Internal Revenue Bulletin 2003-4 (PDF rendition): IRS Revenue Procedures

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

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## 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.

## SPECIAL ANNOUNCEMENT

Announcement 2003-3, page 361.

This announcement lists the names of the neutrals that have been
qualified by the Service and Chief Counsel to serve as arbitra-
tors for contingent liability transaction cases proceeding under
Rev. Proc. 2002-67, 2003-43 I.R.B. 733.

## INCOME TAX

Rev. Rul. 2003-9, page 303.
LIFO; price indexes; department stores. The November 2002
Bureau of Labor Statistics price indexes are accepted for use by
department stores employing the retail inventory and last-in, first-
out inventory methods for valuing inventories for tax years ended
on, or with reference to, November 30, 2002.

Rev. Rul. 2003-14, page 302.

Cost-share payments; SWCA. The Soil and Water Conserva-
tion Assistance Program (SWCA) is substantially similar to the type
of programs described in sections 126(a)(1) through (8) within
the meaning of section 126(a)(9) of the Code. All or a portion of
cost-share payments received under the SWCA program is eli-
gible for exclusion from gross income to the extent permitted by
section 126.

Rev. Rul. 2003-15, page 302.

Cost-share payments; AMA. The Agricultural Management As-
sistance Program (AMA) is substantially similar to the type of pro-
grams described in sections 126(a)(1) through (8) within the
meaning of section 126(a)(9) of the Code. All or a portion of cost-
share payments received under the AMA program is eligible for
exclusion from gross income to the extent permitted by sec-
tion 126.

Rev. Proc. 2003-11, page 311.

This procedure describes the Service's Offshore Voluntary Com-
pliance Initiative for taxpayers that have underreported their United
States income tax liability through financial arrangements that in
any manner rely on the use of offshore payment cards or off-
shore financial arrangements.

## EMPLOYEE PLANS

Notice 2003-7, page 310.

Weighted average interest rate update. The weighted aver-
age interest rate for January 2003 and the resulting permis-
sible range of interest rates used to calculate current liability for
purposes of the full funding limitation of section 412(c)(7) of the
Code are set forth.

Rev. Proc. 2003-13, page 317.
Deemed IRAs; section 602 of EGTRRA. This procedure de-
scribes the application of section 408(q) of the Code for deemed
IRAs as added by section 602 of the Economic Growth and Tax
Relief Reconciliation Act for plan years after December 31, 2002.

Rev. Proc. 2003-16, page 359.
Section 644 of EGTRRA; 60-day rollover requirement;
waiver. This document describes a procedure for obtaining a
waiver of the 60-day rollover requirement under sections 402(c)(3)
and 408(d)(3) of the Code for distributions after December 31,
2001.

## EXEMPT ORGANIZATIONS

Rev. Rul. 2003-13, page 305.

Transfers of assets. This ruling describes the responsibilities
of a private foundation relating to section 507 and chapter 42
(sections 4940-4945) of the Code when it transfers all of its as-
sets to one or more public charities described in sections
509(a)(1), 509(a)(2), or 509(a)(3).

(Continued on the next page)

Finding Lists begin on page ii.

Department of the Treasury
Internal Revenue Service

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## EXEMPT ORGANIZATIONS-CONT.

### Rev. Proc. 2003-12, page 316.

This procedure clarifies that an entity described in section
501(c)(3) of the Code can also meet the requirements of sec-
tion 115(1). It also provides information on drafting dissolution
clauses in the articles of organization of a section 501(c)(3) en-
tity that requests a letter ruling that its income is excluded from
gross income under section 115(1).

## ADMINISTRATIVE

### Notice 2003-8, page 310.

This notice advises that until further notice from the Service, no
information reporting will be required under section 6045 of the
Code with regard to securities futures contracts.

Rev. Proc. 2003-11, page 311.

This procedure describes the Service's Offshore Voluntary Com-
pliance Initiative for taxpayers that have underreported their United
States income tax liability through financial arrangements that in
any manner rely on the use of offshore payment cards or off-
shore financial arrangements.

Rev. Proc. 2003-14, page 319.

Indian tribal government trusts for minors. This proce-
dure provides a safe harbor under which the Service will treat an
Indian tribe as the grantor and owner of a trust for the receipt
of gaming revenues under the Indian Gaming Regulatory Act (25
U.S.C. sections 2701-2721) (IGRA) for the benefit of minors or
legal incompetents. Beneficiaries of an IGRA trust will not be re-
quired to include amounts in gross income when transferred to,
or earned by, the IGRA trust under the economic benefit doc-
trine. Comments are requested on the application of the eco-
nomic benefit doctrine to IGRA trusts that are not within the scope
of this revenue procedure and the type of trust provisions that
preclude the application of the economic benefit doctrine. Rev.
Proc. 2003-3 amplified.

### Rev. Proc. 2003-15, page 321.

This procedure provides issuers of qualified mortgage bonds, as
defined in section 143(a) of the Code, and issuers of mort-
gage credit certificates, as defined in section 25(c), with a list
of qualified census tracts for each state and the District of Co-
lumbia. The qualified census tracts are based on data from the
2000 census. Rev. Proc. 93-38 obsoleted.

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## The IRS Mission

Provide America's taxpayers top quality service by helping them
understand and meet their tax responsibilities and by applying
the tax 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 rul-
ings and procedures of the Internal Revenue Service and for pub-
lishing Treasury Decisions, Executive Orders, Tax Conventions,
legislation, court decisions, and other items of general inter-
est. It is published weekly and may be obtained from the Super-
intendent of Documents on a subscription basis. Bulletin contents
are consolidated semiannually into Cumulative Bulletins, which
are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-
stantive 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 pub-
lished rulings apply retroactively unless otherwise indicated. Pro-
cedures relating solely to matters of internal management are
not published; however, statements of internal practices and pro-
cedures that affect the rights and duties of taxpayers are pub-
lished.

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 taxpay-
ers or technical advice to Service field offices, identifying de-
tails 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 re-
lied on, used, or cited as precedents by Service personnel in the
disposition of other cases. In applying published rulings and pro-
cedures, the effect of subsequent legislation, regulations, court

decisions, rulings, and procedures must be considered, and Ser-
vice personnel and others concerned are cautioned against reach-
ing 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 sub-
jects are contained in the other Parts and Subparts. Also in-
cluded in this part are Bank Secrecy Act Administrative Rulings.
Bank Secrecy Act Administrative Rulings are issued by the De-
partment of the Treasury's Office of the Assistant Secretary (En-
forcement).

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

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

The first 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 first Bulletin of the succeeding semiannual pe-
riod, respectively.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

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

### Section 25 .- Interest on Cer- tain Home Mortgages

26 CFR 1.25-3T: Qualified mortgage credit certifi-
cate.

The qualified census tracts for the states and the
District of Columbia are set forth for use in deter-
mining the portion of loans required to be placed in
targeted areas under section 143(h). See Rev. Proc.
2003-15, page 321.

### Section 61 .- Gross Income Defined

26 CFR 1.61-1: Gross income.

Beneficiaries of trusts for the receipt of gaming
revenues under the Indian Gaming Regulatory Act for
the benefit of minors or legal incompetents that con-
form to the procedures of this revenue procedure will
not be required to include amounts in gross income
when transferred to, or earned by, the trust under the
economic benefit doctrine. Rather, beneficiaries will
include amounts in income when actually or con-
structively received. See Rev. Proc. 2003-14, page 319.

### Section 103 .- Interest on State and Local Bonds

26 CFR 1.103-1: Interest upon obligations of a State,
Territory, etc.

The qualified census tracts for the states and the
District of Columbia are set forth for use in deter-
mining the portion of loans required to be placed in
targeted areas under section 143(h). See Rev. Proc.
2003-15, page 321.

### Section 126 .- Certain Cost- Sharing Payments

26 CFR 16A.126-1: Certain cost-sharing payments
\- In general (Temporary).

Cost-share payments; SWCA. The Soil
and Water Conservation Assistance Pro-
gram (SWCA) is substantially similar to the
type of programs described in sections
126(a)(1) through (8) within the meaning
of section 126(a)(9) of the Code. All or a
portion of cost-share payments received un-
der the SWCA program is eligible for ex-
clusion from gross income to the extent
permitted by section 126.

### Rev. Rul. 2003-14

ISSUE

Is the Soil and Water Conservation As-
sistance (SWCA) program substantially
similar to the type of programs described
in § 126(a)(1) through (8) of the Internal
Revenue Code, so that the SWCA pro-
gram is within the scope of § 126(a)(9) and,
thereby, cost-share payments received un-
der the SWCA program are eligible for ex-
clusion from gross income to the extent
permitted by § 126?

#### FACTS

The SWCA program, authorized under
the provisions of Title II of the Agricul-
tural Risk Protection Act of 2000, Pub. L.
No. 106-224, 114 Stat. 358, is a volun-
tary program that provides payments to
farmers and ranchers to implement mea-
sures needed to conserve and improve soil,
water, and related natural resources and to
comply with federal and state environmen-
tal laws. A farmer or rancher who partici-
pates in the SWCA program enters into a
5 to 10 year cost-share agreement with the
Department of Agriculture pursuant to
which the farmer or rancher agrees to
implement specific eligible conservation
practices in return for cost-share payments
in the amount of 75 percent of the cost of
an eligible practice. The total maximum
payment per participant cannot exceed
$50,000.

The Secretary of Agriculture has deter-
mined that cost-share payments under the
SWCA program are primarily for the pur-
pose of conservation.

### LAW AND ANALYSIS

Under § 126(a), gross income does not
include the excludable portion of payments
received under certain conservation pro-
grams set forth in § 126(a)(1) through (8).
Under § 126(a)(9), a program affecting
"small watersheds" that is administered by
the Secretary of Agriculture also is eli-
gible for § 126 treatment if the Commis-
sioner determines that the program is
substantially similar to the type of pro-

grams described in §§ 126(a)(1) through (8).
See § 16A.126-1(d)(3) of the temporary In-
come Tax Regulations for the definition of
"small watershed."

Once the Commissioner has determined
that a program is substantially similar to the
types of programs described in § 126(a)(1)
through (8), taxpayers receiving cost-share
payments under that program must deter-
mine what portion of the cost-share pay-
ments is excludable from gross income
under § 126. See § 126(b)(1), and
§ 16A.126-1 relating to the partial exclu-
sion for certain cost-share payments to de-
termine what portion of the cost-share
payments is excludable from gross income
under § 126.

#### HOLDING

The SWCA program is substantially
similar to the type of programs described
in §§ 126(a)(1) through (8) within the mean-
ing of § 126(a)(9). All or a portion of cost-
share payments received under the SWCA
program is eligible for exclusion from gross
income to the extent permitted by § 126.
See § 126(b)(1) and § 16A.126-1 to deter-
mine what portion, if any, of the cost-share
payments is excludable from gross income
under § 126.

### DRAFTING INFORMATION

The principal author of this revenue rul-
ing is Nicole R. Cimino of the Office of As-
sociate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this revenue ruling, con-
tact Ms. Cimino at (202) 622-3120 (not a
toll-free call).

26 CFR 16A.126-1: Certain cost-sharing payments
\- In general (Temporary).

Cost-share payments; AMA. The Ag-
ricultural Management Assistance Pro-
gram (AMA) is substantially similar to the
type of programs described in sections
126(a)(1) through (8) within the meaning
of section 126(a)(9) of the Code. All or a
portion of cost-share payments received un-
der the AMA program is eligible for exclu-

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sion from gross income to the extent per-
mitted by section 126.

## Rev. Rul. 2003-15

### ISSUE

Is the Agricultural Management Assis-
tance (AMA) program substantially simi-
lar to the type of programs described in
§ 126 (a)(1) through (8) of the Internal Rev-
enue Code, so that the AMA program is
within the scope of § 126(a)(9) and, thereby,
cost-share payments received under the
AMA program are eligible for exclusion
from gross income to the extent permit-
ted by § 126?

### FACTS

The AMA program, authorized under the
provisions of Title I of the Agricultural Risk
Protection Act of 2000, Pub. L. No. 106-
224, 114 Stat. 358, is a voluntary pro-
gram that provides cost-share assistance to
agricultural producers to address threats to
soil, water, and related natural resources by
incorporating certain conservation prac-
tices into their farming operations. An ag-
ricultural producer who participates in the
AMA program enters into a 5 to 10 year
cost-share agreement with the Department
of Agriculture pursuant to which the agri-
cultural producer agrees to implement eli-
gible conservation practices in return for
cost-share payments in the amount of 75
percent of the cost of the eligible prac-
tice, with a limit of $50,000 per person for
any fiscal year. The total cost-share pay-
ments paid per person over the course of
the contract cannot exceed $150,000.

The Secretary of Agriculture has deter-
mined that cost-share payments under the
AMA program are primarily for the pur-
pose of conservation.

### LAW AND ANALYSIS

Under § 126(a), gross income does not
include the excludable portion of payments
received under certain conservation pro-
grams set forth in § 126(a)(1) through (8).
Under § 126(a)(9), a program affecting
"small watersheds" that is administered by
the Secretary of Agriculture also is eli-
gible for § 126 treatment if the Commis-
sioner determines that the program is
substantially similar to the type of pro-

grams described in §§ 126(a)(1) through (8).
See § 16A.126-1(d)(3) of the temporary In-
come Tax Regulations for the definition of
"small watershed."

Once the Commissioner has determined
that a program is substantially similar to the
types of programs described in § 126(a)(1)
through (8), taxpayers receiving cost-share
payments under that program must deter-
mine what portion of the cost-share pay-
ments is excludable from gross income
under § 126. See § 126(b)(1), and
§ 16A.126-1 relating to the partial exclu-
sion for certain cost-share payments to de-
termine what portion of the cost-share
payments is excludable from gross income
under § 126.

### HOLDING

The AMA program is substantially simi-
lar to the type of programs described in
§§ 126(a)(1) through (8) within the mean-
ing of § 126(a)(9). All or a portion of cost-
share payments received under the AMA
program is eligible for exclusion from gross
income to the extent permitted by § 126.
See § 126(b)(1) and § 16A.126-1 to deter-
mine what portion, if any, of the cost-share
payments is excludable from gross income
under § 126.

