This week, Sloan Speck (Colorado) reviews a new work by Andrew Belnap (U. Texas, McCombs Sch. Bus.), Jeffrey L. Hoopes (UNC, Accounting) & Read Hadfield (U. Texas, McCombs Sch. Bus.), Does Voluntary Private Tax Disclosure Reduce IRS Audit Risk? (Sept. 30, 2025).

As a formal matter, IRS private letter rulings provide legal certainty to specific taxpayers on specific issues under the Internal Revenue Code. Legal scholars and tax practitioners have long held, however, that the function and import of PLRs extend far beyond this narrow usage. More broadly, PLRs represent a type of “shadow law” with strategic and substantive implications for how private parties implement tax rules in a system predicated on voluntary compliance. In a valuable new article, Andrew Belnap, Jeffrey Hoopes, and Read Hadfield extend the body of knowledge on PLRs’ collateral effects by demonstrating a compelling link between publicly disclosed PLRs and the IRS’s general propensity to audit PLR recipients in subsequent periods. Their findings are a big deal. PLRs not only shape private parties’ interactions with the tax system; these rulings also appear to affect the IRS’s enforcement priorities, which implies even greater systemic importance for this specialized form of subregulatory administrative guidance.

Using a bespoke, AI-constructed dataset of public company filings, Belnap, Hoopes, and Hadfield examine firms’ statements about IRS audits after those firms disclose a PLR. They find that post-PLR audit rates are significantly and considerably lower: by 3.9 percentage points, compared to a baseline rate of 16.9%. That is, firms that disclose a PLR are almost one-quarter less likely to disclose material disputes with the IRS in later years. This reduction could stem from changes in firm behavior, perhaps in anticipation of increased IRS monitoring. The authors, however, use multiple additional specifications that control for possible decreases in firms’ tax aggressiveness after a PLR. They determine that “the observed reduction in audit rates is unlikely to be driven by behavioral shifts and instead reflects the audit consequences of the PLR itself” (21). Again, this statement is weighty. If PLRs tend to reduce overall IRS scrutiny, then firms can leverage the ruling process to achieve both certainty with respect to a single tax position and a prospective reduction in risk with respect to all of their tax positions. This framing is not how scholars and practitioners typically think of the PLRs process.

Moreover, Belnap, Hoopes, and Hadfield find that their effect—the reduction in audit rates after a PLR—is concentrated among smaller firms (in the bottom half of public companies by size) and firms that report moderately lower-than-median effective tax rates (below the median but above the quartile of firms with the lowest ETRs). This texture in the data bolsters the authors’ conclusion that PLRs “serve as a valuable signal to the IRS” in marginal decisions to audit (27). If the IRS initiates audits as a matter of course for large public companies, PLRs’ signaling effects may prove moot, and any signal provided by a PLR may be overwhelmed by very low or very high ETRs that imply “clearly aggressive or clearly conservative tax strategies” (id.). Although outside of the ambit of the authors’ article, one might speculate, for example, that PLRs could reduce audit scope or intensity (but not audit incidence) for larger or more tax-aggressive firms. Without further exploration of these intuitions, one should be cautious about cabining the audit-related benefits of PLRs only to smaller and moderately aggressive firms.

Belnap, Hoopes, and Hadfield’s counterintuitive conclusions about PLRs and audit risk have important normative implications for tax administration in the United States, and the authors seem to generally favor devoting more public and private resources to the PLR process (28). Indeed, the authors note that public company disclosures of PLRs have roughly tripled since the mid-1990s (from 1% of firm-year observations to 2.9%), with a peak in 2015 (3.7%). This trend suggests that taxpayers and the IRS both may see value in the PLR process (see 3). This trend, however, also may reflect a broader market for tax certainty. Circular 230’s standards for private tax opinions changed in 2005 (stricter) and 2015 (looser), and the burgeoning demand for PLRs through the latter year may simply compensate for taxpayers’ reduced demand for legal opinions during this decade-long stretch. If taxpayers are simply seeking the most permissive source of tax advice, I think it’s risky for PLRs to serve as a signal for less IRS scrutiny. On the other hand, the PLR process, from “no names” phone calls to the collaborative authoring of rulings’ text, gives the IRS a genuine seat at the table when private parties do deals, and these parties really do accommodate IRS concerns in transactional structures. More of these public-private negotiations probably advances the cause of tax administration, and a prospective pass on future audits may be a small price to pay for greater (or more meaningful) public oversight. At the bottom line, the authors’ insights tend to complicate questions about how policymakers should allocate agency resources to advance tax compliance.

