Legal Definitions - determination letter

A determination letter is a document issued by the Internal Revenue Service (IRS) in response to a taxpayer's request. It provides an opinion about the tax implications of a particular transaction or situation. For example, a nonprofit organization may request a determination letter to confirm its tax-exempt status.

The determination letter is also known as a ruling letter. It is an official statement from the IRS that provides guidance to taxpayers on how to comply with tax laws and regulations.

Here are some examples of situations where a determination letter may be requested:

• A business wants to know if a particular expense is tax-deductible.
• An individual wants to know if they qualify for a certain tax credit.
• A charity wants to confirm its tax-exempt status.

These examples illustrate how a determination letter can provide clarity and guidance on tax matters. By obtaining a determination letter, taxpayers can ensure that they are complying with tax laws and regulations and avoid potential penalties or fines.