Internal Revenue Bulletin 2016-6 (PDF rendition): IRS Announcements

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.

# INTERNAL REVENUE BULLETIN

4
IRS

Bulletin No. 2016-6
February 8, 2016

## 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.

## INCOME TAX

Rev. Rul. 2016-04, page 299.

Federal rates; adjusted federal rates; adjusted federal long-
term rate and the long-term exempt rate. For purposes of
sections 382, 642, 1274, 1288, and other sections of the
Code, tables set forth the rates for February 2016.

Notice 2016-08, page 304.

Notice 2016-08 announces that the Treasury Department and
the IRS intend to amend the regulations under chapter 3
(sections 1441-1464) and chapter 4 (sections 1471-1474) of
the Internal Revenue Code to: (1) Provide that a participating
FFI or reporting Model 2 FFI will submit its preexisting account
certification to the IRS by the same date it is required to submit
its first periodic certifications of compliance. (2) Specify the
time period and date for submitting a registered deemed
compliant FFI's periodic certification of compliance described
in § 1.1471-5(f)(1)(ii)(B), and provide that local FFIs and re-
stricted funds must submit their one-time preexisting account
certifications with their first periodic certification of compli-
ance. (3) Modify applicable transitional reporting rules for cal-
endar year 2015 to provide that a participating FFI, reporting
Model 2 FFI, or registered deemed-compliant FFI is not re-
quired to report gross proceeds paid to, or with respect to, an
account held by a nonparticipating FFI. Amendments under
both chapters 3 and 4 will specify the circumstances under
which a withholding agent may rely upon electronically fur-
nished Forms W-8 and W-9 collected by intermediaries and
flow-through entities.

Notice 2016-10, page 307.

regulations that the Treasury Department and IRS intend to
issue which will allow a netting procedure that, if applied by the
RICs, will greatly reduce the administrative costs and burdens
on the U.S. government, RICs, and the RICs' shareholders. The
notice also provides guidelines for RICs wishing to obtain
closing agreements relating to tax consequences arising from
the receipt of such refunds.

### Notice 2016-11, page 312.

Credit for Indian Coal Production and Inflation Adjustment Fac-
tor for Calendar Year 2015: The notice reports for 2015 the
inflation adjustment factor used to determine the availability of
the section 45 credit for Indian coal production and includes
the credit amount for Indian coal production.

### Notice 2016-12, page 312.

This notice provides the maximum vehicle values for use with
the special valuation rules under regulation section 1.61-21(d)
and (e) for 2016. These values are adjusted for inflation and
must be adjusted annually by reference to the Consumer Price
Index.

## EXEMPT ORGANIZATIONS

Announcement 2016-04, page 313.

Revocation of IRC 501(c)(3) Organizations for failure to meet
the code section requirements. Contributions made to the
organizations by individual donors are no longer deductible
under IRC 170(b)(1)(A).

(Continued on the next page)

Finding Lists begin on page ii.

Notice 2016-09, page 306.

Notice 2016-09 extends the date by which social welfare orga-
nizations must notify the Internal Revenue Service of intent to
operate under section 501(c)(4), as required by new section 506,
added to the Internal Revenue Code by the Protecting Americans
from Tax Hikes Act of 2015. With respect to the separate process
by which an organization may, at its option, request a determina-
tion that it qualifies for section 501(c)(4) tax-exempt status, the
Notice states that organizations seeking IRS recognition of sec-
tion 501(c)(4) status should continue using Form 1024, "Applica-
tion for Recognition of Exemption Under Section 501(a)," until
further guidance is issued and clarifies that the filing of Form 1024
will not relieve an organization of the requirement to submit the
section 506 notification.

## EXCISE TAX

Notice 2016-05, page 302.

This notice provides rules for claimants to make one-time
claims for the retroactively extended 2015 biodiesel mixture
and alternative fuel excise tax credits. It also provides guidance
for claimants to claim the other retroactively extended fuel
credits for 2015, including the alternative fuel mixture excise
tax credit.

## ADMINISTRATIVE

Notice 2016-05, page 302.

### Notice 2016-10, page 307.

This notice relates to alternative methods of compliance with
the rules under sections 853 and 905(c) as they apply when a
regulated investment company (RIC) receives a refund of a
foreign tax that when paid by the RIC, was treated as paid by
the RIC's shareholders under section 853(b)(2) because an
election was made under section 853(a). The notice describes
regulations that the Treasury Department and IRS intend to
issue which will allow a netting procedure that, if applied by the
RICs, will greatly reduce the administrative costs and burdens
on the U.S. government, RICs, and the RICs' shareholders. The
notice also provides guidelines for RICs wishing to obtain
closing agreements relating to tax consequences arising from
the receipt of such refunds.

Notice 2016-12, page 312.

## The IRS Mission

Provide America's taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.

## Introduction

The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.

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 other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.

Revenue rulings represent the conclusions of the Service 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, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted 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
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
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 Other Related Items, and Subpart B, Legisla-
tion 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 Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury's Office of the Assistant Sec-
retary (Enforcement).

### Part IV .- Items of General Interest.

This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

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.

## Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

### Section 1274 .- Determination of Issue Price in the Case of Certain Debt Instruments Issued for Property

(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872).

#### Rev. Rul. 2016-04

This revenue ruling provides various
prescribed rates for federal income tax

purposes for February 2016 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (ad-
justed AFR) for the current month for
purposes of section 1288(b). Table 3
sets forth the adjusted federal long-term
rate and the long-term tax-exempt rate
described in section 382(f). Table 4 con-
tains the appropriate percentages for de-

termining the low-income housing
credit described in section 42(b)(1) for
buildings placed in service during the
current month. However, under section
42(b)(2), the applicable percentage for
non-federally subsidized new buildings
placed in service after July 30, 2008,
shall not be less than 9%.

Finally, Table 5 contains the federal
rate for determining the present value of
an annuity, an interest for life or for a term
of years, or a remainder or a reversionary
interest for purposes of section 7520.

REV. RUL. 2016-4 TABLE 1 Applicable Federal Rates (AFR) for February 2016

Period for Compounding Annual Semiannual Short-term

Quarterly

Monthly

AFR

.81%

110% AFR

.89%

120% AFR

.97%

130% AFR

1.05%

Mid-term

AFR

1.82%

1.81%

1.80%

110% AFR

2.00%

1.99%

1.98%

120% AFR

2.18%

2.17%

2.16%

130% AFR

2.36%

2.35%

2.34%

150% AFR

2.74%

2.72%

2.71%

2.70%

175% AFR

3.20%

3.17%

3.16%

3.15%

AFR

Long-term

2.62%

2.60%

2.59%

110% AFR

2.88%

2.86%

2.85%

2.84%

120% AFR

3.14%

3.12%

3.11%

3.10%

130% AFR

3.41%

3.38%

3.37%

3.36%

REV. RUL. 2016-4 TABLE 2 Adjusted AFR for February 2016 Period for Compounding

Annual

Semiannual

Quarterly

Monthly

Short-term adjusted AFR

.61%

Mid-term adjusted AFR

1.39%

Long-term adjusted AFR

2.53%

2.51%

2.50%

# REV. RUL. 2016-4 TABLE 3 Rates Under Section 382 for February 2016

Adjusted federal long-term rate for the current month
2.53%

Long-term tax-exempt rate for ownership changes during the current month (the highest of the
adjusted federal long-term rates for the current month and the prior two months.)

2.65%

# REV. RUL. 2016-4 TABLE 4 Appropriate Percentages Under Section 42(b)(1) for February 2016

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service
after July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

7.51%

Appropriate percentage for the 30% present value low-income housing credit

3.22%

# REV. RUL. 2016-4 TABLE 5 Rate Under Section 7520 for February 2016

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of
years, or a remainder or reversionary interest

2.2%

## Section 42 .- Low-Income Housing Credit

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month of
February 2016. See Rev. Rul. 2016-4, page 299.

## Section 280G .- Golden Parachute Payments

Federal short-term, mid-term, and long-term
rates are set forth for the month of February 2016.
See Rev. Rul. 2016-4, page 299.

## Section 382 .- Limitation on Net Operating Loss Carryforwards and Certain Built-In Losses Following Ownership Change

The adjusted applicable federal long-term rate is
set forth for the month of February 2016. See Rev.
Rul. 2016-4, page 299.

# Section 412 .- Minimum Funding Standards

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 467 .- Certain Payments for the Use of Property or Services

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 468 .- Special Rules for Mining and Solid Waste Reclamation and Closing Costs

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 482 .- Allocation of Income and Deductions Among Taxpayers

Federal short-term, mid-term, and long-term
rates are set forth for the month of February 2016.
See Rev. Rul. 2016-4, page 299.

# Section 483 .- Interest on Certain Deferred Payments

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 642 .- Special Rules for Credits and Deductions

Federal short-term, mid-term, and long-term
rates are set forth for the month of February 2016.
See Rev. Rul. 2016-4, page 299.

# Section 807 .- Rules for Certain Reserves

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 846 .- Discounted Unpaid Losses Defined

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 1288 .- Treatment of Original Issue Discount on Tax-Exempt Obligations

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 7520 .- Valuation Tables

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Section 7872 .- Treatment of Loans With Below- Market Interest Rates

The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of February 2016. See Rev. Rul. 2016-4, page 299.

