Rev. Proc. 2026-21 — This revenue procedure establishes a significant issue ruling program to allow taxpayers to request rulings on one or more issues that (1) are solely under the jurisdiction of the Associate Chief…

# SECTION 1. PURPOSE

This revenue procedure describes a program for letter rulings with respect to certain issues solely under the jurisdiction of the Associate Chief Counsel (Corporate). This program does not diminish the availability of letter rulings under existing programs.

# SECTION 2. CHANGES

This revenue procedure modifies and amplifies Rev. Proc. 2026-1, 2026-1 I.R.B. 1, which explains how the Internal Revenue Service (Service) provides advice to taxpayers on issues under the jurisdiction of the Associate Chief Counsel (Corporate). This revenue procedure also modifies and amplifies Rev. Proc. 2026-3, 2026-1 I.R.B. 143, which sets forth the areas of the Internal Revenue Code (Code)¹ under the jurisdiction of the Associate Chief Counsel (Corporate) relating to issues on which the Service will not issue letter rulings.

# SECTION 3. BACKGROUND

.01 Prior Ruling Policy. As described in this section 3.01, the Service has taken various positions over time on issuing letter rulings on only part of an integrated transaction.

(1) Rev. Proc. 2001-3. Rev. Proc. 2001-3, 2001-1 I.R.B. 111, modified by Ann. 2001-25, 2001-11 I.R.B. 895, provided that the Service would not rule on whether a transaction qualifies under § 332, 351, 368(a)(1)(A), (B), (C), (E) or (F), or 1036, and whether various consequences (such as nonrecognition and basis) result from the application of that section, unless the Service determined that there was a significant issue that must be resolved in order to decide those matters. In that case, the Service would rule on the entire transaction and not just on the significant issue. See section 3.01(29) of Rev. Proc. 2001-3.

(2) Rev. Proc. 2009-25. Rev. Proc. 2009-25, 2009-24 I.R.B. 1088, announced a pilot program for letter rulings on issues arising in the context of distributions to which § 355 applies (§ 355 distributions). Under this program, a taxpayer could request a letter ruling on part of a larger transaction or on a particular issue under a Code section that a transaction presented. In turn, the Service would issue a letter ruling on the particular issue raised in the letter ruling request and not on any other issue (including, in some cases, qualification of the distribution under § 355) or on any other aspect of the transaction.

(3) Rev. Proc. 2013-32. Rev. Proc. 2013-32, 2013-28 I.R.B. 55, provided that the Service no longer would rule on (i) whether a transaction qualifies for nonrecognition treatment under § 332, 351, 355, or 1036, (ii) whether a transaction constitutes a reorganization within the meaning of § 368, or (iii) the various tax consequences resulting from the application of those Code sections. Instead, the Service would rule only on significant issues presented in transactions described in those Code sections (significant issue rulings). Rev. Proc. 2013-32 further provided that (i) the Service would not issue a letter ruling with respect to an issue that is clearly and adequately addressed by statute, regulations, decision of a court, or authority published in the Internal Revenue Bulletin (comfort ruling), but that (ii) except with respect to issues under §§ 332, 351, 355, 368, and 1036 and the tax consequences resulting from the application of those Code sections, an Associate office may, in its discretion, issue a comfort ruling if the Associate office is otherwise ruling on another issue arising in the same transaction. Rev. Proc. 2013-32 also provided that the pilot program announced in Rev. Proc. 2009-25 was discontinued.

(4) Rev. Proc. 2017-52. Rev. Proc. 2017-52, 2017-41 I.R.B. 283, provides procedures for requesting letter rulings regarding § 355 distributions. Rev. Proc. 2017-52 established a pilot program to issue letter rulings that address the general Federal income tax consequences of a § 355 distribution. Rev. Proc. 2017-52 also provides procedures for requesting such rulings and clarifies procedures for requesting rulings on significant issues presented in those transactions. Rev. Proc. 2017-52 modified and superseded a number of prior revenue procedures, including superseding Rev. Proc. 2009-25 and Rev. Proc. 2013-32.

(5) Rev. Proc. 2024-1 and Rev. Proc. 2024-3. Rev. Proc. 2024-1, 2024-1 I.R.B. 1, and Rev. Proc. 2024-3, 2024-1 I.R.B. 143, removed issues under §§ 332, 351, 368, and 1036 from the list of areas in which letter rulings ordinarily would not be issued, permitted the issuance of comfort rulings relating to transactions under §§ 332, 351, 355, 368, 1036, and related operative provisions, and ended the practice of issuing significant issue rulings, including with respect to § 355 distributions. See sections 6.11 and 16 of Rev. Proc. 2024-1; section 1.02 of Rev. Proc. 2024-3.

