Wachtell Lipton recently issued the 2023 edition of its “Spin-Off Guide.” This 83-page publication is a terrific resource for getting up to speed on the wide variety of issues associated with spin-off transactions. Tax issues loom large for spin-offs, and companies considering a spin-off must decide whether to move forward on the basis of legal opinions or seek a private letter ruling. One of the Guide’s 2022 updates relates to a new IRS pilot program for obtaining a private letter ruling on an accelerated basis. Here’s an excerpt:
Depending on the complexity of the request, the process of obtaining a ruling has, in recent years, taken approximately six months from the date of submission. However, in January 2022, the IRS established an 18-month pilot program (expiring July 2023) permitting taxpayers to request expedited handling of private letter ruling requests through a “fast-track” process. If the IRS grants a request for “fast-track” processing, it will generally endeavor to complete its review of the ruling request, and, if appropriate, issue the ruling, within 12 weeks after the request is assigned to an IRS review team.
A taxpayer can request that the IRS process its ruling request within a period shorter than 12 weeks if certain additional requirements are satisfied, including demonstrating that there is a business exigency outside the taxpayer’s control necessitating faster processing and there will be adverse consequences if the IRS does not accommodate the request. Ruling requests involving particularly complex transaction structures or legal issues, while eligible for “fast-track” processing, may be subject to a review period longer than 12 weeks.
– John Jenkins