## DRAFTING INFORMATION

The principal author of this revenue rul-
ing is Nicole R. Cimino of the Office of As-
sociate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this revenue ruling, con-
tact Ms. Cimino at (202) 622-3120 (not a
toll-free call).

## Section 143 .- Mortgage Rev- enue Bonds: Qualified Mort- gage Bond and Qualified Veterans' Mortgage Bond

26 CFR 6a.1034-2: Qualified mortgage bond.

The qualified census tracts for the states and the
District of Columbia are set forth for use in deter-
mining the portion of loans required to be placed in
targeted areas under section 143(h). See Rev. Proc.
2003-15, page 321.

## Section 402 .- Taxability of Beneficiary of Employees' Trust

Pursuant to section 644 of the Economic Growth
and Tax Relief Reconciliation Act of 2001, a rev-
enue procedure provides a method for obtaining a
waiver from the 60-day rollover requirement of sec-
tion 402(c)(3)(A) of the Internal Revenue Code. See
Rev. Proc. 2003-16, page 359.

## Section 408 .- Individual Re- tirement Accounts

Pursuant to section 644 of the Economic Growth
and Tax Relief Reconciliation Act of 2001, a rev-
enue procedure provides a method for obtaining a
waiver from the 60-day rollover requirement of sec-
tion 408(d)(3)(A) and (D) of the Internal Revenue
Code. See Rev. Proc. 2003-16, page 359.

## Section 451 .- General Rule for Taxable Year of Inclusion

### 26 CFR 1.451-1: General rule for taxable year of in- clusion.

Beneficiaries of trusts for the receipt of gaming
revenues under the Indian Gaming Regulatory Act for
the benefit of minors or legal incompetents that con-
form to the procedures of this revenue procedure will
not be required to include amounts in gross income
when transferred to, or earned by, the trust under the
economic benefit doctrine. Rather, beneficiaries will
include amounts in income when actually or con-
structively received. See Rev. Proc. 2003-14, page 319.

## Section 472 .- Last-in, First-out Inventories

26 CFR 1.472-1: Last-in, first-out inventories.

LIFO; price indexes; department
stores. The November 2002 Bureau of La-
bor Statistics price indexes are accepted for
use by department stores employing the re-
tail inventory and last-in, first-out inven-
tory methods for valuing inventories for tax
years ended on, or with reference to, No-
vember 30, 2002.

## Rev. Rul. 2003-9

The following Department Store Inven-
tory Price Indexes for November 2002 were
issued by the Bureau of Labor Statistics.
The indexes are accepted by the Internal
Revenue Service, under § 1.472-1(k) of the
Income Tax Regulations and Rev. Proc. 86-
46, 1986-2 C.B. 739, for appropriate ap-

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plication to inventories of department stores
employing the retail inventory and last-
in, first-out inventory methods for tax years
ended on, or with reference to, Novem-
ber 30, 2002.

The Department Store Inventory Price
Indexes are prepared on a national basis and
include (a) 23 major groups of depart-
ments, (b) three special combinations of the
major groups - soft goods, durable goods,

and miscellaneous goods, and (c) a store to-
tal, which covers all departments, includ-
ing some not listed separately, except for
the following: candy, food, liquor, tobacco,
and contract departments.

# BUREAU OF LABOR STATISTICS, DEPARTMENT STORE INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS (January 1941 = 100, unless otherwise noted)

Groups

Nov. 2001

Nov. 2002

Percent Change from Nov. 2001 to Nov. 20021

1. Piece Goods

492.1

473.3

-3.8

2. Domestics and Draperies

597.2

571.3

-4.3

3. Women's and Children's Shoes

659.0

652.4

-1.0

4. Men's Shoes

877.2

899.2

2.5

5. Infants' Wear

641.4

622.7

-2.9

6. Women's Underwear

574.5

551.8

-4.0

7. Women's Hosiery

355.0

345.3

-2.7

8. Women's and Girls' Accessories

562.2

559.1

-0.6

9. Women's Outerwear and Girls' Wear

385.3

373.5

-3.1

10. Men's Clothing

582.7

572.1

-1.8

11. Men's Furnishings

625.4

603.6

-3.5

12. Boys' Clothing and Furnishings

490.1

461.3

-5.9

13. Jewelry

907.3

871.7

-3.9

14. Notions

806.5

793.1

-1.7

15. Toilet Articles and Drugs

979.8

972.5

-0.7

16. Furniture and Bedding

629.5

622.2

-1.2

17. Floor Coverings

627.3

600.6

-4.3

18. Housewares

762.5

738.6

-3.1

19. Major Appliances

226.5

221.6

-2.2

20. Radio and Television

52.3

47.5

-9.2

21. Recreation and Education2

88.4

84.6

-4.3

22. Home Improvements2

124.2

125.2

0.8

23. Auto Accessories2

110.4

111.7

1.2

Groups 1 - 15: Soft Goods.

592.1

575.9

-2.7

Groups 16 - 20: Durable Goods

418.8

404.5

-3.4

Groups 21 - 23: Misc. Goods2

97.6

95.4

-2.3

Store Total3

528.0

513.0

-2.8

1Absence of a minus sign before the percentage change in this column signifies a price increase.

2Indexes on a January 1986=100 base.

3The store total index covers all departments, including some not listed separately, except for the following: candy, food, liquor, tobacco, and contract depart-
ments.

# DRAFTING INFORMATION

The principal author of this revenue rul-
ing is Michael Burkom of the Office of As-
sociate Chief Counsel (Income Tax and

Accounting). For further information re-
garding this revenue ruling, contact
Mr. Burkom at (202) 622-7718 (not a toll-
free call).

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# Section 507 .- Termination of Private Foundation Status

26 CFR 1.507-1, 1.507-2, 1.507-3, 1.507-4, 1.507-7:
Special rules; Transfers to publicly supported orga-
nizations; Liability in case of transfers.
(Also §§ 4940, 4941, 4942, 4943, 4944, 4945;
53.4940-1, 53.4941(a)-1, 53.4942(a)-3.)

Transfers of assets. This ruling de-
scribes the responsibilities of a private foun-
dation relating to section 507 and chapter
42 (sections 4940-4945) of the Code when
it transfers all of its assets to one or more
public charities described in sections
509(a)(1), 509(a)(2), or 509(a)(3).

# Rev. Rul. 2003-13

## ISSUES

If a private foundation distributes all of
its net assets to one or more public chari-
ties described in § 509(a)(1), § 509(a)(2) or
§ 509(a)(3) of the Internal Revenue Code
under the facts described below:

1\. Has the private foundation termi-
nated its foundation status and is the pri-
vate foundation liable for tax under
§ 507(c)?

2\. What are the consequences of the dis-
tribution under:

(a) § 4940;

(b) § 4941;

(c) § 4942;

(d) § 4943;

(e) § 4944; and

(f) § 4945?

### FACTS

Each of the following situations as-
sumes that: (i) the private foundation has
not committed either willful repeated acts
(or failures to act), or a willful and fla-
grant act (or failure to act), giving rise to
liability for tax under chapter 42; (ii) the
private foundation is not an operating foun-
dation within the meaning of § 4942(j)(3);
(iii) the transferee organizations are not con-
trolled (directly or indirectly) by the pri-
vate foundation or by one or more
disqualified persons with respect to the pri-
vate foundation; (iv) the private founda-
tion has not previously terminated (or had
terminated) its private foundation status; (v)
the transferee organization is a public char-
ity described in § 509(a)(1), § 509(a)(2), or
§ 509(a)(3) that retains its public charity

classification for at least three years fol-
lowing the date of the distribution; (vi) the
private foundation does not impose any ma-
terial restrictions as described in § 1.507-
2(a)(8)(i) on the transferred assets, and (vii)
the private foundation retains sufficient in-
come or assets to pay any chapter 42 taxes,
such as the tax imposed under § 4940 for
the portion of the taxable year prior to the
distribution, and pays such taxes when due.

Situation 1. P is recognized as exempt
from federal income tax under § 501(c)(3)
and is classified as a private foundation un-
der § 509(a). Pursuant to a plan of disso-
lution, P distributes all its net assets to X.

X is recognized as exempt from fed-
eral income tax under § 501(c)(3) and is not
a private foundation because X is described
in § 509(a)(1) (i.e. an organization de-
scribed in § 170(b)(1)(A) (other than clauses
(vii) and (viii))). X has been in existence
and so described for a continuous period of
at least 60 calendar months immediately
preceding the distribution. After P distrib-
utes all its net assets, P files articles of dis-
solution with the appropriate state authority.

Situation 2. The facts are the same as
Situation 1, except that X has been in ex-
istence for fewer than 60 calendar months
immediately preceding the distribution, and
was not formed as a result of a consolida-
tion of other organizations described in
§ 509(a)(1) that would have been in exist-
ence for a continuous period of 60 calen-
dar months prior to the distribution had they
continued in existence.

Situation 3. The facts are the same as
Situation 1, except that X is an organiza-
tion described in § 509(a)(2).

Situation 4. The facts are the same as
Situation 1, except that X is an organiza-
tion described in § 509(a)(3).

LAW

Section 507(a) provides that, except as
provided in § 507(b), the status of any or-
ganization as a private foundation shall be
terminated only if (1) such organization no-
tifies the Secretary of its intent to accom-
plish such termination, or (2) with respect
to such organization, there have been ei-
ther willful repeated acts (or failures to act),
or a willful and flagrant act (or failure to
act), giving rise to a liability for tax un-
der chapter 42, and the Secretary notifies
such organization that it is liable for the tax
imposed by § 507(c). Under § 507(a)(1) and
(2), the organization's private foundation

status is terminated when the organiza-
tion pays the tax imposed by § 507(c) or
the entire amount of such tax is abated un-
der § 507(g).

Section 507(b)(1)(A) provides that the
private foundation status of any organiza-
tion, with respect to which there have not
been either willful repeated acts (or fail-
ures to act) or a willful and flagrant act (or
failure to act) giving rise to a liability for
tax under chapter 42, shall be terminated,
if the private foundation distributes all its
net assets to one or more organizations de-
scribed in § 170(b)(1)(A) (other than clauses
(vii) and (viii)) each of which has been in
existence and so described for a continu-
ous period of at least 60 calendar months
immediately preceding such distribution.

Section 507(c) imposes a tax on each or-
ganization whose private foundation sta-
tus is voluntarily or involuntarily terminated
under § 507(a). The tax imposed is the
lower of (1) the amount that the private
foundation substantiates by adequate records
or other corroborating evidence as the ag-
gregate tax benefit resulting from the
§ 501(c)(3) status of such foundation, or (2)
the value of the net assets of the founda-
tion.

Section 1.507-1(b)(1) provides that in
order to terminate its private foundation sta-
tus under § 507(a)(1), an organization must
submit a statement to the Manager, Ex-
empt Organizations Determinations, Tax Ex-
empt and Government Entities Division
(TE/GE), of its intent to terminate its pri-
vate foundation status under § 507(a)(1).
Such statement must set forth in detail the
computation and amount of tax imposed un-
der § 507(c). Unless the organization re-
quests abatement of such tax pursuant to
§ 507(g), full payment of such tax must be
made at the time the statement is filed un-
der § 507(a)(1). An organization may re-
quest the abatement of all of the tax
imposed under § 507(c), or may pay any
part thereof and request abatement of the
unpaid portion of the amount of tax as-
sessed. If the organization requests abate-
ment of the tax imposed under § 507(c) and
such request is denied, the organization must
pay such tax in full upon notification by the
Service that such tax will not be abated.

Section 1.507-1(b)(7) provides that a
transfer of all the assets of a private foun-
dation does not result in a termination of
the transferor private foundation under
§ 507(a), unless the transferor private foun-

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dation elects to terminate pursuant to
§ 507(a)(1), or § 507(a)(2) is applicable.

Section 1.507-2(a)(1) provides that un-
der § 507(b)(1)(A), a private foundation,
may terminate its private foundation sta-
tus by distributing all its net assets to one
or more organizations described in
§ 170(b)(1)(A) (other than clauses (vii) and
(viii)) each of which has been in exist-
ence and so described for a continuous pe-
riod of at least 60 calendar months
immediately preceding such distribution. As
§ 507(a) does not apply to such a termi-
nation, a private foundation that makes such
a termination is not required to give the no-
tification described in § 507(a)(1). A pri-
vate foundation that terminates its private
foundation status under § 507(b)(1)(A) does
not incur tax under § 507(c) and, there-
fore, no abatement of such tax under
§ 507(g) is required.

Section 1.507-2(a)(4) provides that an
organization that terminates its private foun-
dation status pursuant to § 507(b)(1)(A) will
remain subject to the provisions of chap-
ter 42 until it distributes all its net assets
to distributee organizations described in
§ 507(b)(1)(A).

Section 1.507-2(a)(7) provides that a pri-
vate foundation will meet the requirement
that it "distribute all of its net assets" within
the meaning of § 507(b)(1)(A) only if it
transfers all its right, title, and interest in
and to all its net assets to one or more or-
ganizations referred to in § 507(b)(1)(A).

Section 1.507-2(a)(8)(i) provides, in part,
that to effectuate a transfer of "all of its
right, title, and interest in and to all of net
assets," a transferor private foundation may
not impose any material restriction or con-
dition that prevents the transferee organi-
zation from freely and effectively employing
the transferred assets, or the income de-
rived therefrom, in furtherance of its ex-
empt purposes.

Section 1.507-3(e) provides that if a pri-
vate foundation transfers all or part of its
assets to one or more organizations de-
scribed in § 509(a)(1), (2), or (3) and, within
a period of 3 years from the date of such
transfers, one or more of the transferee or-
ganizations lose their § 509(a)(1), (2), or (3)
status and become private foundations, then
the transfer will be treated as a transfer de-
scribed in § 507(b)(2) and the provisions of
§ 1.507-3(a) shall be treated as applying to
such transferee from the date any such
transfer was made to it.

