us-irs-announcements-irb-1996-43-pdf•Internal Revenue Bulletin 1996-43 (PDF rendition): IRS Announcements
Internal Revenue Bulletin 1996-43 (PDF rendition): IRS Announcements
us-irs-announcements-irb-1996-43-pdfInternal Revenue Bulletin 1996-43 (PDF rendition): IRS AnnouncementsGuidance
Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.
INCOME TAX Rev. Rul. 96–51, page 5. Taxes, accrual of deduction.Under the all events test of section 461 of the Code, an accrual method employer may deduct in Year 1 its otherwise deductible FICA and FUTA taxes imposed with respect to year-end wages properly accrued in Year 1, but paid in Year 2, if the requirements of the recurring item exception are met. P.L. 104–191, page 7. An Act to amend the Internal Revenue Code of 1996, to improve portability and continuity of health insurance coverage in the group and individual markets and to promote the use of medical savings accounts, is repro- duced. EMPLOYEE PLANS Rev. Proc. 96–49, page 74. Retirement plans; section 414(u); model amend- ments.This procedure describes how certain plan sponsors may adopt model amendments to amend their plans to comply with the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994, P. L. 103–353, and section 414(u) of the Code, which was added by section 1704(n) of the Small Business Job Protection Act of 1996, P. L. 104–188. EXEMPT ORGANIZATIONS Announcement 96–109, page 76. A list is given of organizations now classified as private foundations. ADMINISTRATIVE Announcement 96–110, page 77. Corporations and partnerships will not automatically receive Package 1120 or 1065 for 1996. Instead, they will receive a postcard and may order either package if necessary. Finding Lists begin on page 79. Announcement Relating to Court Decisions, on page 4. Announcement of Declaratory Judgment Proceedings Under Section 7428, on page 77. Bulletin No. 1996–43 October 21, 1996 HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. Mission of the Service The purpose of the Internal Revenue Service is to collect the proper amount of tax revenue at the least cost; serve the public by continually improving the quality of our products and services; and perform in a manner warranting the highest degree of public confidence in our integrity, efficiency and fairness. Statement of Principles of Internal Revenue Tax Administration The function of the Internal Revenue Service is to administer the Internal Revenue Code. Tax policy for raising revenue is determined by Congress. With this in mind, it is the duty of the Service to carry out that policy by correctly applying the laws enacted by Congress; to determine the reasonable meaning of various Code provisions in light of the Congressional purpose in enacting them; and to perform this work in a fair and impartial manner, with neither a government nor a taxpayer point of view. At the heart of administration is interpretation of the Code. It is the responsibility of each person in the Service, charged with the duty of interpreting the law, to try to find the true meaning of the statutory provision and not to adopt a strained construction in the belief that he or she is ‘‘protecting the revenue.’’ The revenue is properly protected only when we as- certain and apply the true meaning of the statute. The Service also has the responsibility of applying and administering the law in a reasonable, practical manner. Issues should only be raised by examining officers when they have merit, never arbitrarily or for trading purposes. At the same time, the examining officer should never hesitate to raise a meritorious issue. It is also important that care be exercised not to raise an issue or to ask a court to adopt a position inconsistent with an established Service position. Administration should be both reasonable and vigorous. It should be conducted with as little delay as possible and with great courtesy and considerateness. It should never try to overreach, and should be reasonable within the bounds of law and sound administration. It should, however, be vigorous in requiring compliance with law and it should be relentless in its attack on unreal tax devices and fraud. 2 Introduction The Internal Revenue Bulletin is the authoritative instru- ment of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Inter- nal Revenue Service and for publishing Treasury Deci- sions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly and may be obtained from the Superin- tendent of Documents on a subscription basis. Bulletin contents of a permanent nature are consolidated semi- annually into Cumulative Bulletins, which are sold on a single-copy basis. It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Proce- dures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Revenue rulings represent the conclusions of the Ser- vice on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwar- ranted invasions of privacy and to comply with statutory requirements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and proce- dures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be consid- ered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions, and Subpart B, Legislation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administra- tive Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforce- ment). Part IV.—Items of General Interest. With the exception of the Notice of Proposed Rulemak- ing and the disbarment and suspension list included in this part, none of these announcements are consoli- dated in the Cumulative Bulletins. The first Bulletin for each month includes an index for the matters published during the preceding month. These monthly indexes are cumulated on a quarterly and semiannual basis, and are published in the first Bulletin of the succeeding quarterly and semi-annual period, respectively. The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, D.C. 20402. 