830 CMR 62C.00 is amended by adding the following section:
830 CMR 62C.3.2: Letter Rulings

(1) General

The purpose of this regulation is to describe the general procedures of the Department of Revenue in issuing rulings and information letters to taxpayers on specific issues as to the interpretation or application of the Massachusetts tax laws. This regulation also informs taxpayers and their representatives where they may direct requests for rulings and information letters and outlines procedures to be followed in order to promote efficient handling of their inquiries.

It is the practice of the Department to answer inquiries of individuals and organizations, whenever appropriate in the interest of sound tax administration, as to their status for tax purposes and as to the tax effect of their acts or transactions.

(2) Definitions

(a) A "ruling" or "letter ruling" is an "advisory ruling" within the meaning of General Laws Chapter 30A, Section 8, issued in writing to a taxpayer or his authorized representative by the Commissioner of Revenue that interprets and applies the tax laws to a specific set of facts. The preparation of rulings has been largely delegated to the Rulings and Regulations Bureau.

(b) An "information letter" is a statement issued by the Department that does no more than call attention to an interpretation or well-established principle of tax law, without applying it to a specific set of facts. An information letter may be issued when the nature of the request from the individual or the organization suggests that it is seeking general information, or where the request does not meet all the requirements of subsection (4) of this regulation, and it is believed that such general information will assist the individual or organization.

An information letter issued by the Department is advisory only and the provisions of subsection (8) of this regulation do not apply.
(3) Subject Matter of Rulings
(a) The Commissioner issues rulings on prospective transactions and on completed transactions before the return is filed.

(b) Ordinarily, the Commissioner will not rule on matters relating to the application of the estate tax to property or the estate of a living person.

(c) In matters involving state taxes and related procedural matters the Commissioner issues rulings with respect to prospective transactions either before or after the return is filed or the assessment is made.

(d) The Commissioner will not ordinarily rule with respect to an issue, whether related to a prospective or a completed transaction, if he knows or has reason to believe that the same or a similar issue is before the Department in connection with an examination or audit of the liability of the same taxpayer for the same or any other prior period.

(e) The Commissioner may issue rulings to business, trade or industrial associations, or to other similar groups relating to their own tax status or liability. He may also issue rulings to such a group relating to the application of the tax laws to members of the group; however subsection (8) hereof does not apply to such a ruling, which is advisory only, and the Department is not bound to recognize it in the examination of returns of the group or its members.

(f) There are certain areas where, because of the inherently factual nature of the problem involved, or for other reasons, the Commissioner will not issue rulings at all, or ordinarily will not issue rulings. A ruling is not issued on alternative plans of proposed transactions or on hypothetical situations. A list of such areas may be set forth in announcements issued from time to time. Such lists are not all inclusive since the Commissioner may decline to issue rulings on other questions whenever warranted by the facts or circumstances of a particular case.
(4) Requests for Rulings
(a) Each request for a ruling must contain a complete statement of all relevant facts relating to the transaction. Such facts include names, addresses, and taxpaying identifying numbers of all interested parties; a full and precise statement of the business reasons for the transaction; and a carefully detailed description of the transaction. In addition, true copies of all contracts, wills, deeds, agreements, instruments, and other documents relevant to the ruling must be submitted as part of the request. However, relevant facts reflected in documents submitted must be included in the taxpayer's statement and not merely incorporated by reference, and must be accompanied by an analysis of their bearing on the issue or issues, specifying the pertinent provisions. (The term "all interested parties" is not to be construed as requiring a list of all shareholders of a widely held corporation requesting a ruling relating to a reorganization, or a list of employees where a large number may be involved in a plan.) The request must contain a statement whether, to the best of the knowledge of the taxpayer or his representative, the identical issue is being considered by the Department in connection with an active examination or audit of a tax return already filed. Where the request pertains to only one step of a large integrated transaction, the facts and circumstances must be submitted with respect to the entire transaction. Documents and exhibits which are submitted become a part of the Department's file which cannot be returned. If the request is with respect to a corporate distribution, reorganization, or other similar or related transaction, the corporate balance sheet nearest the date of the transaction should be submitted. (If the request relates to a prospective transaction, the most recent balance sheet should be submitted.)

If a ruling request on the same transaction has been or is being submitted to the Internal Revenue Service or the taxing authority of another state, the request should so disclose.

