Press Room

25 Jan 2024

Implications of IRS Cuts to Transactional No-Rule List – Marek Krawczyk

Partner and Head of US Business Tax, Marek Krawczyk and Ben Furtick of Certa Insurance Partners discuss the implications of the new IRS guidance for transactions and restructurings of multinational groups, in Bloomberg Tax. 

Marek and Ben’s article was published in Bloomberg Tax, 24 January 2024.

There are often transactions or restructurings of or among multinational groups where the US is one of several relevant jurisdictions.  While tax rulings or clearance letters in many jurisdictions are more common, a US tax ruling was generally not possible for most transactions, or feasible where it was possible.  The US advisor is likely to offer a written opinion that (best case) will give a “should” level of comfort.  Those experienced in US tax know that a “should” opinion from a reputable firm is a high level of assurance.  Those unfamiliar with US tax customs may mistakenly view this as the US advisor not being confident in their advice.

This scenario could be changing with the recently issued Revenue Procedures 2024-1 and 2024-3.  The IRS annually publishes its list of issues that it will not rule on (No Rule List) and the procedures for obtaining a ruling.  The wide reach of the No Rule List is part of the reason ”should” level opinions are often sought.  The other is the potentially long timeline for obtaining a ruling. Corporate provisions around liquidations, corporate formations, and acquisitive reorganizations, however, have been removed from the No Rule List for 2024, which makes these types of regularly used transactions available for rulings (even for “comfort rulings” where there aren’t any significant or complex technical matters at hand).  The new rules also provide for a 12-week fast-track letter ruling process.  While there will be more ruling requests going forward and US advisors will no longer have to sheepishly state that a ruling is not possible, this generous expansion is unlikely to materially shift the way that US tax advice is delivered.

Corporate Multinationals

Large multinational groups are generally most concerned with their effective tax rate (ETR).  Securing rulings could reduce risk of unexpected movements in ETR by giving some certainty in audits, both with the IRS and with external financial statement auditors.  However, the letter ruling is only as good as the facts and representations that support it.  Within the representations of the letter ruling request are likely to be statements about tax conclusions that still cannot be ruled on (for example, business purpose).  Therefore, a ruling may not be the end of enquiry, but rather the starting point.

Further, it is required by law that letter rulings issued by the IRS are published for public inspection. Identifying information can be deleted, but the facts for some taxpayers may be so unique that even with the redactions, they can be identified.  Additionally, transactions sometimes contain elements of tax planning that the company and their advisors would rather keep between themselves and the IRS.


Tax diligence on a target company can be stressful for the target’s internal tax team during a transaction process.  Being able to provide a buyer’s advisors with letter rulings for significant tax matters would allow the internal tax team to be work on forward-looking projects.  It could also be a way to preserve or accelerate value.  Avoiding price chips for uncertain positions and reducing escrowed amounts could put more cash into seller’s hands sooner.

Here, timing is likely to be the gating issue.  The fast-track timeline, combined with the time to draft and submit a ruling request could still be slower than the transaction timeline, especially where an investment fund is involved.  Unless the target entity is obtaining rulings prior to the launch of the sales process, rulings will likely remain out of the question.


In many cases, tax liability insurance can be coupled with a US tax opinion or memo from a tax advisor as an alternative to seeking a private letter ruling. Tax insurance has been a particularly attractive option in the context of an M&A transaction operating on a fast timeline or in respect of a position on which the IRS does not issue rulings.  Given the speed of M&A transactions, insurance may be preferable to seeking a ruling, even with the fast-track process.

Coverage under a tax insurance policy is bespoke to a specific potential tax liability and can include coverage for potential interest, insurable penalties, and gross up to the extent proceeds from the insurance policy are taxable on receipt by the insured. As with a ruling request, a taxpayer would need to attest (in a representations letter to the tax insurance policy) to the accuracy of the facts, factual assumptions, and factual representations. Exclusions to coverage are generally limited to change of law, fraud, and material misrepresentation of key facts (qualified by the actual knowledge of the insured).  As not all issues can be covered in rulings (e.g. business purpose tests), insurance can provide greater certainty, even where a ruling is sought.

The role of advisors

Whether it is a letter ruling, a US tax opinion, or an insurance policy covering a tax position, the representations required of and signed off by the taxpayer will be critical for a positive outcome.  Advisors that regularly draft advice on these topics will have the knowledge required to ensure that a representation for any of the above purposes is true and accurate and also satisfies the technical requirements.  While the balance of work between opinions and letter rulings is likely to shift towards the latter given these new rules, advisors are likely to still have a significant role in assisting multinational groups with their most important transactions.

Marek Krawczyk

Marek is a Partner and Head of US Business Tax at Andersen LLP, and works with European based corporate and individual clients with corporate or partnership investment on their US related issues.

Email: Marek Krawczyk