3 Announcement Relating to Court Decisions It is the policy of the Internal Rev- enue Service to announce at an early date whether it will follow the holdings in certain cases. An Action on Decision is the document making such an an- nouncement. An Action on Decision will be issued at the discretion of the Service only on unappealed issues decided ad- verse to the government. Generally, an Action on Decision is issued where its guidance would be helpful to Service personnel working with the same or similar issues. Unlike a Treasury Regu- lation or a Revenue Ruling, an Action on Decision is not an affirmative state- ment of Service position. It is not intended to serve as public guidance and may not be cited as precedent. Actions on Decisions shall be relied upon within the Service only as conclu- sions applying the law to the facts in the particular case at the time the Action on Decision was issued. Caution should be exercised in extending the recommenda- tion of the Action on Decision to similar cases where the facts are different. Moreover, the recommendation in the Action on Decision may be superseded by new legislation, regulations, rulings, cases, or Actions on Decisions. Prior to 1991, the Service published acquiescence or nonacquiescence only in certain regular Tax Court opinions. The Service has expanded its acquiescence program to include other civil tax cases where guidance is determined to be helpful. Accordingly, the Service now may acquiesce or nonacquiesce in the holdings of memorandum Tax Court opinions, as well as those of the United States District Courts, Claims Court, and Circuit Courts of Appeal. Regardless of the court deciding the case, the recom- mendation of any Action on Decision will be published in the Internal Rev- enue Bulletin. The recommendation in every Action on Decision will be summarized as acquiescence, acquiescence in result only, or nonacquiescence. Both “acqui- escence” and “acquiescence in result only” mean that the Service accepts the holding of the court in a case and that the Service will follow it in disposing of cases with the same controlling facts. However, “acquiescence” indicates nei- ther approval nor disapproval of the reasons assigned by the court for its conclusions; whereas, “acquiescence in result only” indicates disagreement or concern with some or all of those reasons. Nonacquiescence signifies that, although no further review was sought, the Service does not agree with the holding of the court and, generally, will not follow the decision in disposing of cases involving other taxpayers. In refer- ence to an opinion of a circuit court of appeals, a nonacquiescence indicates that the Service will not follow the holding on a nationwide basis. However, the Service will recognize the precedential impact of the opinion on cases arising within the venue of the deciding circuit. The announcements published in the weekly Internal Revenue Bulletins are consolidated semiannually and annually. The semiannual consolidation appears in the first Bulletin for July and in the Cumulative Bulletin for the first half of the year, and the annual consolidation appears in the first Bulletin for the following January and in the Cumulative Bulletin for the last half of the year. The Commissioner ACQUIESCES in the following decisions: Burlington Northern Railroad Co. v. Commissioner, 1 82 T.C. 143 (1984) Eastman Kodak Co. v. United States, 2 534 F.2d 252 (Ct. Cl. 1976) Velinsky v. Commissioner, 3 T.C. Memo 1996–180 The Commissioner does NOT AC- QUIESCE the following decision: Brown Group, Inc. v. Commissioner, 4 77 F.3d 217 (8th Cir. 1996) vacating and remanding104 T.C. 105 (1995) 1 Acquiescence and that Rev. Rul. 74–70 be recon- sidered relating to whether an accrual basis tax- payer may deduct, pursuant to the all events test of section 1.461–1(a)(2) of the Treasury Regula- tions, the employer’s portion of payroll taxes on year-end salaries where the salaries are properly accruable but unpaid at year-end and the obliga- tion to remit the taxes does not arise until the following year when such wages are paid to employees. 2 Acquiescence and that Rev. Rul. 74–70 be recon- sidered relating to whether an accrual basis tax- payer may deduct, pursuant to the all events test of section 1.461–1(a)(2) of the Treasury Regula- tions, the employer’s portion of payroll taxes on year-end salaries where the salaries are properly accruable but unpaid at year-end and the obliga- tion to remit the taxes does not arise until the following year when such wages are paid to employees. 3 Acquiescence relating to whether, for purposes of the grossly erroneous requirement of section 6013(e) of the Code, an adjustment to cost of goods sold (COGS) is an omission of gross income or an item of “deduction, credit, or basis.” 4 Nonacquiescence relating to whether a controlled foreign corporation’s (“CFC’s”) distributive share of partnership income is foreign base company sales income under section 954(d) of the Code, when the partnership income is earned under circumstances in which it would have been foreign base company sales income if earned directly by the CFC partner. 4 Part I. Rulings and Decisions Under the Internal Revenue Code of 1986 Section 461.