Quick answer

Revenue Rulings and Private Letter Rulings (PLRs) give taxpayers concrete IRS guidance that can change how you document, report, or defend a tax position. Revenue Rulings are public, precedent-style interpretations published in the Internal Revenue Bulletin and relied on by IRS examiners; PLRs are written to an individual taxpayer and are binding only for that taxpayer’s facts (but the IRS often publishes them in redacted form). (IRS guidance: Revenue Rulings; Private Letter Rulings.)

How Revenue Rulings work

  • What they are: Formal, published interpretations the IRS issues to explain how the tax law applies to a recurring factual scenario.
  • Legal weight: Binding on the IRS and its employees for the issue described, used consistently in exams and administrative practice. They are persuasive to taxpayers and often relied on in planning, but courts are not bound and may reach different conclusions.
  • Where to find them: The Internal Revenue Bulletin and the IRS website; see our primer on Revenue Ruling.

How Private Letter Rulings (PLRs) work

  • What they are: Written rulings issued by the IRS in response to a taxpayer’s request about how tax law applies to that taxpayer’s specific facts.
  • Legal weight: Binding only on the IRS with respect to the requesting taxpayer and the particular transaction described. Other taxpayers cannot rely on a PLR as a binding precedent, though published, redacted PLRs are available and can be persuasive.
  • Practical note: Requesting a PLR involves a formal submission and a user fee; the IRS will refuse to rule on hypothetical or purely future transactions in some cases. Read more in our Private Letter Ruling glossary.

Practical effects on tax positions

  1. Reducing audit risk: A published Revenue Ruling that supports your treatment makes an IRS examiner more likely to accept it without proposed adjustments.
  2. Strengthening documentation: Citing a ruling and matching your facts to the ruling’s fact pattern improves your chances in an audit or administrative appeal.
  3. Planning certainty: A PLR can give a taxpayer near-certain IRS treatment for a planned transaction — useful for high‑value or novel deals where uncertainty would be costly.
  4. Precedent vs. persuasion: Revenue Rulings carry more consistent administrative weight; redacted PLRs are persuasive to practitioners but not binding on other taxpayers.

When to consider asking for a PLR (cost/benefit)

  • Consider a PLR when a transaction is material, irreversible, or would create significant tax exposure if the IRS later challenges it.
  • Don’t request a PLR for routine issues where published guidance already exists — it can be slower and costly.
  • In my practice, I recommend PLRs selectively for complex mergers, novel tax-structure questions, or transactions that will materially affect financial statements.

Limitations and risks

  • Binding scope: PLRs apply only to the requester’s described facts; any material difference can render the PLR inapplicable.
  • Not a court win: Even a Revenue Ruling or PLR does not guarantee a court will rule the same way if a case reaches litigation.
  • Timing and revocation: The IRS can withdraw or modify administrative guidance; always check for superseding rulings or regulations before relying.

Practical steps to use rulings to support a position

  1. Match facts precisely — document facts, dates, contracts, and computations that mirror the ruling’s fact pattern.
  2. Cite the ruling and explain the parallels in audit correspondence or tax disclosures.
  3. Consider professional review — a CPA or tax attorney can evaluate whether a PLR request is justified and draft the submission.

Example (brief)

A taxpayer planning a complex asset transfer with potentially large tax consequences sought a PLR in my practice. The PLR clarified the IRS’s view for that exact structure, allowing the client to proceed with predictable tax reporting and reduced contingency reserves.

Related resources on FinHelp

Authoritative sources

  • IRS — Revenue Rulings and the Internal Revenue Bulletin (IRS guidance)
  • IRS — Private Letter Rulings (published, redacted versions)

Disclaimer: This article is educational only and does not constitute tax advice. For guidance on a particular situation, consult a qualified tax professional or attorney.