Rev. Proc. 2026-21: Establishment of significant issue ruling program for certain corporate transactions
The program applies to all letter ruling requests postmarked or received by the IRS after May 5, 2026.
The IRS today released Rev. Proc. 2026-21 that establishes a program to provide letter rulings on one or more "significant issues" regarding certain corporate transactions. This program is in response to feedback from taxpayers and practitioners requesting the reinstatement of the practice of issuing "significant issue rulings" to improve the efficiency and timeliness of the letter ruling process.
The new program allows taxpayers to request a ruling on a "significant issue" that is:
- Solely under the jurisdiction of the Associate Chief Counsel (Corporate),
- Significant (as defined in the revenue procedure), and
- Involves the tax consequences or characterization of a transaction (or part of a transaction) described in section 332, 351, 355, 368, or 1036.
A "significant issue" is defined as a “germane and specific issue of law, provided that a ruling on the issue would not be a comfort ruling or the conclusion in such a ruling otherwise would not be essentially free from doubt.”
Under this program, the IRS may issue a letter ruling addressing a significant issue without addressing the overall qualification of the transaction. For example, the IRS may rule on the application of section 355(e) without ruling on whether the overall transaction qualifies under section 355.
The significant issue ruling program applies to all letter ruling requests postmarked or, if not mailed, received by the IRS after May 5, 2026.