—General Rule for Taxable Year of Deduction 26 CFR 1.461–1: General rule for taxable year of deduction. (Also § 1.461–5.) Taxes, accrual of deduction.Under the all events test of section 461 of the Code, an accrual method employer may deduct in Year 1 its otherwise deductible FICA and FUTA taxes imposed with respect to year-end wages properly ac- crued in Year 1, but paid in Year 2, if the requirements of the recurring item exception are met. Rev. Rul. 96–51 ISSUE Under the all events test of § 461 of the Internal Revenue Code, may an accrual method employer deduct in Year 1 its otherwise deductible Federal Insur- ance Contributions Act (FICA) and Fed- eral Unemployment Tax Act (FUTA) taxes imposed with respect to year-end wages properly accrued in Year 1, but paid in Year 2? FACTS X, a corporation, employs the accrual method of accounting and uses a cal- endar taxable year.Xpays otherwise deductible wages to its employees bi- weekly on the Friday immediately fol- lowing a two-week pay period. Wages for the pay period beginning Saturday, December 23, 1995, and ending Friday, January 5, 1996, were paid toX’s employees on Friday, January 12, 1996. Prior to filing its 1995 corporate federal income tax return on March 15, 1996,X paid the taxes owed under §§ 3111 (the employer’s share of FICA taxes) and 3301 (FUTA taxes) with respect to the December 23–31, 1995 wages thatX properly accrued in 1995.Xproperly adopted the recurring item exception under § 1.461–5 of the Income Tax Regulations as a method of accounting with respect toX’s recurring liability for its share of FICA and FUTA taxes imposed in connection with accrued but unpaid year-end wages. On its 1995 return,Xdeducted the FICA and FUTA taxes it paid on the accrued year-end wages. LAW AND ANALYSIS Section 461(a) provides that the amount of any deduction or credit must be taken for the taxable year that is the proper taxable year under the method of accounting used in computing taxable income. Section 461(h) and § 1.461–1(a)(2)(i) provide that, under the accrual method of accounting, a liability is incurred, and is generally taken into account for fed- eral income tax purposes, in the taxable year in which (1) all the events have occurred that establish the fact of the liability, (2) the amount of the liability can be determined with reasonable accu- racy, and (3) economic performance has occurred with respect to the liability. The economic performance requirement applies to liabilities allowable as a de- duction or otherwise incurred after July 18, 1984. Section 1.461–4(g)(6) provides gener- ally that, if a taxpayer is liable to pay a tax, economic performance occurs as the tax is paid to the governmental authority that imposed it. Section 1.461–5 provides a recurring item exception to the general rule of economic performance. Under the recur- ring item exception, a liability is treated as incurred for a taxable year if: (1) at the end of the taxable year, all events have occurred that establish the fact of the liability and the amount can be determined with reasonable accuracy; (2) economic performance occurs on or before the earlier of (a) the date that the taxpayer timely files a return (including extensions), or (b) the 15th day of the ninth calendar month after the close of the taxable year; (3) the liability is recurring in nature; and (4) either the amount of the liability is not material or accrual of the liability in the earlier year results in a better matching of the liability against the income to which it relates. Section 1.461–5(b)(5)(ii) provides that, in the case of a liability for taxes, the matching requirement of the recur- ring item exception is deemed satisfied. Rev. Rul. 74–70, 1974–1 C.B. 116, holds that, under the all events test, an accrual basis employer generally may not deduct its share of FICA taxes payable with respect to wages accrued but unpaid at year-end until the taxable year in which those wages are actually or constructively paid. InEastman Kodak Co. v. United States, 534 F.2d 252 (Ct. Cl. 1976), acq., this Bulletin, page 4, the court held that an accrual basis employer may deduct its share of FICA, FUTA, and state unemployment taxes with respect to year-end wages in the year the wages were accrued, rather than in the follow- ing year when the wages were paid. The court held that, under the all events test, the fact of the liability may be estab- lished, and the amount thereof reason- ably ascertained, even though no legally enforceable obligation to pay the taxes in issue had arisen by year-end. The court found that the fact of the employ- er’s liability for the taxes was estab- lished as an automatic consequence of its definite and legal obligation to pay the underlying year-end accrued wages. See also Burlington Northern R.R. v. Commissioner, 82 T.C. 143 (1984),acq. this Bulletin, page 4 (reaching the same conclusion on the deductibility of the § 3221 employer tax under the Railroad Retirement Tax Act with respect to accrued year-end wages). Similarly,Xsatisfied the all events test for the federal employment taxes imposed with respect to accrued year- end wages for 1995 because the fact of its liability to pay those taxes was established as an automatic consequence of its accrual of the underlying wages and the amount of those taxes was reasonably ascertainable. Further,Xsat- isfied the requirements of the recurring item exception because the all events test was satisfied by the end of 1995, economic performance occurred within the prescribed time because the taxes were paid prior to the filing ofX’s 1995 return, the liability was recurring in nature, and the accrual of the tax liabil- ity in 1995 is deemed (under § 1.461– 5(b)(5)(ii)) to result in a better matching of that liability against the income to which it relates. Accordingly,Xmay deduct on its 1995 return the FICA and FUTA taxes it paid on the accrued year-end wages. HOLDING Under the all events test of § 461, an accrual method employer may deduct in Year 1 its otherwise deductible FICA and FUTA taxes imposed with respect to year-end wages properly accrued in Year 1, but paid in Year 2, provided the employer satisfies the requirements of the recurring item exception with re- spect to these taxes. EFFECT ON OTHER DOCUMENTS Rev. Rul. 74–70 is revoked. 