Glossary · Institutions & Instruments
Private taxpayer ruling
In short
A formal written determination applying the law to one taxpayer's specific facts. Stronger than an information letter: the taxpayer who received it is protected against the tax itself, provided the reliance was reasonable and the information given was adequate and accurate, for transactions from the date it was received.
In full
A formal ruling requested in writing, on facts the requester sets out, before the tax has accrued. Where ADOR later revokes or modifies it, A.R.S. § 42-2101(D) bars applying the revocation retroactively to periods before its effective date, and bars the Department from assessing any penalty or tax attributable to erroneous advice in the ruling — on two conditions: that the taxpayer reasonably relied on it, and that the penalty or tax did not result from the taxpayer failing to provide adequate or accurate information, or from a change in that information. That is the meaningful difference from an ordinary written answer.
Requested under A.R.S. § 42-2101 by written application stating the taxpayer's identity, all relevant facts, whether the issue is under audit, protest, or appeal, and whether the same request has gone to another taxing authority. ADOR treats a request as a private taxpayer ruling where the taxpayer's identity is given, and as a taxpayer information ruling where it is not. A taxpayer information ruling binds the Department only if identifying information is supplied before publication.
A ruling may issue only where no tax has accrued on the transactions described. Where it addresses ongoing business activities it applies only to transactions occurring, or liabilities accruing, after the taxpayer receives it. It may not be relied on, cited, or introduced in evidence by any other taxpayer.
ADOR must meet with the requestor within thirty days unless the meeting is waived, provide a draft at least thirty days before issuing, and issue within ninety days absent agreed delay. ADOR's Letter Rulings page states a shorter operational target — forty-five business days after all requested information is received. Rulings are public records, subject to confidentiality limits and a request to withhold publication.
A.R.S. § 42-2101; ADOR Letter Rulings page