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Private Letter Rulings and General Information Letters


Rule 3.1 describes how the Comptroller can respond to a written inquiry for taxability guidance related to Texas tax laws, rules, and policies. The Comptroller can issue:

  • A general information letter, or
  • A private letter ruling.

General Information Letters

A general information letter is advisory information provided by the Comptroller in response to a written inquiry about the taxability of an item or transaction. General information letters will typically refer requestors to existing resources, such as a rule, publication, or statute, to answer their questions. These responses are not binding on the Comptroller and cannot be relied on for purposes of the agency’s policy regarding detrimental reliance relief. The Comptroller will regard any written inquiry regarding a taxability issue as a general information letter request unless the inquiry meets the criteria for a private letter ruling request as outlined in the rule.

Private Letter Rulings

A private letter ruling is the Comptroller’s written determination on the application of relevant tax laws, rules, and policies to a specific set of facts. It is binding on the Comptroller, except as noted below, and, provided the taxpayer’s identity is revealed, the person or entity to whom or which the request relates can rely on it for purposes of the agency’s detrimental reliance policy in Rule 3.10.

How to Request a Private Letter Ruling

Please consult Rule 3.1 before submitting a private letter ruling request to make sure all requirements are met, as the information below is not a substitute for the rule.

A request for a ruling must be in writing, but no particular format is required. It must be clearly identified as a request for a private letter ruling and include a statement of the ruling requested from the Comptroller.

In order to receive detrimental reliance relief under Rule 3.10, a request for a private letter ruling must contain identifying information for the person or entity to whom or which the request relates, including:

  • name and address;
  • Texas taxpayer number, federal employer identification number, and state of formation as applicable;
  • signature of the person making the request, or of the authorized representative of the person making the request, or of any third party authorized to represent the person before the Comptroller, accompanied by a power of attorney.

The reporting entity of a combined group requesting a private letter ruling relating to franchise tax must include identifying information for each member of the combined group that is a party to any transactions described in the ruling request.

A request for a ruling must contain disclosures as to whether or not:

  • the issue is under consideration by the Comptroller in connection with an audit, refund request, hearing, voluntary disclosure agreement or litigation, for the person or entity to whom or which the ruling request relates or to a related person; and
  • a request on the same or a similar issue has been or will be submitted to a taxing jurisdiction of another state.

A request for a private letter ruling must include:

  • a detailed statement of all relevant facts;
  • a copy of all relevant documents;
  • a statement of authorities supporting the requested ruling and an explanation of the grounds for the ruling, and
  • a statement of authorities contrary to the requested ruling.

Each person requesting a ruling is under an affirmative duty to identify any and all contrary authorities. If the requestor determines there are no contrary authorities, or is unable to locate such authorities, the request must include a statement that the requestor has identified all relevant authorities to the best of the requestor’s knowledge.

Relevant facts in documents should be detailed in the request and not merely be incorporated by reference in the detailed statement of relevant facts.

The Comptroller can request additional information as needed.

Acknowledgement of Receipt of a Private Letter Ruling Request

The Comptroller will promptly acknowledge receipt of all private letter ruling requests.

When a Private Letter Ruling Will Not Be Issued

The Comptroller is not required to provide a response to a ruling request. For example, the Comptroller can issue a general information letter in response to a request for a ruling that does not meet the requirements for a private letter ruling request.

If the Comptroller requests additional information needed to issue a private letter ruling, including required information that was not provided in the original request, and that information is not provided, the Comptroller will not issue a private letter ruling.

Also, if the request relates to an audit examination of any type, a refund request, a voluntary disclosure agreement, an administrative hearing, or litigation before the Comptroller for the same person, or a related person, and for the same or any prior tax period, the Comptroller will not issue a private letter ruling.

Binding Effect

A private letter ruling can be relied on by the person who receives it, prospectively from the date of its issuance, with respect only to the particular issue and the person identified in the request for the ruling.

A member of a combined group can rely on a private letter ruling issued to the reporting entity of a combined group to the extent that the ruling relates to that member and that member was identified in the ruling request.

Detrimental reliance applies to private letter rulings as provided in Rule 3.10, Taxpayer Bill of Rights, for the person or entity to whom or which the ruling request relates. See also the Compact with Texans.