# Part III. Administrative, Procedural, and Miscellaneous

## Biodiesel and Alternative Fuels; Claims for 2015; Excise Tax

Notice 2016-05

Section 1. PURPOSE

This notice provides rules claimants
must follow to make a one-time claim for
payment of the credits and payments al-
lowable under §§ 6426(c), 6426(d), and
6427(e) of the Internal Revenue Code
(Code) for biodiesel (including renewable
diesel) mixtures and alternative fuels sold
or used during calendar year 2015 (collec-
tively, 2015 biodiesel and alternative fuel
incentives). These rules are prescribed un-
der §§ 185(b)(4) and 192(c) of the Pro-
tecting Americans from Tax Hikes Act of
2015 (PATH Act), Pub. L. 114-113 Div.
Q (2015) (the Act). This notice also pro-
vides instructions for how a claimant may
offset its § 4081 liability with the
§ 6426(e) alternative fuel mixture credit
for 2015, and provides instructions for
how a claimant may make certain income
tax claims for biodiesel, second genera-
tion biofuel, and alternative fuel.

# Section 2. BACKGROUND

Sections 6426(a) and (c) allow a
blender of a biodiesel (including renew-
able diesel) mixture to claim a $1.00-per-
gallon credit against its tax liability under
§ 4081 (relating to the tax imposed on
taxable fuel). Similarly, §§ 6426(a) and
(e) allow a blender of an alternative fuel
mixture to claim a credit against its tax
liability under § 4081, except that the
credit amount is $0.50 per gallon. Sec-
tions 6426(a) and (d) allow a person that
sells or uses alternative fuel as a fuel in a
motor vehicle or motorboat and in avia-
tion to claim a $0.50-per-gallon credit
against the claimant's tax liability under
§ 4041 (relating to the tax imposed on
diesel fuel and alternative fuel).

Blenders of biodiesel (including re-
newable diesel) mixtures and persons that
sell or use alternative fuel as a fuel in a
motor vehicle or motorboat and in avia-
tion may claim any excess credit under
§§ 6426(c) or (d) as a payment under

§ 6427(e) or as a refundable income tax
credit under § 34. As an alternative to the
payments and credits allowed under
§§ 6426, 6427, and 34, a blender of a
biodiesel (including renewable diesel)
mixture may claim a nonrefundable in-
come tax credit under § 40A (see Section
8 of this notice for additional informa-
tion). For federal income tax purposes, a
claimant reduces its § 4081 excise tax
liability by the amount of excise tax credit
allowable under § 6426(c) and its § 4041
excise tax liability by the amount of ex-
cise tax credit allowable under § 6426(d)
in determining its deduction for those ex-
cise taxes or its cost of goods sold deduc-
tion attributable to those excise taxes. See
Notice 2015-56, 2015-35 I.R.B. 235.

The Code provisions that authorize
these credits and payments expired for
sales and uses after December 31, 2014,
but were reinstated by the Act for sales
and uses through 2016. Sections 185(b)(4)
and 192(c) of the Act direct the Secretary
of the Treasury (Secretary) to issue guid-
ance providing for a one-time submission
of claims under §§ 6426(c), 6426(d), and
6427(e) for 2015. The Act requires the
guidance to provide for a 180-day period
for the submission of claims (in such man-
ner as prescribed by the Secretary) to be-
gin no later than 30 days after the guid-
ance is issued.

Sections 184 and 185(a) of the Act also
reinstated Code provisions authorizing
credits for second generation biofuel pro-
ducers (§ 40(b)(6)) and biodiesel and re-
newable diesel used as fuel (§ 40A), re-
spectively. The second generation biofuel
producer credit expired for production af-
ter December 31, 2014, and was reinstated
by the Act for production through 2016.
The credit for biodiesel and renewable
diesel used as fuel expired for sales and
uses after December 31, 2014, and was
reinstated by the Act for sales and uses
through 2016.

## Section 3. SCOPE

This notice provides the procedure for
claiming 2015 biodiesel and alternative fuel
incentives. Claimants that filed "protective"
or anticipatory claims during 2015 for
biodiesel and alternative fuel incentives

covered by this notice should refile their
claims pursuant to the procedures provided
in this notice. The IRS will not treat as
perfected any such protective or anticipatory
claims previously filed with the IRS that are
not timely supplemented in accordance with
these procedures.

Except as provided by this notice, the
rules in Notice 2005-4, 2005-1 C.B. 289
(providing guidance on alcohol and
biodiesel fuel tax credits and payments),
as modified by Notice 2005-62, 2005-2
C.B. 443 (providing guidance for certain
biodiesel issues not addressed in Notice
2005-4), and Notice 2006-92, 2006-2
C.B. 774 (providing guidance on alterna-
tive fuel and alternative fuel mixture
taxes, credits, and payments), apply to
claims for 2015 biodiesel and alternative
fuel incentives.

This notice prescribes a method for
submitting claims for the alternative fuel
mixture credit relating to alternative fuel
mixtures sold or used during 2015.

This notice does not affect the income
tax claims described in Section 8 of this
notice.

# Section 4. HOW TO MAKE A ONE- TIME CLAIM FOR CREDITS AND PAYMENTS ALLOWABLE UNDER §§ 6426(c), 6426(d), AND 6427(e)

Claimants must follow the procedures
listed below to make a one-time claim
under this notice for payment of credits
and payments allowable under §§ 6426(c),
6426(d), and 6427(e) relating to 2015
biodiesel and alternative fuel incentives.

· Claimants must submit claims for
2015 biodiesel and alternative fuel in-
centives on Form 8849, Claim for Re-
fund of Excise Taxes.

· Claimants must include Schedule 3
(Form 8849), Certain Fuel Mixtures
and the Alternative Fuel Credit, with
their submission and enter amounts for
2015 biodiesel and alternative fuel in-
centives on Line 2 and Line 3 of
Schedule 3, as appropriate.

· Claimants must follow the instructions
to Form 8849 and Schedule 3 when
preparing their submission to the ex-
tent that those instructions do not con-
flict with this notice.

. Each claimant must claim all 2015
biodiesel and alternative fuel incen-
tives for which the claimant is eligible
on a single Form 8849.

· Each claimant must mail its submis-
sion to the address listed for Schedule
3 in the instructions to Form 8849 un-
der Where to File. Alternatively,
claimants may electronically file Form
8849 and Schedule 3 through any elec-
tronic return originator, transmitter, or
intermediate service provider partici-
pating in the IRS e-file program for
excise taxes.

· Claimants are reminded that they must
be registered by the IRS in order to
make alternative fuel claims under
§§ 6426(d) and 6427(e) and to make
alternative fuel mixture claims under
§ 6426(e) (described in Section 6 of
this notice). Claimants that are not al-
ready registered by the IRS may apply
to the IRS for registration by filing
Form 637, Application for Registra-
tion (For Certain Excise Tax Activi-
ties), in accordance with the instruc-
tions to Form 637.

· Claimants may not combine 2015 and
2016 claims for biodiesel and alterna-
tive fuel incentives. Claims for 2015
biodiesel and alternative fuel incen-
tives must be made in accordance with
the rules for one-time claims pre-
scribed in this notice. Claims for 2016
biodiesel and alternative fuel incen-
tives must be made in accordance with
the normal rules for filing such claims.

# Section 5. CLAIM PERIOD AND DUE DATE FOR BIODIESEL AND ALTERNATIVE FUEL INCENTIVES

Although a claimant may submit its
claim under this notice as early as January
15, 2016, the 180-day claim period for 2015
biodiesel and alternative fuel incentives be-
gins on February 8, 2016. Consequently, all
claims for 2015 biodiesel and alternative
fuel incentives must be filed on or before
August 8, 2016. The IRS will not process
claims filed after that date. The IRS will
deem any claim that is submitted by the
method prescribed in this notice before Feb-
ruary 8, 2016, as filed on February 8, 2016.

If the IRS does not pay a 2015 biodie-
sel and alternative fuel incentives claim
that conforms to this notice within 60 days
after the claim is received, the IRS will

pay the claim with interest from the claim
filing date (February 8, 2016, in the case
of claims submitted before that date) us-
ing the overpayment rate and method pro-
vided by § 6621 of the Code.

## Section 6. HOW TO MAKE AN ALTERNATIVE FUEL MIXTURE CLAIM UNDER § 6426(e)

For 2015, all alternative fuel mixture
credit claims allowed by § 6426(e), includ-
ing claims for the fourth quarter, must be
made on Form 720X, Amended Quarterly
Federal Excise Tax Return. The IRS is un-
able to process 2015 claims on the fourth
quarter Form 720 due to the timing of en-
actment of the Act. Failure to file a Form
720, Quarterly Federal Excise Tax Return,
and remit the § 4081 tax due for any quarter
in 2015 before submitting a claim allowed
by § 6426(e) on Form 720X will result in
delayed processing of the claim and delayed
payment of refunds resulting from the
credit. Similarly, failure to follow the claim
procedure in this section will result in de-
layed processing and payment of 2015
§ 6426(e) claims. Claimants are reminded
that the claim for a § 6426(e) credit for any
quarter may not exceed the § 4081 liability
incurred in the quarter for which the credit is
being claimed. Form 720X allows claimants
to adjust multiple quarters on a single Form
720X.

## Section 7. CLAIM PERIOD AND DUE DATE FOR ALTERNATIVE FUEL MIXTURE CREDITS

The claim period for the 2015 alterna-
tive fuel mixture credit begins on Febru-
ary 8, 2016. The IRS will deem any claim
that is submitted by the method prescribed
in section 6 of this notice before February
8, 2016, as filed on February 8, 2016.
Generally, claims for the § 6426(e) alter-
native fuel mixture credit must be made
within three years from the time the return
was filed or two years from the time the
tax was paid, whichever is later.