Section 1.507-4(b) provides that pri-
vate foundations that make transfers de-
scribed in § 507(b)(1)(A) or (2) are not
subject to the tax imposed under § 507(c)
with respect to such transfers unless the pro-
visions of § 507(a) become applicable.

Section 1.507-7(a) provides that the
value of net assets for purposes of § 507(c)
shall be determined at whichever time such
value is higher: (1) the first day action is
taken by the organization that culminates
in its ceasing to be a private foundation, or
(2) the date it ceases to be a private foun-
dation.

Section 1.507-7(b)(1) provides that in
the case of a termination under § 507(a)(1),
the date of action referred to in § 1.507-
7(a)(1) shall be the date the terminating
foundation gives the notification described
in § 507(a)(1).

Section 4940(a) generally imposes an ex-
cise tax on a private foundation's net in-
vestment income for the taxable year.

Section 4940(c)(1) defines net invest-
ment income as the amount by which the
sum of the gross investment income and the
capital gain net income exceeds the deduc-
tions allowed under 4940(c)(3).

Section 53.4940-1(f)(1) provides that a
distribution of property for purposes de-
scribed in § 170(c)(1) or (2)(B) that is a
qualifying distribution under § 4942 shall
not be treated as a sale or disposition of
property.

Section 4941(a)(1) imposes a tax on each
act of self-dealing between a disqualified
person and a private foundation. Section
53.4946-1(a)(8) provides that, for pur-
poses of § 4941, the term "disqualified per-
son" shall not include any organization
described in § 501(c)(3) (other than an or-
ganization described in § 509(a)(4)).

Section 4942(a) generally imposes a tax
on the undistributed income of a private
foundation (other than an operating foun-
dation under § 4942(j)(3)) for any taxable
year, that has not been distributed before the
first day of the second (or any succeed-
ing) taxable year following such taxable
year.

Section 4942(c) defines "undistributed
income" for any taxable year as the amount
by which the distributable amount for such
taxable year exceeds the qualifying distri-
butions made out of such distributable
amount for such taxable year.

Section 4942(d) defines "distributable
amount" as the amount equal to the sum of

the minimum investment return, plus cer-
tain other amounts, reduced by the sum of
the taxes imposed on such private founda-
tion for the taxable year under subtitle A
and § 4940.

Section 4942(g)(1)(A) defines "quali-
fying distribution" as any amount (includ-
ing that portion of reasonable and necessary
administrative expenses) paid to accom-
plish one or more purposes described in
§ 170(c)(2)(B) other than a contribution to
(i) an organization controlled directly or in-
directly by the foundation or by one or
more disqualified persons with respect to
the foundation, unless certain requirements
are satisfied, or (ii) any private founda-
tion that is not an operating foundation un-
der § 4942(j)(3), unless certain requirements
are satisfied.

Section 53.4942(a)-3(a)(3) provides, in
part, that control of a donee organization
is determined without regard to any con-
ditions imposed upon the donee as part of
the distribution or any other restrictions ac-
companying the distribution as to the man-
ner the distribution is to be used, unless
such conditions or restrictions are described
in § 1.507-2(a)(8).

Section 4943(a)(1) imposes a tax on the
"excess business holdings" (as defined in
§ 4943(c)) of any private foundation in a
business enterprise.

Section 4944(a)(1) imposes a tax on any
amount invested by a private foundation in
a manner that jeopardizes the carrying out
of any of the foundation's exempt pur-
poses.

Section 4945 imposes a tax on any "tax-
able expenditure" (as defined in § 4945(d))
made by a private foundation.

Section 4945(d)(4)(A) states that the term
"taxable expenditure" includes any amount
paid or incurred by a private foundation as
a grant to an organization unless the orga-
nization is described in paragraph (1), (2),
or (3) of § 509(a) or is an exempt operat-
ing foundation (as defined in § 4940(d)(2)).

Section 4945(h) provides that the ex-
penditure responsibility referred to in
§ 4945(d)(4) means a private foundation is
responsible to exert all reasonable efforts
and to establish adequate procedures to (1)
see that the grant is spent solely for the pur-
pose for which made, (2) obtain full and
complete reports from the grantee on how
the funds are spent, and (3) make full and
detailed reports with respect to such ex-
penditures to the Secretary.

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Section 4946 provides that the term 'dis-
qualified person' includes a substantial con-
tributor to a private foundation.

In Rev. Rul. 75-289, 1975-2 C.B. 215,
a private foundation defined in § 509 dis-
tributed all its net assets to an organiza-
tion, described in § 170(b)(1)(A)(vi), that
had been in existence for only 20 months.
The organization was formed as a result of
a consolidation of two organizations each
of which would have been an organiza-
tion described in § 170(b)(1)(A)(vi) and in
existence for a continuous period of 60 cal-
endar months before the distribution had
they continued in existence. The ruling held
that the private foundation had terminated
its private foundation status under
§ 507(b)(1)(A).

### ANALYSIS

#### SECTION 507

Under § 507(b)(1)(A), an organization's
status as a private foundation is termi-
nated if the organization distributes all its
net assets to one or more organizations de-
scribed in § 509(a)(1) (i.e., organizations de-
scribed in § 170(b)(1)(A) (other than in
clauses (vii) and (viii))) each of which has
been in existence and so described for a
continuous period of at least 60 calendar
months immediately preceding the distri-
bution. An organization that terminates its
private foundation status under
§ 507(b)(1)(A) is not required to give no-
tice under § 507(a)(1) and is not subject to
the tax described in § 507(c). See § 1.507-
2(a)(1).

If a private foundation distributes all its
net assets to one or more public charities,
at least one of which is described in
§ 509(a)(1) and has been so described for
fewer than 60 calendar months immedi-
ately preceding the distribution or is de-
scribed in §§ 509(a)(2) or (3), then the rules
of § 507(b)(1)(A) do not apply. In this case,
the distributions do not cause the private
foundation to terminate its private founda-
tion status. See § 1.507-1(b)(7). The pri-
vate foundation may choose to terminate its
private foundation status by submitting a
statement of its intent to terminate its pri-
vate foundation status under § 507(a)(1) to
the Manager, Exempt Organizations De-
terminations, Tax Exempt and Govern-
ment Entities Division (TE/GE). See
§ 1.507-1(b)(1). Such statement must set

forth in detail the computation and amount
of tax imposed under § 507(c). See § 1.507-
1(b)(1). If the private foundation has no net
assets on the day it provides notice (e.g.,
it provides notice at least one day after it
distributes all its net assets), the tax im-
posed by § 507(c) will be zero. See
§ 507(a)(1) and § 507(c); and §§ 1.507-
7(a) and (b). A submission of a Form
990-PF marked "Final" does not consti-
tute notice of termination of private foun-
dation status under § 507(a)(1). See § 1.507-
1(b)(1).

In Situation 1, P transfers all its net as-
sets to X, which is described in § 509(a)(1)
and has been so described for a continu-
ous period of at least 60 calendar months
immediately preceding the distribution. Ac-
cordingly, the distribution is subject to the
rules of § 507(b)(1)(A), rather than the rules
of § 507(a)(1). See § 507(b)(1)(A) and
§ 1.507-2(a)(1).

Because the distribution is described in
§ 507(b)(1)(A), P's status as a private foun-
dation is terminated upon the distribution
and P is not subject to the tax described in
§ 507(c). See § 1.507-2(a)(1) and § 1.507-
4(b). P is not required to give notice un-
der § 507(a)(1) to terminate its private
foundation status.

In Situation 2, X is an organization de-
scribed in § 509(a)(1) that has been in ex-
istence and so described for fewer than 60
calendar months immediately preceding the
distribution. In Situation 3, X is an orga-
nization described in § 509(a)(2). In Situ-
ation 4, X is an organization described in
§ 509(a)(3). Accordingly, the distributions
in Situations 2, 3, and 4 are not subject to
the rules of § 507(b)(1)(A). See § 507(b)
(1)(A) and § 1.507-2(a)(1).

Because the distributions in Situations
2, 3, and 4 are not described in
§ 507(b)(1)(A), P's status as a private foun-
dation is not terminated unless it gives no-
tice under § 507(a)(1). See § 1.507-1(b)(1)
and § 1.507-1(b)(7). If P does not pro-
vide notice and does not terminate, P is not
subject to the tax under § 507(c).

If P chooses to provide notice, and there-
fore terminates, it is subject to the tax un-
der § 507(c) on the date it provides notice;
however, if P has no net assets on the day
it provides notice (e.g., it provides notice
at least one day after it distributes all its net
assets), the tax imposed by § 507(c) will be

zero. See § 507(a)(1) and § 507(c); and
§§ 1.507-7(a) and (b).

#### SECTION 4940

In Situations 1, 2, 3, and 4, the distri-
butions do not constitute an investment of
P for purposes of § 4940; therefore the dis-
tributions do not give rise to net invest-
ment income under § 4940(a). See
§ 53.4940-1(f)(1).

#### SECTION 4941

In Situations 1, 2, 3, and 4, the distri-
butions are to § 501(c)(3) organizations,
which are not treated as disqualified per-
sons for purposes of § 4941. See § 53.4946-
1(a)(8). Thus, the distributions do not
constitute self-dealing transactions and are
not subject to tax under § 4941(a)(1).

#### SECTION 4942

In Situations 1, 2, 3, and 4, the distri-
butions are paid to accomplish one or more
purposes described in § 170(c)(2)(B) and are
not made to organizations controlled di-
rectly or indirectly by P or by one or more
disqualified persons with respect to P. Thus,
the distributions are qualifying distribu-
tions for purposes of § 4942(g)(1)(A).

#### SECTION 4943

In Situations 1, 2, 3, and 4, the distri-
butions do not cause P to have excess busi-
ness holdings subject to tax under § 4943(a).

#### SECTION 4944

In Situations 1, 2, 3, and 4, the distri-
butions do not constitute investments for
purposes of § 4944 and therefore are not
jeopardizing investments subject to tax un-
der § 4944(a)(1).

#### SECTION 4945

In Situations 1, 2, 3, and 4, the distri-
butions are to organizations described in
§§ 509(a)(1), (2), or (3). Therefore, the dis-
tributions are not taxable expenditures un-
der § 4945. See § 4945(d)(4)(A). P will not
be required to exercise expenditure respon-
sibility with respect to the distributions un-
der § 4945(d)(4) or (h).

#### HOLDINGS

Under the facts of the ruling:

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1\. A private foundation that distrib-
utes all its net assets to one or more orga-
nizations described in § 509(a)(1) (i.e.,
organizations described in § 170(b)(1)(A)
(other than in clauses (vii) and (viii))) each
of which has been in existence and so de-
scribed for a continuous period of at least
60 calendar months immediately preced-
ing the distribution terminates its private
foundation status under § 507(b)(1)(A). The
private foundation is not required to file a
notice of termination under § 507(a)(1) and
is not liable for tax under § 507(c).

A private foundation that distributes all
its net assets to one or more public chari-
ties, at least one of which is described in
§ 509(a)(1) and has been so described for
fewer than 60 calendar months immedi-
ately preceding the distribution or is de-
scribed in §§ 509(a)(2) or (3), does not
terminate its private foundation status un-
less it gives notice under § 507(a)(1). If the
private foundation does not provide no-
tice and does not terminate, the private
foundation is not subject to tax under
§ 507(c). If the private foundation chooses
to provide notice, and therefore terminates,
it is subject to the tax under § 507(c) on the
date notice is given; however, if the pri-
vate foundation has no net assets on the day
it provides notice (e.g., it provides notice
at least one day after it distributes all its net
assets), the tax imposed by § 507(c) will be
zero.

If the private foundation elects to ter-
minate its private foundation status under
§ 507(a)(1), it must submit a statement to
the Manager, Exempt Organizations De-
terminations, Tax Exempt and Govern-
ment Entities Division (TE/GE), of its intent
to terminate its private foundation status un-
der § 507(a)(1). Such statement must set
forth in detail the computation and amount
of tax imposed under § 507(c). The sub-
mission of a Form 990-PF marked "Fi-
nal" does not constitute notice of
termination of private foundation status un-
der § 507(a)(1).

2\. (a) The distribution does not give rise
to net investment income and is not sub-
ject to tax under § 4940(a).

(b) The distribution does not consti-
tute a self-dealing transaction and is not sub-
ject to tax under § 4941(a)(1).

(c) The distribution constitutes a quali-
fying distribution for the transferor pri-
vate foundation under § 4942.

(d) The distribution does not result in ex-
cess business holdings and is not subject to
tax under § 4943(a).

(e) The distribution does not constitute
an investment jeopardizing the transferor
private foundation's exempt purposes and
is not subject to tax under § 4944(a)(1).

(f) The distribution is not a taxable ex-
penditure described in § 4945.

#### DRAFTING INFORMATION

The principal author of this revenue rul-
ing is Theodore R. Lieber of the Exempt
Organizations, Tax Exempt and Govern-
ment Entities Division. For further infor-
mation regarding this revenue ruling, contact
Theodore R. Lieber at (202) 283-8999 (not
a toll-free call).

##### Section 671 .- Trust Income, Deductions, and Credits At- tributable to Grantors and Others as Substantial Owners

26 CFR 1.671-1: Grantors and others treated as sub-
stantial owners; scope

The Internal Revenue Service will treat an In-
dian tribe as the grantor and owner of a trust for the
receipt of gaming revenues under the Indian Gam-
ing Regulatory Act (25 U.S.C. sections 2701-2721)
(IGRA) for the benefit of minors or legal incompe-
tents if the trust conforms to the procedures of this
revenue procedure. See Rev. Proc. 2003-14, page 319.

#### Section 1234B .- Gains or Losses From Securities Fu- tures Contracts

Until further notice, the Internal Revenue Ser-
vice will not require information reporting under sec-
tion 6045 with respect to securities futures contracts.
See Notice 2003-8, page 310.

#### Section 1256 .- Section 1256 Contracts Marked to Market

Until further notice, the Internal Revenue Ser-
vice will not require information reporting under sec-
tion 6045 with respect to securities futures contracts.
See Notice 2003-8, page 310.