5 APPLICATION The tax treatment of an employer’s FICA and FUTA taxes with respect to year-end wages within the scope of this revenue ruling constitutes a method of accounting. An employer currently treat- ing those taxes in a manner different from that provided in this revenue ruling must seek the Commissioner’s consent to change its method of accounting. A change in method of accounting for those taxes is a change in method of account- ing to which §§ 446(e) and 481 apply. This change in method of accounting must be made in accordance with Rev. Proc. 92–20, 1992–1 C.B. 685. DRAFTING INFORMATION The principal author of this revenue ruling is Barry M. Freiman of the Office of Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Mr. Freiman at (202) 622–4950 (not a toll-free call). 6 Part II. Treaties and Tax Legislation Subpart B.—Legislation and Related Committee Reports Public Law 104–191 104th Congress, H.R. 3103 1 August 21, 1996 An Act to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, ****** 1 This publication of the law is restricted to excerpts involving tax matters. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 Part III. Administrative, Procedural, and Miscellaneous 26 CFR 601.201: Rulings and determination let- ters. Rev. Proc. 96–49 SECTION 1. PURPOSE This revenue procedure provides a model amendment that will give plan sponsors a streamlined way to amend their plans to comply with the require- ments of the Uniformed Services Em- ployment and Reemployment Rights Act of 1994, Pub. L. No. 103–353 (‘‘USERRA’’), and § 414(u) of the In- ternal Revenue Code. The revenue pro- cedure also provides that plan amend- ments to reflect the provisions of USERRA and § 414(u) generally will not be required to be made before 1998. Section 414(u) was added by § 1704(n) of the Small Business Job Protection Act of 1996, Pub. L. No. 104–188 (‘‘SBJPA’’). The model amendment is available for use by sponsors of master or prototype (‘‘M&P’’), regional proto- type, volume submitter specimen, indi- vidually designed, and simplified em- ployee pension (‘‘SEP’’) plans that have received favorable opinion, notification, advisory, ruling, or determination letters that take into account the requirements of the Tax Reform Act of 1986, Pub. L. No. 99–514 (‘‘TRA ’86’’). SECTION 2. BACKGROUND AND GENERAL INFORMATION .01 USERRA, codified at 38 U.S.C. §§ 4301–4333, revised and restated the federal law protecting veterans’ reem- ployment rights. Under USERRA, which is interpreted and enforced by the Veter- ans’ Employment and Training Service of the U.S. Department of Labor, an employee who is absent from a position with an employer because of military service generally is entitled to reemploy- ment with that employer, subject to certain limits and exceptions. USERRA also requires certain other rights and benefits to be provided or made avail- able, including, in certain circumstances, coverage under the employer’s health plan. In addition, on reemployment, an employee is entitled to receive certain pension, profit-sharing and similar ben- efits (under defined benefit or defined contribution plans) that would have been received but for the employee’s absence during military service. USERRA sets forth various rules relating to the em- ployee’s reemployment and other rights and benefits, including— •the types of military service cov- ered, •advance notice of military service to be given to an employer, •documentation of reemployment eligibility, •exceptions for dishonorable dis- charge and employer hardship, •the position in which an individual must be reemployed, and •enforcement procedures. .02 Section 414(u) generally provides that a contribution that is made by an employer or employee to an individual account plan or by an employee to a contributory defined benefit plan, and that is required under USERRA, is taken into account for purposes of the limita- tions of § 402(g), 402(h), 403(b), 404(a), 404(h), 408, 415 or 457 in the year to which the contribution relates, not the year in which the contribution is made. In addition, § 414(u) provides that a plan is not treated as failing to meet the requirements of § 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401- (k)(12), 401(m), 403(b)(12), 408(k)(3), 408(k)(6), 408(p), 410(b), or 416 be- cause of the contribution (or the right to make the contribution). .03 Section 414(u) generally provides that an employer maintaining a plan shall be treated as meeting the require- ments of USERRA only if an employee reemployed under USERRA is treated as not having incurred a break in service because of the period of military ser- vice, the employee’s military service is treated as service with the employer for vesting and benefit accrual purposes, the employee is permitted to make addi- tional elective deferrals and employee contributions in an amount not exceed- ing the maximum amount the employee would have been permitted or required to contribute during the period of mili- tary service if the employee had actually been employed by the employer during