# Section 8. CLAIMS NOT AFFECTED BY THIS NOTICE

This notice does not affect 2015 claims
for the nonrefundable income tax credit
under § 40(b)(6) for second generation
biofuel producers. Taxpayers should con-
tinue to submit these claims separately on,

and in accordance with, Form 6478, Bio-
fuel Producer Credit. This notice also
does not affect 2015 claims for the non-
refundable income tax credits under
§ 40A(b)(1) for biodiesel mixtures,
§ 40A(b)(2) for biodiesel (including re-
newable diesel), or under § 40A(b)(4) for
the small agri-biodiesel producer credit.
Taxpayers should continue to submit
these claims separately on, and in accor-
dance with, Form 8864, Biodiesel and Re-
newable Diesel Fuels Credit. A taxpayer
must submit Form 8864 with its income
tax return in accordance with the instruc-
tions to its income tax return form. Tax-
payers are reminded that under § 40A(c),
credits allowable under § 40A must be
reduced to the extent that any benefit is
claimed under §§ 6426 and 6427 with
respect to the same biodiesel (including
renewable diesel).

Similarly, this notice does not affect
2015 claims for the refundable income tax
credit under § 34 for biodiesel mixtures or
alternative fuel. Taxpayers should con-
tinue to submit these claims separately on,
and in accordance with, Form 4136,
Credit for Federal Tax Paid on Fuels. A
taxpayer must submit Form 4136 with its
income tax return in accordance with the
instructions to its income tax return form.
Taxpayers are reminded that under
§ 34(b), credits are not allowed under § 34
for any amount properly payable under
§ 6427 and claimed in a timely filed claim.
For this purpose, the IRS will treat as
timely filed any claim submitted for
amounts payable under § 6427 that con-
forms to the rules provided in this notice.

# Section 9. DRAFTING INFORMATION

The principal author of this notice is
Amanda F. Dunlap of the Office of Associ-
ate Chief Counsel (Passthroughs & Special
Industries). For further information regard-
ing this notice contact Amanda F. Dunlap at
(202) 317-6855 (not a toll-free number). For
further information regarding the income
tax treatment of the 2015 biodiesel and al-
ternative fuel incentives or Notice 2015-56,
please contact Shareen Pflanz at (202) 317-
7006 (not a toll-free number).

Timing of Submitting
Preexisting Accounts and
Periodic Certifications;
Reporting of Accounts of
Nonparticipating FFIs;
Reliance on Electronically
Furnished Forms W-8 and
W-9

Notice 2016-08

This notice announces that the Trea-
sury Department and the Internal Revenue
Service (IRS) intend to amend the regula-
tions under chapter 4 (sections 1471-1474
of the Internal Revenue Code) to: (1)
modify the date for submitting to the IRS
the preexisting account certifications re-
quired of certain foreign financial institu-
tions (FFIs); (2) specify the period and
date for submitting to the IRS the periodic
certification of compliance described in
§ 1.1471-5(f)(1)(ii)(B) for a registered
deemed compliant FFI; and (3) modify the
transitional information reporting rules for
accounts of nonparticipating FFIs to elim-
inate the requirement to report on gross
proceeds for the 2015 year. The Treasury
Department and the IRS also intend to
amend the regulations under chapters 3
and 4 to specify the circumstances under
which a withholding agent may rely on
electronically furnished Forms W-8 and
W-9 collected by intermediaries and
flow-through entities.

The amendments described in this no-
tice will ease burdens on FFIs and respond
to comments regarding certain aspects of
the regulations under chapters 3 and 4.
Prior to the issuance of these amendments,
taxpayers may rely on the rules described
in this notice.

## I. Participating FFIs and Reporting Model 2 FFIs Preexisting Account Certifications

### A. Background

Section 1.1471-4(c)(7) and section
8.03(A) of the FFI agreement (Rev. Proc.
2014-38, 2014-29 I.R.B. 131) require
participating FFIs and reporting Model 2
FFIs to certify to the IRS that they: (1)
have complied with the due diligence pro-
cedures of § 1.1471-4(c) for preexisting

accounts within the applicable timeframe
for complying with such procedures and
(2) did not have practices and procedures
to assist account holders in the avoidance
of chapter 4 ("preexisting account certifi-
cation"). The preexisting account certifi-
cation must be made no later than 60 days
following the date that is two years after
the effective date of the FFI agreement.
For example, a participating FFI or report-
ing Model 2 FFI that has an FFI agree-
ment with an effective date of June 30,
2014, must submit a preexisting account
certification to the IRS by August 29,
2016.

A participating FFI or reporting Model
2 FFI also is required under § 1.1471-
4(f)(3) and section 8.03 of the FFI agree-
ment to periodically certify to the IRS that
it has complied with the terms of the FFI
agreement ("periodic certification of com-
pliance"). Section 1.1471-4(f)(3)(i) pro-
vides the general rules for the periodic
certification of compliance and specifies
that it must be submitted to the IRS no
later than six months following the end of
the certification period. Notwithstanding
the regulations, section 8.03 of the FFI
agreement allows the periodic certifica-
tion of compliance to be submitted on or
before July 1 of the calendar year follow-
ing the certification period. The first cer-
tification period begins on the effective
date of the FFI agreement and ends at the
close of the third full calendar year fol-
lowing the effective date of the FFI agree-
ment. Each subsequent certification pe-
riod is every three calendar years
following the previous certification pe-
riod. Thus, under the FFI agreement, if a
participating FFI or reporting Model 2 FFI
has an FFI agreement with an effective
date of June 30, 2014, the first certifica-
tion period for the FFI ends on December
31, 2017, and the FFI's first periodic cer-
tification of compliance must be made on
or before July 1, 2018.

## B. Modification of Timing for Participating FFI and Reporting Model 2 FFI Preexisting Account Certifications

In response to comments, and to reduce
compliance burdens on stakeholders and
streamline the implementation of the certi-
fication requirements, the Treasury Depart-
ment and the IRS intend to amend the chap-
ter 4 regulations and the FFI agreement to

provide that the preexisting account certifi-
cation must be submitted to the IRS at the
same time that the participating FFI or re-
porting Model 2 FFI is required to submit its
first periodic certification of compliance. In
addition, the regulations under chapter 4
will be modified to conform with the FFI
agreement such that the periodic certifica-
tion of compliance must be submitted on or
before July 1 of the calendar year following
the certification period, instead of no later
than six months following the end of the
certification period. Therefore, the preexist-
ing account certification will be due to the
IRS by July 1, 2018, for a participating FFI
or reporting Model 2 FFI that has an FFI
agreement with an effective date of June 30,
2014, instead of by August 29, 2016.

The changes to the preexisting account
certification described in this notice do not
affect the deadlines for a participating FFI
or reporting Model 2 FFI to complete the
due diligence procedures for preexisting
accounts under § 1.1471-4(c) and the FFI
agreement, and FFIs will therefore be re-
quired to certify to the completion of
those procedures within the time required.

## II. Preexisting Account Certifications by Local FFIs and Restricted Funds and Periodic Certifications of Compliance by Registered Deemed- Compliant FFIs

### A. Background

A registered deemed-compliant FFI that
is a local FFI or restricted fund is required to
make a one-time certification regarding its
preexisting accounts similar to the certifica-
tion requirement of a participating FFI. See
§§ 1.1471-5(f)(1)(i)(A)(7) and 1.1471-
5(f)(1)(i)(D)(6), respectively. Restricted
funds must make this certification by the
later of December 31, 2014, or six months
after the date the FFI registers as a registered
deemed-compliant FFI. The chapter 4 regu-
lations do not specify a time for local FFIs
to make this certification.

In addition, each registered deemed-
compliant FFI must certify every three years
to the IRS that all of the requirements for the
deemed-compliant category claimed by the
FFI have been satisfied since the later of the
date the FFI registered as a registered
deemed-compliant FFI or June 30, 2014
("periodic certification of registered deemed-
compliant status"). § 1.1471-5(f)(1)(ii)(B).

The chapter 4 regulations do not specify a
time for submitting the periodic certifica-
tion of registered deemed-compliant sta-
tus or the date on which the first certifi-
cation period begins.

B. Modification of Timing of Preexisting
Account Certification by Local FFIs and
Restricted Funds and Periodic
Certification of Compliance by
Registered Deemed-Compliant FFIs

The chapter 4 regulations will be
amended to provide that local FFIs and re-
stricted funds must submit their one-time
certifications regarding preexisting accounts
at the same time that they submit the first
periodic certification of registered deemed-
compliant FFI status. The chapter 4 regula-
tions will also be modified to provide that
registered deemed-compliant FFIs must
provide the periodic certification of regis-
tered deemed-compliant FFI status on or
before July 1 of the calendar year following
the end of the certification period. In addi-
tion, the regulations will provide that the
first certification period begins on the later
of the date the FFI registered as a deemed-
compliant FFI or June 30, 2014, and ends at
the close of the third full calendar year fol-
lowing such date. Subsequent certification
periods will continue to be the three-
calendar-year period following the previous
certification period. For example, a regis-
tered deemed-compliant FFI that is a local
FFI and that has such status on June 30,
2014, will be required to make its one-time
certification regarding preexisting accounts
and its first periodic certification of regis-
tered deemed-compliant FFI status on or
before July 1, 2018.

### III. Transitional Reporting of Accounts of Nonparticipating FFIs

#### A. Background

Under § 1.1471-4(d)(2)(ii)(F) a partic-
ipating FFI that maintains an account of a
nonparticipating FFI (including a limited
branch and limited FFI treated as a non-
participating FFI) must provide transi-
tional reporting to the IRS of all foreign
reportable amounts paid to or with respect
to the account for each calendar year 2015
and 2016. A foreign reportable amount
means foreign source payments described
in § 1.1471-4(d)(4)(iv) (which includes
gross proceeds). Alternatively, a partici-

pating FFI may report all income, gross
proceeds, and redemptions paid to or with
respect to an account held by a nonpartic-
ipating FFI, instead of reporting only for-
eign reportable amounts. Section 1.1471-
4(d)(2)(ii)(F). Similar transitional repor-
ting rules apply to reporting Model 2 FFIs
for accounts of nonparticipating FFIs for
calendar years 2015 and 2016. Section
6.04 of the FFI agreement.

