Private Letter Ruling - PLR

AAA

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".

INVESTOPEDIA EXPLAINS '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. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  2. Tax Shelter

    A legal method of minimizing or decreasing an investor's taxable ...
  3. Pension Plan

    A type of retirement plan, usually tax exempt, wherein an employer ...
  4. Roth IRA

    An individual retirement plan that bears many similarities to ...
  5. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  6. Income Tax

    A tax that governments impose on financial income generated by ...
Related Articles
  1. Taxes

    Tax Treatment Of Roth IRA Distributions

    Learn the requirements for withdrawing funds tax and penalty free.
  2. Taxes

    Exceptions To The 60-Day Retirement Account Rollover Rule

    A non-qualified distribution might still be tax and/or penalty free under certain conditions.
  3. Retirement

    Did Your Roth IRA Conversion Pass or Fail?

    If you are moving assets from a Traditional IRA to a Roth IRA, you need to know the associated tax rules.
  4. The Affordable Care Act is the largest change to the tax code in 20 years that could affect you when you file that 2014 tax return next year.
    Taxes

    How Might The Affordable Care Act Affect You?

    The Affordable Care Act is the largest change to the tax code in 20 years that could affect you when you file that 2014 tax return next year.
  5. The marginal tax rate is based on a progressive tax system.
    Personal Finance

    What's a Marginal Tax Rate?

    The marginal tax rate is based on a progressive tax system, where tax rates for an individual will increase as income rises. This method of taxation aims to fairly tax individuals based upon ...
  6. Taxes

    How are savings bonds taxed?

    Learn who is responsible for reporting U.S. EE savings bond interest for taxation and when the interest can be reported for proper taxation.
  7. Venezuela has more oil than anyone, and Brazil and Argentina have lots going for them, too, so why can't they get out of their own way economically?
    Economics

    Where NOT To Invest in Latin America

    Venezuela has more oil than anyone, and Brazil and Argentina have lots going for them, too, so why can't they get out of their own way economically?
  8. Retirement

    What are the Social Security tax caps?

    Learn how the Social Security tax cap works, what percentage of income is deducted for Social Security taxes and the history of Social Security tax changes.
  9. Credit & Loans

    Are credit card rewards considered taxable income by the IRS?

    Learn about when the Internal Revenue Service considers the financial value of gifts received from credit card reward programs to be taxable income.
  10. Retirement

    Are Social Security survivor benefits for children considered taxable income?

    Learn why receiving Social Security survivor benefits on behalf of children does not affect income tax for a surviving parent or guardian.

You May Also Like

Hot Definitions
  1. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  2. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  3. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  4. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Law Of Supply And Demand

    A theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply ...
Trading Center