that period (‘‘make-up contributions’’), and the employee is entitled to any accrued benefits that are contingent on employee contributions or elective de- ferrals to the extent the employee pays the contributions or elective deferrals to the plan. Make-up contributions must be permitted during the period that begins on the date of reemployment and contin- ues for five years or, if less, three times the period of military service. With respect to make-up contributions, the employer must make matching contribu- tions that would have been required if the make-up contributions had actually been made during the period of military service. .04 Section 414(u) provides that an employee is treated as receiving com- pensation from the employer during the period of military service equal to the compensation the employee otherwise would have received from the employer during that period, or, if the compensa- tion the employee otherwise would have received is not reasonably certain, the employee’s average compensation from the employer during the period immedi- ately preceding the period of military service. For purposes of § 414(u), USERRA is not treated as requiring the crediting of earnings to an employee with respect to any contribution before the contribution is actually made or requiring any allocation of forfeitures to the employee for the period of military service. Section 414(u) also provides that, if a plan provides for the suspen- sion of an employee’s obligation to repay a loan for any part of any period of military service, the suspension is not taken into account for purposes of § 72(p), 401(a) or 4975(d)(1). .05 USERRA provides generally that it is effective with respect to reemploy- ments initiated 60 days or more after the October 13, 1994, enactment date of USERRA, that is, reemployments initi- ated on or after December 12, 1994. USERRA provides that an employee pension benefit plan has two years from the date of enactment, that is, until October 13, 1996, to come into compli- ance. Section 1704(n)(3) of SBJPA pro- vides that § 414(u) is effective as of December 12, 1994. The relief provided by § 414(u) extends to plans that are not operated in compliance with the requirements of USERRA specified in § 414(u) until after October 12, 1996, as well as to plans that were operated in compliance with those requirements be- fore October 13, 1996. .06 Provisions of SBJPA that are un- related to USERRA changed various qualification requirements for plans. Section 1465 of SBJPA provides that, if a plan amendment is required by certain changes under SBJPA (‘‘SBJPA change’’), the amendment is not re- quired to be made before the first day of the first plan year beginning on or after January 1, 1998 (January 1, 2000, for a governmental plan as defined in 74 § 414(d) of the Code), if the plan is operated in accordance with the SBJPA change during the period from the effec- tive date of the SBJPA change to the time the plan amendment is required and if the plan amendment reflecting the SBJPA change applies retroactively to that period. .07 Plan amendments to reflect the provisions of USERRA and § 414(u) will not be required to be made before the date plan amendments will be re- quired to be made under § 1465 of SBJPA. SECTION 3. MODEL AMENDMENT .01 All plans—Sponsors described in subsection .02 may amend their plans by adopting, word-for-word, the model lan- guage in the appendix to this revenue procedure in accordance with the in- structions in this revenue procedure. If a sponsor to whom the model language is available pursuant to subsection .02 adopts the model language, neither ap- plication to the Service nor a user fee is required. The Service will not issue new opinion, notification, advisory, ruling, or determination letters for plans that are amended solely to add the model lan- guage described in this section. .02 The model language is available only to sponsors of M&P, regional pro- totype, volume submitter specimen, and individually designed (including volume submitter and SEP) plans that, as of the date of the adoption of the model amendment, have reliance on a favor- able opinion, notification, advisory, rul- ing, or determination letter that takes into account the requirements of TRA ’86 under Rev. Proc. 87–50, 1987–2 C.B. 647, as modified; Rev. Proc. 89–9, 1989–1 C.B. 780, as modified; Rev. Proc. 89–13, 1989–1 C.B. 801, as modi- fied; Rev. Proc. 90–20, 1990–1 C.B. 495; Rev. Proc. 91–41, 1991–2 C.B. 697; Rev. Proc. 91–66, 1991–2 C.B. 870; Rev. Proc. 93–39, 1993–2 C.B. 513; or Rev. Proc. 96–6, 1996–1 I.R.B. 151. .03 M&P, Regional Prototype and Volume Submitter Plans—M&P, re- gional prototype and volume submitter plan sponsors that use the model lan- guage must file Form 8837, Notice of Adoption of Revenue Procedure Model Amendments. SECTION 4. RELIANCE An employer entitled to rely on an opinion, notification, ruling, or determi- nation letter will not lose reliance on the letter merely because of this amend- ment. Plan amendments made in accor- dance with section 2.07 and section 3 of this revenue procedure will not cause the plan to lose its otherwise applicable extended reliance period under Rev. Procs. 