Under § 1.1471-4(d)(7)(ii)(B) and sec-
tion 6 of the FFI agreement, participating
FFIs and reporting Model 2 FFIs are ex-
cepted from reporting gross proceeds paid to
U.S. accounts and accounts held by owner-
documented FFIs for calendar year 2015.

## B. Amendments to the Transitional Reporting Rules under

§ 1.1471-4(d)(2)(ii)(F) for
Nonparticipating FFIs

Commenters have noted the burdens of
requiring gross proceeds reporting for ac-
counts held by nonparticipating FFIs in ad-
vance of when such amounts have to be
reported for a U.S. account or account of an
owner-documented FFI. The transitional re-
porting for accounts of nonparticipating
FFIs under § 1.1471-4(d)(2)(ii)(F) was not
intended to require more information to be
reported than would be required for U.S.
accounts or accounts held by owner-
documented FFIs under § 1.1471-4(d). In
response to these comments, the regula-
tions will be amended to provide that,
with respect to calendar year 2015, a par-
ticipating FFI, reporting Model 2 FFI, or
registered deemed-compliant FFI required
to report under the requirements of a par-
ticipating FFI is not required to report
gross proceeds paid to or with respect to
an account held by a nonparticipating FFI.

## IV. Electronically Furnished Forms W-8 and W-9

### A. Background

Section 1.1441-1(e)(4)(iv) provides that
a withholding agent may establish a system
for a beneficial owner or payee to electron-
ically furnish a Form W-8, an acceptable
substitute Form W-8, or such other form as
the IRS may prescribe, and provides re-
quirements for such a system. Section
1.1441-1(e)(4)(iv)(B) requires, among
other things, that the electronic system pro-
vide that the Form W-8 be signed electron-

ically and under penalties of perjury by the
person whose name is on the Form W-8.
When the requirements set forth in
§ 1.1441-1(e)(4)(iv) are met, a withholding
agent may accept the electronic version of
the Form W-8 as an original. These re-
quirements for an electronic system also ap-
ply for chapter 4 purposes as provided in
§ 1.1471-3(c)(6)(iv). Announcement 98-27
(1998-1 C.B. 865) provides similar stan-
dards for purposes of establishing an elec-
tronic system for the Form W-9.

A foreign intermediary or flow-through
entity that has not entered into a qualified
intermediary, foreign withholding part-
nership, or foreign withholding trust
agreement is a nonqualified intermediary
(NQI), nonwithholding foreign partner-
ship (NWP), or nonwithholding foreign
trust (NWT) under the chapter 3 regula-
tions. An NQI, NWP, or NWT that re-
ceives a payment on behalf of its account
holders, partners, owners, or beneficiaries
is required to provide documentation to its
withholding agent so that the withholding
agent may reliably associate the payment
(or portion of the payment) with valid
documentation upon which it may rely to
determine its requirement to withhold un-
der § 1.1441-1(b). The regulations under
section 1441 further provide that a with-
holding agent that receives documentation
for a payee or beneficial owner through an
NQI, NWP, or NWT (including a U.S.
branch or territory financial institution de-
scribed in § 1.1441-1(b)(2)(iv), other than
a U.S. branch or territory financial insti-
tution that is treated as a U.S. person) may
rely on such documentation unless the
withholding agent knows that the docu-
mentation is unreliable or incorrect as de-
scribed § 1.1441-7(b)(10) (referred to as
the standards of knowledge). Similar stan-
dards of knowledge rules are provided for
chapter 4 purposes in § 1.1471-3(e)(4)(vi).

### B. Modification of Standards of Knowledge Requirements

Commenters have requested that the
regulations specify that a withholding
agent may rely on a Form W-8 or W-9
for a beneficial owner or payee that has
been indirectly obtained by the withhold-
ing agent through an NQI, NWP, or NWT,
irrespective of whether the NQI, NWP, or
NWT collects the underlying Form W-8
through an electronic system described in

§ 1.1441-1(e)(4)(iv) or Form W-9 through
an electronic system described in An-
nouncement 98-27. The commenters note
that, in the absence of such guidance, cur-
rent industry practice is for withholding
agents to reject these forms because they
cannot confirm the authenticity of the elec-
tronic signature. As a result, the payee or
beneficial owner may be subject to with-
holding under chapter 3 or 4 or backup
withholding under section 3406 based on an
applicable presumption rule.

To reduce burden and avoid unnecessary
overwithholding, the Treasury Department
and the IRS intend to provide in the stan-
dards of knowledge in §§ 1.1441-7(b)(10)
and 1.1471-3(e)(4)(vi)(A)(2) that a with-
holding agent may rely on a Form W-8 or
W-9 that has been collected from the ben-
eficial owner or payee of the payment
through an electronic system maintained by
an NQI, NWP, or NWT and furnished to the
withholding agent by such NQI, NWP, or
NWT, provided that the NQI, NWP, or
NWT is a direct or indirect account holder
of the withholding agent and the withhold-
ing agent obtains from the NQI, NWP, or
NWT a written statement confirming that
the electronic documentation was generated
from a system that meets the requirements
in § 1.1441-1(e)(4)(iv), § 1.1471-3(c)(6)(iv),
or Announcement 98-27, as applicable, and
the withholding agent does not have actual
knowledge that such statement is incorrect.

# DRAFTING INFORMATION

The principal authors of this notice are
Nancy Lee and Tara Ferris of the Office of
Associate Chief Counsel (International).
For further information regarding this no-
tice, contact Ms. Lee or Ms. Ferris at
(202) 317-6942 (not a toll-free number).

Section 506 Notification
Requirement for New and
Certain Existing Section
501(c)(4) Organizations
Notice 2016-09

# SECTION 1. PURPOSE AND OVERVIEW

This Notice provides interim guidance
regarding section 405 of the Protecting

Americans from Tax Hikes Act of 2015 (the
PATH Act), enacted on December 18, 2015,
as part of the Consolidated Appropriations
Act, 2016 (Pub. L. 114-113). Specifically,
this Notice addresses the due date of notifi-
cations required to be submitted under new
section 506 of the Internal Revenue Code
(Code) by social welfare organizations de-
scribed in section 501(c)(4) and the separate
process by which an organization may, at its
option, request a determination that it qual-
ifies for section 501(c)(4) tax-exempt status.

The section 506 notification require-
ment applies to social welfare organiza-
tions described in section 501(c)(4) that
are established after December 18, 2015,
and to certain organizations existing on
that date. The Department of the Treasury
(Treasury Department) and the Internal
Revenue Service (IRS) intend to issue
temporary regulations under section 506
prescribing the manner in which organi-
zations described in section 501(c)(4)
must notify the IRS of their intent to op-
erate under section 501(c)(4). Organiza-
tions will have at least 60 days from the date
such regulations are issued to submit the
information required under section 506, and
should wait to submit the information until
the regulations are issued. No penalties un-
der section 6652(c)(4) will apply to a sec-
tion 501(c)(4) organization that provides the
section 506 notification by the due date pro-
vided in the regulations.

# SECTION 2. BACKGROUND

Section 501(a) of the Code generally
provides that an organization described in
section 501(c) is exempt from federal in-
come tax. In particular, section 501(c)(4)
describes organizations "operated exclu-
sively for the promotion of social welfare."
A social welfare organization is described in
section 501(c)(4) (and, therefore, exempt
from tax under section 501(a)) if it satisfies
the requirements applicable to such status.
Although an organization may apply to the
IRS for recognition that the organization
qualifies for section 501(c)(4) tax-exempt
status, there is no requirement to do so (ex-
cept as provided in section 6033(j)(2) for
organizations that fail to file required infor-
mation returns or notices). Accordingly, an
organization described in section 501(c)(4)
that files the required annual information
return or notice, as applicable, need not seek

an IRS determination of its qualification for
tax-exempt status.

Section 405(a) of the PATH Act added
new section 506, requiring an organiza-
tion to notify the IRS of its intent to op-
erate as an organization described in sec-
tion 501(c)(4), and amended sections
6033(f) and 6652(c), relating to required
annual information returns by tax-exempt
organizations and penalties for failures to
file such returns, respectively.

Section 506 requires an organization
described in section 501(c)(4), no later
than 60 days after the organization is es-
tablished, to notify the Secretary (in the
manner prescribed by regulations) that it
is operating as a section 501(c)(4) organi-
zation. For certain existing organizations,
the notification is due no later than June
15, 2016, 180 days after the date of en-
actment of the PATH Act. Section 506(b)
provides that the notification must in-
clude: (1) the name, address, and taxpayer
identification number of the organization;
(2) the date on which, and the State under
the laws of which, the organization was
organized; and (3) a statement of the pur-
pose of the organization. Section 506(c)
requires the Secretary to send the organi-
zation an acknowledgement of the receipt
of its notification within 60 days. Section
506(d) permits the Secretary to extend the
60-day notification period for reasonable
cause. Section 506(e) provides that the
Secretary shall impose a reasonable user
fee for submission of the notification. Fi-
nally, section 506(f) provides that, upon
request by an organization to be treated as
an organization described in section
501(c)(4), the Secretary may issue a de-
termination with respect to treatment as a
section 501(c)(4) organization, and that
the organization's request will be treated
as an application for exemption from tax-
ation under section 501(a) subject to pub-
lic inspection under section 6104.

