Tax Insight

IRS reinstates “significant issue” ruling program

Insight
5 minute read
May 11, 2026

What happened?

The IRS released Rev. Proc. 2026-21 on May 5, reinstating a prior, longstanding program to allow taxpayers to request private letter rulings on “significant issues” arising in certain corporate transactions, rather than requiring a ruling on the entire transaction. The reinstated “significant issue” program applies to all qualifying ruling requests postmarked or received after May 5, 2026.

Why is it relevant?

This guidance marks a reversal of the IRS’s 2024 policy that had ended the “significant issue” ruling program. By modifying and amplifying the IRS’s advance ruling procedures under Rev. Proc. 2026-1 and Rev. Proc. 2026-3, newly issued Rev. Proc. 2026-21 reinstates the IRS’s historical approach of providing a flexible and targeted process for taxpayers to receive timely guidance on corporate transactions. Specifically, the resumption of “significant issue” rulings provides taxpayers with an additional process that could reduce their time and expenses for obtaining rulings, while addressing their most critical transactional issues.

Actions to consider

Taxpayers should consider incorporating the “significant issue” program into their transaction planning strategies and, with regard to their particular transactions, engage early with advisors to determine whether this option provides an advantageous ruling process. Because “significant issue” rulings address only certain discrete issues, rather than the federal income tax consequences of the entire transaction, taxpayers and their advisors will need to weigh the respective benefits of each IRS ruling process based on the facts and circumstances of their particular transaction.