(b) As an alternative procedure for the issuance of rulings on prospective transactions, the taxpayer may elect to submit a summary statement of the facts he considers controlling the issue, in addition to the complete statement required for ruling requests by subsection (4)(a) above. Assuming agreement with the taxpayer's summary statement, the Commissioner will use it as the basis for ruling. Any taxpayer wishing to adopt this procedure should submit with the request for ruling:
1. A complete statement of facts relating to the transactions together with related documents, as required by subsection (4)(a) above; and

2. A summary statement of the facts which he believes should be controlling in reaching the requested conclusion.
Where the taxpayer's statement of controlling facts is accepted, the ruling will be based on these facts and only this statement will ordinarily be incorporated in the letter ruling.

(c) If the taxpayer is contending for a particular determination, he must furnish an explanation of the grounds for his contentions, together with a statement of relevant authorities in support of his views. Even though the taxpayer is urging no particular determination with regard to a proposed or prospective transaction, he must state his views as to the tax results on the proposed action and furnish a statement of relevant authorities to support such views.

(d) A request by or for a taxpayer must be signed by the taxpayer or his authorized representative. A power of attorney (Form M-2848) may be used with regard to letter rulings requested under this regulation.

(e) A request for a ruling should be addressed to the Commissioner of Revenue, 100 Cambridge Street, Boston, Massachusetts 02204; Attention: Rulings and Regulations Bureau, Room 703.

(f) The Department will acknowledge receipt of all requests for letter rulings. If a request does not comply with the provisions of this regulation, the requirements which have not been met will be indicated.

(g) A taxpayer or his representative who desires an oral discussion of the issue or issues involved should indicate such desire in writing when filing the request or soon thereafter in order that the conference may be arranged at that stage of consideration when it will be most helpful.

(h) It is the practice of the Department to process requests for rulings and information letters in regular order and expeditiously as possible. Compliance with a request for consideration of a particular matter ahead of its regular order, or by a specified time, tends to delay the disposition of other matters. Requests for processing ahead of the regular order made in writing in a separate letter submitted with the request or subsequent thereto and showing clear need for such treatment will be given consideration as the particular circumstances warrant. However, no assurance can be given that any letter will be processed by the time requested. For example, the scheduling of a closing date for a transaction or a meeting of the Board of Directors or shareholders of a corporation without due regard to the time it may take to obtain a ruling, will not be deemed sufficient reason for handling a request ahead of its regular order. Neither will the possible effect of fluctuation in the market price of stocks on a transaction be deemed sufficient reason for handling a request out of order.

(i) When a taxpayer receives a ruling or information letter prior to the filing of his return with respect to any transaction that has been consummated and that is relevant to the return being filed, he should attach a copy of the ruling or information letter to the return.
(5) Conferences
(a) If a conference has been requested by the taxpayer, the interested persons will be notified of the time and place of the conference. A conference is normally scheduled only when the Department deems it will be helpful in deciding the case or an adverse decision is indicated. If conferences are being arranged with respect to more than one request for a ruling involving the same taxpayer, they will be so scheduled as to cause the least inconvenience to the interested persons.

(b) A taxpayer is entitled, as a matter or right, to only one conference in the Department. In order to promote a free and open discussion of the issues, the conference will usually be held after the Department has had an opportunity to study the case. However, at the request of the taxpayer or his representative, the conference may be held at an earlier stage in the consideration of the case than the Department would ordinarily designate.

(c) The provisions of this regulation limiting the number of conferences to which a taxpayer is entitled will not foreclose the invitation of a taxpayer to attend further conferences when, in the opinion of the Department personnel, such need arises.

(d) It is the responsibility of the taxpayer to add to the case file a written record of any additional data, lines of reasoning, and precedents, which are proposed by the taxpayer and discussed at a conference but which were not previously or adequately presented in writing.
(6) Withdrawal of Requests
The taxpayer's request for ruling may be withdrawn at any time prior to the issuance of the ruling. However, in such a case, the Department may consider the information submitted in any subsequent audit or examination of the taxpayer's return. Even though a request is withdrawn, all correspondence and exhibits will be retained in the Department and will not be returned to the taxpayer.
(7) Oral Advice to Taxpayers
The Department does not issue rulings upon oral requests. A taxpayer may, of course, seek oral technical assistance from the Department in the preparation of his return or report, pursuant to other established procedures. Such oral advice is advisory only and the Department is not bound to recognize it in the examination of the taxpayer's return.
(8) Effect of Rulings
(a) A taxpayer may rely on a ruling issued to that taxpayer unless and until the ruling is revoked or modified at any time in the wise administration of the taxing statutes. If a ruling is revoked or modified, the revocation of modification applies to all open years under the statutes, unless the Commissioner limits the retroactive effect of the revocation or modification. A taxpayer may not rely on a ruling issued to another taxpayer.

