 Section 15.07(2) of Rev. Proc. 2016-1 is modified to read as follows:

If a taxpayer or taxpayers requesting reduced user fees pursuant to this section 15.07(2) also request a pre-submission conference pursuant to section 10.07, the taxpayer(s) should notify the Associate office at or before the pre-submission conference that the taxpayer(s) intend to request reduced user fees pursuant to this paragraph. At the pre-submission conference, the taxpayer(s) should discuss with the Associate office how the letter ruling requests will satisfy the requirements of this paragraph.

The reduced fee for substantially identical letter rulings is applicable to taxpayers requesting closing agreements as described in section 2.02 of this revenue procedure, assuming they meet the requirements described above for letter rulings.

.02 The text in the "CATEGORY" column of paragraph (A)(5)(a) of Appendix A of Rev. Proc. 2016-1 is modified to read as follows:

The user fee for a request for a Foreign Insurance Excise Tax Waiver Agreement received on or after February 4, 2016 is $7,200. Paragraph (A)(3)(e) of Appendix A of Rev. Proc. 2016-1 is modified to reflect this correction.

SECTION 5: EFFECT ON OTHER DOCUMENTS

Section 15.07(2) of Rev. Proc. 2016-1 and paragraph (A)(5)(a) of Appendix A of Rev. Proc. 2016-1 are modified to reflect the revisions to the requirements for the reduced user fee for substantially identical letter rulings set forth in section 3 of this notice. Paragraph (A)(3)(e) of Appendix A of Rev. Proc. 2016-1 is modified to reflect the correct user fee for a request for a Foreign Insurance Excise Tax Waiver Agreement provided in section 4 of this notice.

SECTION 6: EFFECTIVE DATE

The guidance provided in section 3 of this notice is effective for letter ruling requests under the jurisdiction of the Associate Chief Counsel (Corporate), the Associate Chief Counsel (Financial Institutions and Products), the Associate Chief Counsel (Income Tax and Accounting), the Associate Chief Counsel (International), the Associate Chief Counsel (Passthroughs and Special Industries), the Associate Chief Counsel (Procedure and Administration), or the Associate Chief Counsel (Tax Exempt and Government Entites) received on or after September 27, 2016, and requests pending with the Service as of September 27, 2016.

The guidance provided in section 4 of this notice is effective for requests for Foreign Insurance Excise Tax Waiver Agreements received on or after February 4, 2016.

DRAFTING INFORMATION

The principal author of this notice is Laura Leigh Bates of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this notice, please contact Laura Leigh Bates at (202) 317-3400 (not a toll-free call).