In News Release IR-2020-212[1] the IRS reminded taxpayers of the option to request an expedited letter ruling request, and that COVID-19 issues can justify asking for such expedited processing.

The news release notes that normally letter ruling requests are processed in the order received, but there is a procedure in place for requesting expedited processing:

As set forth in Rev. Proc. 2020-1, the IRS ordinarily processes requests for letter rulings in the order that they were received. A taxpayer with a compelling need to have a request processed more quickly may request expedited handling.[2]

The news release continues to explain the procedure for making the request.

The request for expedited handling must be made in writing, preferably in a separate letter submitted with the letter ruling request. Requests for expedited handling are granted at the discretion of the IRS and typically involve a factor outside of the taxpayer's control that creates a real business need to obtain a letter ruling before a certain date in order to avoid serious business consequences. Requests for expedited handling should be submitted as promptly as possible after the taxpayer has become aware of the deadline or compelling business need.[3]

Section 7.02(4) of Revenue Procedure 2020-1 has the detailed information on expedited processing.  That section provides the following additional information on the request:

A taxpayer with a compelling need to have a request processed ahead of requests received before it may request expedited handling. This request must explain in detail the need for expedited handling. The request for expedited handling must be made in writing, preferably in a separate letter included with the request for the letter ruling or determination letter or provided soon after its filing. If the request for expedited handling is contained in the letter requesting the letter ruling or determination letter, the letter should state at the top of the first page “Expedited Handling Is Requested. See page ___ of this letter.”[4]

The request for expedited handling will not be forwarded to a branch for action until the user fee is paid.[5] For this reason, it is advisable to discuss the matter informally with the IRS employee who has been authoring rulings in the area before proceeding down this path if the ruling will only be useful if issued under the expedited program. Of course, that’s advisable generally when a ruling request is being considered even if expedited processing is not being requested—it’s best to know before the fee is paid if there is no chance of a favorable ruling.

The criteria the Service uses to make the decision on whether to expedite the ruling is described in Notice 2020-1:

Whether a request for expedited handling will be granted is within the Service’s discretion. The Service may grant the request when a factor outside a taxpayer’s control creates a real business need to obtain a letter ruling or determination letter before a certain date to avoid serious business consequences. Examples include situations in which a court or governmental agency has imposed a specific deadline for the completion of a transaction, or where a transaction must be completed expeditiously to avoid an imminent business emergency (such as the hostile takeover of a corporate taxpayer), provided that the taxpayer can demonstrate that the deadline or business emergency, and the need for expedited handling, resulted from circumstances that could not reasonably have been anticipated or controlled by the taxpayer. To qualify for expedited handling in such situations, the taxpayer must also demonstrate that the taxpayer submitted the request as promptly as possible after becoming aware of the deadline or emergency. The extent to which the letter ruling or determination letter request complies with all of the applicable requirements of this revenue procedure, and fully and clearly presents the issues, is a factor in determining whether expedited treatment will be granted. When the Service agrees to process a request out of order, it cannot give assurance that any letter ruling or determination letter will be processed by the date requested.[6]

The news release makes clear that the COVID-19 pandemic will qualify as an event out of the taxpayer’s control:

The COVID-19 pandemic is a factor outside of the taxpayer’s control that can support a request for expedited handling under Rev. Proc. 2020-1. As a result, and consistent with Executive Order 13924 of May 19, 2020, taxpayers are encouraged to seek expedited handling if they face a compelling need related to COVID-19.  Such requests will be handled as provided in Rev. Proc. 2020-1.[7]

Notice 2020-1 does caution about issues that will not generally be found to justify expedited processing of the request:

The scheduling of a closing date for a transaction or a meeting of the board of directors or shareholders of a corporation, without regard for the time it may take to obtain a letter ruling or determination letter, will not be considered a sufficient reason to process a request ahead of its regular order. Also, the possible effect of fluctuation in the market price of stocks on a transaction will not be considered a sufficient reason to process a request out of order.[8]

Advisers will not want to list either of those as reasons justifying expedited processing, and may expect IRS inquiries if the information suggests these may be the real reason why the taxpayer is seeking expedited treatment.

The Revenue Procedure concludes reminding taxpayers of the fact that even a request that does meet the criteria for expedited processing needs to fully comply with the other requirements for a ruling request in order for the letter to be issued most rapidly:

Because most requests for letter rulings and determination letters cannot be processed out of order, the Service urges all taxpayers to submit their requests well in advance of the contemplated transaction. In addition, to facilitate prompt action on letter ruling requests, taxpayers are encouraged to ensure that their initial submissions comply with all of the requirements of this revenue procedure (including the requirements of other applicable guidelines set forth in Appendix G of this revenue procedure), to prepare “two-part” requests described in section 7.02(3) of this revenue procedure when possible, and to promptly provide any additional information requested by the Service.[9]

The ruling concludes by noting that letter ruling requests, including those asking for expedited treatment, can be submitted electronically under special procedures the IRS put in place in response to the COVID-19 pandemic:

In addition, Rev. Proc. 2020-29, 2020-21 I.R.B. 859 (May 18, 2020)[10], sets forth procedures for the electronic submission of letter ruling requests.

[1] “IRS reminds taxpayers and practitioners of expedited letter ruling procedures,” IR-2020-212, September 16, 2020, https://www.irs.gov/newsroom/irs-reminds-taxpayers-and-practitioners-of-expedited-letter-ruling-procedures (retrieved September 16, 2020)

[2] “IRS reminds taxpayers and practitioners of expedited letter ruling procedures,” IR-2020-212, September 16, 2020

[3] “IRS reminds taxpayers and practitioners of expedited letter ruling procedures,” IR-2020-212, September 16, 2020

[4] Revenue Procedure 2020-1, Section 7.02(4)

[5] Revenue Procedure 2020-1, Section 7.02(4)

[6] Revenue Procedure 2020-1, Section 7.02(4)

[7] “IRS reminds taxpayers and practitioners of expedited letter ruling procedures,” IR-2020-212, September 16, 2020

[8] Revenue Procedure 2020-1, Section 7.02(4)

[9] Revenue Procedure 2020-1, Section 7.02(4)

[10] Revenue Procedure 2020-29, https://www.irs.gov/irb/2020-21_IRB#REV-PROC-2020-29 (retrieved September 16, 2020)