Section 405(b) of the PATH Act
amended section 6033(f) to require a sec-
tion 501(c)(4) organization submitting the
section 506 notification to include with its
first annual information return filed there-
after any additional information pre-
scribed by regulation that supports the or-
ganization's treatment as an organization
described in section 501(c)(4).

Section 405(c) of the PATH Act
amended section 6652(c) to impose pen-

alties for failure to file the notification by
the date and in the manner prescribed in
section 506 (and implementing regula-
tions). In particular, section 6652(c)(4)(A)
imposes a penalty on an organization that
fails to submit the notification equal to
$20 per day for each day the failure con-
tinues, up to a maximum of $5,000. Ad-
ditionally, section 6652(c)(4)(B) imposes
a similar penalty on persons who fail to
timely submit the notification in response
to a written request by the Secretary.

Section 405(f) of the PATH Act pro-
vides that, in general, the section 506 no-
tification requirement and the related
amendments to sections 6033 and 6652
apply to organizations described in sec-
tion 501(c)(4) that are established after
December 18, 2015, the date of enactment
of the PATH Act. Section 405(f)(2) of the
PATH Act provides that these provisions
also apply to any other section 501(c)(4)
organization that had not, on or before the
date of enactment: (1) applied for a writ-
ten determination of recognition as an or-
ganization described in section 501(c)(4)
(using Form 1024, “Application for Rec-
ognition of Exemption Under Section
501(a)"); or (2) filed at least one annual
information return or notice required un-
der section 6033(a)(1) or 6033(i) (that is,
a Form 990, "Return of Organization Ex-
empt From Income Tax," or, if eligible,
Form 990-EZ, "Short Form Return of
Organization Exempt From Income Tax"
or Form 990-N (e-Postcard)). Existing
organizations described in section
405(f)(2) of the PATH Act have until June
15, 2016 (180 days after the date of en-
actment) to submit the section 506 notifi-
cation.

# SECTION 3. EXTENSION OF PERIOD TO NOTIFY IRS

The Treasury Department and the IRS
intend to issue temporary regulations im-
plementing the section 506 requirement
that organizations described in section
501(c)(4) notify the IRS of their intent to
operate under section 501(c)(4). In order
to provide adequate transition time for
organizations to comply with the new pro-
cedures, the Treasury Department and the
IRS are extending the due date for sub-
mitting the section 506 notification until at
least 60 days from the date the regulations
are issued. No penalties under section

6652(c)(4) will apply to a section
501(c)(4) organization that submits the re-
quired notification by the due date pro-
vided in the regulations. In addition, com-
ments from the public regarding the new
section 506 notification requirement and
related provisions will be requested dur-
ing the rulemaking process.

# SECTION 4. REQUESTS FOR DETERMINATION

Section 506(c) requires the IRS to ac-
knowledge receipt of a section 506 noti-
fication. This acknowledgment is not a
determination by the IRS that the organi-
zation qualifies for section 501(c)(4) tax-
exempt status. Rather, section 506(f) pro-
vides that an organization seeking IRS
recognition of its tax-exempt status may
separately request such a determination.
Section 506(f) provides that such a re-
quest will be treated as an application for
exemption from taxation under section
501(a) and therefore will be subject to
public inspection under section 6104. Un-
til further guidance is issued, organiza-
tions requesting IRS recognition of ex-
empt status under section 501(c)(4)
should continue to use the Form 1024.
The filing of Form 1024 is optional and
will not relieve an organization of the
requirement to file the section 506 notifi-
cation.

# SECTION 5. DRAFTING INFORMATION

The principal author of this Notice is
Chelsea Rubin of the Office of Associate
Chief Counsel (Tax Exempt and Govern-
ment Entities). For further information re-
garding this Notice, contact Chelsea Ru-
bin at (202) 317-5800 (not a toll-free
number).

## Guidance Relating to Refunds of Foreign Tax for Which an Election Was Made Under Section 853 Notice 2016-10

# SECTION 1. OVERVIEW

The Department of the Treasury (Trea-
sury Department) and the Internal Reve-

nue Service (IRS) are issuing this notice
to address the application of sections 853
and 905(c) of the Internal Revenue Code
to the receipt by a regulated investment
company (RIC) of a refund of a tax that
was eligible for a foreign tax credit under
section 901 or 903 ("foreign tax") if that
foreign tax, when paid by the RIC, was
treated as paid by the RIC's shareholders
under section 853(b)(2) because an elec-
tion was made under section 853(a). This
notice describes regulations under sec-
tions 853 and 905(c) that the Treasury
Department and the IRS intend to issue.
This notice also provides guidance on ob-
taining administrative relief through clos-
ing agreements.

RICs do not generally have changes to
their foreign tax liabilities, as described in
section 905(c), both because foreign with-
holding taxes, which RICs generally pay,
are usually determinable at the time the
income from which the tax is withheld is
paid or accrued, and because section
986(a)(1)(E) provides that a RIC reporting
income using an accrual method translates
foreign income taxes into dollars using the
exchange rate as of the date the income
accrues. Therefore, both the amount of the
foreign tax, as denominated in the foreign
currency, and the appropriate exchange
rate for the tax are typically ascertainable
before the RIC furnishes statements to
shareholders or files its income tax return.

Recently, however, the Court of Justice
of the European Union held that member
states of the European Union could not
impose withholding taxes on certain for-
eign investors if substantially similar do-
mestic investors were not subject to tax.
Numerous RICs are now seeking, and
some have received, refunds of foreign
taxes paid to these countries. In light of
these refund claims and payments, taxpay-
ers have requested that the Treasury De-
partment and the IRS provide guidance
concerning the appropriate treatment of
these refunds by RICs that made elections
under section 853(a) for the years in
which the taxes were originally paid.

Although such refunds are subject to
section 905(c), the Code does not explic-
itly address how section 905(c) applies to
amounts that were treated as paid by a
RIC's shareholders under section 853 or
the manner in which a RIC and its share-
holders may satisfy their obligations un-

der section 905(c). In general, when a
foreign tax is refunded, the taxpayer must
notify the IRS, which redetermines the
amount of the taxpayer's U.S. tax liability
for the year or years affected, and the
taxpayer must pay any redetermined
amount upon notice and demand. When
RICs receive refunds of foreign taxes,
however, providing adequate notification
to shareholders and the IRS may be im-
practical, in part because the RICs may
not know the identities or addresses of
shareholders who claimed foreign tax
credits in previous years. Without guid-
ance providing alternative procedures for
the particular situation of RICs that made
elections under section 853 and their
shareholders, the application of section
905(c) could lead to significant adminis-
trative costs and uncertainty for the U.S.
government and for RICs and their share-
holders.

The Treasury Department and the IRS
believe that published guidance detailing al-
ternative methods that RICs and their share-
holders may use to satisfy their obligations
under sections 853 and 905(c) will promote
effective tax administration. This notice pro-
vides guidance, and describes regulations
that the Treasury Department and the IRS
intend to issue, in order to help affected
taxpayers discharge their obligations under
sections 853 and 905(c).

Section 2 provides background infor-
mation with respect to sections 853 and
905(c). Section 3 provides that RICs and
their shareholders may satisfy their obli-
gations under sections 853 and 905(c) un-
der two alternative methods-following a
netting method or obtaining a closing
agreement. These two alternatives are de-
scribed in sections 4 and 5. Section 6
describes the expected effective date of
the regulations described in section 4 and
the effective date of the guidance in sec-
tion 5. Section 7 solicits comments and
provides contact information for purposes
of submitting comments. Section 8 relates
to requirements under the Paperwork Re-
duction Act.

# SECTION 2. BACKGROUND

## .01 The Election Provided in Section 853

Section 853 allows a RIC that meets
certain requirements to make an annual
election under which the RIC's sharehold-

ers are treated as if they paid a proportion-
ate share of any foreign tax that was paid
by the RIC during the RIC's taxable year
to which the election relates. The election
is available to a RIC if: (1) more than 50
percent of the value of its assets, at the
close of the taxable year, consists of stock
or securities in foreign corporations, and
(2) the RIC has complied with the require-
ments in section 852(a) and § 1.852-1(a)
of the Income Tax Regulations. If the RIC
makes this election for a taxable year, it
forgoes a deduction or credit for foreign
taxes. Instead, under section 853(b)(2)(A),
the RIC's shareholders are required to in-
clude in their gross income and treat as
paid by them their proportionate shares of
the foreign taxes and, accordingly, are el-
igible to claim either a deduction or credit
for those foreign taxes in accordance with
sections 164 and 901. In addition, each
shareholder of an electing RIC, under sec-
tion 853(b)(2)(B), must treat as gross in-
come from sources without the United
States the sum of the shareholder's pro-
portionate share of the foreign taxes and
the portion of any dividend paid by the
RIC that represents income derived from
sources without the United States.

A RIC that makes the election under
section 853(a) must provide certain infor-
mation to its shareholders and the IRS.
First, under section 853(c) and the regu-
lations thereunder, the RIC must identify,
in a written statement furnished to each
shareholder, each shareholder's propor-
tionate share of foreign taxes paid by the
RIC and each shareholder's proportionate
share of the RIC's income derived from
sources without the United States. Under
§ 1.853-4(a), the RIC must file a state-
ment as part of its income tax return
(Form 1120-RIC, "U.S. Income Tax Re-
turn for Regulated Investment Compa-
nies," or its successor) that sets forth the
total amount of income received from
sources without the United States; the to-
tal amount of foreign taxes paid; the
amount, if any, of the foreign taxes paid
that are not eligible for the section 853(a)
election; the date, form, and contents of
the written statement furnished to its
shareholders; and the proportionate share
of income received and taxes paid during
the taxable year that are attributable to one
share of its stock. Under § 1.853-4(d), the
RIC must also file, as part of its return for

the taxable year, a Form 1118, "Foreign
Tax Credit-Corporations."

