Rev. Proc. 73-5

Section 1. Purpose

The purpose of this Revenue Procedure is to provide revised procedures for the handling of protests of adverse determinations under section 367 of the Internal Revenue Code of 1954. Under the revised procedures, the decisions regarding such determinations are made by the Assistant Commissioner (Technical) based upon recommendations made to him by an ad hoc advisory board.

Sec. 2. Background

.01 Advance rulings on certain transactions involving foreign corporations required under section 367 of the Code are issued by the Director, Income Tax Division. These rulings constitute a finding under section 367 that the exchange in question is or is not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income tax.

.02 Revenue Procedure 68-23, 1968-1 C.B. 821, describes guidelines used by the Internal Revenue Service in considering requests for rulings under section 367 of the Code. The guidelines usually will be followed in issuing rulings. However, notwithstanding the guidelines, an adverse ruling may be issued in any case if, based on all the facts and circumstances, it is determined that it has not been established that tax avoidance is not one of the principal purposes of the transaction. On the other hand, a favorable ruling may be issued if, based on all the facts and circumstances of the case, it is established that tax avoidance is not one of the principal purposes of the transaction.

Sec. 3. Procedure

.01 The taxpayer may, within 90 days after receipt of an adverse ruling letter under section 367, protest the adverse determination by letter to the Assistant Commissioner (Technical). The letter should include:

1 A copy of the ruling letter.

2 The reasons for the protest, the grounds for contending that one of the principal purposes for the transaction is not the avoidance of Federal income tax, and (where applicable) the arguments in support of a protest as to the validity of a ruling position set forth in the guidelines announced in Revenue Procedure 68-23. No factual material not previously submitted and considered by the Income Tax Division should be included in the protest.

3 A statement whether a conference is desired.

4 Names of persons (including authorized representatives) expected to attend the conference, if granted.

.02 The Assistant Commissioner (Technical) will establish an ad hoc advisory board to consider each protest. The Assistant Commissioner will not be a member of the board but will be present at any conference granted. Neither the Director, Income Tax Division, the Chief, Reorganization Branch, nor any member of their staffs will be a member of the board. However, the Director, Income Tax Division and Chief, Reorganization Branch will be either present or represented at any conference granted.

.03 The taxpayer ordinarily will be granted a conference upon request. Such conference will be held in the office of the Assistant Commissioner (Technical) in Washington, D. C. The taxpayer will be notified of the time and date of the conference, and of the names of the members of the board.

.04 The board will consider all materials submitted in writing by the taxpayer and oral arguments presented at the conference. Whether or not a conference is granted, all protests will be considered by the board, which will make its recommendation to the Assistant Commissioner (Technical) for his decision.

.05 The Assistant Commissioner (Technical) will inform the taxpayer in writing of his decision.

Sec. 4. Inquiries

Inquiries in regard to this Revenue Procedure should be addressed to the Assistant Commissioner (Technical), Attention: T:I:R, Internal Revenue Service, Washington, D.C. 20224.

Sec. 5. Effect on Other Documents

This Revenue Procedure supersedes Revenue Procedure 69-12, 1969-1 C.B. 401 and section 6.15 of Revenue Procedure 72-3, 1972-1 C.B. 698 at 703.