DealLawyers.com Blog

This Fenwick memo says that the IRS has reinstated its “significant issue” private letter ruling program, which was suspended in 2024. Here’s the IRS’s Rev. Proc. reinstating the program and here’s an excerpt from Fenwick’s memo on the decision:

The program will allow taxpayers to seek letter rulings on significant, specific issues relevant to either tax-free spin-off under § 355 of the tax code. Under this program, the IRS may, for example, issue a letter ruling addressing significant issues presented by the application of § 355(e), even though the ruling does not address overall qualification of the transaction as a tax-free spin-off under § 355.

In addition to tax-free spin-offs under § 355, significant issue rulings are also available for transactions (or parts of transactions) governed by §§ 332, 351, 368, or 1036.

This decision is helpful to transaction planners because with the suspension of the program, companies considering a spin-off or other transaction with significant tax issues had to request a ruling from the IRS on the entire transaction. Under the significant issue ruling program, companies can ask the IRS to address only a particular issue, instead of asking the IRS to bless the entire deal – and that can save time & resources.

– John Jenkins