89–9 and 89–13, as modified by Rev. Proc. 93–9, 1993–1 C.B. 474, or section 13 of Rev. Proc. 93–39. DRAFTING INFORMATION The principal author of this revenue procedure is Richard Wright of the Employee Plans Division. For further information regarding this revenue pro- cedure, contact the Employee Plans Di- vision’s telephone assistance service be- tween 1:30 and 4:00 p.m., Eastern Time, Monday through Thursday at (202) 622– 6074/6075 or Mr. Wright at (202) 622– 6214. (These telephone numbers are not toll-free numbers.) For further information regarding USERRA, contact the local office of the Veterans’ Employment and Training Ser- vice (‘‘VETS’’) of the U.S. Department of Labor or contact the VETS National Office at 1–202–219–8611. APPENDIX MODEL AMENDMENTS AMENDMENT 1 (Note to Sponsor: The following model amendment may be used to amend plans to provide for the requirements of USERRA and § 414(u) of the Code.) ‘‘Notwithstanding any provision of this plan to the contrary, contributions, ben- efits and service credit with respect to qualified military service will be pro- vided in accordance with § 414(u) of the Internal Revenue Code.’’ AMENDMENT 2 (Note to Sponsor: The following model amendment may be used to amend plans that provide for loans to participants, if the sponsor chooses to suspend loan repayments during participants’ periods of military service.) ‘‘Loan repayments will be suspended under this plan as permitted under § 414(u)(4) of the Internal Revenue Code.’’ 75 Part IV. Items of General Interest Foundations Status of Certain Organizations Announcement 96–109 The following organizations have failed to establish or have been unable to maintain their status as public chari- ties or as operating foundations. Accord- ingly, grantors and contributors may not, after this date, rely on previous rulings or designations in the Cumulative List of Organizations (Publication 78), or on the presumption arising from the filing of notices under section 508(b) of the Code. This listing doesnotindicate that the organizations have lost their status as organizations described in section 501(c)(3), eligible to receive deductible contributions. Former Public Charities. The follow- ing organizations (which have been treated as organizations that are not private foundations described in section 509(a) of the Code) are now classified as private foundations: Accessibly Fun Resort and Campground Inc., Bloomington, MN Ambulance Rescue 33 LTD, Chillicothe, IL American Association of University Women North Shore Memorial, Chicago, IL American Export Worldwide, Washington, DC Androy Project Committee, Hibbing, MN Anxiety Control Techniques, Tinley Park, IL Apple Retreat Ministries, New Prague, MN Archeological Institute of America Minn Society Inc., Minneapolis, MN Arrowhead Wilderness Camps Inc., Highland Park, IL ASI-Jamestown Inc., St. Paul, MN Aspects and Expectations Inc., Madison, WI Big Bend Vernon Historical Society Inc., Big Bend, WI Bonduel Community Archives Inc., Bonduel, WI Bradley Sigma Phi Historical Landmark, Madison, WI California Acupuncture Resources Inc., San Leandro, CA Cambridge Productions, Chicago, IL Cameron Senior Citizens, Cameron, WI Carbondale Community Orchestra Inc., Carbondale, IL Casa Guatemala, Chicago, IL Cascade Community Food Cupboard, Cascade, MT Center for Development of Hardy Landscape Plants Inc., Chanhassen MN Charles Restoration Mission, Detroit, MI Chicago Numisatic Foundation Rare Coin Museum & Library Inc., Chicago, IL Childrens Kidney Disease Society CKDS, Minneapolis, MN Christian Bridge, Palos Heights, IL Christian Health Association of Liberia Support Group, Aurora, IL Christy Lynn Schaeffer Memorial Scholarship Fund LTD, Wolf Lake, IL Columbia Park Tower Fund Inc., Malone, WI Commonwealth Development Corporation, Inc., Detroit, MI Community Support Systems, Chicago, IL Concern for Car Owners Inc., Okemos, MI Cultural & Educational Productions Association, Homewood, IL Dale Mahnke Musical Ministries, Shelbyville, IL Diocese of Chicago Housing Development Corporation, Chicago, IL District 637 Foundation, Redwood Falls, MN Don Irwin Ministries Inc., Minneapolis, MN Douglas Mental Health Foundation Inc., Viroqua, WI Dr. Jakub G. Schlichter Research Foundation, Chicago, IL E. F. Jablonski Family Foundation Inc., Wausau, WI Employment Awareness Resources, Broadview, IL Environmental Advisory Group, Inc., Florence, AL Evensong Foundation, Chicago, IL Express Learning Center Inc., Chicago, IL Family Drozdz-Czerkawski Foundation, Chicago, IL Farrington Company, Inc., New York, NY Illinois Association for Gifted Children, Glenview, IL Illinois Society of Fire Service Instructors, Oak Lawn, IL Institute for Child and Family, Milwaukee, WI Institute for World Resource Research, Woodbridge, IL Janesville Youth Football Inc., Janesville, WI J. Hawk Aquatic Club Inc., Whitewater, WI Joan Vaala Memorial Trust, Madison, MN John P. Loftus Scholarship Fund, Chicago, IL Lake County Knights Inc., Wildwood, IL Lee County Drug Dependency Rehabilitation Center, Inc., Tupelo, MS Lewis and Clark International Ayh Hostel, St. Charles, MO Marbleworks Theatre, Chicago, IL Mather Health Care Inc., Evanston, IL Maumee Valley-Wabash & Erie Canal Historical Society Incorporated, Woodburn, IN Maywood Renaissance Center Inc., Maywood, IL Mt. Pulaski Community Unit District No. 23 Education FDTN, Mt. Pulaski, IL National Black Caucus of Special Educators, Chicago, IL National Writers Uplink, Danville, IL New Vision of Faith Development Corporation, Chicago, IL New World Repertory Company, Chicago, IL Orpheus of America, Chicago, IL Pace Group, Inc., Wisconsin Rapids, WI Pro Education Inc., Palos Hills, IL Pro Hispanic Political Educational Project Inc., Paoli, PA Projected Images of Hudson County, Hoboken, NJ Project Redemption, Reamstown, PA Project 2000 Plus Inc., Frederick, MD Quantum Group, Minneapolis, MN Rabbi Benjamin Steinberg Education Fund Inc., Baltimore, MD Raft Inc., Washington, PA Reach Out 56 Inc., Philadelphia, PA Sakhisizwe Christian Ministries