#### Section 4940 .- Excise Tax Based on Investment Income

Responsibilities of a private foundation relating to
section 507 and chapter 42 (sections 4940-4945) when
it transfers all of its assets to one or more organiza-
tions described in section 509(a). See Rev. Rul. 2003-
13, page 305.

##### Section 4941 .- Taxes on Self-Dealing

Responsibilities of a private foundation relating to
section 507 and chapter 42 (sections 4940-4945) when
it transfers all of its assets to one or more organiza-
tions described in section 509(a). See Rev. Rul. 2003-
13, page 305.

###### Section 4942 .- Taxes on Failure to Distribute Income

Responsibilities of a private foundation relating to
section 507 and chapter 42 (sections 4940-4945) when
it transfers all of its assets to one or more organiza-
tions described in section 509(a). See Rev. Rul. 2003-
13, page 305.

###### Section 4943 .- Taxes on Ex- cess Business Holdings

Responsibilities of a private foundation relating to
section 507 and chapter 42 (sections 4940-4945) when
it transfers all of its assets to one or more organiza-
tions described in section 509(a). See Rev. Rul. 2003-
13, page 305.

###### Section 4944 .- Taxes on In- vestments Which Jeopardize Charitable Purpose

Responsibilities of a private foundation relating to
section 507 and chapter 42 (sections 4940-4945) when
it transfers all of its assets to one or more organiza-
tions described in section 509(a). See Rev. Rul. 2003-
13, page 305.

###### Section 4945 .- Taxes on Tax- able Expenditures

Responsibilities of a private foundation relating to
section 507 and chapter 42 (sections 4940-4945) when
it transfers all of its assets to one or more organiza-
tions described in section 509(a). See Rev. Rul. 2003-
13, page 305.

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# Section 6045 .- Returns of Brokers

26 CFR 1.6045-1: Returns of information of bro-
kers and barter exchanges.

Until further notice, the Internal Revenue Ser-
vice will not require information reporting under sec-
tion 6045 with respect to securities futures contracts.
See Notice 2003-8, page 310.

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# Part III. Administrative, Procedural, and Miscellaneous

## Weighted Average Interest Rate Update

### Notice 2003-7

Sections 412(b)(5)(B) and 412(l)(7)(C)(i)
of the Internal Revenue Code provide that
the interest rates used to calculate current
liability for purposes of determining the full
funding limitation under § 412(c)(7) and the
required contribution under § 412(l) must
be within a permissible range around the
weighted average of the rates of interest on
30-year Treasury securities during the four-
year period ending on the last day before
the beginning of the plan year.

Notice 88-73, 1988-2 C.B. 383, pro-
vides guidelines for determining the
weighted average interest rate and the re-
sulting permissible range of interest rates

used to calculate current liability for the pur-
pose of the full funding limitation of
§ 412(c)(7) of the Code.

Section 417(e)(3)(A)(ii)(II) of the Code
defines the applicable interest rate, which
must be used for purposes of determining
the minimum present value of a partici-
pant's benefit under § 417(e)(1) and (2), as
the annual rate of interest on 30-year Trea-
sury securities for the month before the date
of distribution or such other time as the Sec-
retary may by regulations prescribe. Sec-
tion 1.417(e)-1(d)(3) of the Income Tax
Regulations provides that the applicable in-
terest rate for a month is the annual inter-
est rate on 30-year Treasury securities as
specified by the Commissioner for that
month in revenue rulings, notices or other
guidance published in the Internal Rev-
enue Bulletin.

The rate of interest on 30-year Trea-
sury Securities for December 2002 is 4.92
percent. Pursuant to Notice 2002-26,
2002-15 I.R.B. 743, the Service has de-
termined this rate as the monthly average
of the daily determination of yield on the
30-year Treasury bond maturing in Febru-
ary 2031.

Section 405 of the Job Creation and
Worker Assistance Act of 2002 amended
§ 412(l)(7)(C) of the Code to provide that
for plan years beginning in 2002 and 2003
the permissible range is extended to 120
percent.

The following rates were determined for
the plan years beginning in the month
shown below.

Month

Year

Weighted Average

90% to 110% Permissible Range

90% to 120% Permissible Range

January

2003

5.54

4.98 to 6.09

4.98 to 6.65

### Drafting information

The principal author of this notice is
Todd Newman of the Employee Plans, Tax
Exempt and Government Entities Divi-
sion. For further information regarding this
notice, please contact the Employee Plans'
taxpayer assistance telephone service at
1-877-829-5500 (a toll-free number), be-
tween the hours of 8:00 a.m. and 6:30 p.m.
Eastern time, Monday through Friday.
Mr. Newman may be reached at 1-202-
283-9888 (not a toll-free number).

## Information Reporting for Securities Futures Contracts

### Notice 2003-8

Until further notice, the Internal Rev-
enue Service will not require information
reporting under Code section 6045 with re-
spect to securities futures contracts.

#### Background

The Commodity Futures Moderniza-
tion Act of 2000 (the "Act") authorized
trading in securities futures contracts
("SFCs"). The Securities Exchange Act of
1934, as amended by the Act, defines a SFC
generally as a contract of sale for future de-
livery of a single security or a narrow-
based security index. See 15 U.S.C.
§ 78c(a)(55)(A) (2000).

Section 6045(a) of the Internal Rev-
enue Code provides that brokers, when re-
quired by the Secretary, must make a return,
in accordance with such regulations as the
Secretary may prescribe, regarding each of
the broker's customers, with such details re-
garding gross proceeds and other informa-
tion as the Secretary may by forms or
regulations require.

#### Deferral of Potential Information Reporting Obligations

The Service will issue published guid-
ance identifying the circumstances, if any,
in which brokers must file information re-
turns under section 6045 regarding SFC in-

vestments or transactions of the brokers'
customers. Depending on the conclusions
reached, this guidance may take the form
of regulations, of a notice published in the
Federal Register, or of a publication in the
Internal Revenue Bulletin. Pending this
guidance, the Service will not require in-
formation reporting under section 6045 with
respect to SFCs. Thus, to the extent cur-
rent law can be interpreted as requiring bro-
kers to prepare information returns under
section 6045 with respect to SFCs, no such
returns will be required pending issuance
of the guidance described above. This No-
tice 2003-8 does not affect information-
reporting obligations, if any, with respect
to SFCs under any other Code section.

For further information regarding this no-
tice, contact Nathan Rosen of the Office of
the Associate Chief Counsel (Procedure &
Administration), Administrative Provi-
sions and Judicial Practice Division, at (202)
622-4910 (not a toll-free call).

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# Offshore Voluntary Compliance Initiative

Rev. Proc. 2003-11

## SECTION 1. PURPOSE

.01 This revenue procedure describes the
Internal Revenue Service's Offshore Vol-
untary Compliance Initiative for taxpay-
ers that have underreported their United
States income tax liability through finan-
cial arrangements that in any manner rely
on the use of offshore payment cards (in-
cluding credit, debit, or charge cards) is-
sued by banks in foreign jurisdictions or
offshore financial arrangements (includ-
ing arrangements with foreign banks,
financial institutions, corporations, part-
nerships, trusts, or other entities). This rev-
enue procedure applies to tax years ending
after December 31, 1998, and to tax years
ending before that date to the extent pro-
vided in section 8 of this revenue proce-
dure.

.02 The Service has determined that
some taxpayers have used offshore pay-
ment cards or offshore financial arrange-
ments to avoid United States income taxes.
The Offshore Voluntary Compliance Ini-
tiative described in this revenue proce-
dure affords taxpayers that have used these
devices an opportunity to avoid certain pen-
alties that would otherwise apply.

SECTION 2. SCOPE OF THE
OFFSHORE VOLUNTARY
COMPLIANCE INITIATIVE

.01 With respect to unreported income
or false deductions associated with the use
of offshore payment cards or offshore fi-
nancial arrangements, the Service:

(1) will not impose the civil fraud pen-
alty under section 6663, the fraudulent fail-
ure to file penalty under section 6651(f), and
information return civil penalties for fail-
ure to comply with sections 6035, 6038,
6038A, 6038B, 6038C, 6039F, 6046,
6046A, and 6048; and

(2) will, in appropriate circumstances,
impose the delinquency penalty under sec-
tion 6651, the accuracy-related penalty un-
der section 6662, or both penalties against
taxpayers that participate in the Offshore
Voluntary Compliance Initiative.

.02 The Financial Crimes Enforcement
Network (FinCEN) will not impose civil

penalties for failure to timely file a Re-
port of Foreign Bank and Financial Ac-
counts (FBAR) against eligible taxpayers
that participate in the Offshore Voluntary
Compliance Initiative. For more informa-
tion, see FinCEN's website at www.
fincen.gov and look under Regulatory/BSA
Guidance.

.03 The Service will treat the request to
participate in the Offshore Voluntary Com-
pliance Initiative as a request to make a vol-
untary disclosure pursuant to its Voluntary
Disclosure Practice as described in
IR-2002-135, Dec. 11, 2002. See also Trea-
sury Directive 15-41, dated December 1,
1992 (delegating to the Service the author-
ity to investigate the criminal FBAR pen-
alty).

.04 Any contact or communication by
the Service with a taxpayer regarding the
taxpayer's request to participate in the Off-
shore Voluntary Compliance Initiative is not
an examination of books and records for
purposes of section 7605(b) or Rev. Proc.
94-68, 1994-2 C.B. 803. The Service may
audit the returns of any taxpayer that par-
ticipates in the Offshore Voluntary Com-
pliance Initiative, and may propose
adjustments for items that are not resolved
under the Offshore Voluntary Compliance
Initiative.

## SECTION 3. APPLICATION PROCESS

.01 Taxpayers that want to participate in
the Offshore Voluntary Compliance Initia-
tive must, on or before April 15, 2003, send
a written request to participate in the Off-
shore Voluntary Compliance Initiative to the
National Offshore Voluntary Compliance
Initiative Coordinator. Taxpayers may send
the written request via the United States
Postal Service to P.O. Box 480, Bensa-
lem, PA 19020; by private delivery ser-
vice to 11601 Roosevelt Blvd., Philadelphia,
PA 19154, Attn .: DP S6005; or by email to
VCI@irs.gov. The written request must:

(1) state that the taxpayer requests to
participate in the Offshore Voluntary Com-
pliance Initiative and is a taxpayer eli-
gible to participate in the program, as
described in section 4 of this revenue pro-
cedure;

(2) state the taxpayer's name, taxpayer
identification number, current address, and
daytime telephone number;

(3) state the name and employer iden-
tification number of any entity (including
but not limited to corporations, partner-

ships, trusts, and estates) that the taxpayer
caused to use offshore payment cards or off-
shore financial arrangements, or that was
the source of funds that the taxpayer caused
to be transferred to a foreign jurisdiction;

(4) state the name and office location of
any Service official whom the taxpayer has
previously contacted about making a vol-
untary disclosure; and

(5) include complete information re-
garding the taxpayer's introduction to off-
shore payment cards and offshore financial
arrangements, including the following:

(a) the names, addresses, and tele-
phone numbers of any parties who pro-
moted or solicited the taxpayer's use of
offshore payment cards or offshore finan-
cial arrangements;

(b) if known to the taxpayer, the
names, addresses, and telephone numbers
of any parties who advised or assisted the
promoters or solicitors in marketing off-
shore payment cards or offshore financial
arrangements; and

(c) all promotional materials, transac-
tional materials, and other related corre-
spondence and documentation that the
taxpayer at any time received regarding off-
shore payment cards or offshore financial
arrangements. Taxpayers that send a writ-
ten request to participate in the Offshore
Voluntary Compliance Initiative by email
to VCI@irs.gov must send these materi-
als by mail or private delivery service (to
the addresses provided in subsection .01
above) within five days of the email. These
taxpayers should include with the materi-
als a copy of the email sent to VCI@irs.gov.

SECTION 4. TAXPAYERS THAT ARE
ELIGIBLE TO PARTICIPATE IN THE
OFFSHORE VOLUNTARY
COMPLIANCE INITIATIVE

.01 A taxpayer that has used offshore
payment cards or offshore financial ar-
rangements is eligible to participate in the
Offshore Voluntary Compliance Initiative
if the taxpayer meets the following
conditions:

(1) the taxpayer's written request to par-
ticipate in the Offshore Voluntary Compli-
ance Initiative is received before:

(a) the Service has initiated a civil ex-
amination or criminal investigation of the
taxpayer, or has notified the taxpayer that
it intends to commence such an examina-
tion or investigation;

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(b) the Service has received informa-
tion from a third party (e.g., informant, other
governmental agency, or the media) alert-
ing the Service to the specific taxpayer's
noncompliance;

(c) the Service has initiated a civil ex-
amination or criminal investigation that is
directly related to the specific liability of
the taxpayer; or

(d) the Service has acquired informa-
tion directly related to the specific liabil-
ity of the taxpayer from a criminal
enforcement action (e.g., search warrant,
grand jury subpoena);

(2) the taxpayer has not promoted, so-
licited, or, in any way, facilitated the par-
ticipation of others (other than members of
the taxpayer's immediate family, or of in-
dividuals from whom the taxpayer did not
receive compensation of more than a nomi-
nal amount) in arrangements to avoid taxa-
tion by using offshore payment cards,
offshore financial arrangements, or any other
abusive transaction, domestic or offshore,
such as arrangements based on arguments
refuted by the Service in The Truth About
Frivolous Tax Arguments found at
www.irs.gov/pub/irs-utl/friv_tax.pdf,

(3) during the years in which the tax-
payer seeks to participate in the Offshore
Voluntary Compliance Initiative, the tax-
payer has not derived income from ille-
gal sources, such as income from drug
trafficking; and

(4) during the years in which the tax-
payer seeks to participate in the Offshore
Voluntary Compliance Initiative, the tax-
payer has not used the offshore payment
cards or offshore financial arrangements to
support or, in any way, facilitate illegal ac-
tivities not related to taxes.