.02 Requirements under Section 905(c)

Under section 905(c), if a taxpayer
claims a credit for taxes paid or accrued
under section 901 (or deemed paid under
section 902 or 960) and that foreign tax is
refunded, the taxpayer generally must no-
tify the IRS, which shall redetermine the
amount of the taxpayer's U.S. tax liability
for the year or years affected. Any U.S.
tax due by reason of the foreign tax refund
must be paid upon notice and demand.
Interest accrues under section 6601 on the
amount of tax due, but under section
905(c)(5), the amount of interest is capped
for the period prior to the receipt of the
refund at the amount of interest paid by
the foreign country or possession of the
United States on the refund.

## .03 Exchange Rates and Foreign Currency Gain or Loss

For purposes of calculating the U.S. dol-
lar amount of a refund received by a RIC of
foreign tax that is denominated in a foreign
currency and the RIC's basis in the foreign
currency refunded, a RIC must translate the
refunded foreign tax into dollars using the
same exchange rate that it used to translate
the foreign taxes into dollars when such
taxes were originally reported as paid. See
sections 986(a)(1)(E) and 986(a)(2)(B)(ii).
Upon disposition of the foreign currency
refunded, the RIC must recognize any for-
eign currency gain or loss. See section
988(c)(1)(C) and the regulations under that
section.

# SECTION 3. APPLICATION

As an alternative to applying the gen-
eral rules under section 905(c), a RIC and
its shareholders may discharge their obli-
gations under sections 853 and 905(c)
with respect to foreign tax refunds de-
scribed below by utilizing either the
method described in section 4 or the
method described in section 5. Failure to
discharge those obligations under either
the general rules provided in section
905(c) or one of the alternative methods
described in sections 4 and 5 may result in
asserted deficiencies and penalties for the
RIC and any shareholders of that RIC that
claimed a related foreign tax credit.

# SECTION 4. NETTING OF FOREIGN TAXES IN REFUND YEAR

## .01 Eligibility to Use Netting

The regulations described in this sec-
tion 4 are expected to apply if a RIC
receives in a taxable year (the "refund
year") a refund of foreign tax that had
been paid in a taxable year in which the
RIC made an election under section
853(a). These regulations are expected to
provide a netting method that such RICs
may apply in lieu of the general rules
under section 905(c), if the following re-
quirements are met:

(a) The economic benefit of the refund
and any related interest payment received
by the RIC primarily inures to the RIC's
refund-year shareholders (as opposed to,
if different, shareholders in the year or
years in which the RIC paid the refunded
foreign taxes);

(b) The RIC was not held predomi-
nantly by entities described in section
817(h)(4)(A) or (B) in the year in which
the RIC paid the refunded foreign taxes;

(d) The RIC paid an amount of foreign
taxes in the refund year that is equal to or
greater than the amount of the foreign tax
adjustment described in section 4.03 for
that year.

## .02 Netting Procedure

The regulations are expected to pro-
vide that, if a RIC applies the method
described in this section 4, then for pur-
poses of section 853, the RIC must reduce
the amount of foreign taxes reported by
the RIC to its shareholders for the refund
year by the amount of the foreign tax
adjustment defined in section 4.03.

## .03 Foreign Tax Adjustment

(a) Components of the Foreign Tax Ad-
justment

The foreign tax adjustment for a refund
year is equal to the sum of:

(1) All foreign tax refunds received by
the RIC in the refund year; and

(2) All interest adjustments, as defined
in section 4.03(b).

(b) Interest Adjustment Defined

An interest adjustment period begins
on the date on which the RIC made a
payment of foreign tax related to the re-
fund and ends on the date on which the
RIC receives the refund. Each payment of
foreign tax that relates to a refund pro-
duces one or more separate interest adjust-
ment periods. (Foreign tax amounts paid
in the same taxable year may have been
refunded on different dates during the re-
fund year at issue, and foreign taxes re-
funded on a single date may have been
paid on different dates and in different
taxable years.)

The amount of the interest adjustment,
calculated for each interest adjustment pe-
riod, is an amount equal to the lesser of:

(1) The amount of interest that would
be calculated for that period under section
6601 with respect to an underpayment of
tax equal to the amount of the associated
foreign tax refund; or

(2) The amount of interest paid by a
foreign country or possession of the
United States to the RIC with respect to
the associated foreign tax refund for that
period.

.04 Effects of Netting

(a) The RIC shall not include as in-
come from sources without the United
States the amount of the foreign tax ad-
justment.

(b) The shareholders of the RIC shall
not include in their gross income under
section 853(b)(2)(A) and § 1.853-2(b) the
amount of the current year foreign taxes
that are offset by the foreign tax refund
component of the foreign tax adjustment,
and that amount shall be excluded from
the amount of income reported to the
shareholders under § 1.853-3. The share-
holders of the RIC shall include in their
gross income under section 853(b)(2)(A)
and § 1.853-2(b) the amount of the cur-
rent year foreign taxes that are offset by
the interest adjustment component of the
foreign tax adjustment, and that amount
shall be included in the amount of income
reported to shareholders under § 1.853-3.

(c) To determine the dividends paid
deduction, the amount of the foreign taxes
paid in the refund year for which an ad-
dition to the dividends paid deduction oth-
erwise would be allowed under section
853(b)(1)(B) shall be reduced by the
amount of the foreign tax adjustment as

defined in section 4.03 for that taxable
year.

## .05 Notification Requirement for RICs Utilizing Netting

The regulations are expected to pro-
vide that, if a RIC applies the netting
method described in this section 4, the
RIC must notify the IRS of each refund on
a statement attached to a Form 1118, or its
successor, for the refund year. This state-
ment must include the following informa-
tion:

(a) The amount of each refund;

(b) The date on which each refund was
received;

(d) The taxable year or years with re-
spect to which the foreign tax to which
each refund relates was reported to share-
holders;

(e) The amount of interest paid by the
foreign country or possession of the
United States with respect to each re-
funded amount;

(f) The exchange rates used to translate
any foreign currency amounts into dollars;
and

(g) With respect to each refunded
amount, the amounts included in the for-
eign tax adjustment as defined in section
4.03.

### .06 Example: Netting Refunds Against Foreign Taxes Paid

(a) Facts. Corporation L, a RIC, in-
vests in country P stocks in each of tax-
able years 1 through 6 and makes a valid
election under section 853(a) for all years.
In each of years 1 through 5, Corporation
L earned 1,000u of dividend income from
country P stocks and paid 100u in foreign
tax. In each of years 1 through 5, the
applicable exchange rate is lu = $1. With
respect to years 1 through 5, Corporation
L distributed $900 to shareholders and
reported to shareholders their aggregate
proportionate shares of foreign source in-
come and foreign taxes paid of $1,000 and
$100, respectively. Corporation L also re-
ported $1,000 of dividend income and
claimed $1,000 in dividends paid deduc-
tions ($900 from the distribution made to
shareholders and $100 under section

853(b)(1)(B) for the foreign taxes paid)
with respect to each of years 1 through 5.

In year 6, Corporation L receives div-
idend income of 1,000u, pays 100u in
foreign taxes, and also receives a refund
of 55u of the foreign tax it paid in year 1.
In year 6, the applicable exchange rate is
lu = $2. Country P paid to Corporation L
interest of 1u on the foreign tax refund,
which was less than the amount of interest
adjustment that would be calculated for
the interest adjustment period under sec-
tion 6601 with respect to an underpay-
ment of tax equal to $55 (55u translated at
the applicable exchange rate for year 1).
Corporation L exchanges the 956u (900u
dividends received, net of withholding
tax, plus 55u received as a refund of for-
eign tax and 1u received as interest on the
foreign tax refund) for $1,912 and distrib-
utes $1,912 to its shareholders with re-
spect to year 6 ($1,800 from dividends
received that year, net of withholding tax,
plus $110 received as a refund of foreign
tax and $2 received as interest on the
foreign tax refund). Assume that Corpo-
ration L has no expenses allocated and
apportioned to the dividend income and
that it meets the requirements for netting
under section 4.01 of this notice.

(b) Results. Corporation L received a
refund and applies netting under section 4.
For purposes of furnishing statements to
shareholders, Corporation L must reduce
the $200 of foreign tax paid in year 6 by
the foreign tax adjustment as determined
under section 4.03 of this notice. The for-
eign tax adjustment is the sum of the
refund and the interest adjustment, or $57
(a $55 refund and a $2 interest adjust-
ment).

The exchange of the refunded amount
for dollars results in $55 of foreign cur-
rency gain under section 988 ($110 value
of refunded foreign currency in year 6 less
$55 basis from year 1). Corporation L
must report $2,000 of dividend income
and $55 of foreign currency gain but does
not include as additional income the
amount of the foreign tax adjustment.

Corporation L may claim $2,055 in
dividends-paid deductions ($1,912 from
the actual distribution to year 6 sharehold-
ers, plus $143 ($200 foreign taxes paid
less $57 foreign tax adjustment) of foreign
taxes paid under section 853(b)(1)(B). See
section 4.04 of this notice.

Corporation L must attach a statement
to its Form 1118 for year 6 that includes
the information listed in section 4.05 of
this notice. After netting, Corporation L's
shareholders are deemed to have paid for-
eign taxes in year 6 of $143 ($200 foreign
taxes paid less $57 foreign tax adjust-
ment). Corporation L must report to its
year 6 shareholders $2,057 of gross for-
eign source income ($1,912 from the dis-
tribution plus $145 from the foreign taxes
paid in year 6 ($200 foreign taxes paid in
year 6 less $55 foreign tax refund under
section 4.04(b) of this notice)) and $143
of foreign tax, and Corporation L's year 6
shareholders must include such income in
their gross income and treat such foreign
tax as paid by them.

