and date will be published in a subsequent issue of the FEDERAL REGISTER, unless the person or persons who have requested a hearing withdraw their requests for a hearing before notice of the hearing has been filed with the Office of the Federal Register.

DONALD C. ALEXANDER, Commissioner.

This document contains proposed amendments to the Statement of Procedural Rules (26 CFR Part 601). The proposed amendments relate to the public inspection of certain rulings and determination letters in order to implement the policy announced by the Internal Revenue Service in IR-1409, dated August 9, 1974, to open such material to public inspection. This document takes into account comments from interested parties which were solicited by IR-1409.

These proposed amendments authorize the prospective disclosure of certain rulings, determination letters, and, in certain cases, acknowledgements of withdrawal of requests for rulings or determination letters that are issued by the Internal Revenue Service. The rulings which are the subject of these proposed amendments include rulings necessitated by certain provisions of the Internal Revenue Code of 1954, such as, for example, sections 367, 442, and 446 (e). However, the proposed amendments do not apply to such documents that are issued in the employee plan area or in response to an application for exemption under section 501 (a) in order to allow the Internal Revenue Service to consider further the extent to which the procedures required by these proposed amendments should apply to such material. The proposed amendments also do not apply to earnings and profits determinations made pursuant to Rev. Proc. 65-10, 19651 C.B. 738.

In general, these proposed amendments provide for public inspection beginning approximately 30 days after the issuance of the ruling, determination letter, or acknowledgement of withdrawal of a request for a ruling or determination letter. Furthermore, in certain cases, a delay in public inspection may be granted for an additional period not to exceed 13 weeks.

The Internal Revenue Service will make available for public inspection the full text, including identifying information, of the documents authorized to be open to public inspection by these proposed amendments; however, these proposed amendments do provide procedures for protecting trade secrets and national defense or foreign policy secrets.

A new subparagraph (16), as added to § 601.201 (e), sets forth additional instructions to persons requesting rulings or determination letters. Under these additional instructions, a request for a ruling or determination letter must also contain:

(1) A waiver of confidential treatment,

(2) If applicable, a declaration that certain information is a trade secret. (3) A declaration whether or not any matter is a national defense or foreign policy secret,

(4) An affirmation under penalties of perjury,

(5) A prominent indication, on the first page of the request, of each section of the Internal Revenue Code, related statute, or tax treaty to which the request relates, and

(6) If desired, a request for delay of public inspection.

Pursuant to existing § 601.201 (e) (8), any request for a ruling or determination letter that does not comply with these additional instructions, as well as those provisions already in § 601.201 (e), will be acknowledged, and the requirements that have not been met will be pointed out.

A new subparagraph (17) (i), as added to § 601.201 (e), describes the form and manner in which a waiver of confidential treatment must be made. Such a waiver is a blanket waiver, except for information that is contended to be a trade secret or national defense or foreign policy secret. Information is not a trade secret merely because it is commercial or financial information. Accordingly, commercial or financial information obtained from the person requesting the ruling or determination letter is not excluded from the waiver and will not be withheld from public inspection.

The Internal Revenuse Service will withhold from public inspection and copying any material which it determines is a trade secret or national defense or foreign policy secret. The language of the declaration in § 601.201 (e) (16) (iii) that is required for withholding national defense or foreign policy information is derived from Pub. L. 93-502 which amends the Freedom of Information Act (5 U.S.C. 552).

The proposed amendments would add a new subparagraph (17) (ii) to § 601.201(e) which would describe the manner for submitting a declaration that cerain information is a trade secret or a declaration whether such request. contains a national defense or foreign policy secret.

The proposed amendments would add a new subparagraph (18) to § 601.201 (e) which would describe the form and manner in which an affirmation must be submitted.

The proposed amendments would add a new subparagraph (19) to § 601.201 (e) which would describe the manner in which a request for delay in public inspection must be made and the standard the Internal Revenue Service will use in accepting or rejecting such a request.

The proposed amendments would add a new subparagraph (2) to § 601.201 (j), relating to withdrawals of requests for rulings or determination letters, which would describe the consequences in the event of a withdrawal of such request because the Service rejects in whole or in part a declaration that certain information is a trade secret, a declaration whether such request contains national defense or foreign policy secrets, or a request for delay in public inspection.