A private letter ruling is not binding on the Comptroller if material facts were omitted or misstated in the request, or if the facts subsequently developed are materially different from the facts on which the ruling was based.

A ruling is not binding on the Comptroller on a prospective basis if there has been a change in the applicable laws, rules, or Comptroller decisions; or, a Texas or federal court decision that the Comptroller determines affects the ruling’s validity becomes final and non-appealable. And, a private letter ruling is not binding on the Comptroller prospectively if the Comptroller has modified or revoked the private letter ruling.

Modification or Revocation of a Private Letter Ruling

The Comptroller can modify or revoke a private letter ruling if the ruling is found to be in error or not in accordance with laws or current Comptroller policy or guidelines. The Comptroller will not apply the modification or revocation retroactively with respect only to the particular issue and the person identified in the request for the ruling.

The Comptroller will provide written notice of a modification or revocation by mail to the taxpayer’s address as it appears in Comptroller records, or, if there are no Comptroller records, to the contact information provided in the private letter ruling request.

If the modification or revocation is due to a change in state or federal law, a final decision of a court of law, or a change in agency rule, the effective date of the modification or revocation is the date of the event requiring the modification or revocation.

If a ruling is modified or revoked due to a change in Comptroller policy that is not reflected in an agency rule, the ruling is effective until the date of the written notice sent to the requestor or person for whom the request was made.

Confidentiality and Publication of Private Letter Rulings

Information provided to the Comptroller when requesting a private letter ruling or a general information letter is confidential to the extent provided by the Public Information Act and controlling interpretations as applied to the Comptroller by the Attorney General’s office and court decisions.

The Comptroller will publish all private letter rulings, redacted for confidentiality, on the Comptroller’s State Tax Automated Research (STAR) System, including information regarding any modification or revocation of such rulings.


FAQs and Sample Private Letter Ruling Requests

1.  Under Rule 3.1(c)(1)(H), each request for a private letter ruling must identify contrary authorities. What does that mean?

The Comptroller will consider issuing a private letter ruling when existing taxability guidance in statutes, rules, or other controlling authorities does not exist or is not clear. The person requesting the private letter ruling needs to explain why such guidance is lacking. To provide that information the requestor needs to identify all known contrary or contradictory authorities.

For example, when trying to answer a taxability question, a taxpayer may determine that the plain language in a controlling statute and the analysis in a final Comptroller hearing decision appear to conflict when applied to the taxpayer's particular fact situation. Or, existing Comptroller letter rulings may indicate that two different outcomes are possible under a similar set of facts. The person requesting the private letter ruling should clearly identify the conflicting authorities or other statements of policy and explain why the person's tax responsibilities are not clear and Comptroller assistance is needed.

There may be situations where no conflicting or contrary authority exists after a diligent search by a taxpayer. In those situations, the request should clearly explain that the taxpayer needs guidance because none exists and/or why the taxpayer is requesting guidance if there are no conflicting authorities. Stated differently, if there is no question as to the tax treatment that applies to a particular set of facts, then there is no reason for a private letter ruling to be issued.

Even if there are no conflicting or contrary authorities, the request must explain the alternative taxability arguments that can be made in relation to the requested ruling so that the Comptroller understands why assistance is needed.

In addition, if taxability guidance exists, the Comptroller will not issue a private letter ruling just to confirm that guidance in a letter.

2.  Rule 3.1(c)(3)(A) states that the Comptroller will not issue a private letter ruling if a person is under “an audit of any type.” However, Rule 3.10(e)(5) provides that the Comptroller will provide assistance if a taxpayer is under audit and needs input from the Tax Policy Division. How can a taxpayer obtain taxability assistance when under audit?

It is the Comptroller's intent not to issue a private letter ruling if it relates to the same type of tax as the audit. The Comptroller can still issue a private letter ruling if the taxpayer is under audit for sales tax, but, for example, the private letter ruling request is for franchise tax guidance.

The Comptroller acknowledges that some taxpayers are always under audit given their size and/or volume of taxable transactions. Taxpayers in this situation can still request a private letter ruling and the Comptroller will take that fact into consideration. The taxpayer should make such fact clear in its request, which will be verified.

Any taxpayer under audit that needs taxability guidance related to the same tax type can still request assistance. The response will not be a private letter ruling issued under Rule 3.1, and it will not provide detrimental reliance relief as provided under Rule 3.10(c).

