What is a Private Letter Ruling?
A. If you feel that your circumstances warrant prior approval from the IRS – for example, you plan to calculate your payments and use a cost of living index – you may want to obtain a private letter ruling from the IRS before you take a distribution. A private letter ruling is an IRS response to a taxpayer’s formal request for an opinion on the taxpayer’s situation. The IRS charges a fee for each such ruling. Although many tax experts rely on these rulings to broadly interpret the position of the IRS on various issues, each ruling applies only to the taxpayer actually requesting it . For 2002, the procedure on obtaining a private letter ruling from the IRS, you can consult Revenue Procedure 2002-1 (pages 125+), for the steps to follow and pages 56+ and Appendix A for User Fees. The procedure is usually contained in the first Internal Revenue Bulletin issued each year. Remember, if you want to be 100% sure you’ll survive an IRS audit on your SEPP, get your own private letter ruling. A p
