Private Letter Ruling - PLR

DEFINITION of 'Private Letter Ruling - PLR'

An interpretation of statute or administrative rules and their application to a particular set of facts or circumstances. The private letter ruling addresses unusual or complex questions pertaining to a particular taxpayer and his or her tax situation. The purpose of the letter ruling is to advise the taxpayer regarding the tax treatment he or she can expect from the IRS in the circumstances specified by the ruling. Also known as "letter ruling" or "LTR".

BREAKING DOWN 'Private Letter Ruling - PLR'

In other words, if a taxpayer has a tax issue with the IRS, that person, before completing a certain action (i.e. paying the required taxes), can request the IRS to rule on that tax issue. The private letter ruling is the letter the IRS sends back to the taxpayer, which explains the rulings and the rational for the decision. The PLR is specific and applicable to that tax situation and that taxpayer only. Moreover, private letter rulings of other taxpayers cannot be used as precedence by a person requesting a ruling regarding his or her own issue, and in no way binds the IRS to take a similar position when dealing with different taxpayers.

RELATED TERMS
  1. Interpretive Letter

    A letter issued by banking regulators that interprets the banking ...
  2. Notice Of Deficiency

    A letter from the Internal Revenue Service that advises a taxpayer ...
  3. Blind Taxpayer

    A taxpayer who qualifies for the additional standard deduction ...
  4. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a ...
  5. Bank Confirmation Letter - BCL

    A letter confirming that a line of credit has been secured from ...
  6. Substitute Return

    A tax filing that the IRS will create for a taxpayer in order ...
Related Articles
  1. Personal Finance

    IRS Asset Seizures: Could It Happen To You?

    If you can't pay your taxes, know that the IRS has many avenues for collecting what you owe.
  2. Personal Finance

    New Tax Rules Target The Top Tax Bracket

    The American Taxpayer Relief Act brings about new tax rules for the wealthy that people such as Warren Buffett have been calling for over the last few years.
  3. Personal Finance

    Form 9465: Don't Pay Your Back Taxes Without It

    This form can lighten your tax load if you owe Uncle Sam.
  4. Investing

    Personal Income Tax Guide: Common Filing Mistakes

    By Ken ClarkNo matter how much tax planning you do, if you screw up the actual process of filing your taxes, the ensuing penalties and time spent cleaning up the mess can quickly wipe out any ...
  5. Personal Finance

    20 Tax Changes You Need To Know About

    Don't miss out on the tax changes. Here's a list that you need to know about.
  6. Investing

    The Complete Guide To Job Searching: Cover Letters

    You have found a job that sounds ideal. You might have the exact skills that the employer is looking for, but unless you can broadcast your abilities, the employer may never know you are the ...
  7. Financial Advisor

    Federal Tax Brackets

    Why do we have income tax brackets? What do they do for us? Read this to understand the basics and where to find your own bracket.
  8. Personal Finance

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  9. Investing

    Personal Income Tax Guide: 6 Overlooked Deductions And Credits

    By Ken ClarkDue to the overwhelming and ever-changing nature of the U.S. tax code, most taxpayers can't name more than the three or four of the most commonly deductible expenditures. Not only ...
  10. Managing Wealth

    Explaining the Wash Sale Rule

    The wash sale rule is a provision that prohibits taxpayers from creating artificial losses by selling stocks and bonds at a loss, then repurchasing them.
RELATED FAQS
  1. What is an IRS letter audit / audit by correspondence?

    Learn about IRS letter audits, how tax returns are selected for audits and the common outcomes in the letter audits conducted ... Read Answer >>
  2. When are you legally required to get a letter of credit?

    Learn how exporters or importers who deal in international trade use letters of credit to ensure that transactions are safe, ... Read Answer >>
  3. Can entities other than banks issue letters of credit?

    Obtaining a letter of credit from a non-bank is legally acceptable according to the ICC, but companies tend to prefer to ... Read Answer >>
  4. How legally binding is a letter of intent?

    Find out when a letter of intent is binding and when it is not. Understand the roles of drafting language, relationships ... Read Answer >>
  5. Can the IRS audit you after a refund?

    Learn how the U.S. Internal Revenue Service (IRS) can conduct a tax audit even after a taxpayer was issued a tax refund in ... Read Answer >>
  6. What is a bank's legal liability when issuing a letter of credit?

    Learn the responsibility of banks that issue letters of credit Letters of credits ensure payment on transactions between ... Read Answer >>
Trading Center