# SECTION 5. CLOSING AGREEMENTS

## .01 General Rules for Closing Agreements under this Notice

Under this section, a RIC that receives
a refund of foreign tax that had been paid
in a prior taxable year in which an election
was made under section 853(a) may re-
quest a closing agreement addressing the
treatment of the refund. A request for a
closing agreement will be granted when
such an agreement is determined by the
IRS to be in the interest of sound tax
administration.

A closing agreement generally will be
considered to be in the interest of sound
tax administration when:

(a) the RIC has demonstrated that ei-
ther it is precluded from applying, or it is
not reasonably practical for it to apply, the
general rules under section 905(c) or the
method described in section 4; and

(b) the RIC can provide information
that is sufficient to establish, to the satis-
faction of the IRS, a reasonable estimate
of the aggregate adjustments that would
be due under section 905(c) with respect
to the foreign tax credits claimed by its
shareholders (including former sharehold-
ers) who were treated under section 853 as
paying the foreign tax.

## .02 Requirements for, and Timing of, Requesting a Closing Agreement

A request for a closing agreement must
comply with applicable guidance relating
to such requests, including, but not limited

to, Revenue Procedure 2016-1, 2016-1
I.R.B. 1, or its successor, as well as any
future guidance published in the Internal
Revenue Bulletin applicable to closing
agreements on this issue. Due to applica-
ble deadlines for tax reporting, a tentative
request for a closing agreement under this
section 5 should be initially submitted in
accordance with the pre-submission con-
ference procedures provided in Revenue
Procedure 2016-1 or other applicable
guidance in the Internal Revenue Bulletin,
as soon as possible after the receipt of the
refund of foreign tax. The tentative re-
quest should propose a method for calcu-
lating the aggregate adjustment and
should include details regarding the infor-
mation available to make such calcula-
tions and the information that reasonably
could be obtained.

## .03 Notification Requirement for RICs Requesting Closing Agreements

If a RIC has submitted a request for a
closing agreement but the IRS has not yet
determined whether a closing agreement
is in the interest of sound tax administra-
tion, then the RIC must attach a statement
to its Form 1118 for the refund year con-
taining the information required in para-
graphs (a) through (f) of section 4.05,
along with a statement that a closing
agreement has been requested, that the
request has not been withdrawn or denied,
and the date on which the request was
submitted.

# SECTION 6. EFFECTIVE DATES

## .01 In General

Except as otherwise provided in this
section 6, the regulations described in sec-
tion 4 are expected to apply to any refund
year ending on or after February 8, 2016.

The guidance described in section 5
applies to requests for closing agreements
filed on or after February 8, 2016.

## .02 Taxpayer Reliance on Section 4

For refund years ending before the is-
suance of any proposed regulations or
temporary regulations described in this
notice, taxpayers may rely on the rules
described in section 4.

.03 Special Rules for Taxpayers
Applying the Rules Described in Section
4 to Refund Years Ending Before
February 8, 2016

The regulations described in section 4
are expected to provide that a RIC may
apply the regulations to refund years end-
ing before February 8, 2016.

The regulations also are expected to
provide that, if a RIC applies the netting
method described in section 4 with respect
to refund years ending before February 8,
2016, then for such refund years the RIC
may, as an alternative to applying the
rules described in section 4.04(b):

(a) apply the rules described in section
4.04(b) by excluding from the amount in-
cluded in the shareholder's gross income
under section 853(b)(2)(A) and § 1.853-
2(b) the full amount of the current year
foreign taxes that are offset by the foreign
tax adjustment, rather than just the amount
of the current year foreign taxes that are
offset by the foreign tax refund compo-
nent of the foreign tax adjustment; or

(b) apply an approach that is expected
to produce substantially the same U.S.
Federal income tax liability that the RIC's
shareholders would have had, in the ag-
gregate, under either section 4.04(b) or
6.03(a).

An example of a possible approach un-
der section 6.03(b) would be for the RIC
to include the interest adjustment in the
shareholders' gross income, but reduce
the amount of the foreign tax adjustment
associated with such interest by an
amount that reasonably approximates the
U.S. income tax that would be collected
from the RIC's shareholders on that in-
come. This approach would only be per-
missible, however, if it was expected to
produce substantially the same U.S. Fed-
eral income tax liability that the RIC's
shareholders would have had, in the ag-
gregate, under section 6.03(a).

# SECTION 7. REQUEST FOR COMMENTS AND CONTACT INFORMATION

The Treasury Department and the IRS
solicit comments on the rules described in
this notice. The Treasury Department and
the IRS specifically solicit comments on
whether, and to what extent, netting of a
refund should be permitted if the foreign

tax adjustment exceeds the foreign taxes
paid in the refund year, and whether ex-
cess refunds should be allowed to carry
over to a subsequent year or years and
netted against foreign taxes paid in those
years.

The Treasury Department and the IRS
also solicit comments on the principles to
be applied to interest adjustments for pe-
riods prior to and after the date on which
the refund of foreign tax is received by the
RIC. In order to approximate the U.S. tax
consequences that would arise had the for-
eign tax refunds been paid directly to the
shareholders who originally claimed the
foreign tax credits, the interest adjustment
would need to account for the fact that
interest generally would run on a redeter-
mination under section 905(c) from the
due date of the taxpayer's return on which
the credit was claimed until the date on
which the redetermined amount is actually
paid. This period is divided into two sep-
arate periods under section 905(c) - the
"pre-refund" period (which is subject to
the limitation under section 905(c)(5)) and
the "post-refund" period. This Notice only
addresses interest during the pre-refund
period. Accordingly, the Treasury Depart-
ment and the IRS are considering whether
an approach should be developed to take
post-refund interest into account and how
to make any such approach administrable
for both the IRS and for RICs and their
shareholders. In that respect, the Treasury
Department and the IRS request com-
ments regarding the date on which the
underpayment should be deemed to be
satisfied under the netting method (such as
April 15 of the following calendar year)
and how interest could be calculated for
the period between the date on which the
refund is received by the RIC and the date
on which the underpayment is deemed to
be satisfied under the netting method.

The Treasury Department and the IRS
also solicit comments on whether and in
what respects closing agreements relating
to these issues could be standardized and
what information, if any, can be reason-
ably and uniformly relied upon for calcu-
lating the aggregate adjustment relating to
such refunds at the RIC level, as opposed
to at the shareholder level, when such a
calculation is appropriate.

In addition, the Treasury Department
and the IRS solicit comments as to

whether guidance is needed to clarify how
the generally applicable rules of section
905(c) operate with respect to both a RIC
that makes an election under section
853(a) and its shareholders.

Written comments may be submitted to
the Office of Associate Chief Counsel (In-
ternational), Attention: Larry R. Pounders,
Internal Revenue Service, IR-4549, 1111
Constitution Avenue, NW, Washington,
DC 20224. Alternatively, taxpayers may
submit comments electronically to
Notice.comments@irscounsel.treas.gov.
Comments will be available for public
inspection and copying. For further infor-
mation regarding this notice, contact Mr.
Pounders of the Office of Associate Chief
Counsel (International) at (202) 317-5465
(not a toll-free number).

# SECTION 8. PAPERWORK REDUCTION ACT

The collection of information con-
tained in this notice has been reviewed
and approved by the Office of Manage-
ment and Budget in accordance with the
Paperwork Reduction Act (44 U.S.C.
3507) under control number 1545-0123.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless the col-
lection of information displays a valid
OMB control number.

The collection of information in this
revenue procedure is under sections 4.05
and 5.03.

This information is required to allow
the IRS to verify the calculations made by
the RIC, and to verify the appropriate
amount of gross foreign source income
and foreign tax credits available to share-
holders. The likely respondents are RICs
that invest in foreign securities. The esti-
mated total annual reporting recordkeep-
ing burden is 15,000 hours. The estimated
annual burden per respondent/record-
keeper is 10 hours. The estimated number
of respondents/recordkeepers is 1,500.

The estimated frequency of responses
is occasional.

Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential as
required by 26 U.S.C. § 6103.

# Credit for Indian Coal Production and Inflation Adjustment Factor for Calendar Year 2015

## Notice 2016-11

This notice publishes the inflation ad-
justment factor for calendar year 2015 for
the Indian coal production credit under
section 45 of the Internal Revenue Code.
The 2015 inflation adjustment factor is
used in determining the availability of the
credit and applies to calendar year 2015
sales of Indian coal produced in the
United States or a possession thereof. The
inflation adjustment factor for Indian coal
for calendar year 2015 was published in
the Federal Register on January 20, 2016.
Section 186 of Division Q of the Consol-
idated Appropriations Act, 2016 (Pub. L.
No. 114-113) extends the credit period
for the Indian coal production credit from
a 9-year period beginning on January 1,
2006, to an 11-year period beginning on
January 1, 2006. This provision is effec-
tive for coal produced in the United States
or a possession thereof after December 31,
2014.

## BACKGROUND

For calendar year 2015, section
45(e)(10)(A) provides in the case of a
producer of Indian coal, the credit deter-
mined under section 45 for any taxable
year is an amount equal to the applicable
dollar amount per ton of Indian coal (i)
produced by the taxpayer at an Indian coal
production facility during the 11-year pe-
riod beginning on January 1, 2006, and
(ii) sold by the taxpayer (I) to an unrelated
person, and (II) during such 11-year pe-
riod and such taxable year.

