What is a PLR?

A PLR is a Private Letter Ruling from the IRS. What does that mean exactly? A PLR is a written request a taxpayer submits to obtain some sort of exception to a tax rule. The IRS interprets and applies tax laws to the taxpayer’s specific set of facts. The IRS then makes a statement about the taxpayer’s transaction and this statement is binding upon the IRS as long as the taxpayer accurately described the submitted facts and specifically carries out the transaction as stated.

It is important to note that although a PLR may give some insight as to how the IRS may respond to a specific situation, the IRS’ analysis and decision only applies to the taxpayer who submitted the request. A PLR is not law and it may not be relied upon as a source of authority or legal precedent by anyone else.