The proposed amendments would revise paragraph (1) of § 601.201 to clarify the fact that a taxpayer may not rely upon, use, or cite as precedent any ruling issued to another taxpayer. (Pursuant to § 601.201 (m), determination letters will be given the same effect as rulings decsribed in § 601.201(1).) A new § 601.703 (e), would put the public on notice of the provisions of §601.201 (1) or (m) by providing for a statement to be placed by the Internal Revenue Service on each page of the material authorized by these proposed amendments to be open to public inspection.

The proposed amendments would add to § 601.702 a cross-reference to a new § 601.703.

New § 601.703 would provide rules with respect to public inspection of certain rulings, determination letters, and related documents.

Paragraph (b) (5) (ii) of the new section is "reserved" pending further consideration whether the index should be a cumulative index and how frequently the index should be cumulated.

Paragraph (c) of the new section described the place and procedure for public inspection and copying of all material authorized to be open to public inspection and copying by these amendments.

Paragraph (d) of the new section, relating to records retention, is "reserved". Further consideration is contemplated as to whether material authorized to be open to public inspection and copying by these proposed amendments should be retained or destroyed after a period of time and how long such period should be.

Proposed Amendments to the Statement of Procedural Rules. In order to provide rules with respect to public inspection and copying of rulings and determination letters, the following proposed amendments are made to the Statement of Procedural Rules (26 CFR Part 601):

PART 601-STATEMENT OF PROCEDURAL RULES

Paragraph 1. Section 601.201 is amended by adding subparagraphs (16), (17), (18), and (19) at the end of paragraph (e) and by revising paragraph (j), the first sentence of paragaraph (1)(1), paragraph (n) (2) (i), and the first sentence of paragraph (o)(2) (i). These added and revised provisions read as follows:

SECTION 601.201 RULINGS AND DETERMINATION LETTERS

(e) Instructions to taxpayers. * * *

(16) A request for a ruling or determination letter to which § 601.703 would apply and which is filed with the Internal Revenue Service after the close of business on (the date this amendment is published in the FEDERAL REGISTER as a final document) must also contain

(i) A waiver of confidential treatment in the manner described in paragraph (e) (17) (i) of this section,

(ii) If applicable, a declaration that certain information is a trade secret (as defined in § 601.703 (b) (b)), submitted in the manner described in paragraph (e) (17) (ii) of this section,

(iii) A declaration, submitted in the manner described in paragraph (e) (17) (ii) of this section, stating either that no matter in the request or accompanying exhibits is, or that certain designated matter therein is, specifically author

42-846-75- -19

ized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy and is in fact classified pursuant to such Executive order,

(iv) An affirmation in the form and manner described in paragraph (e) (18) of this section,

(v) A prominent indication, on the first page of the request, of each section of the Internal Revenue Code, related statute, or tax treaty to which the request relates, or such other indication in such other manner as the Commissioner may from time to time require, and

(vi) If desired, a request for delay of public inspection in the manner described in paragraph (e) (19) of this section.

(17) (i) The waiver of confidential treatment referred to in paragraph (e) (16) (i) of this section shall be made by written statement in the request signed by or for the person making the request and all other persons whom the Internal Revenue Service shall determine may have a direct interest in maintaining the confidentiality of information in the request. The waiver shall state that each such person "expressly waives any right to confidential treatment with respect to the request, all information and correspondence in connection with the request, all information contained in the ruling, determination letter or acknowledgement of withdrawal issued, and all other materials included in the file connected with the request, the ruling, the determination letter or acknowledgement of withdrawal. The waiver may be made using words substantially similar to those in the preceding statement. A waiver of confidential treatment is not required

(A) With respect to trade secrets or

(B) With respect to national defense or foreign policy information specifically authorized under criteria established by an Executive order to be kept secret. A waiver may make reference to a declaration referred to in paragraph (e) (17) (ii) of this section.

(ii) The declaration referred to in paragraph (e) (16) (ii) or (iii) of this section shall be made in a separate document attached as an exhibit to the request for a ruling or determination letter. The declaration shall contain the information desired to be withheld from public inspection and include the reasons for the position that the information is the type which will be withheld from public inspection pursuant to § 601.703 (b) (2) (i) or (ii). Such information shall not appear anywhere in the request for a ruling or determination letter or accompanying documents except in the declaration. The declaration shall refer specifically to the relevant portions of the request for a ruling or determination letter and shall describe fully how the information contained in the declaration is relevant to the request. Any obtainable corroborative evidence therefor, such as a letter from an appropriate government agency confirming that certain information is specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy and is in fact properly classified pursuant to such Executive order, shall also be submitted. See paragraph (j) (2) of this section for applicable procedures in the event that either declaration is rejected.