(b) A ruling found to be in error or not in accord with the current view of the Department may be modified or revoked. Except in rare or unusual circumstances, the revocation or modification of ruling will not be applied retroactively with respect to the taxpayer to whom the ruling was originally issued or to a taxpayer whose tax liability was directly involved in such ruling if (1) there has been no misstatement or omission of material facts, (2) the facts subsequently developed are not materially different from the facts on which the ruling was based, (3) there has been no change in the applicable law, (4) the ruling was originally issued with respect to a prospective or proposed transaction, and (5) the taxpayer directly involved in the ruling acted in good faith in reliance upon the ruling and the retroactive revocation would be to his detriment.

To illustrate, the tax liability of each shareholder is directly involved in a ruling on the reorganization of a corporation. However, the tax liability of members of an industry is not directly involved in a ruling issued to one of the members, and the holding in a revocation or modification of a ruling or to one member of an industry may be retroactively applied to other members of that industry. By the same reasoning, a tax practitioner may not obtain the nonretroactive application to one client of a modification or revocation of a ruling previously issued to another client. Where a ruling to a taxpayer is revoked with retroactive effect, the notice to such taxpayer will, except in fraud cases, set forth the grounds upon which the revocation is being made and the reasons why the revocation is being applied retroactively.

(c) A ruling issued to a taxpayer with respect to a particular transaction represents a holding of the Department on that transaction only. However, the application of that ruling to the transaction will not be affected by the subsequent issuance of regulations, if the conditions specified in subsection (b) above are met. If the ruling is later found to be in error or no longer in accord with the holding of the Department, it will afford the taxpayer no protection with respect to a like transaction in the same or a subsequent year, except to the extent provided in subsections (8)(d) and (8)(e).

(d) If a ruling is issued covering a continuing action or a series of actions and it is determined that the ruling was in error or no longer in accord with the holding of the Department, the Commissioner ordinarily will limit the retroactivity of the revocation or modification to a date no earlier than that on which the original ruling is modified or revoked.

(e) A ruling holding that the sale or lease of a particular article is subject to the sales of use tax or that a particular transfer of occupancy of a room is subject to the room occupancy excise will not revoke or modify retroactively a prior ruling holding that the particular sale or lease or transfer of occupancy was not taxable, if the taxpayer to whom the prior ruling was issued, in reliance on such ruling, parted with possession or ownership of the article or transferred the occupancy without passing the tax on to his customer.

(f) In the case of rulings involving transactions completed before issuance of the ruling, the limitations on retroactive revocation in subsection 8(b) will not apply since the transactions will not have been entered into in reliance on the ruling.
(9) Confidentiality.
(a) Persons requesting rulings must do so on the basis that the text of any ruling will be open to public inspection subject to the deletions hereinafter set forth. Persons requesting rulings waive all copyrights, rights to privacy and similar rights to prevent disclosure of the text of rulings, except as such rights are provided in this subsection.

(b) Before making any letter ruling available for public inspection under subsection (10) the Department shall delete:
1. the names, addresses, and other identifying details of the person to whom the ruling pertains and of any other person identified therein;

2. information specifically exempted from disclosure by any statute which is applicable to the Department;

3. trade secrets and commercial or financial information obtained from a person and privileged or confidential; and

4. information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
The Department's personnel are instructed that it is the policy of the Department to treat information deleted pursuant to this paragraph as information the disclosure of which is prohibited by General Laws Chapter 62C, Section 21.
The Department will take into consideration all comments and proposed texts submitted by the person who requested the ruling received within 20 days of the date of the ruling but the Department shall make the final determination of the contents of the text of the ruling which is open to public inspection.
(10) Publicity of Letter Rulings
(a) The Department may take steps to bring letter rulings which are open to public inspection to the attention of the news media and publishers of tax services. Although the resources of the Department may not permit the Department to bring all rulings to the attention of the news media and publishers of tax services, the Department hopes that all rulings which may be helpful to taxpayers and their representatives will be published in tax services as soon as possible after such rulings are open to public inspection in as complete form as possible.

(b) To facilitate publication and public inspection of rulings the Department will maintain a file of all letter rulings for public inspection. The Department intends to index all such rulings on the basis of date issued and statutory provisions dealt with. The Department will endeavor to enable persons to obtain copies of letter rulings which are open to public inspection at the expense of the person seeking such copies.