Overall, Belnap, Hoopes, and Hadfield’s article is a compelling and insightful exploration of an understudied aspect of tax administration—one that, in recent years, has received renewed interest from legal scholars. Belnap, Hoopes, and Hadfield’s article provides a crucial intervention and starting point for discussion as legal scholars, economists, accountants, and policymakers rethink the positive and normative aspects of the private letter ruling process.

Here’s the rest of this week’s SSRN Tax Roundup:

Alice Abreu (Temple), Bridget J. Crawford (Pace), Anthony C. Infanti (Pittsburgh), Marilyn J. Harbur (Sr. Asst. Atty. Gen., Or. Dept. Just.), Jaye Calhoun (Kean Miller) & Stewart M. Weintraub (Schnader Harrison Segal & Lewis), American Bar Association Resolution 507 (2025) and Associated Report, Tax Law. (forthcoming 2026)

Jillian R. Adams (U. Tenn., Haslam C. Bus.), Alexander Edwards (U. Toronto, Rotman Sch. Mgmt.) & Michael Marin (U. Toronto, Dept. Mgmt.), The Impact of Digital Sales Taxes on Pricing and Participation in Digital Marketplaces (Nov. 24, 2025)

Eric J. Allen (UC, Riverside), Henry L. Friedman (UCLA), Yiyuan Wang (Chinese U. Hong Kong) & Yuqing Zhou (Chinese U. Hong Kong), Corporate Income Tax Rates and Household Consumption (Dec. 3, 2025)

Reuven S. Avi-Yonah (Michigan), Corporate Taxation and Industrial Policy, 120 Tax Notes Int’l 155 (Oct. 6, 2025)

Reuven S. Avi-Yonah (Michigan), Repealing Reorgs, U. Mich. L. & Econ. Rsch. Paper (Dec. 1, 2025)

Jennifer Blouin (U. Penn., Wharton Sch.), Frank Zhou (U. Penn., Wharton Sch.) & Cindy Xinyao Zhu (U. Penn., Wharton Sch.), The Labor Consequences of R&D Tax Capitalization (June 7, 2025)

Travis Chow (U. Hong Kong), Allen H. Huang (Hong Kong U. Sci. & Tech.), Kai Wai Hui (U. Hong Kong) & Terry J. Shevlin (UC, Irvine), Judge Ideology and Corporate Tax Planning (Oct. 18, 2025)

Salvatore Ciucci (U. Campania Luigi Vanvitelli), The Tax Rebate Trade-Off, FEEM Working Paper No. 26-2025 (Nov. 14, 2025)

Beth A. Colgan (UCLA), Of Guilty Property and Civil/Remedial Punishment: The Implications and Perils of “History” for the Excessive Fines Clause and Beyond, 3 J. Am. Const. Hist. 697 (2025)

Sara Drango (U. Chicago, Booth Sch. Bus.), Sarah Moshary (UC, Berkeley) & Bradley Shapiro (U. Chicago, Booth Sch. Bus.), California’s Firearm Excise Tax Is Almost Fully Passed on to Consumers (Nov. 21, 2025)

Osman Geyik (Dicle U.) & Robert W. McGee (Fayetteville St. U., Dept. Acct.), Empirical Analysis of the Effect of Gender on Tax Evasion, Tax Compliance and Tax Perception in Turkey (Nov. 22, 2025)