(18) The affirmation referred to in paragraph (e) (16 (iv) of this section shall be set forth following the signature at the end of each request for a ruling or determination letter and any subsequent submission with respect thereto, shall be made by or for the person making the request under penalties of perjury, and shall be separately signed. The signed declaration must be in the following form:

Under the penalties of perjury I declare that I have examined the statement of facts presented in this request and in any accompanying exhibits and statements and, to the best of my knowledge and belief, they are true, correct, and complete.

In addition, if the request for the ruling or determination letter of subsequent submission with respect thereto is prepared by the authorized representative of the person making the request, such authorized representative shall submit a signed declaration under penalties of perjury stating that he prepared the request and accompanying documents or subsequent submission and to the best of his knowledge that the statement of facts contained therein is true, correct, and complete.

(19) The request for delay of public inspection referred to in paragraph (e) (16) (vi) of this section shall be made in a separate letter attached to the request for a ruling or determination letter. The request shall contain a statement

setting forth the reasons for requesting delay of public inspection. The burden will be on the person requesting the ruling or determination letter to establish clearly that the delay in public inspection will prevent serious harm to any person or is necessary to prevent a violation of law. Moreover, any delay of public inspection will be limited to the minimum period necessary under the circumstances. In no event shall the requested delay exceed 13 weeks in addition to the period for delay of public inspection provided by § 601.703(b) of approximately 30 days after the ruling, determination letter, or acknowledgement of withdrawal (described in paragraph (j) (1) of this section) is issued. If the Internal Revenue Service determines that the request for delay of public inspection is reasonable and adequately substantiated, the request will be granted and the person making the request will be so advised. See paragraph (j) (2) of this section for applicable procedures in the event that the request is rejected. (j) Withdrawals of requests. (1) The taxpayer's request for a ruling or a determination letter may be withdrawn at any time prior to the signing of the letter of reply and the withdrawal will be acknowledged in writing. However, in such a case, in the discretion of the Internal Revenue Service, the letter acknowledging withdrawal with respect to a request for a ruling or determination letter filed with the Internal Revenue Service after the close of business on (the date this amendment is published in the FEDERAL REGISTER as a final document) may discuss the issues raised and the proposed response by the Service and the National Office may furnish its views to the district director whose office has or will have audit jurisdiction of the taxpayer's return. The information submitted will be considered by the district director in a subsequent audit or examination of the taxpayer's return. Even though a request is withdrawn, all correspondence and exhibits will be retained in the Service and may not be returned to the taxpayer. For rules as to public inspection of a letter of acknowledgement of withdrawal, see § 601.703. The provisions of paragraph (1) or (m) of this section shall apply with respect to not treating an acknowledgement of withdrawal as a precedent.

(2) A person's request for a ruling or determination letter may be withdrawn without the consequences specified in paragraph−(j) (1) of this section if, as a result of a disagreement over the availability of certain material for public inspection under § 601.703 (b), the Internal Revenue Service determines that it should reject in whole or in part either a person's declaration under paragraph (e) (17) (ii) of this section (that certain submitted information is a trade secret or a national defense or foreign policy secret) or such person's request for delay of public inspection under paragraph (e) (19) of this section. If the Service determines that such a declaration or request should be rejected in whole or in part, the person making such declaration or request will be notified in writing by the Service and will be considered to have withdrawn the request for a ruling or determination letter unless such person files with the Service a written acceptance of the rejection within 30 days (60 days if the person's mailing address is outside. the United States) after the date of the Service's letter rejecting the declaration or request. If the request for a ruling or determination letter is withdrawn as a result of the rejection by the Service of a declaration described in paragraph (e) (17) (ii) of this seciton or of a request for delay in publication described in paragraph (e)(19) of this section, then notwithstanding the provisions of paragraph (j) (1) of this section no further response by the Service to the request for a ruling or determination letter will be sent or given and any information or correspondence received by the Service from the taxpayer or other persons submitting information will be returned. This subparagraph shall not apply to such a declaration or request for delay in publication that is submitted after the filing of the request for a ruling or determination letter except with respect to material submitted in such declaration or submitted with such request for delay in publication. For example, material submitted by a taxpayer in a declaration on March 10, 1975, with respect to a request for a ruling filed on February 12, 1975, will be returned to the taxpayer if the declaration is rejected and the taxpayer withdraws his request for the ruling. However, the material submitted on February 12, 1975, in the request for the ruling will be retained in the Service and will not be returned to the taxpayer, pursuant to paragraph (j) (1) of this section.