SECTION 5. ACKNOWLEDGMENT
OF THE TAXPAYER'S REQUEST TO
PARTICIPATE IN THE OFFSHORE
VOLUNTARY COMPLIANCE
INITIATIVE

.01 The Service will acknowledge re-
ceipt of the taxpayer's written request to
participate in the Offshore Voluntary Com-
pliance Initiative within 30 calendar days
of receipt of the request. In its acknowl-
edgment, the Service will advise whether
the taxpayer has been preliminarily deter-
mined to be eligible to participate in the
Offshore Voluntary Compliance Initiative
or has been determined to be ineligible to
participate in the Offshore Voluntary Com-

pliance Initiative. A preliminary determi-
nation of eligibility will not prevent the
Service from later determining that the tax-
payer is not eligible to participate in the Off-
shore Voluntary Compliance Initiative due
to a failure to comply with the conditions
of section 4.01(2), (3), or (4), section 6, or
section 7 of this revenue procedure.

SECTION 6. ADDITIONAL

REQUIREMENTS THAT A TAXPAYER
MUST SATISFY AFTER THE
SERVICE PRELIMINARILY
DETERMINES THAT THE TAXPAYER
IS ELIGIBLE TO PARTICIPATE IN
THE OFFSHORE VOLUNTARY
COMPLIANCE INITIATIVE

.01 Within 150 calendar days of the date
of the letter informing the taxpayer that the
Service has preliminarily determined that
the taxpayer is eligible to participate in the
Offshore Voluntary Compliance Initiative,
the taxpayer must send the following ma-
terial to the National Offshore Voluntary
Compliance Initiative Coordinator, via the
United States Postal Service to P.O. Box
480, Bensalem, PA 19020, or by private de-
livery service to 11601 Roosevelt Blvd.,
Philadelphia, PA 19154, Attn .: DP S6005:

(1) copies of original and amended fed-
eral income tax returns for tax periods end-
ing after December 31, 1998, that the
taxpayer previously filed;

(2) copies of any powers of attorney
(Forms 2848) granted by the taxpayer with
respect to tax years in which the taxpayer
requests to participate in the Offshore Vol-
untary Compliance Initiative;

(3) descriptions of offshore payment
cards and foreign and domestic accounts of
any kind (including the name and address
of the bank or financial institution, the ac-
count number, and the date the account was
opened), and descriptions of foreign as-
sets in which the taxpayer has or had any
ownership or beneficial interest or that are
or were controlled by the taxpayer (i.e., the
taxpayer has or had the practical ability to
direct or influence the financial transac-
tions or affairs of an account or entity, or
the use or disposition of an asset, whether
this ability was exercised directly or indi-
rectly through a nominee, agent, power of
attorney, letter of directions, letter of wishes,
or any other device whatsoever) at any time
after December 31, 1998;

(4) descriptions of entities of any kind
(including but not limited to corporations,

partnerships, trusts, and estates) and any
nominees through which the taxpayer ex-
ercised control over foreign funds, assets,
or investments at any time after Decem-
ber 31, 1998;

(5) descriptions of the source of any for-
eign funds, assets, or investments owned or
controlled by the taxpayer at any time af-
ter December 31, 1998;

(6) all promotional materials, transac-
tional materials, and other related corre-
spondence and documentation regarding
offshore payment cards or offshore finan-
cial arrangements received subsequent to the
date the taxpayer submits the request to par-
ticipate in the Offshore Voluntary Compli-
ance Initiative;

(7) complete and accurate amended or
delinquent original federal income tax re-
turns of the taxpayer for all tax years end-
ing after December 31, 1998, which are
supported by an explanation of previously
unreported income or incorrectly claimed
deductions or credits (whether or not re-
lated to offshore payment cards or off-
shore financial arrangements);

(8) complete and accurate amended or
delinquent original information returns re-
quired by sections 6035, 6038, 6038A,
6038B, 6038C, 6039F, 6046, 6046A, and
6048 for which the taxpayer requests re-
lief from penalties; and

(9) complete and accurate FBARs for
tax years ending after December 31, 1998.
(FBAR forms are available by contacting
FinCEN at 800-949-2732 and on FinCEN's
website, www.fincen.gov.)

.02 Upon the Service's request, and
within the period of time allowed by the
Service in its request, the taxpayer must pro-
vide documentation of the matters described
in section 6.01 paragraphs (3) through (5)
of this revenue procedure, and informa-
tion regarding all transactions conducted
through the foreign accounts and entities.

.03 Upon the Service's request, and
within the period of time allowed by the
Service in its request, the taxpayer must pro-
vide executed consents or special con-
sents to extend the time to assess tax for
years that the taxpayer requests to partici-
pate in the Offshore Voluntary Compli-
ance Initiative.

.04 At the time the taxpayer files the re-
quired amended or delinquent original re-
turns, the taxpayer must fully pay the tax
liabilities, including applicable penalties un-
der sections 6651 and 6662, and interest,

2003-4 I.R.B.

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or make other financial arrangements ac-
ceptable to the Service for all years cov-
ered by the Offshore Voluntary Compliance
Initiative. In addition, the taxpayer must
fully pay all other unpaid, previously as-
sessed liabilities, or make other financial ar-
rangements acceptable to the Service. For
purposes of this revenue procedure, other
financial arrangements acceptable to the Ser-
vice shall include the completion and sub-
mission of complete financial statements to
the National Offshore Voluntary Compli-
ance Initiative Coordinator at the time
amended or delinquent returns are filed in
compliance with section 6.01 of this rev-
enue procedure. A complete financial state-
ment shall include all assets, domestic and
foreign, in which the taxpayer has an own-
ership or beneficial interest or over which
the taxpayer has control, whether directly
or indirectly, through a nominee, agent,
power of attorney, letter of directions, let-
ter of wishes, or any other device.

## SECTION 7. FINAL DETERMINATION THAT A TAXPAYER IS ELIGIBLE TO PARTICIPATE IN THE OFFSHORE VOLUNTARY COMPLIANCE INITIATIVE

.01 After an eligible taxpayer meets the
requirements of sections 3 and 6 of this rev-
enue procedure, the taxpayer must execute
a specific matters closing agreement in the
form appended to this revenue procedure
as Exhibit 1. In the closing agreement, the
taxpayer must waive all defenses to the as-
sessment and collection of tax, penalties,
and interest under the Offshore Voluntary
Compliance Initiative, including any de-
fenses based on the expiration of the pe-
riod of limitations on assessment or
collection. The taxpayer must also agree that
the failure to disclose information that
would make the taxpayer ineligible to par-
ticipate in the Offshore Voluntary Compli-
ance Initiative, or the failure to fully and
accurately provide the information required
by sections 3 and 6 of this revenue proce-
dure, constitutes a misrepresentation of a
material fact under section 7121.

.02 Execution of the closing agreement
by the Commissioner constitutes a final de-
termination under section 7121 that the tax-

payer is eligible to participate in the
Offshore Voluntary Compliance Initiative.

SECTION 8. TREATMENT OF TAX
YEARS ENDING PRIOR TO
JANUARY 1, 1999

.01 For cases resolved under the Off-
shore Voluntary Compliance Initiative, the
Service does not intend to solicit or se-
cure information concerning an eligible par-
ticipating taxpayer's federal income tax
liabilities for tax years ending prior to Janu-
ary 1, 1999. Eligible participating taxpay-
ers, however, must provide information
about all aspects of the taxpayer's involve-
ment with offshore payment cards or off-
shore financial arrangements, regardless of
the year in which such activities began.

.02 If it comes to the Service's atten-
tion that substantial tax avoidance occurred
in tax years ending prior to January 1, 1999,
the Service reserves the right to examine
such prior tax years and to assess tax, pen-
alties, and interest, if the period of limita-
tions on assessment and collection for those
years is open. If any eligible participating
taxpayer files complete and accurate
amended or delinquent original returns for
tax years ending prior to January 1, 1999,
which are supported by an explanation of
previously unreported income or incor-
rectly claimed deductions or credits
(whether or not related to offshore pay-
ment cards or offshore financial arrange-
ments), the Service will resolve the
taxpayer's liability for those years for tax,
penalties, and interest on the same basis that
the Service will resolve liabilities for tax
years ending after December 31, 1998, un-
der the Offshore Voluntary Compliance Ini-
tiative.

## SECTION 9. EFFECTIVE DATE

.01 This revenue procedure is effec-
tive on January 14, 2003.

## SECTION 10. PAPERWORK REDUCTION ACT

.01 The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office of
Management and Budget in accordance with
the Paperwork Reduction Act (44 U.S.C.
§ 3507) under control number 1545-1822.
An agency may not conduct or sponsor, and

a person is not required to respond to, a col-
lection of information unless the collec-
tion of information displays a valid OMB
control number.

.02 The collection of information in this
revenue procedure is in Section 3 (APPLI-
CATION PROCESS), Section 6 (ADDI-
TIONAL REQUIREMENTS THAT A
TAXPAYER MUST SATISFY AFTER
THE SERVICE PRELIMINARILY DE-
TERMINES THAT THE TAXPAYER IS
ELIGIBLE TO PARTICIPATE IN THE
OFFSHORE VOLUNTARY COMPLI-
ANCE INITIATIVE), Section 7 (FINAL
DETERMINATION THAT A TAXPAYER
IS ELIGIBLE TO PARTICIPATE IN THE
OFFSHORE VOLUNTARY COMPLI-
ANCE INITIATIVE), and Section 8
(TREATMENT OF TAX YEARS END-
ING PRIOR TO JANUARY 1, 1999). This
information will be used to determine
whether a taxpayer is eligible for the Off-
shore Voluntary Compliance Initiative and
to apply the terms of the initiative. This in-
formation will also further the Service's un-
derstanding of how offshore payment cards
and offshore financial arrangements have
been promoted and solicited. Collection of
the information described in this revenue
procedure is required to obtain the ben-
efits of the Offshore Voluntary Compli-
ance Initiative. The likely respondents are
individuals, corporations, partnerships, trusts,
and other entities.

.03 The estimated total annual report-
ing burden is uncertain but estimated to be
at least 100,000 hours. The estimated an-
nual burden per respondent varies from 25
hours to 75 hours, depending on individual
circumstances, with an estimated average
of 50 hours. The number of respondents is
uncertain but estimated to be in the thou-
sands. The estimated frequency of responses
is at least one per respondent.

.04 Books or records relating to a col-
lection of information must be retained as
long as their contents may become mate-
rial in the administration of any internal rev-
enue law. Generally, tax returns and tax
return information are confidential, as re-
quired by 26 U.S.C. § 6103.

SECTION 11. CONTACT
INFORMATION

.01 The principal author of this rev-
enue procedure is Stuart Spielman of the

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EXHIBIT 1

Department of the Treasury-Internal Revenue Service

# Closing Agreement On Final Determination Covering Specific Matters

Under section 7121 of the Internal Revenue Code:

(Taxpayer's name)

(Taxpayer's address and identifying number)

WHEREAS, Taxpayer has underreported federal income taxes for [specify tax years] through financial arrangements that in some
manner rely on the use of offshore payment cards (including credit, debit, or charge cards) issued by banks in foreign jurisdic-
tions or offshore financial arrangements (including arrangements with foreign banks, financial institutions, corporations, partner-
ships, trusts, or other entities);

WHEREAS, Taxpayer has requested to participate in the Offshore Voluntary Compliance Initiative, which is described in Rev-
enue Procedure 2003-11; and

WHEREAS, Taxpayer has agreed to all the terms and conditions of the Offshore Voluntary Compliance Initiative.

NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL TAX PURPOSES THAT:

1\. For [Year 1], Taxpayer used offshore payment cards or offshore financial arrangements to avoid reporting income in the amount
of [specify amount] and to claim false deductions in the amount of [specify amount]. [Insert only if applicable: For Year 1, Tax-
payer had additional unreported income in the amount of [specify amount] and false deductions in the amount of [specify amount.]]
For [Year 2], Taxpayer used offshore payment cards or offshore financial arrangements to avoid reporting income in the amount
of [specify amount] and to claim false deductions in the amount of [specify amount]. [Insert only if applicable: For Year 2, Tax-
payer had additional unreported income in the amount of [specify amount] and false deductions in the amount of [specify amount]]
[Continue in this manner for all tax years.]

2\. For [Year 1], penalties under sections [indicate sections] of the Internal Revenue Code apply to underpayments attributable
to the unreported income and false deductions. For [Year 2], penalties under sections [indicate sections] apply to underpay-
ments attributable to the unreported income and false deductions. [Continue in this manner for all tax years.]

3\. Interest is due as provided by law on Taxpayer's underpayments of tax and penalties.

4\. Taxpayer waives all defenses to the assessment and collection of tax, penalties, and interest described in the preceding para-
graphs, including any defense based on the expiration of the period of limitations on assessment or collection.

5\. This closing agreement does not prevent the Internal Revenue Service from auditing Taxpayer for [specify tax years] and pro-
posing adjustments unrelated to offshore payment cards or to offshore financial arrangements. This closing agreement also does
not prevent the Service from proposing adjustments related to offshore payment cards or to offshore financial arrangements if,
subsequent to the date that this closing agreement is executed, the Service determines that Taxpayer, contrary to the provisions
of Revenue Procedure 2003-11, failed to fully and accurately provide the information and materials required by sections 3 and
6 of the revenue procedure. Any examination or determination under this paragraph 5 does not constitute a second examination
for purposes of section 7605(b) of the Code or Rev. Proc. 94-68, 1994-2 C.B. 803.

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6\. Failure to disclose information that would make Taxpayer ineligible to participate in the Offshore Voluntary Compliance Ini-
tiative or failure to fully and accurately provide the information or material required by sections 3 and 6 of Revenue Procedure
2003-11 constitutes a misrepresentation of a material fact under section 7121 of the Code.

## Instructions

This agreement must be signed and filed in triplicate. (All copies must have original signatures.) The original and copies of the
agreement must be identical. The name of the taxpayer must be stated accurately. The agreement may relate to one or more years.

