Colorado Department of Revenue
Regulation Governing Private Letter Rulings
 and Informational Letters
(Regulation 24-35-103.5)
1)	Scope.
This regulation describes the procedures for applying for and issuing private letter rulings and information letters to a taxpayer in response to the taxpayer’s request for an interpretation of Tax law and/or application of Tax laws to a specific set of facts.  This regulation does not govern “For Your Information” (“FYIs”), Questions & Answers, instructions, oral or email communications to or from the department, general correspondence, assessments, refunds, final determinations (e.g. issued by executive director, auditors, or tax conferee), forms, and other statements or publications issued by the department.
2)	Definitions.
a)	“Tax” means those state and local taxes (including interest and penalties related to those taxes) administered by the department (Titles 29, 32, and 39, C.R.S.).
b)	"Information letter" or “Letter” means a non-binding letter issued to a specific taxpayer in response to the taxpayer’s request for interpretation and/or application of Taxes and submitted in accordance with this regulation. An information letter is advisory only and the provisions of section 10 of this regulation do not apply.
c)	“Private Letter Ruling” or “Ruling” means a binding letter issued by the department addressed to specifically designated taxpayer(s) in response to a request by that taxpayer(s) and submitted in conformance with this regulation.
d)	“Person” includes individuals, corporations, partnerships, limited liability companies and others set forth in §39-21-101(3), C.R.S.
e)	“Related Party” means related party as defined by §267, I.R.C. and/or a member of an affiliated group of which the taxpayer is a member as defined by §1504, I.R.C.
3)	Subject Matter of Rulings and Letters.
a)	Matters subject to Rulings and Letters.  The department will issue Letters and Rulings in response to a taxpayer’s inquiry on a broad range of subject matter that involve an interpretation of a Tax law (including statute, ordinance, resolution and regulation), the applicability of Tax to a given set of facts, a taxpayer’s Tax status, and procedural issues relating to such Taxes.
b)	Matters not subject to Rulings and Letters.  Unless otherwise specifically agreed to by the department, the department will not issue Letters or Rulings regarding:
i)	An issue, whether related to a prospective or a completed transaction, if the same or a closely related issue is before the department or Internal Revenue Service in connection with an examination or audit by the department or Internal Revenue Service of the same taxpayer for the same or any other prior period.
ii)	An issue or closely related issue is pending appeal with the tax conferee, executive director, or courts.
iii)	A matter involving the Tax consequence of any proposed federal, state, local legislation.
iv)	Whether “reasonable,” “good cause,” “good faith,” or other similar standard is satisfied in circumstances where such criteria is a requirement of Tax law.
v)	Whether a proposed transaction would subject the taxpayer to civil fraud or criminal penalty.
vi)	Questions of fact, such as valuation.
vii)	Factual scenarios that require documentation or facts so voluminous as to be onerous to resolve, including questions of “business purpose” and “economic substance.”
viii)	Federal law or state constitutional law.
ix)	On only part of an integrated or step transaction.
x)	Business, trade or industrial associations, or to other similar groups to the extent to which such request relates to their member’s or constituency’s Tax status or liability.  The department, however, may issue a Letter on such questions.
c)	The department will decline to issue Rulings and Letters if it lacks sufficient resources to prepare a response to the same.
d)	The list of topics set forth in this subsection 3(b) is intended to be fairly complete.  However, the department reserves the right not to issue Rulings or Letters when it determines that it would not be in the best interest of the State.
e)	The department shall give, within 30 days receipt thereof, notice to the taxpayer of the department’s decision to issue or decline to issue a Ruling or Letter.
4)	Applications for Rulings and Letters.
a)	Letters.  In general, a request for a Letter can be informal and not as comprehensive as is required for a request for a Ruling (see subsection 4(b), below).  The Letter request should contain a reasonable description of the facts and identification of issues.  Citation to statutes or legal authority is helpful, but not necessary.  The department does not charge a fee for issuing a Letter.
b)	Rulings.  A request for a Ruling must contain: 
i)	A statement that the taxpayer is requesting a Ruling pursuant to this regulation.
ii)	Statement of Facts and Issues.  The request must include a complete and detailed statement of all relevant facts.  This statement will, unless expressly agreed to by the department, constitute the factual basis for the Ruling.  Therefore, relevant and material facts contained in documents submitted with the request must be specifically set forth in the statement of facts, together with specific citations to the pertinent documents where such facts are set forth.  It is insufficient disclosure to incorporate by reference factual material contained in documents (e.g., “See Sales Contract for more details.”).
iii)	A complete and detailed statement of the business reason(s) for the transaction.
iv)	True and complete copies of all documents relevant to the Ruling. 
v)	A statement that the same or substantially similar issue is not being considered by the department or Internal Revenue Service in connection with an active examination, audit of the taxpayer(s) or Related Party(ies)
vi)	For requests that pertain to only one step of a large integrated transaction, documents relating to the entire transaction must be submitted.
vii)	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.
viii)	A statement whether the taxpayer, related party, or member of an affiliated group, has made the same or similar request for a ruling relating to the same or similar issue to the Internal Revenue Service or the taxing authority of another state or local jurisdiction.  The request to, and ruling of (if issued), the Internal Revenue Service or other taxing jurisdiction must be attached.