Section 45(e)(10)(B)(i) defines "appli-
cable dollar amount" for any taxable year
as (I) $1.50 in the case of calendar years
2006 through 2009, and (II) $2.00 in the
case of calendar years beginning after
2009.

For calendar year 2015, section
45(d)(10) provides in the case of a facility
that produces Indian coal, the term "In-
dian coal production facility" means a fa-
cility which is placed in service before
January 1, 2009.

Section 45(e)(2)(B) defines the infla-
tion adjustment factor for a calendar year
as the fraction the numerator of which is
the GDP implicit price deflator for the
preceding calendar year and the denomi-
nator of which is the GDP implicit price
deflator for the calendar year 1992. The
term "GDP implicit price deflator" means
the most recent revision of the implicit
price deflator for the gross domestic prod-
uct as computed and published by the
Department of Commerce before March
15 of the calendar year.

Under section 45(e)(10)(B)(ii), in the
case of any calendar year after 2006, each
of the dollar amounts under section
45(e)(10)(B)(i) shall be equal to the prod-
uct of such dollar amount and the inflation
adjustment factor determined under sec-
tion 45(e)(2)(B) for the calendar year, ex-
cept that section 45(e)(2)(B) shall be ap-
plied by substituting 2005 for 1992.

## INFLATION ADJUSTMENT FACTOR

The inflation adjustment factor for cal-
endar year 2015 for Indian coal produc-
tion is 1.1772.

## CREDIT AMOUNT FOR INDIAN COAL PRODUCTION

The credit for Indian coal production
for calendar year 2015 under section
45(e)(10)(B) is $2.354 per ton on the sale
of Indian coal.

## DRAFTING AND CONTACT INFORMATION

The principal author of this notice is
Jennifer A. Records of the Office of As-
sociate Chief Counsel (Passthroughs &
Special Industries). For further informa-
tion regarding this notice contact Ms. Re-
cords on (202) 317-6853 (not a toll-free
number).

## Maximum Vehicle Values for 2016 for Use With Vehicle Cents-Per-Mile and Fleet-Average Valuation Rules

Notice 2016-12
PURPOSE

This notice provides the maximum ve-
hicle values for 2016 that taxpayers need
to determine the value of personal use of
employer-provided vehicles under the
special valuation rules provided under
section 1.61-21 (d) and (e) of the Income
Tax Regulations.

### MAXIMUM VEHICLE VALUES

The maximum value of employer-
provided vehicles first made available to
employees for personal use in calendar
year 2016 for which the vehicle cents-per-
mile valuation rule provided under Regu-
lation section 1.61-21(e) may be applica-
ble is $15,900 for a passenger automobile
and $17,700 for a truck or van.

The maximum value of employer-
provided vehicles first made available to
employees for personal use in calendar
year 2016 for which the fleet-average val-
uation rule provided under Regulation
section 1.61-21(d) may be applicable is
$21,200 for a passenger automobile and
$23,100 for a truck or van.

### EFFECTIVE DATE

This notice applies to employer-
provided passenger automobiles first
made available to employees for personal
use in calendar year 2016.

### DRAFTING INFORMATION

The principal author of this notice is
Kathleen Edmondson of the Office of the
Division Counsel/Associate Chief Coun-
sel (Tax Exempt & Government Entities).
For further information on this notice con-
tact Ms. Edmondson on (202) 317-6798
(not a toll-free number).

## Part IV. Items of General Interest

Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code

Announcement 2016-04

Table of Contents

The Internal Revenue Service has re-
voked its determination that the organiza-
tions listed below qualify as organizations
described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.

Generally, the IRS will not disallow
deductions for contributions made to a

listed organization on or before the date of
announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section
170(c)(2) if the organization has not
timely filed a suit for declaratory judg-
ment under section 7428 and if the con-
tributor (1) had knowledge of the revoca-
tion of the ruling or determination letter,
(2) was aware that such revocation was
imminent, or (3) was in part responsible
for or was aware of the activities or omis-
sions of the organization that brought
about this revocation.

If on the other hand a suit for declara-
tory judgment has been timely filed, con-

tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on February 8, 2016
and would end on the date the court first
determines the organization is not de-
scribed in section 170(c)(2) as more par-
ticularly set for in section 7428(c)(1). For
individual contributors, the maximum de-
duction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.

NAME OF ORGANIZATION

Effective Date of Revocation

LOCATION

The Ameridream Inc.

February 5, 1999

Bethesda, MD

The Pencil Project

January 1, 2009

Austin, TX

Estes Family Educational and Charitable Foundation

January 1, 2010

Lufkin, TX

American Friends of Yeshiva Shaare Chaim, Inc.

May 1, 2008

Edison, NJ

Arseny and Olga Kovshar Private Charitable Memorial Foundation

April 30, 2004

San Francisco, CA

World Wide Water Foundation, Ltd.

January 1, 2011

Dahlonega, GA

Community Alliance for the Ethical Treatment of Youth, Inc.

January 1, 2012

Portland, OR

Birmingham Business Development Initiative, Inc.

June 1, 2010

Birmingham, AL

Yes I Can Ministry

January 1, 2013

Rialto, CA

# 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 describe the
effect:

Amplified describes a situation where
no change is being made in a prior pub-
lished 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 ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).

Clarified is 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.

Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.

Modified is 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 published position. (Compare
with amplified and clarified, above).

Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.

Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.

Superseded describes 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 previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
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 superseded.

Supplemented is 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 rul-
ings in the series.

Suspended is 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 ma-
terial published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

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.

COOP-Cooperative.

IC-Insurance Company.

Ct.D .- Court Decision.

I.R.B .- Internal Revenue Bulletin.

CY-County.

LE-Lessee.

D-Decedent.

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 .- Statement 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.

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 Contributions Act.

FISC-Foreign International Sales Company.

FPH-Foreign Personal Holding Company.

BK-Bank.

B.T.A .- Board of Tax Appeals.

C-Individual.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

CI-City.

DC-Dummy Corporation.

X-Corporation.

Y-Corporation.

Z-Corporation.

## Numerical Finding List1

Bulletins 2016-1 through 2016-6

Announcements:

2016-1, 2016-3 I.R.B. 283
2016-2, 2016-3 I.R.B. 283
2016-3, 2016-4 I.R.B. 294
2016-4, 2016-6 I.R.B. 313

### Notices:

2016-1, 2016-2 I.R.B. 265
2016-2, 2016-2 I.R.B. 265
2016-3, 2016-3 I.R.B. 278
2016-4, 2016-3 I.R.B. 279
2016-5, 2016-6 I.R.B. 302
2016-6, 2016-4 I.R.B. 287
2016-7, 2016-5 I.R.B. 296
2016-8, 2016-6 I.R.B. 304
2016-9, 2016-6 I.R.B. 306
2016-10, 2016-6 I.R.B. 307
2016-11, 2016-6 I.R.B. 312
2016-12, 2016-6 I.R.B. 312

### Proposed Regulations:

REG-138344-13, 2016-4 I.R.B. 294

Revenue Procedures:

2016-1, 2016-1 I.R.B. 1
2016-2, 2016-1 I.R.B. 102

2016-3, 2016-1 I.R.B. 126
2016-4, 2016-1 I.R.B. 142

2016-5, 2016-1 I.R.B. 188
2016-6, 2016-1 I.R.B. 200
2016-7, 2016-1 I.R.B. 239
2016-8, 2016-1 I.R.B. 243
2016-10, 2016-2 I.R.B. 270
2016-11, 2016-2 I.R.B. 274
2016-13, 2016-4 I.R.B. 290

## Revenue Rulings:

2016-1, 2016-2 I.R.B. 262
2016-2, 2016-4 I.R.B. 284
2016-3, 2016-3 I.R.B. 282

2016-4, 2016-6 I.R.B. 299

Treasury Decisions:

9745, 2016-2 I.R.B. 256

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2015-27 through 2015-52 is in Internal Revenue Bulletin
2015-52, dated December 28, 2015.

# Finding List of Current Actions on Previously Published Items1

Bulletins 2016-1 through 2016-6

# Revenue Rulings:

2008-15
Revoked by
Rev. Rul. 2016-3, 2016-3 I.R.B. 282

## Announcements:

2007-21
Modified by
Ann. 2016-1, 2016-3 I.R.B. 283

Notices:

2005-50
Modified by
Notice 2016-2, 2016-2 I.R.B. 265

2014-79
Superseded by
Notice 2016-1, 2016-2 I.R.B. 265

### Revenue Procedures:

2015-1
Superseded by
Rev. Proc. 2016-2, 2016-1 I.R.B. 1

2015-2
Superseded by
Rev. Proc. 2016-2, 2016-1 I.R.B. 102

2015-3
Superseded by
Rev. Proc. 2016-3, 2016-1 I.R.B. 126
2015-5
Superseded by
Rev. Proc. 2016-5, 2016-1 I.R.B. 142

2015-7
Superseded by
Rev. Proc. 2016-7, 2016-1 I.R.B. 188

2015-8
Superseded by
Rev. Proc. 2016-8, 2016-1 I.R.B. 200

2015-9
Superseded by
Rev. Proc. 2016-5, 2016-1 I.R.B. 239

2015-10
Superseded by
Rev. Proc. 2016-10, 2016-2 I.R.B. 270

2015-22
Superseded by
Rev. Proc. 2016-8, 2016-1 I.R.B. 243

2015-53
Modified by
Rev. Proc. 2016-11, 2016-2 I.R.B. 274

"A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2015-27 through 2015-52 is in Internal Revenue Bulletin
2015-52, dated December 28, 2015.

# Internal Revenue Service Washington, DC 20224

Official Business
Penalty for Private Use, $300

# INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

# We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
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Internal Revenue Bulletin 2016-6 (PDF rendition): IRS Announcements

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