(1) Effect of rulings. (1) A taxpayer may not rely upon, use, or cite as precedent any ruling issued to another taxpayer. ***

(n) Organizations claiming exemption under section 501 or 521 of the Code. ***

(2) Processing applications. (1) Under the general procedures outlined in paragraphs (a) through (m) of this section, key district directors are authorized to issue determination letters involving applications for exemption under sections 501 and 521 of the Code. However, paragraphs (16) through (19) of paragraph (e) of this section shall not apply with respect to applications for exemption under section 501(a).

(0) Employees' trusts or plans.

(2) Instructions to taxpayers. (i) All of the provisions of paragraph (e) of this section are applicable to requests for determination letters of the type discussed in this paragraph, except that subparagraphs (16) through (19) of such paragraph (e) of this section shall not apply. * * *

Par. 2. Section 601.702 is amended by redesignating paragraph (e) as paragraph (f) and by adding a new paragraph (e). The added and redesignated provisions read as follows:

SECTION 601.702 PUBLICATION AND PUBLIC INSPECTION

(e) Certain rulings and determination letters. For additional rules with respect to public inspection of certain rulings, determination letters, and related documents, see § 601.703.

(f) Other disclosure provisions. For procedures to be followed by officers and employees of the Internal Revenue Service upon receipt of a request or demand for certain internal revenue records or information the disclosure procedure for which is not covered by this section, see § 601.9000–1 of this chapter.

Par. 3. There is added immediately after § 601.702 the following new section: SECTION 601.703 ADDITIONAL RULES WITH RESPECT TO PUBLIC INSPECTION OF CERTAIN RULINGS AND DETERMINATION LETTERS

(a) Scope. The provisions of this section shall apply with respect to rulings (within the meaning of §§ 601.201 (a) (2) and 601.204(e)), determination letters (within the meaning of § 601.201(a) (3)), and acknowledgements of withdrawals (described in § 601.201 (j) (1)), that were issued with respect to requests for rulings or determination letters filed with the Internal Revenue Service after the close of business on (the date this amendment is published in the FEDERAL REGISTER as a final document), other than rulings, determination letters, and acknowledgements of withdrawal issued either with respect to part I of subchapter D of chapter I of the Code (relating to pension, etc., plans) or in response to an application for exemption under section 501 (a). See section 6104(a) (1) (B) (iv) for rules relating to the public inspection of certain letters or documents issued by the Internal Revenue Service and dealing with the qualification of a pension, profit sharing, or stock bonus plan or exempt status of any related trust or custodial account. This section does not apply to determinations of earnings and profits and of other items issued pursuant to Rev. Proc. 65-10, 1965-1 C.B. 738, as modified by Rev. Proc. 67-12, 1967-1 C.B. 589.

(b) In general. (1) Except as otherwise provided in this paragraph, the full text of all rulings, determination letters, acknowledgements of withdrawals (described in § 601.201(j) (1)) of requests for rulings and determination letters, and an index to the foregoing shall be available for public inspection and copying by any person, in accordance with paragraph (c) of this section, on or after the later of

(i) The first regular working day in the first week beginning 30 days after issuance by the Internal Revenue Service of the ruling, determination letter, or acknowledgement of a withdrawal of a request for a ruling or determination letter, or

(ii) If, under § 601.201 (e) (19), a delay in public inspection is granted for a period not to exceed 13 weeks after the day described in subdivision (i) of this subparagraph, the first regular working day in the first week after such period

ends.

(2) Except as indicated in paragraph (b)(4) of this section, the Internal Revenue Service will withhold from public inspection and copying any material which the Internal Revenue Service determines is

(i) A trade secret within the meaning of paragraph (b)(3) of this section, provided that the taxpayer referred to it in a declaration described in § 601.201 (e) (17) (ii), or