of South Africa Inc., Westminster, MD San Pedro Maritime Heritage Museum, Wilmington, CA Schuyler Jail Museum Inc., Rushville, IL Search and Rescue Dogs of Maryland Inc., Waldorf, MD Senri International School Foundation Inc., Princeton, NJ Serenity House Inter-Island Neighborhood Endowment, St. Thomas, VI Sexual Abuse & Addiction Treatment Foundation Inc., Frederick, MD Shakespeare Guild Incorporated, Washington, DC Shelter Project, Alexandria, VA 761996-43 I.R.B. Shenandoah Fellowship Ministries, McLean, VA Tri City Tennis Association Inc., Marinette, WI Union City Volunteer Fire Department, Union City, PA United Filipino Americans of Lake County, Winthrop Harbor, IL United States Chinese Kuoshu Federation Inc., Towson, MD United States Go Foundation, Inc., New York, NY University of Hull American Foundation, Washington, DC U.S. Council for International Rehabilitation, Washington, DC U.S. Knowhow Inc., Elmhurst, IL Utilization Review Accreditation Commission Inc., Washington, DC Vesta Foundation Inc., Adelphi, MD Vietnam Era Veterans Inter-Tribal Assoc-Womens Auxiliary Inc., Germantown, MD Village Theatre Company, Inc., New York, NY Virginia Center for Public Press Inc., Richmond, VA Virginia Network for Victims and Witnesses of Crime Inc., Alexandria, VA Virginians in Partnership for Housing Inc., Mt. Vernon, VA Vital Foundation, Pittsburgh, PA Vivant Institute, Inc., New York, NY Ward 8 Forum on Education, Washington, DC Warrior Run Lady Defender Basketball Parents and Boosters AS, Turbotville, PA Washingtons Child Project, Washington, DC If an organization listed above sub- mits information that warrants the re- newal of its classification as a public charity or as a private operating founda- tion, the Internal Revenue Service will issue a ruling or determination letter with the revised classification as to foundation status. Grantors and contribu- tors may thereafter rely upon such rul- ing or determination letter as provided in section 1.509(a)–7 of the Income Tax Regulations. It is not the practice of the Service to announce such revised classi- fication of foundation status in the Inter- nal Revenue Bulletin. New Form 8160–A, Form 1120/1120–A Tax Package Postcard, and New Form 8160–C, Form 1065 Package Postcard Announcement 96–110 The 1996 Package 1120 (U.S. Corpo- ration Income Tax Package) and the 1996 Package 1065 (U.S. Partnership Return of Income) will not be mailed automatically to prior year filers of Forms 1120, 1120–A, or 1065 with U.S. addresses. Instead, filers of these returns for 1995 will be sent a postcard (Form 8160–A for corporations or Form 8160–C for partnerships), which will include the pre-printed label to be used with the 1996 return. Corporations or partnerships that need a 1996 package can order it by returning the postpaid reply portion of the postcard. Notice of Disposition of Declaratory Judgment Proceedings Under Section 7428 This announcement serves notice to potential donors that on August 20, 1996, the United States Tax Court en- tered an Order of Dismissal in reponse to the parties’ Joint Motion to Dismiss for Mootness. The Court agreed that the revocation notice is null and void and the organizations listed below are to be recognized as tax exempt under section 501(c)(3) of the Internal Revenue Code. Greater Damascus Baptist Church Dayton, OH Philippi Missionary Baptist Church Dayton, OH 771996-43 I.R.B. Definition of Terms Revenue rulings and revenue procedures (hereinafter referred to as ‘‘rulings’’) that have an effect on previous rulings use the following defined terms to de- scribe the effect: Amplifieddescribes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is ampli- fied. (Compare withmodified, below). Clarifiedis used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confu- sion. It is not used where a position in a prior ruling is being changed. Distinguisheddescribes a situation where a ruling mentions a previously published ruling and points out an es- sential difference between them. Modifiedis used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a pub- lished position. (Compare withamplified andclarified, above). Obsoleteddescribes a previously pub- lished ruling that is not considered de- terminative with respect to future trans- actions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted be- cause of changes in law or regulations. A ruling may also be obsoleted because the substance has been included in regu- lations subsequently adopted. Revokeddescribes situations where the position in the previously published ruling is not correct and the correct position is being stated in the new ruling. Supersededdescribes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previ- ously published over a period of time in separate rulings. If the new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example,modifiedandsuper- sededdescribes a situation where the substance of a previously published rul- ing is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case the previously published ruling is first modified and then, as modified, is su- perseded. Supplementedis used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series. Suspendedis used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study. Abbreviations The following abbreviations in current use and formerly used will appear in material published in the Bulletin. A—Individual. Acq.—Acquiescence. B—Individual. BE—Beneficiary. BK—Bank. B.T.A.—Board of Tax Appeals. C.—Individual. C.B.—Cumulative Bulletin. CFR—Code of Federal Regulations. CI—City. COOP—Cooperative. Ct.D.