If an attorney or agent signs the agreement for the taxpayer, the power of attorney (or a copy) authorizing that person to sign
must be attached to the agreement. If the agreement is made for a year when a joint income tax return was filed by a husband
and wife, it should be signed by or for both spouses. One spouse may sign as agent for the other if the document (or a copy)
specifically authorizing that spouse to sign is attached to the agreement.

If the fiduciary signs the agreement for a decedent or an estate, an attested copy of the letters testamentary or the court order
authorizing the fiduciary to sign, and a certificate of recent date that the authority remains in full force and effect must be at-
tached to the agreement. If a trustee signs, a certified copy of the trust instrument or a certified copy of extracts from that in-
strument must be attached showing:

(1) the date of the instrument;

(2) that it is or is not of record in any court;

(3) the names of the beneficiaries;

(4) the appointment of the trustee, the authority granted, and other information necessary to show that the authority extends to
Federal tax matters; and

(5) that the trust has not been terminated, and that the trustee appointed is still acting. If a fiduciary is a party, Form 56, Notice
Concerning Fiduciary Relationship, is ordinarily required.

If the taxpayer is a corporation, the agreement must be dated and signed with the name of the corporation, the signature and title
of an authorized officer or officers, or the signature of an authorized attorney or agent. It is not necessary that a copy of an en-
abling corporate resolution be attached.

Use additional pages if necessary, and identify them as part of this agreement.

Please see Revenue Procedure 68-16, C.B. 1968-1, page 770, for a detailed description of practices and procedures applicable
to most closing agreements.

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This agreement is final and conclusive except:

(1) the matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of material fact;

(2) it is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including
any stated exception for Code section 7122) notwithstanding any other law or rule of law; and

(3) if it relates to a tax period ending after the date of this agreement, it is subject to any law, enacted after the agreement date,
that applies to that tax period.

By signing, the above parties certify that they have read and agreed to the terms of this document.

Your signature
Date Signed

Spouse's signature (if a joint return was filed)
Date Signed

Taxpayer's representative

Date Signed

Taxpayer (other than individual)

By

Date Signed

Title

Commissioner of Internal Revenue

By

Date Signed

Title

26 CFR 601.201: Rulings and determination letters.
(Also section 115.)

### Rev. Proc. 2003-12

#### SECTION 1. PURPOSE

This Revenue Procedure provides guid-
ance on dissolution provisions for any or-
ganization described in § 501(c)(3) and
exempt from federal income tax under
§ 501(a) of the Code that requests a letter
ruling that its income is excluded from gross
income under § 115(1).

# SECTION 2. BACKGROUND

.01 Section 115(1) of the Code pro-
vides that gross income does not include in-
come that is (i) derived from a public utility
or from the exercise of any essential gov-
ernmental function (the "essential govern-
ment function test"), and (ii) accruing to a
State, any political subdivision thereof, or
the District of Columbia (the "accrual test").
An entity is not required to obtain a rul-
ing from the Service to claim an exclu-
sion from gross income under § 115(1).

.02 One aspect of the accrual test of
§ 115(1) is that assets of the organization
must be distributed upon the organiza-

tion's dissolution to one or more States, po-
litical subdivisions thereof, the District of
Columbia, or to other organizations the in-
come of which is excluded from gross in-
come under § 115(1) (the "distribution of
assets upon dissolution requirement"). The
assets of an entity described in § 115(1) may
not be distributed upon dissolution (or at
any other time) to the United States gov-
ernment. See Rev. Rul. 90-74, 1990-2 C.B.
34; Rev. Rul. 77-261, 1977-2 C.B. 45; Rev.
Rul. 71-589, 1971-2 C.B. 94. An organi-
zation seeking a ruling under § 115(1) will
not be found to satisfy the distribution of
assets upon dissolution requirement of the

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§ 115(1) accrual test if its articles of orga-
nization fail to limit distribution of all the
organization's assets upon dissolution to one
or more States, political subdivision(s)
thereof, the District of Columbia, or to other
organizations whose income is excluded
from gross income under § 115(1).

.03 An organization may be described in
§ 501(c)(3) of the Internal Revenue Code
and its income may also be excluded from
gross income under § 115(1). See Treas.
Reg. § 1.6033-2(g)(1)(v) (a state institu-
tion exempt from taxation under § 501(a)
the income of which is excluded from gross
income under § 115(a) (now § 115(1)) is not
required to file an annual information re-
turn on Form 990, Return of Organiza-
tion Exempt From Income Tax); see also
Rev. Proc. 95-48, §§ 3.01, 4.02, 1995-2
C.B. 418.

.04 To qualify as an organization de-
scribed in § 501(c)(3) and exempt from fed-
eral income tax under § 501(a), an
organization must meet the requirements of
the organizational test of § 501(c)(3). One
requirement of the organizational test is that
the assets of the organization be dedicated
to an exempt purpose. Treas. Reg.
§ 1.501(c)(3)-1(b)(4).

.05 A § 501(c)(3) organization's articles
of organization must contain a dissolu-
tion clause that satisfies the organizational
test of § 1.501(c)(3)-1(b)(4) of the Trea-
sury Regulations, unless the organization is
organized under State laws that satisfy the
distribution of assets upon dissolution pro-
visions of § 1.501(c)(3)-1(b)(4). See Treas.
Reg. § 1.501(c)(3)-1(b)(4); Rev. Proc. 82-2,
1982-1 C.B. 367.

# SECTION 3. APPLICATION

A § 501(c)(3) organization can satisfy the
organizational test of § 1.501(c)(3)-1(b)(4)
of the Treasury Regulations by reason of
its articles of organization or by opera-
tion of law. However, for purposes of ob-
taining a § 115(1) ruling, a § 501(c)(3)
organization will not satisfy the “distribu-
tion of assets upon dissolution require-
ment" of §115(1) unless its articles of
organization also limit distribution of as-
sets on dissolution (to the extent consis-
tent with § 1.501(c)(3)-1(b)(4)) to one or
more States, political subdivisions of States,
the District of Columbia, or other organi-
zations the income of which is excluded un-
der § 115(1). For purposes of obtaining a
§ 115(1) ruling, the organization may not

rely on a provision of state law to satisfy
the distribution of assets upon dissolution
requirement of § 115(1).

# SECTION 4. EXAMPLES

.01 Organization A is exempt from fed-
eral income tax under § 501(a) as an or-
ganization described in § 501(c)(3).
Organization A has a dissolution clause in
its articles of organization that satisfies
Treas. Reg. § 1.501(c)(3)-1(b)(4). Organi-
zation A's articles state that, upon disso-
lution, any assets remaining after the
payment of debts and the satisfaction of li-
abilities are to be distributed (1) to an or-
ganization described in § 501(c)(3) for one
or more exempt purposes, or (2) to the
United States government, or to a State or
local government, for a public purpose. Or-
ganization A requests a letter ruling that its
income is excluded from gross income un-
der § 115(1). Although the dissolution clause
in the articles of Organization A meets the
organizational requirements of § 501(c)(3),
the dissolution clause allows for distribu-
tion to entities to which distributions may
not be made under § 115(1). The dissolu-
tion clause, therefore, fails to satisfy the dis-
tribution of assets upon dissolution
requirement of the accrual test of § 115(1).
In these circumstances, a favorable ruling
on § 115(1) would not be issued.

.02 Organization B is exempt from fed-
eral income tax under § 501(a) as an or-
ganization described in § 501(c)(3).
Organization B has a dissolution clause in
its articles of organization that satisfies
Treas. Reg. § 1.501(c)(3)-1(b)(4). Organi-
zation B's articles state that, upon disso-
lution, any assets remaining after the
payment of debts and the satisfaction of li-

abilities are to be distributed either (1) to
a State or political subdivision thereof for
a public purpose or (2) for one or more ex-
empt purposes to an organization described
in § 501(c)(3) and whose income is also ex-
cludable from gross income under § 115(1).
Organization B requests a letter ruling that
its income is excluded from gross income
under § 115(1). The dissolution clause in the
articles of Organization B meets the
requirements of the organizational test of
§ 501(c)(3) and also satisfies the distribu-
tion of assets upon dissolution require-
ment of the accrual test of § 115(1).

.03 Organization C is exempt from fed-
eral income tax under § 501(a) as an or-
ganization described in § 501(c)(3). Upon

dissolution, Organization C's remaining as-
sets will be distributed by operation of the
law of Organization C's state of incorpo-
ration to a political subdivision of the state
for a public purpose. Organization C re-
quests a letter ruling that its income is ex-
cluded from gross income under § 115(1).
Although state law provides a dissolution
distribution scheme that meets the organi-
zational test of Treas. Reg. § 1.501(c)(3)-
1(b)(4), the state's dissolution provision fails
to satisfy the accrual test of § 115(1) for
purposes of obtaining a § 115(1) letter rul-
ing. In these circumstances, a favorable rul-
ing on § 115(1) would not be issued. To
receive a favorable § 115(1) letter ruling,
Organization C must have articles of or-
ganization that contain a provision satis-
fying the distribution of assets upon
dissolution requirement for the § 115(1) ac-
crual test.

# SECTION 5. DRAFTING INFORMATION

The principal author of this revenue pro-
cedure is Sara T. S. Wolff of the Office of
Division Counsel/Associate Chief Coun-
sel (Tax Exempt and Government Enti-
ties). For further information regarding this
revenue procedure, contact Ms. Wolff at
(202) 622-6080 (not a toll-free call).

# 26 CFR 601.201: Rulings and determination letters.

## Rev. Proc. 2003-13

### SECTION 1. PURPOSE

This revenue procedure provides guid-
ance for employers that want to amend their
plans qualified under § 401(a) of the In-
ternal Revenue Code to include "deemed
IRAs" described in § 408(q). The revenue
procedure also provides a sample plan
amendment that may be used, in conjunc-
tion with IRA language, to amend a quali-
fied plan to provide for deemed IRAs.

### SECTION 2. BACKGROUND

.01 Section 408(q) was added to the
Code by section 602 of the Economic
Growth and Tax Relief Reconciliation Act
of 2001 ("EGTRRA"), Pub. L. 107-16, ef-
fective for plan years beginning after De-
cember 31, 2002. Section 408(q) provides

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that if a qualified employer plan elects to
allow employees to make voluntary em-
ployee contributions to a separate account
or annuity established under the plan, and
under the terms of the qualified employer
plan such account or annuity meets the ap-
plicable requirements of § 408 or 408A for
an individual retirement account or annu-
ity, then such account or annuity shall be
treated under the Code in the same man-
ner as an IRA and not as a qualified em-
ployer plan. The Internal Revenue Service
and Treasury expect to issue regulations un-
der Code § 408(q) in the near future.

.02 Notice 2001-42, 2001-2 C.B. 70,
provides a remedial amendment period un-
der § 401(b), ending no earlier than the end
of the first plan year beginning on or af-
ter January 1, 2005, in which any needed
retroactive EGTRRA plan amendment may
be adopted (the "EGTRRA remedial amend-
ment period"). The availability of the
EGTRRA remedial amendment period is
conditioned on the timely adoption of a
good faith EGTRRA plan amendment.

.03 Notice 2001-57, 2001-2 C.B. 279,
provides sample plan amendments that sat-
isfy, in form, the "good faith EGTRRA plan
amendment" requirement described in the
preceding paragraph. Although not con-
taining a sample plan amendment for
deemed IRAs under Code § 408(q), the no-
tice provides that the good faith plan
amendment requirement applies to § 408(q).

The notice also provides that, until fur-
ther notice, the Service will not consider
EGTRRA in issuing determination, opin-
ion or advisory letters.

.04 Rev. Proc. 2002-10, 2002-4 I.R.B.
401, requires all prototype sponsors with
currently approved IRAs, SEPs, and
SIMPLE IRA plans to amend these docu-
ments and submit applications for opin-
ion letters on the amended documents by
December 31, 2002.

#### SECTION 3. REQUIRED LANGUAGE FOR DEEMED IRAS

.01 Plan sponsors that want to provide
for deemed IRAs must have such provi-
sions in their plan documents and must have
deemed IRAs in effect for employees no
later than the date deemed IRA contribu-
tions are accepted from such employees.
Notwithstanding the preceding sentence,
plan sponsors that want to provide for
deemed IRAs for plan years beginning be-
fore January 1, 2004, (but after Decem-
ber 31, 2002) are not required to have such
provisions in their plan documents before
the end of such plan years. Plan sponsors
must otherwise comply with the rules in
Notice 2001-57. To satisfy the require-
ments for the EGTRRA remedial amend-
ment period, the provisions must reflect a
reasonable, good-faith interpretation of the
statute. The sample plan amendment con-
tained in the appendix to this revenue pro-

cedure, when used in conjunction with IRA
language described in section 3.02 below,
is a reasonable, good-faith interpretation of
the statute.

.02 In addition to the sample plan
amendment in the Appendix, a plan that in-
tends to comply with Code § 408(q) must
also contain language that satisfies § 408 or
408A, relating to traditional and Roth IRAs,
respectively. The Service provides sample
language (a "Listing of Required Modifi-
cations," or "LRMs") that satisfies §§ 408
and 408A on the Service's Web Site at
www.irs.gov/ep. A plan will satisfy the "rea-
sonable, good-faith interpretation of the stat-
ute" requirement with respect to IRA
language if the language addresses every ap-
plicable point in the IRA LRMs.

#### DRAFTING INFORMATION

The principal author of this revenue pro-
cedure is Roger Kuehnle of the Employee
Plans, Tax Exempt and Government Enti-
ties Division. For further information re-
garding this revenue procedure, please
contact Employee Plans' taxpayer assis-
tance telephone service at 1-877-829-
5500 (a toll-free number), between the hours
of 8:00 a.m. and 6:30 p.m. Eastern Time,
Monday through Friday. Mr. Kuehnle can
be reached at 202-283-9888 (not a toll-
free number).

# APPENDIX

## Sample Plan Amendment

(The following sample plan amendment may be adopted only by plans trusteed by a person eligible to act as a trustee of an IRA
under § 408(a)(2) and plans that designate an insurance company to issue annuity contracts under § 408(b). Additional language
that satisfies § 408 or 408A must also be added to the plan.)

