Document Type
Article
Publication Date
2025
Publication
Boston College Law Review
Volume
66
Abbreviation
B.C. L. Rev.
First Page
659
Abstract
Every year, the Internal Revenue Service (IRS) issues hundreds of Private Letter Rulings (PLRs) responding to formal taxpayer inquiries about how tax law will apply to their proposed situations and transactions, which functionally bind the IRS with respect to the taxpayer. Although the Internal Revenue Code formally forbids relying on PLRs as precedent, taxpayers and practitioners closely monitor and structure their operations and advice around PLRs. Taxpayers can withdraw a PLR request at any time for any—or no—reason, and they generally know in advance whether the PLR will be favorable or adverse. Conventional wisdom assumes adverse PLRs should be extremely rare, yet this Article demonstrates that a significant number do exist. Based on a unique dataset of 473 adverse PLRs from 1977–2024, only a small minority can be explained by mistakes or apathy; the majority appear to be strategic. Notably, 65 adverse PLRs (13.7%) were likely obtained for highly strategic reasons tied to PLRs’ normative force, including efforts to trigger backlash against the IRS or to level competitive playing fields.
Examining adverse PLRs reveals how they illuminate the substantive world of letter rulings and generate several important implications for the tax system. These include the need to broaden and formalize third‑party participation in PLRs, to improve equity in access to consequential IRS guidance, and to consider modifications that reduce hidden or one‑sided interpretive effects. Finally, noting the parallels between strategic adverse PLRs and impact litigation, this Article proposes that PLRs themselves can serve as a tool for advancing public‑interest, pro‑fisc positions—counteracting aggressive and abusive tax practices by leveraging PLRs’ unique combination of concreteness, visibility, and normative influence.