.02 Current Ruling Policy. The Service ordinarily will not issue a letter ruling on only part of an integrated transaction. However, if part of an integrated transaction falls under an area of the Code, including those under the jurisdiction of the Associate Chief Counsel (Corporate), on which the Service will not issue letter rulings, the Service may issue a letter ruling on other parts of the transaction. Section 6.03 of Rev. Proc. 2026-1; section 4.02(2) of Rev. Proc. 2026-3. If it is impossible for the Service to determine the tax consequences of an integrated transaction without resolving an issue on which the Service will not issue rulings (no-rule issue) involving a part of the transaction or a related transaction, the taxpayer must state in its letter ruling request to the best of its knowledge and belief the tax consequences of the no-rule issue. The Service’s letter ruling will state that the Service did not consider, and no opinion is expressed upon, that issue. In appropriate cases, notwithstanding the taxpayer’s representation, the Service may decline to issue a letter ruling on the integrated transaction due to the relevance of the no-rule issue. Section 2.03 of Rev. Proc. 2026-3.

In addition, except with respect to issues under §§ 332, 351, 355, 368, 1036, and related operative provisions, the Service ordinarily will not issue comfort rulings, but the Service may in its discretion decide to issue a comfort ruling if the Service is otherwise issuing a letter ruling to the taxpayer on another issue arising in the same transaction. Section 6.11 of Rev. Proc. 2026-1; section 4.02(9) of Rev. Proc. 2026-3.

Furthermore, the Service will not issue letter rulings on questions that the Service determines, in its discretion, should not be answered in the interest of sound tax administration, including due to resource constraints. Section 3.02(10) of Rev. Proc. 2026-3.

A taxpayer requesting a letter ruling solely or primarily under the jurisdiction of the Associate Chief Counsel (Corporate) may request fast-track processing, but not expedited handling, of that letter ruling request. However, expedited handling, but not fast-track processing, may be available for letter ruling requests that include a closing agreement with respect to an issue or letter ruling requests for an extension of time for making an election or other relief. Section 7.02(4) of Rev. Proc. 2026-1; Rev. Proc. 2023-26, 2023-33 I.R.B. 486.

.03 Feedback Requesting Significant Issue Rulings. The Service has received numerous informal comments from taxpayers and practitioners regarding the time required to process letter ruling requests and the scope of those letter ruling requests. Taxpayers and practitioners have recommended that the Service reinstate the practice of issuing significant issue rulings. To use Service resources more efficiently, and to increase the availability and timeliness of letter rulings, this revenue procedure establishes a significant issue ruling program to allow taxpayers to request rulings on one or more issues that—

(1) Are solely under the jurisdiction of the Associate Chief Counsel (Corporate);

(2) Are significant (as defined in section 4.02 of this revenue procedure); and

(3) Involve the tax consequences or characterization of a transaction (or part of a transaction) that is described in § 332, 351, 355, 368, or 1036.

# SECTION 4. SCOPE

.01 Significant Issue Ruling Program. Under the significant issue ruling program described in this revenue procedure, taxpayers may request, and the Service may issue, a ruling on part of an integrated transaction described in § 332, 351, 355, 368, or 1036. In addition, taxpayers may request, and the Service may issue, a ruling on a particular legal issue under a section of the Code or the Income Tax Regulations with respect to a transaction (or part thereof) rather than a ruling that addresses all aspects of that section (or any other section) with respect to the transaction (or part thereof). For example, the Service may issue a letter ruling addressing significant issues presented by the application of § 355(e), 1.368-1(d), or 1.368-2(k), even though the ruling does not address overall qualification of the transaction under § 355 or 368.

In addition, the Service may rule on the tax consequences (such as nonrecognition and basis) resulting from integrated transactions described in § 332, 351, 355, 368, or 1036 to the extent that a significant issue is presented under related Code sections that address such tax consequences. For example, a § 351 exchange that does not present any significant issues under § 351 may present a significant issue regarding the application of § 358 to the transferor in the exchange.

This revenue procedure does not limit the number of significant issues with respect to a transaction that may be the subject of a single letter ruling. However, the Service reserves the right to rule on any other issue related to the transaction (including ruling adversely) if the Service believes that doing so would be in the interest of sound tax administration.

If the Service issues a letter ruling on a significant issue under Rev. Proc. 2026-1 as modified and amplified by this revenue procedure, the letter ruling will state that no opinion is expressed as to the overall tax consequences of the transactions described in the letter ruling or as to any issue or step not specifically addressed by the letter ruling.

.02 Significant Issue. A significant issue is 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. An issue is germane if resolution of the issue is necessary to determine an element of the tax treatment of the transaction. An issue is specific if it is the narrowest articulation of the germane issue. A change of circumstances arising after a transaction ordinarily does not present a significant issue with respect to the transaction.

# SECTION 5. PROCEDURE

.01 In General. Letter ruling requests submitted under Rev. Proc. 2026-1 as modified and amplified by this revenue procedure must comply with the requirements set forth in Rev. Proc. 2026-1, including the requirements of section 6.03 of Rev. Proc. 2026-1, as modified and amplified by this revenue procedure. All pertinent no-rule policies described in Rev. Proc. 2026-3, as modified and amplified by this revenue procedure, will govern requests for letter rulings made pursuant to this revenue procedure. For example, see section 3.01(66) of Rev. Proc. 2026-3 (no-rule policy regarding business purpose under § 355).