To obtain taxability assistance, the taxpayer should first work with the auditor to develop a written statement of facts to which everyone agrees. If there is a dispute over the controlling facts, the Comptroller cannot provide assistance through the Tax Policy Division, but the taxpayer can request further review through an independent audit review or through a request for redetermination in the administrative hearings process.

If the controlling facts are agreed to, both the auditor and the taxpayer should draft written statements of the issue(s) presented and the applicable arguments and authorities in support of the possible taxability determinations. The auditor will then submit the materials to the Tax Policy Division for a response. Although no specific format is required for the request, it should include the following information and materials:

  • The issue(s) presented
  • All relevant facts
  • Complete copies of all relevant documents, such as contracts and all relevant invoices, or representative invoices, as appropriate
  • All relevant authorities
  • Any other information that may assist in making an accurate taxability determination

3.  Rule 3.1(c)(3)(C) does not allow the Comptroller to issue a private letter ruling when a person is working with the agency's Business Activity Research Team (BART) on a Voluntary Disclosure Agreement (VDA). Can a taxpayer still receive taxability guidance to ensure accurate compliance in the future?

Yes. The Comptroller's Tax Policy Division staff is available to work with the taxpayer and the Audit Division to make sure any taxability issues are addressed under Rule 3.10(e)(5).

Any guidance provided by the Tax Policy Division is solely for purposes of the period covered by the VDA and will not serve as a basis for detrimental reliance in the future. And, taxpayers participating in the VDA process are required to disclose their identity even with assistance from Tax Policy. Once the VDA is concluded, the taxpayer can submit a private letter ruling request and if a ruling is issued, the taxpayer can receive detrimental reliance in the future.

The taxpayer should let the auditor assigned to the VDA know they would like input from the Tax Policy Division and provide the following information to the auditor for submission. Although no specific format is required for the request, the request should include the following information and materials:

  • The issue(s) presented
  • All relevant facts
  • Complete copies of all relevant documents, such as contracts and all relevant invoices, or representative invoices, as appropriate
  • All relevant authorities
  • Any other information that may assist in making an accurate taxability determination

4.  Rule 3.1(c)(1)(B) and (C) require that a private letter ruling request include all relevant facts and documents. What information does the Comptroller require to comply with these requirements?

Because a private letter ruling is intended to provide guidance when none exists or a taxpayer believes there are conflicting authorities that apply to the taxpayer's situation, the Comptroller needs to consider all facts that could affect a taxability determination and all relevant documents in their complete form. That means all relevant facts of a transaction need to be identified and explained in detail, and complete copies of contracts and representative invoices must be included.

5.  Is the IRS form 2848 a valid power of attorney form when requesting a private letter ruling? If not, what should the power of attorney document include?

IRS Form 2848 (Power of Attorney and Designation of Representative) is not an acceptable power of attorney for private letter ruling requests and/or representation before the Comptroller's office. IRS Form 2848 specifically states that it will not be honored for representation other than before the Internal Revenue Service.

A power of attorney submitted with a private letter ruling request must contain the following information and can be presented in any format:

  • Taxpayer's Name and Identifying Number (either Texas or Federal Employer Identification Number);
  • Name of the person authorizing representation of the taxpayer and his or her position which demonstrates authority to act on behalf of the taxpayer;
  • Name, address, and contact information of the named representative. If the representative is an entity, the power of attorney must identify at least one person;
  • Statement explaining the scope of representation, meaning whether the power of attorney covers only the request for a private letter ruling, all tax matters before the Comptroller, or something else; and
  • Date signed.

6.  Are there samples of private letter ruling requests a taxpayer can review?

Yes. Here are two samples, franchise and sales, that indicate the type of form and substance that will help the Comptroller quickly determine if a private letter ruling request meets the requirements of Rule 3.1.

In addition, you may want to review all private letter rulings that the Comptroller has issued under Rule 3.1 on the agency's State Tax Automated Research (STAR) System by searching for “private letter ruling.”

7.  Can I contact someone before I submit a request to discuss whether my issue is suitable for a private letter ruling?

Yes. Contact Tax Help and include your name, phone number, email address and the tax type related to your question, such as franchise tax, sales and use tax or hotel tax. A Tax Policy Analyst will contact you to discuss your request.

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