Jim Y. Huang (U. Toronto, Ont. Inst. Stud. Ed.), Fiscal Event Geometry an X-Axis/Y-Axis Coordinate Framework for Cross-Jurisdiction and Intergenerational Analysis (Nov. 18, 2025)

Tarun Jain (Sup. Ct. India), Beneficial Ownership: The New Tax Anti-Evasion Test in Indian Customs Law (Nov. 26, 2025)

Endang Kiswara (Diponegoro U.), A Comparative Study of Tax Information Reliability in Financial Statements as Compliance to Tax Laws and Tax Accounting Standards (Nov. 27, 2025)

Jeroen Lammers (Copenhagen Bus. Sch.) & Błażej Kuźniacki (Lazarski U.), The EU Solidarity Contribution and a More Proportional Alternative: A Study Under EU and International Investment Law, 51 Intertax 451 (2023)

Michael H. Lubetsky (McMillan LLP), Unproven Allegations of Dishonesty, Wilful Blindness, or Gross Negligence: The Case for Cost Consequences in the Tax Court of Canada, 73 Can. Tax J. 467 (2025)

Antonio Lopo Martinez (U. Coimbra Inst. L. Rsch.) & Fernando Ferreira dos Santos f (FUCAPE Bus. Sch.), Brazil’s Dual VAT (IBS/CBS): Accounting Design, International Comparability, and Implications for Financial Reporting (Nov. 29, 2025)

Antonio Lopo Martinez (U. Coimbra Inst. L. Rsch.) & Raimundo Silva (Fed. U. Espirito Santo), Brazil’s Dual VAT (IBS/CBS): Auditing and Forensic Accounting for Informational Neutrality – A Conceptual Framework (Nov. 29, 2025)

Doron Narotzki (U. Akron, Daverio Sch. Acct.), Predicting Tariff Decisions from Oral Argument Transcripts with AI Models (Nov. 19, 2025)

Doron Narotzki (U. Akron, Daverio Sch. Acct.), The U.S. Case Against the Digital Services Tax, 189 Tax Notes Fed. 63 (Oct. 6, 2025)

Sheena Olalo (World Citi C.), Kimberly Joy Busa-Limbauan (World Citi C.), Melody Acodesin (World Citi C.), Florinda G. Vigonte (World Citi C.) & Marmelo V. Abante (World Citi C.), Tax Digitalization Literacy and Bureau of Internal Revenue (BIR) Business Tax Compliance of Selected Microbusinesses: Basis for a Mobile-Friendly Educational Toolkit (Jan. 10, 2025)

Ivan Ozai (Queen’s U.), Global Justice in the Reshaping of International Tax, 27 J. Int’l Econ. L. 639 (2024)

Katerina Pantazatou (U. Luxembourg), Why EU Revenue Matters: A Case for an EU Digital Levy,

3 Eur. L. Open 919 (2024)

Richard D. Pomp (Connecticut), The Case Against Excluding Gross Receipts from the Sales Factor, 42 J. St. Tax’n 29 (2024)

Joao Dacio Rolim (Braz. Inst. Tax L.) & Perisson Andrade (Pontifícia U. Católica de São Paulo), PPT Discretionary Relief: Taxpayer’s Right or Tax Power? (Aug. 30, 2025)

Karabelo Seapi (Unaffiliated), Taxing Automation: The Fourth Industrial Revolution in Extractive Industries (Nov. 15, 2025)

Ugo Antonio Troiano (UC, Riverside), Social Insurance During Lockdowns: Fiscal Policy with Systemic Occupational Risk (Nov. 17, 2025)

Edward A. Zelinsky (Yeshiva University) & Doris Zelinsky (Independent), Brief of Edward A. and Doris Zelinsky in the Appellate Division, Third Department, New York Supreme Court, Cardozo L. Stud. Rsch. Paper No. 2025-27 (Dec. 1, 2025)