ix)	Documents submitted as part of the request become a part of the department's records and, unless otherwise agreed to by the department, the department will not return the same.
x)	The taxpayer must furnish a detailed and complete discussion of the relevant issues underlying its request for a ruling, including a discussion of the relevant Colorado statutes and published court decisions (including statutes or decisions that arguably do not support the taxpayer’s position).  The requirements of the subsection apply even if the taxpayer is not urging a particular result.
xi)	Identification of the taxpayer.  A request for Letter may be submitted without disclosing the taxpayer’s identity.  A request for Ruling may be submitted initially so as not to disclose the identity of the taxpayer.  If, after submitting the request, the department determines that it will issue a Ruling and the taxpayer agrees to payment of the fee, then the taxpayer must disclose in writing the following to the department before the department will proceed with preparing a Ruling:
(1)	Name and trade name, if any.
(2)	Address of physical location and, if different from the location address, mailing address.
(3)	Social Security Number (SSN), Colorado Tax account number, and Federal Employment Information Number (FEIN), if any.
(4)	Telephone number(s) and email address of the taxpayer(s) about whom the request is made.
(5)	The same information required in subsection 4(b)(xi)(1-4) for each person with respect to whom the taxpayer expects the Ruling to apply.
c)	The taxpayer must timely supplement the request with any additional statements, facts, arguments, citations of authority (including court decisions or legislation issued or enacted after the request was issued but before the Ruling is issued), not previously disclosed but known to or knowable upon the exercise of due diligence to the taxpayer at any time prior to the issuance of the Ruling.  
d)	At the time of disclosure of the taxpayer’s identity to the department, as set forth in subsection 4(b)(xi):
i)	A request signed by the taxpayer(s) and, if submitted by an authorized representative, also by the authorized representative.  The signature of the signer shall be accompanied by a declaration that the signer, ”declares that I have examined this request, including the accompanying documents, and, to the best of my knowledge and belief, the facts and representations presented in support of the request are true, correct, and complete.”  The request must be signed by an person authorized to sign on behalf of the entity, and if such person does not have personal knowledge of each of the relevant facts contained in the request, the request must include signed affidavits from those who have such knowledge.
ii)	If a person other than the taxpayer(s) submits the request, then the other person must file a power of attorney (Form DR 0145) with the request unless an effective authorization is already on file with the department.
e)	The department may determine, after examining the request, that additional information is needed.  The department shall request this information from the taxpayer. 
f)	The request for a Ruling or Letter shall be addressed to:
	Colorado Department of Revenue
	Private Letter Ruling Request
	1375 Sherman Street, Denver, Colorado 80261
g)	A taxpayer who desires a conference to discuss the request should indicate such desire in writing when filing the request or as soon as practical.
5)	Fee for Rulings.
a)	The department assesses a fee for a Ruling.  The fee will be an estimated weighted average hourly rate calculated on the wage costs of the staff involved reviewing the request and issuing a Ruling.  The initial hourly rate is $52.  The department will periodically review, no less often than annually, the estimated hourly rate and revise the same, if necessary.  Revisions of the hourly rate shall be posted on the Department’s web site.  Operating costs (mailing, copying, etc.) will be separately charged at the department’s cost.
i)	Initial Fee.  The taxpayer shall pay an initial fee of $400, which shall accompany the request, for staff to make a preliminary determination whether the request is submitted in accordance with this regulation and to develop an estimate of the time necessary to issue a Ruling.  This initial fee is refundable to the extent staff time incurred on the request does not exceed the fee.  The department will periodically review, no less often than annually, the initial fee and revise the same, if necessary.  Revisions of the initial fee shall be posted on the Department’s web site.  
ii)	Additional Fee.  If the department determines that its costs will exceed the initial fee, the department shall charge an additional fee based on the number of staff hours incurred. 
(1)	Estimate.  The department shall provide an estimate of the additional time required to issue a Ruling to the taxpayer.  The taxpayer shall remit payment of the estimated fee before the department performs any work beyond that covered by the initial fee.
(2)	Changes in Estimate.  The department shall give the taxpayer notice of any subsequent change in the estimate of the time required to complete the request.  The taxpayer may decline to incur further fees and, if declined, the request shall be deemed withdrawn.  Fees for costs already incurred shall not be refunded, even if the request is withdrawn.
(3)	Final Statement.  The department shall issue a final statement of the fees and costs to the taxpayer prior to issuing the Ruling.  Such statement shall set forth the hours and operating costs incurred by the department and the amount, if any, that is due or is to be refunded.  The Ruling shall not be delivered to the taxpayer until the final fee and costs are paid in full.
6)	Conferences
a)	If a conference has been requested by the taxpayer or if the department determines that such a conference will be useful in understanding the request, the department will give notice of the date, time and place of the conference.
b)	In general, the department will hold only one conference.  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.