In preparing a letter ruling request under Rev. Proc. 2026-1 as modified and amplified by this revenue procedure, taxpayers should continue to consult other applicable revenue procedures. For example, see Rev. Proc. 2025-30, 2025-42 I.R.B. 489 and Rev. Proc. 2017-52. However, the letter ruling request must include the information and representations described in such revenue procedures (as applicable) only to the extent that they relate to the significant issue. Further, when a taxpayer is requesting a ruling regarding a significant issue under a section of the Code or the Income Tax Regulations (for example, § 355(e)), the taxpayer must provide a representation (to the best knowledge and belief of the taxpayer) that the transaction would otherwise satisfy the requirements under that section (for example, § 355) or, as applicable, the relevant definitional section (for example, § 368).

.02 Rev. Proc. 2026-1. Rev. Proc. 2026-1 is modified and amplified as follows:

(1) Section 6.03. The following text is added after the first paragraph of section 6.03 of Rev. Proc. 2026-1:

Significant issue rulings. In addition, the Office of Associate Chief Counsel (Corporate) may issue a letter ruling on part of an integrated transaction without ruling on the larger transaction if the requested ruling would address one or more issues that: (1) are solely under the jurisdiction of the Associate Chief Counsel (Corporate); (2) are significant; and (3) involve the tax consequences or characterization of a transaction (or part of a transaction) that is described in § 332, 351, 355, 368, or 1036. The Service also may rule on a particular legal issue under a section of the Code or related regulations without ruling on other legal issues under that section of the Code or regulations if the issue meets the three conditions of the preceding sentence.

A significant issue is 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. An issue is germane if resolution of the issue is necessary to determine an element of the tax treatment of the transaction. An issue is specific if it is the narrowest articulation of the germane issue. A change of circumstances arising after a transaction ordinarily does not present a significant issue with respect to the transaction.

Before preparing the letter ruling request under this section 6.03, a taxpayer should follow the procedures provided in section 10.07(1) of this revenue procedure for pre-submission conferences to discuss whether the Office of the Associate Chief Counsel (Corporate) will issue a letter ruling under this section 6.03. The Service reserves the right to rule on any other aspect of the transaction (including ruling adversely) if the Service believes doing so is in the interest of sound tax administration.

All requests for a ruling under this section 6.03 must contain the following:

(1) A narrative description of the transaction that puts the significant issue in context;

(2) A statement identifying the issue;

(3) An analysis of the relevant law that sets forth the authorities most closely related to the issue, explains why these authorities do not resolve the issue, and explains why the issue is significant;

(4) Applicable information and representations from relevant revenue procedures with respect to the significant issue (see Appendix F of this revenue procedure) and as otherwise may be required by the Office of Associate Chief Counsel (Corporate) depending on the facts and circumstances;

(5) If the taxpayer is requesting a ruling on the tax treatment of part of an integrated transaction, a representation regarding the relevant tax consequences of the integrated transaction (to the best knowledge and belief of the taxpayer), assuming that the Service issues the requested ruling;

(6) The precise ruling(s) being requested; and

(7) A statement that no rulings outside the jurisdiction of the Associate Chief Counsel (Corporate) are requested.

(2) Appendix C. The following text is added after question 8 of Appendix C of Rev. Proc. 2026-1:

See section 6.03.

.03 Rev. Proc. 2026-3. The following text is added after the first paragraph of section 4.02(2) of Rev. Proc. 2026-3:

Notwithstanding the prior paragraph, in connection with transactions described in § 332, 351, 355, 368, or 1036, the Office of Associate Chief Counsel (Corporate) may issue a letter ruling on part of an integrated transaction if and to the extent that the transaction presents a significant issue. See section 6.03 of Rev. Proc. 2026-1, 2026-1 I.R.B. 1, as modified and amplified by Rev. Proc. 2026-21, 2026-22 I.R.B. 1538.

# SECTION 6. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 2026-1 and Rev. Proc. 2026-3 are modified and amplified.

# SECTION 7. EFFECTIVE DATE

The significant issue ruling program established by this revenue procedure applies to all letter ruling requests described in section 4.01 of this revenue procedure postmarked or, if not mailed, received by the Service after May 5, 2026.

# SECTION 8. PAPERWORK REDUCTION ACT

The collections of information in this revenue procedure have been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1522.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collections of information in this revenue procedure are in section 5. This information is required to determine whether a taxpayer qualifies for a letter ruling on part of an integrated transaction without the Service ruling on the larger transaction. The collections of information are required to obtain a benefit. The likely respondents are corporations seeking letter rulings. These procedures do not change the estimated burden already approved by OMB.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue tax law. Generally, tax returns and tax return information are confidential, as required by § 6103.

# SECTION 9. DRAFTING INFORMATION

The principal author of this revenue procedure is Jonathan H. Blake of the Office of Associate Chief Counsel (Corporate). For further information regarding this revenue procedure, contact Mr. Blake at (202) 317-6847 (not a toll-free call).

¹ Unless otherwise specified, all “section” references will be to the Internal Revenue Code, as amended, or the Income Tax Regulations.