Noah Hertz Marks (Duke), Winning by Losing: The Strategy of Adverse Letter Rulings, 66 B.C. L. Rev. __ (2025):

Every year, the Internal Revenue Service issues hundreds of Private Letter Rulings (PLRs) responding to formal taxpayer inquiries about how tax law will apply to their proposed situations and transactions. Once issued, PLRs (which read like judicial opinions) functionally bind the Internal Revenue Service with respect to the requesting taxpayer. And while the Internal Revenue Code formally forbids relying on PLRs as precedent, taxpayers and practitioners closely monitor and structure their operations and advice around PLRs.

After submitting a PLR request, taxpayers can withdraw it at any time for any (or no) reason. Furthermore, the PLR process is collaborative, so requesting taxpayers know, far in advance, whether the PLR will be favorable or adverse. 

Because it is hard to imagine why a taxpayer would want the government to issue a formal letter presumptively committing to an adverse position, it is assumed that only a handful of adverse PLRs exist and, in theory, none should exist. But in fact, a significant number of adverse PLRs do exist, and this article is the first systematic empirical analysis of them. It examines a unique dataset of 461 adverse PLRs drawn from review of approximately 10,000 PLRs and stretching from 1977 (when PLRs were first systematically published) through 2023. Only ninety-seven (21%) of them can be explained by human foibles like taxpayer apathy and mistakes. The rest-a significant majority-appear to be strategic actions by requesting taxpayers. Notably, sixty (13%) likely were obtained for highly strategic reasons motivated by PLRs' normative force: either to generate backlash against the IRS or to level competitive playing fields.

Examining adverse PLRs begins to map the substantive world of PLRs and leads to several normative implications for PLRs and the tax system. Such implications include broadening and formalizing third-party input and feedback on PLRs and modifying the PLR process to avoid inequitable access to consequential IRS guidance. Finally, based on the parallels between the highly strategic uses of adverse PLRs and impact litigation, this article proposes using PLRs to pursue public interest, pro-fisc policies and counteract aggressive and even abusive tax positions.

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