Frequently Asked Questions
Who is eligible for the Election to Apply Regulations Retroactively?
Available when the Treasury Department issues new regulations that are favorable to the taxpayer and explicitly allows for an election to apply them to prior open tax years.
How does the Election to Apply Regulations Retroactively work?
Taxpayers may elect to apply new Treasury regulations to a taxable period ending before the regulation's effective date if the Secretary provides for such an election.
What law authorizes the Election to Apply Regulations Retroactively?
The Election to Apply Regulations Retroactively is authorized under IRC §7805(b)(7) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §7805
Source: Internal Revenue Code, Title 26, United States Code
§ 7805. Rules and regulations(a) AuthorizationExcept where such authority is expressly given by this title to any person other than an officer or employee of the Treasury Department, the Secretary shall prescribe all needful rules and regulations for the enforcement of this title, including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue.
(b) Retroactivity of regulations(1) In generalExcept as otherwise provided in this subsection, no temporary, proposed, or final regulation relating to the internal revenue laws shall apply to any taxable period ending before the earliest of the following dates:(A) The date on which such regulation is filed with the Federal Register.
(B) In the case of any final regulation, the date on which any proposed or temporary regulation to which such final regulation relates was filed with the Federal Register.
(C) The date on which any notice substantially describing the expected contents of any temporary, proposed, or final regulation is issued to the public.
(2) Exception for promptly issued regulationsParagraph (1) shall not apply to regulations filed or issued within 18 months of the date of the enactment of the statutory provision to which the regulation relates.
(3) Prevention of abuseThe Secretary may provide that any regulation may take effect or apply retroactively to prevent abuse.
(4) Correction of procedural defectsThe Secretary may provide that any regulation may apply retroactively to correct a procedural defect in the issuance of any prior regulation.
(5) Internal regulationsThe limitation of paragraph (1) shall not apply to any regulation relating to internal Treasury Department policies, practices, or procedures.
(6) Congressional authorizationThe limitation of paragraph (1) may be superseded by a legislative grant from Congress authorizing the Secretary to prescribe the effective date with respect to any regulation.
(7) Election to apply retroactivelyThe Secretary may provide for any taxpayer to elect to apply any regulation before the dates specified in paragraph (1).
(8) Application to rulingsThe Secretary may prescribe the extent, if any, to which any ruling (including any judicial decision or any administrative determination other than by regulation) relating to the internal revenue laws shall be applied without retroactive effect.
(c) Preparation and distribution of regulations, forms, stamps, and other mattersThe Secretary shall prepare and distribute all the instructions, regulations, directions, forms, blanks, stamps, and other matters pertaining to the assessment and collection of internal revenue.
(d) Manner of making elections prescribed by SecretaryExcept to the extent otherwise provided by this title, any election under this title shall be made at such time and in such manner as the Secretary shall prescribe.
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