7)	Issuance of Ruling and Letters.
a)	The department will issue a Ruling within 90 days receipt of the request, unless otherwise agreed to by the taxpayer or the department declines the request.  The time taken by a taxpayer to respond to a request by the department for additional information shall not be considered in calculating the 90-day response period.
b)	The department may place conditions on Ruling, not inconsistent with statute, that the department believes, in the exercise of its discretion, are proper.
c)	The department will use its best efforts to issue a Letter within 90 days receipt of the same, unless otherwise agreed to by the taxpayer or the department declines the request.
8)	Withdrawal of Requests.
a)	The taxpayer's request for Ruling may be withdrawn at any time prior to the issuance of the Ruling.
b)	Unless otherwise agreed to by the department, all documents and information provided as part of the request will be retained in the department and will not be returned to the taxpayer even though a request is withdrawn or declined.
9)	Oral/email Advice to Taxpayers.
a)	The department does not issue Rulings or Letters upon oral or email requests.  A taxpayer may, of course, discuss with staff, either orally or through email, technical assistance from the department.  Such informal advice by the department is advisory only and is not subject to the provisions of section 10, below.
10)	Effect of Rulings.
a)	The department shall be bound by and give effect to the tax determinations set forth in a Ruling, unless and until the Ruling expires or is revoked or modified.  A Ruling submitted in bad faith, or that omits or misstates relevant and material facts, shall be void to the extent that such bad faith, omission or misstatement is relevant and material to the determination set forth in the Ruling.
b)	In general, and unless otherwise expressly stated in a Ruling, a Ruling shall be effective for a period of three years from the date of the Ruling.
c)	The party to whom the Ruling was issued may request that the department renew the Ruling for another three-year period.  The request to renew shall be treated as an original request and all provisions of this regulation shall apply to such a request; except, the taxpayer may satisfy the information required in section 4 by simply incorporating by reference relevant parts of its original request.  Section 5 shall apply, including the fee for the initial estimate.
d)	A Ruling later determined by the department to be in error may be modified or revoked in accordance with the procedures of this regulation.
e)	The Ruling shall be revoked or modified by any of the following:
i)	Written notice to the taxpayer(s) who submitted the request to whom the Ruling was issued by mailing notice of the same to the taxpayer(s) last known address.
ii)	Enactment of legislation that contradicts the tax determinations in the Ruling and that becomes effective subsequent to issuance of the Ruling.
iii)	A contrary decision by any court when the decision is binding on the department.
iv)	Enactment of department regulation that becomes effective subsequent to the issuance of the Ruling.
f)	A revocation or modification pursuant to 10(d)(i or iv) shall apply to all transactions to which the Ruling would otherwise apply but are not undertaken prior to the effective date of the revocation or modification.  The department will consider a number of factors to determine whether a transaction is “undertaken,” including whether the taxpayer has expended significant resources, the time remaining for the anticipated completion of the transaction, and whether the transaction is a series of separate transactions.  Revocation or modification of Rulings pursuant to subsections 10(d)(ii or iii) shall apply retroactively to the extent required by law.
g)	A taxpayer may not rely on a Ruling issued to another taxpayer, including a Related Party, unless such person is disclosed in the request and the department expressly agrees to apply the Ruling to such persons, or a Ruling issued to the taxpayer for transactions or filing periods not specifically addressed in the Ruling, even though the Ruling may deal with the same issue(s) or similar types of transaction.
11)	Appeals from adverse Rulings.
a)	There is no right to appeal a Ruling or Letter.
12)	Taxpayer not bound by Ruling.
a)	A Ruling or Letter does not bind a person.  However, such Ruling or Letter may be evidence relevant to the assessment of penalties and other issues of good faith.
13)	Confidentiality.
a)	Taxpayers requesting a Ruling or Letter must do so on the basis that the text of any ruling may be open to public inspection in accordance with §24-35-103.5(5), C.R.S. 
b)	Before making any Ruling or Letter available for public inspection under subsection 14, the department shall delete:
i)	the names, addresses, and other identifying details of the person to whom the ruling pertains and of any other person identified therein;
ii)	information specifically exempted from disclosure by any statute which is applicable to the department;
iii)	trade secrets and commercial or financial information obtained from a person and privileged or confidential; and
iv)	Information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
c)	The department shall submit to the taxpayer, at the time the Ruling or Letter is issued to the taxpayer, a proposed “public” version of the Ruling or Letter that the department proposes to make available to the public.  The taxpayer shall, thereafter, file with the department within 20 working days from the date of mailing of such proposed “public” draft Ruling or Letter any written objections to the disclosure of the “public” version of the Ruling or Letter.  Failure to file an objection shall be deemed a waiver of any claim that the same contains confidential information.  The objection(s) must be detailed and specifically cite the objectionable text, provide a detailed and complete statement of the basis of the objection to the disclosure of the text, and propose specific alternative text.  The department will take into consideration any objections, but the department shall make the final determination of the contents of the text of the “public” Ruling or Letter. 
14)	Publication of Letters and Rulings.
a)	The department will make available to the public “public” versions of Letters and Rulings to the extent permitted by Colorado law.
b)	The department may, in its discretion, make “public” Letters and Rulings available to the public through the department’s publications, web site, emails, and other public information and educational resources.