### SECTION __. DEEMED IRAS

1\. Applicability and effective date. This section shall apply if elected by the employer in the adoption agreement and shall be
effective for plan years beginning after the date specified in the adoption agreement.

2\. Deemed IRAs. Each participant may make voluntary employee contributions to the participant's
[insert “tradi-
tional" or "Roth"] IRA under the plan. The plan shall establish a separate
[insert "account" or "annuity"] for
the designated IRA contributions of each participant and any earnings properly allocable to the contributions, and maintain sepa-
rate recordkeeping with respect to each such IRA.

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3\. Reporting duties. The
[insert "trustee" or "issuer"] shall be subject to the reporting requirements of section 408(i)
of the Internal Revenue Code with respect to all IRAs that are established and maintained under the plan.

4\. Voluntary employee contributions. For purposes of this section, a voluntary employee contribution means any contribution (other
than a mandatory contribution within the meaning of section 411(c)(2) of the Code) that is made by the participant and which
the participant has designated, at or prior to the time of making the contribution, as a contribution to which this section applies.

5\. IRAs established pursuant to this section shall be held in
[insert "a trust" or "an annuity"] separate from the trust
established under the plan to hold contributions other than deemed IRA contributions and shall satisfy the applicable require-
ments of sections 408 and 408A of the Code, which requirements are set forth in section
[insert the section of the
plan that contains the IRA requirements].

## (Adoption agreement provisions)

Section
of the plan, Deemed IRAs: (check one)

shall be effective for plan years beginning after December 31,
(enter a year later than 2001).

shall not apply.

26 CFR 601.601: Rules and regulations.

(Also Part I, sections 61, 451, 671; 1.61-1; 1.451-1;
1.671-1.)

## Rev. Proc. 2003-14

### SECTION 1. PURPOSE

This revenue procedure provides a safe
harbor under which the Internal Revenue
Service will treat an Indian tribe as the
grantor and owner of a trust for the re-
ceipt of gaming revenues under the In-
dian Gaming Regulatory Act (25 U.S.C.
§§ 2701-2721) (IGRA) for the benefit of
minors or legal incompetents. In addition,
under this revenue procedure, beneficia-
ries of an IGRA trust will not be required
to include amounts in gross income when
transferred to, or earned by, the IGRA trust
under the economic benefit doctrine. Rather,
beneficiaries will include amounts in in-
come when actually or constructively re-
ceived.

### SECTION 2. BACKGROUND

.01 Indian tribes and their members have
requested guidance on determining the tax-
able years in which beneficiaries must in-
clude in gross income amounts transferred
to, or earned by, an IGRA trust. In addi-
tion, Indian tribes have requested guid-

ance about the situations in which a tribe
will be considered the grantor and owner
of an IGRA trust.

.02 Under § 451 of the Internal Rev-
enue Code (Code) and §§ 1.451-1(a) and
1.451-2 of the Income Tax Regulations, a
taxpayer using the cash receipts and dis-
bursements method of accounting must in-
clude gains, profits, and income in gross
income for the taxable year in which those
items are actually or constructively re-
ceived. In addition, under the economic ben-
efit doctrine, a taxpayer using the cash
receipts and disbursements method of ac-
counting must include in gross income cur-
rently any financial or economic benefit
derived from the absolute right to receive
property in the future that has been irre-
vocably and unconditionally set aside for
the taxpayer in a trust or fund. Sproull v.
Commissioner, 16 T.C. 244 (1951), aff'd per
curiam, 194 F.2d 541 (6th Cir. 1952);
Pulsifer v. Commissioner, 64 T.C. 245
(1975).

.03 Section 671 provides that, where it
is specified under subpart E, part I, sub-
chapter J, chapter 1, subtitle A of the Code
("subpart E") that the grantor or another
person shall be treated as the owner of any
portion of a trust, there shall be included
in computing the taxable income and cred-
its of the grantor or the other person those
items of income, deductions, and credits
against tax of the trust that are attribut-

able to that portion of the trust to the ex-
tent that such items would be taken into
account under chapter 1 in computing tax-
able income or credits against the tax of an
individual. Section 672 provides defini-
tions and rules for purposes of subpart E.
Subpart E and the accompanying regula-
tions define the circumstances under which
a grantor is treated as the owner of all or
a portion of a subpart E trust.

.04 IGRA provides rules regarding the
conduct of class II and class III gaming on
Indian lands within an Indian tribe's juris-
diction and an Indian tribe's use of rev-
enues from that gaming. Under IGRA, net
revenues from any class II and class III
gaming activities conducted or licensed by
any Indian tribe may be used to make per
capita payments to members of the In-
dian tribe only if: (A) the Indian tribe has
prepared a plan to allocate revenues to au-
thorized uses; (B) the Secretary of the In-
terior approves the plan as adequate; (C) the
interests of minors and other legally in-
competent persons who are entitled to re-
ceive any of the per capita payments are
protected and preserved and the per capita
payments are disbursed to the parents or le-
gal guardians of the minors or legal in-
competents in such amounts as may be
necessary for the health, education, or wel-
fare of the minors or other legally incom-
petent persons under a plan approved by the
Secretary of the Interior and the govern-

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ing body of the Indian tribe; and (D) the
per capita payments are subject to fed-
eral taxation and the Indian tribe notifies
members of that tax liability when pay-
ments are made. Section 11(b)(3) and
(d)(1)(A) of IGRA, 25 U.S.C. § 2710(b)(3)
and (d)(1)(A).

### SECTION 3. SCOPE

This revenue procedure applies to each
Indian tribe, each IGRA trust, and each ben-
eficiary of an IGRA trust.

### SECTION 4. DEFINITIONS

For purposes of this revenue procedure:

.01 Indian tribe. The term "Indian tribe"
has the same meaning as in 25 U.S.C.
§ 2703(5).

.02 IGRA trust. An "IGRA trust" is a
trust that an Indian tribe establishes un-
der IGRA to receive and invest per capita
payments for its members who are mi-
nors or legal incompetents pending distri-
bution of the trust assets to those members
after they attain the age of majority or cease
to be legal incompetents.

.03 Minor and legal incompetent. The
terms "minor" and "legal incompetent" have
the same meaning as in 25 CFR § 290.2 (re-
lating to review of Indian tribal revenue al-
location plans adopted under IGRA).

.04 Per capita payment. The term "per
capita payment" has the same meaning as
in 25 CFR § 290.2, but in no event shall
the term include compensation for ser-
vices.

### SECTION 5. APPLICATION

.01 In general. For any period in which
all of the requirements of section 5.02 of
this revenue procedure are met:

(1) The Indian tribe that establishes (or
has established) an IGRA trust will be
treated as the grantor and owner of the trust
under subpart E, and

(2) The beneficiaries of an IGRA trust
will not be required to include per capita
payments received by the trust, and any
earnings on the per capita payments, in
gross income until the taxable year that the
beneficiaries actually or constructively re-
ceive the amounts under § 451 and the
regulations thereunder.

.02 Requirements for IGRA trusts.

(1) The Indian tribe has complied with
the requirements of § 11(b)(3) of IGRA, 25
U.S.C. § 2710(b)(3), regarding the dis-

bursement of per capita payments to mem-
bers of the Indian tribe.

(2) All contributions to the trust are per
capita payments disbursed under a rev-
enue allocation plan that complies with the
requirements of § 11(b)(3) of IGRA, 25
U.S.C. § 2710(b)(3).

(3) All beneficiaries of the trust are
members of the Indian tribe that estab-
lishes the trust.

(4) Each trust beneficiary is a minor or
legal incompetent at the time of the estab-
lishment of a trust interest for the benefi-
ciary, and all contributions to the trust with
respect to that beneficiary are made for the
period that the beneficiary is a minor or le-
gal incompetent.

(5) The trust is a valid trust under ap-
plicable federal, state, local, and tribal law
and all of the material terms and provi-
sions of the trust are enforceable under those
laws.

(6) The governing trust instrument states
that the trust is intended to be a grantor
trust, that the Indian tribe is the grantor of
the trust (within the meaning of subpart E),
and that the trust shall be construed ac-
cordingly.

(7) The governing trust instrument grants
to the Indian tribe a power, an interest, or
a combination thereof, described in §§ 673
through 677, that would cause the Indian
tribe to be treated as owner of the trust un-
der subpart E.

(8) The governing trust instrument pro-
vides that-

(a) trust assets are not available to a
beneficiary until the beneficiary attains a
specified age or ceases to be a legal in-
competent, except for distributions for the
health, education, or welfare of the ben-
eficiary made at the sole discretion of the
trustee pursuant to the governing trust in-
strument;

(b) beneficiaries shall have no pre-
ferred claim on, or any beneficial owner-
ship interest in, any assets of the trust; any
rights created under the trust instrument
shall be mere unsecured contractual rights
of beneficiaries against the Indian tribe; and
at all times during the continuance of the
trust, the principal and income of the trust
shall be subject to claims of general credi-
tors of the Indian tribe under applicable fed-
eral, state, local, and tribal law;

(c) the trustee shall cease payments to
beneficiaries and shall hold the assets of the
trust for the benefit of the Indian tribe's

general creditors throughout any period dur-
ing which the trustee believes or has rea-
son to believe that the Indian tribe is unable
to pay its debts as they become due, or is
subject to a pending insolvency or bank-
ruptcy proceeding;

(d) amounts payable to beneficiaries
under the governing trust instrument may
not be anticipated, assigned (either at law
or in equity), alienated, pledged, encum-
bered or subjected to attachment, garnish-
ment, levy, execution or other legal or
equitable process; and

(e) the beneficiary's share will be paid
to the Indian tribe if the beneficiary dies
prior to attaining the specified age or le-
gal competency, or alternatively the ben-
eficiary dies prior to attaining the specified
age or legal competency without one or
more of the following relatives surviving:
a spouse, parent, child, or sibling.

# SECTION 6. AMPLIFICATION OF REV. PROC. 2003-3

.01 This revenue procedure amplifies
section 4.01 of Rev. Proc. 2003-3, 2003-1
I.R.B. 113, relating to areas in which rul-
ing letters or determination letters will not
ordinarily be issued, by adding the follow-
ing new paragraphs:

Section 451 .- General Rule for Tax-
able Year of Inclusion-The income tax
consequences as a result of being a ben-
eficiary of a trust that an Indian tribe (as
defined in 25 U.S.C. § 2703(5)) estab-
lishes to receive and invest per capita
payments for its members who are mi-
nors or legal incompetents under the In-
dian Gaming Regulatory Act (25 U.S.C.
§§ 2701-2721), if the trust meets the re-
quirements of section 5.02 of Rev. Proc.
2003-14.

Sections 671 through 679 .- Grantors and
Others Treated as Substantial Owners-
Whether an Indian tribe (as defined in
25 U.S.C. § 2703(5)) that establishes a
trust to receive and invest per capita
payments for its members who are mi-
nors or legal incompetents under the In-
dian Gaming Regulatory Act (25 U.S.C.
§§ 2701-2721) is the grantor and owner
of the trust, if the trust meets the re-
quirements of section 5.02 of Rev. Proc.
2003-14.

.02 This revenue procedure also ampli-
fies section 5 of Rev. Proc. 2003-3, relat-
ing to areas in which rulings or

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determination letters will not be issued un-
til the Service resolves the issue through
publication of a revenue ruling, revenue pro-
cedure or otherwise, by adding the follow-
ing new paragraphs:

Section 451 .- General Rule for Tax-
able Year of Inclusion-The income tax
consequences as a result of being a ben-
eficiary of a trust that an Indian tribe (as
defined in 25 U.S.C. § 2703(5)) estab-
lishes to receive and invest per capita
payments for its members (regardless of
whether they are minors or legal incom-
petents) under the Indian Gaming Regu-
latory Act (25 U.S.C. §§ 2701-2721) if
the trust does not meet the requirements
of section 5.02 of Rev. Proc. 2003-14.

Sections 671 through 679 .- Grantors and
Others Treated as Substantial Owners-
Whether an Indian tribe (as defined in
25 U.S.C. § 2703(5)) that establishes a
trust to receive and invest per capita
payments for its members (regardless of
whether they are minors or legal incom-
petents) under the Indian Gaming Regu-
latory Act (25 U.S.C. §§ 2701-2721) is
the grantor and owner of the trust if the
trust does not meet the requirements of
section 5.02 of Rev. Proc. 2003-14.

# SECTION 7. EFFECTIVE DATES

This revenue procedure (except sec-
tion 6) is effective for taxable years begin-
ning after December 31, 2001. Section 6 of
this revenue procedure applies to requests
for rulings received or pending in the na-
tional office on or after January 6, 2003.

# SECTION 8. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2003-3 is amplified.

# REQUEST FOR COMMENTS

The Service requests comments on this
revenue procedure and on the application
of the economic benefit doctrine to IGRA
trusts that are not within the scope of this
revenue procedure. Specifically, the Ser-
vice requests comments concerning the type
of trust provisions that preclude the appli-
cation of the economic benefit doctrine.

Comments should be submitted by April
28, 2003, either to:

Internal Revenue Service
P.O. Box 7604
Ben Franklin Station

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Washington, DC 20044
Attn: CC:PA:T:CRU (CC:ITA:4)
Room 5529

or electronically at: Notice.Comments@
irscounsel.treas.gov (the Service's com-
ments e-mail address). All comments are
available for public inspection and copy-
ing.

# DRAFTING INFORMATION

The principal author of this revenue pro-
cedure is Elizabeth Kaye of the Office of
the Associate Chief Counsel (Income Tax
and Accounting). For further information re-
garding this revenue procedure, contact
Ms. Kaye at (202) 622-4920 (not a toll-
free call).

26 CFR 601.201: Rulings and determination letters.
(Also Part I, sections 25, 103, 143, 1.25.4T, 1.103-1,
6.A.1034-2.)

## Rev. Proc. 2003-15

### SECTION 1. PURPOSE

This revenue procedure provides issu-
ers of qualified mortgage bonds, as de-
fined in section 143(a) of the Internal
Revenue Code, and issuers of mortgage
credit certificates, as defined in section
25(c), with a list of qualified census tracts
for each state and the District of Colum-
bia.