—Court Decision. CY—County. D—Decedent. DC—Dummy Corporation. DE—Donee. Del. Order—Delegation Order. DISC—Domestic International Sales Corporation. DR—Donor. E—Estate. EE—Employee. E.O.—Executive Order. ER—Employer. ERISA—Employee Retirement Income Security Act. EX—Executor. F—Fiduciary. FC—Foreign Country. FICA—Federal Insurance Contribution Act. FISC—Foreign International Sales Company. FPH—Foreign Personal Holding Company. F.R.—Federal Register. FUTA—Federal Unemployment Tax Act. FX—Foreign Corporation. G.C.M.—Chief Counsel’s Memorandum. GE—Grantee. GP—General Partner. GR—Grantor. IC—Insurance Company. I.R.B.—Internal Revenue Bulletin. LE—Lessee. LP—Limited Partner. LR—Lessor. M—Minor. Nonacq.—Nonacquiescence. O—Organization. P—Parent Corporation. PHC—Personal Holding Company. PO—Possession of the U.S. PR—Partner. PRS—Partnership. PTE—Prohibited Transaction Exemption. Pub. L.—Public Law. REIT—Real Estate Investment Trust. Rev. Proc.—Revenue Procedure. Rev. Rul.—Revenue Ruling. S—Subsidiary. S.P.R.—Statements of Procedural Rules. Stat.—Statutes at Large. T—Target Corporation. T.C.—Tax Court. T.D.—Treasury Decision. TFE—Transferee. TFR—Transferor. T.I.R.—Technical Information Release. TP—Taxpayer. TR—Trust. TT—Trustee. U.S.C.—United States Code. X—Corporation. Y—Corporation. Z—Corporation. 78 Numerical Finding List 1 Bulletins 1996–27 through 1996–42 Announcements: 96–61, 1996–27 I.R.B.72 96–62, 1996–28 I.R.B.55 96–63, 1996–29 I.R.B.18 96–64, 1996–29 I.R.B.18 96–65, 1996–29 I.R.B.18 96–66, 1996–29 I.R.B.19 96–67, 1996–30 I.R.B.27 96–68, 1996–31 I.R.B.45 96–69, 1996–32 I.R.B.38 96–70, 1996–32 I.R.B.40 96–71, 1996–33 I.R.B.16 96–72, 1996–33 I.R.B.16 96–73, 1996–33 I.R.B.18 96–74, 1996–33 I.R.B.19 96–75, 1996–34 I.R.B.29 96–76, 1996–34 I.R.B.29 96–77, 1996–35 I.R.B.15 96–78, 1996–35 I.R.B.15 96–79, 1996–35 I.R.B.15 96–80, 1996–35 I.R.B.16 96–81, 1996–36 I.R.B.13 96–82, 1996–36 I.R.B.14 96–83, 1996–36 I.R.B.14 96–84, 1996–36 I.R.B.14 96–85, 1996–37 I.R.B.20 96–86, 1996–37 I.R.B.21 96–87, 1996–37 I.R.B.21 96–88, 1996–38 I.R.B.150 96–89, 1996–37 I.R.B.22 96–90, 1996–37 I.R.B.22 96–91, 1996–37 I.R.B.23 96–92, 1996–38 I.R.B.151 96–93, 1996–38 I.R.B.151 96–94, 1996–38 I.R.B.153 96–96, 1996–39 I.R.B.41 96–97, 1996–39 I.R.B.41 96–98, 1996–39 I.R.B.42 96–99, 1996–39 I.R.B.42 96–100, 1996–40 I.R.B.10 96–101, 1996–40 I.R.B.10 96–102, 1996–40 I.R.B.11 96–103, 1996–40 I.R.B.12 96–104, 1996–41 I.R.B.10 96–105, 1996–42 I.R.B.19 96–106, 1996–42 I.R.B.23 96–107, 1996–42 I.R.B.27 Court Decisions: 2058, 1996–34 I.R.B.13 2059, 1996–34 I.R.B.10 2060, 1996–34 I.R.B.5 Delegation Orders: 155 (Rev. 4), 1996–40 I.R.B.9 Notices: 96–36, 1996–27 I.R.B.11 96–37, 1996–31 I.R.B.29 96–38, 1996–31 I.R.B.29 96–39, 1996–32 I.R.B.8 96–40, 1996–33 I.R.B.11 96–41, 1996–35 I.R.B.6 96–42, 1996–35 I.R.B.6 Notices—Continued 96–43, 1996–36 I.R.B.7 96–44, 1996–36 I.R.B.7 96–45, 1996–39 I.R.B.7 96–46, 1996–39 I.R.B.7 96–47, 1996–39 I.R.B.8 96–48, 1996–39 I.R.B.8 96–49, 1996–41 I.R.B.6 96–50, 1996–41 I.R.B.6 96–51, 1996–42 I.R.B.6 96–52, 1996–42 I.R.B. 8 Proposed Regulations: CO–9–96, 1996–34 I.R.B.20 CO–24–96, 1996–30 I.R.B.22 CO–25–96, 1996–31 I.R.B.30 CO–26–96, 1996–31 I.R.B.31 FI–59–94, 1996–30 I.R.B.23 FI–32–95, 1996–34 I.R.B.21 FI–48–95, 1996–31 I.R.B.36 FI–28–96, 1996–31, I.R.B.33 GL–7–96, 1996–33 I.R.B.13 IA–292–84, 1996–28 I.R.B.38 IA–26–94, 1996–30 I.R.B.24 IA–29–96, 1996–33 I.R.B.14 INTL–4–95, 1996–36 I.R.B.8 PS–22–96, 1996–33 I.R.B.15 PS–39–93, 1996–34 I.R.B.27 REG–208215–91, 1996–38 I.R.B.145 REG–209826–96, 1996–42 I.R.B.10 REG–209827–96, 1996–37 I.R.B.19 REG–245562–96, 1996–41 I.R.B.8 Public Laws: 104–117, 1996–34 I.R.B.19 104–134, 1996–38 I.R.B.7 104–168, 1996–38 I.R.B.8 Railroad Retirement Quarterly Rate 1996–29 I.R.B.14 Revenue Procedures: 96–36, 1996–27 I.R.B.11 96–37, 1996–29 I.R.B.16 96–39, 1996–33 I.R.B.11 96–40, 1996–32 I.R.B.8 96–41, 1996–32 I.R.B.9 96–42, 1996–32 I.R.B.14 96–43, 1996–35 I.R.B.6 96–44, 1996–35 I.R.B.7 96–45, 1996–35 I.R.B.12 96–46, 1996–38 I.R.B.144 96–47, 1996–39 I.R.B.10 96–48, 1996–39 I.R.B.10 Revenue Rulings: 96–33, 1996–27 I.R.B.4 96–34, 1996–28 I.R.B.4 96–35, 1996–31 I.R.B.4 96–36, 1996–30 I.R.B.6 96–37, 1996–32 I.R.B.4 96–38, 1996–33 I.R.B.4 96–39, 1996–34 I.R.B.4 96–42, 1996–35 I.R.B.4 96–43, 1996–36 I.R.B.4 96–44, 1996–38 I.R.B.4 96–45, 1996–39 I.R.B.5 Revenue Rulings—Continued 96–46, 1996–39 I.R.B.5 96–47, 1996–40 I.R.B.7 96–48, 1996–40 I.R.B.4 96–49, 1996–41 I.R.B.4 96–50, 1996–42 I.R.B.4 Tax Conventions: 1996–28 I.R.B. 36 1996–36 I.R.B.6 1996–40 I.R.B.8 Treasury Decisions: 8673, 1996–27 I.R.B.4 8674, 1996–28 I.R.B.7 8675, 1996–29 I.R.B.5 8676, 1996–30 I.R.B.4 8677, 1996–30 I.R.B.7 8678, 1996–31 I.R.B.11 8679, 1996–31 I.R.B.4 8680, 1996–33 I.R.B.5 8681, 1996–37 I.R.B.17 8682, 1996–37 I.R.B.4 1 A cumulative list of all Revenue Rulings, Rev- enue Procedures, Treasury Decisions, etc., pub- lished in Internal Revenue Bulletins 1996–1 through 1996–26 will be found in Internal Rev- enue Bulletin 1996–27, dated July 1, 1996. 79 Finding List of Current Action on Previously Published Items 1 Bulletins 1996–27 through 1996–42 *Denotes entry since last publication Revenue Procedures: 80–27 Modified by 96–40, 1996–32 I.R.B.8 87–32 Modified by TD 8680, 1996–33 I.R.B.5 92–20 Modified by TD 8680, 1996–33 I.R.B.5 95–29 Superseded by 96–36, 1996–27 I.R.B.11 95–29A Superseded by 96–36, 1996–27 I.R.B.11 95–30 Superseded by 96–42, 1996–32 I.R.B.14 1 A cumulative finding list for previously published items mentioned in Internal Revenue Bulletins 1996–1 through 1996–26 will be found in Internal Revenue Bulletin 1996–27, dated July 1, 1996. 80
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