### SECTION 2. BACKGROUND

.01 Section 103(a) of the Code pro-
vides that, except as provided in section
103(b), gross income does not include in-
terest on any state or local bond. Section
103(b)(1) provides that section 103(a) shall
not apply to any private activity bond that
is not a "qualified bond" within the mean-
ing of section 141. Section 141(e) pro-
vides that the term "qualified bond" includes
any private activity bond if that bond: (1)
is a qualified mortgage bond; (2) meets the
volume cap requirements under section 146;
and (3) meets the applicable requirements
under section 147.

.02 Section 143(a)(1) of the Code pro-
vides that the term "qualified mortgage
bond" means a bond which is issued as part
of a "qualified mortgage issue". Section
143(a)(2)(A) provides that the term "quali-
fied mortgage issue" means an issue by a

state or political subdivision thereof of one
or more bonds but only if: (i) all proceeds
of the issue (exclusive of issuance costs and
a reasonably required reserve) are to be used
to finance owner occupied residences; (ii)
the issue meets the requirements of sub-
sections (c), (d), (e), (f), (g), (h), (i), and
(m)(7); (iii) the issue does not meet the pri-
vate business tests of paragraphs (1) and (2)
of section 141(b); and (iv) with respect to
amounts received more than 10 years af-
ter the date of issuance, repayments of
$250,000 or more of principal on financ-
ing provided by the issue are used not later
than the close of the first semi-annual pe-
riod beginning after the date the prepay-
ment (or complete repayment) is received
to redeem bonds that are part of the is-
sue.

.03 An issue of bonds meets the require-
ments of subsection (h) of section 143 of
the Code only if at least 20 percent of the
proceeds of the issue is made available for
owner financing of "targeted area resi-
dences" for at least 1 year after the date on
which owner financing is first made avail-
able with respect to targeted area resi-
dences. Subsection (h)(2) provides, however,
that the amount made available need not ex-
ceed 40 percent of the average annual ag-
gregate principal amount of mortgages
executed during the immediately preced-
ing 3 calendar years for single-family, owner
occupied residences located in targeted ar-
eas within the jurisdiction of the issuing au-
thority.

.04 Targeted area residences are de-
fined in section 143(j)(1)(A) to include resi-
dences in a qualified census tract. A
"qualified census tract," according to sec-
tion 143(j)(2)(A), is a census tract in which
70 percent or more of the families have in-
come that is 80 percent or less of the state-
wide median family income. Section
143(j)(2)(B) of the Code provides that the
determination that a census tract is a "quali-
fied census tract" must be based on the
most recent decennial census for which data
are available. The last list of qualified cen-
sus tracts, published in Rev. Proc. 93-38,
1993-2 C.B. 483, was based on the 1990
Census.

.05 Section 6a.103A-2(b)(4)(ii) of the
Temporary Income Tax Regulations pro-
vides that, with respect to any particular
bond issue, the determination that a cen-
sus tract is a "qualified census tract" may
be based upon the decennial census data

<!-- PageFooter="2003-4 I.R.B." -->

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available 3 months prior to the date of is-
suance and shall not be affected by offi-
cial changes to the data during or after that
3-month period.

.06 Section 143(k)(2)(A) of the Code
provides that the term "statistical area"
means (i) a metropolitan statistical area
("MSA"), and (ii) any county (or the por-
tion thereof) that is not within an MSA.

.07 An MSA is currently defined as an
area containing at least one urbanized area
with a population of at least 50,000, plus
adjacent outlying counties having a high de-
gree of social and economic integration with
the central county as measured through
commuting. See Office of Management and
Budget ("OMB"), Standards for Defining
Metropolitan and Micropolitan Statistical
Areas; Notice, 65 FR 249, December 27,

2000\. (New area definitions based on Cen-
sus 2000 will be released by OMB in 2003).

.08 A state or local government may
elect to exchange all or part of its quali-
fied mortgage bond authority for author-
ity to issue mortgage credit certificates. In
general, the recipient of a mortgage credit
certificate may claim a federal income tax
credit equal to the product of the certifi-
cate credit rate and the interest paid or ac-
crued during the tax year on the remaining
principal of the certified indebtedness
amount. Section 25(c)(2)(A)(iii)(V) of the
Code provides that the indebtedness certi-
fied by mortgage credit certificates must
meet the requirements of section 143(h)
concerning the portion of loans to be placed
in targeted areas.

.09 The list of qualified census tracts is
developed by HUD for publication by the
service. HUD's determination is based upon
decennial census data received by HUD
from the Bureau of the Census.

#### SECTION 3. APPLICATION

The qualified census tracts for each state
and the District of Columbia as listed be-
low are based on the 2000 census. In 2000,
the Bureau of the Census has provided data
for all areas, not only the metropolitan sta-
tistical areas. Thus, the list of qualified cen-
sus tracts includes tracts in Block numbering
areas (BNA) in nonmetropolitan counties
as well as tracts in Metropolitan Statisti-
cal Areas (MSA).

<!-- PageFooter="2003-4 I.R.B." -->

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<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

ALABAMA

Butler County

953100

Calhoun County

000500

000600

Dallas County

996400

996500

Etowah County

000700

001400

Houston County

040600

Jefferson County

000300

000500

000700

001500

002700

002900

003200

003400

003900

004500

005101

010100

010302

Lauderdale County

010300

010700

Lee County

040700

040800

041600

Madison County

000201

001100

001200

001600

002100

002501

Mobile County

000401

000402

000600

001200

001400

001501

001502

002700

004000

004100

004200

004300

004600

004800

Montgomery County

000100

000200

000300

000600

001000

001100

001200

003000

Perry County

987200

Russell County

030200

030800

Tuscaloosa County

011200

011701

011800

Wilcox County

994700

ALASKA

Anchorage Municipality

000600

001000

Bethel Census Area

000100

000300

Fairbanks North Star Borough

001100

001800

Kenai Peninsula Borough

000100

Skagway-Hoonah-Angoon Census Area

000200

Wade Hampton Census Area

000100

Yukon-Koyukuk Census Area

000100

000400

ARIZONA

Apache County

940100

942600

942700

944100

944200

944300

Cochise County

000600

000900

Coconino County

000800

001000

941100

944500

Gila County

940200

940400

Graham County

940500

La Paz County

020100

020500

Maricopa County

061400

092900

103306

107201

108601

108602

109000

110200

110701

111202

111203

111602

112507

112602

112800

113201

113202

113203

113300

113500

113601

113700

113800

113900

114200

114302

114401

114402

114500

114701

114702

114703

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State and County or County Equivalent

Qualified Census Tracts

ARIZONA (cont.)

Maricopa County (cont.)

114800

114900

115200

115300

115801

115900

116100

116602

941000

941100

Mohave County

940400

951700

951800

Navajo County

940300

941000

942400

944400

944500

944700

944800

Pima County

000100

001000

001301

001302

002100

002300

002400

002601

002801

002802

003702

003801

004104

004111

004900

005100

940600

940700

940800

941100

941200

Santa Cruz County

996402

Yuma County

000301

000302

000401

000402

000700

001300

011401

011600

ARKANSAS

Craighead County

000602

Crittenden County

030501

030502

Jefferson County

001300

Miller County

020400

020600

Phillips County

980500

Pulaski County

000900

001700

002800

Washington County

010900

CALIFORNIA

Alameda County

401300

401400

401600

401700

401800

402100

402200

402500

402600

402700

402800

402900

403000

403300

405400

407500

420400

422800

Butte County

000604

001000

002800

002900

003000

003200

Contra Costa County

328000

365002

379000

Fresno County

000100

000200

000300

000400

000500

000600

000700

000800

000900

001000

001100

001201

001202

001301

001302

001405

001500

002000

002100

002300

002400

002501

002502

002601

002701

002702

002800

002902

003001

003102

003300

003400

004404

004704

004800

005202

005403

005602

005604

006200

006500

006801

006802

007100

007800

008200

008301

008302

008402

Humboldt County

000100

000200

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State and County or County Equivalent

Qualified Census Tracts

CALIFORNIA (cont.)

Imperial County

010400

011400

011500

012100

012302

012400

012500

Kern County

000200

000300

000400

000600

001101

001102

001103

001201

001202

001300

001400

001500

001600

002000

002100

002200

002301

002302

002500

002600

002812

003000

003400

004000

004102

004402

004500

004700

004800

004901

005202

005300

005900

006202

006301

006302

006401

006402

Kings County

000300

000900

001002

001100

001300

001400

001701

Lake County

000500

000700

000800

Los Angeles County

104701

106404

117405

117406

117510

117530

119340

120030

120101

120102

122410

123203

123204

123205

123206

123410

124202

127220

127520

128210

128302

128303

134305

183520

183810

183820

186401

190200

190400

190510

190520

190700

190800

190901

190902

191000

191110

191120

191201

191203

191204

191300

191410

191420

191500

191610

191620

191710

191720

191810

191820

192520

192610

192620

192700

195600

195710

195720

195802

197300

197420

197600

197700

199000

199120

199201

199400

199700

199800

199900

203100

203200

203300

203500

203600

203710

203720

204120

204200

204300

204410

204420

204600

204700

204810

204910

205110

205120

206010

206020

206030

206200

206300

207100

207300

207710

208000

208300

208400

208500

208620

208710

208720

208800

208902

208903

208904

209101

209102

209200

209300

209401

209402

209403

209510

209520

209810

209820

210010

211110

211200

211310

211320

211410

211801

211802

211910

211920

212100

212202

212203

212204

212303

212304

212305

212306

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State and County or County Equivalent

Qualified Census Tracts

CALIFORNIA (cont.)

Los Angeles County (cont.)

212410

212420

212500

212610

212620

212900

213201

213202

213310

213320

213401

213402

218120

218210

218800

218900

221110

221120

221220

221301

221302

221400

221500

221600

221710

221810

221820

222200

222500

222600

222700

224010

224020

224200

224310

224320

224410

224420

224600

224700

226000

226410

226420

226700

227010

227020

228100

228210

228220

228310

228320

228410

228420

228500

228600

228710

228720

228800

228900

229200

229300

229410

229420

231100

231210

231220

231300

231600

231710

231720

231800

231900

232110

232120

232400

232500

232600

232700

232800

234900

235202

236100

236201

236202

237100

237200

237500

237600

237710

237720

238310

238320

239200

239310

239330

239500

239600

239700

239800

240010

240020

240200

240300

240400

240500

240600

240700

240800

240900

241000

241120

241400

242100

242200

242300

242600

242700

243000

243100

265301

269600

275520

291120

293202

294700

294810

294820

294830

294900

296210

296220

297110

302201

302501

402302

402501

402702

402801

402802

408800

432801

432802

433301

433402

433403

433502

433901

462000

481714

482303

482304

504102

530901

531101

531201

531202

531301

531602

531702

531800

532605

532606

532700

532800

532900

533000

533103

533104

533105

533107

533201

533300

533401

533403

533501

533503

533601

533702

533801

533901

533902

534001

534102

534201

534301

534404

534405

534406

535000

535101

535200

535300

535501

535503

535605

535606

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<!-- PageFooter="January 27, 2003" -->
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State and County or County Equivalent

Qualified Census Tracts

CALIFORNIA (cont.)

Los Angeles County (cont.)

540000

540202

540400

540502

540600

540700

541400

541500

541603

541604

541605

541606

542601

542602

570203

570304

570603

571600

572500

572800

572900

573001

573002

573201

573202

573300

575101

575102

575103

575201

575202

575300

575401

575402

575500

575801

575802

575803

575901

575902

576000

576200

576300

576401

576402

576403

576501

576502

576503

576901

576902

600100

600201

600202

600301

600602

601100

601211

601501

601600

601700

601802

601900

602105

602501

602502

602503

900602

900704

900806

910402

910403

910501

910502

Madera County

000601

000602

000800

000900

Mendocino County

011600

Merced County

000504

001003

001005

001301

001302

001502

001503

001601

001602

001901

002201

Monterey County

001000

001300

Orange County

074403

074405

074406

074902

075002

075003

075004

089104

Riverside County

030300

030400

030502

030503

040203

040204

041500

041600

041703

041704

042202

042209

042211

042504

042505

042515

042710

042723

042800

043006

043308

043401

043403

043405

043503

043507

043600

044000

044101

044503

044506

044507

044509

044510

044915

045207

045301

045400

045502

045604

045605

045705

045706

940100

Sacramento County

000500

000700

000900

001000

001100

001300

001800

002100

002700

002800

003700

004203

004402

004500

004602

004903

005002

005201

005300

005506

006202

006400

006600

006702

006800

007300

007413

007503

008800

009110

San Bernardino County

001400

001500

001600

003402

003700

004201

004202

004700

004800

004900

005000

005400

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State and County or County Equivalent

Qualified Census Tracts

CALIFORNIA (cont.) San Bernardino County (cont.)

005500

005600

005800

005900

006202

006302

006401

006402

006500

006800

006900

007000

007107

007407

007408

007601

009400

009800

010014

010402

010414

940100

940500

San Diego County

000900

001200

001600

001700

001800

002201

002202

002301

002302

002401

002402

002501

002601

002602

002707

002708

002709

002710

003302

003303

003404

003501

003601

003602

003603

003901

003902

004000

004100

004501

004502

004600

004700

004800

004900

005000

005100

005600

005700

005800

006200

006600

010012

010013

010015

010112

010401

010502

011400

011500

011601

011602

011802

012500

013103

013206

014400

015701

015703

015801

015802

015901

018200

018400

019501

020009

020207

020212

San Francisco County

010700

011300

011400

011500

011700

011800

012400

012500

016100

023103

060300

060502

060700

San Joaquin County

000100

000300

000402

000500

000600

000700

000800

001700

001900

002200

002300

003308

003309

003406

003407

004401

San Luis Obispo County

010901

Santa Barbara County

002304

002403

002404

002702

002911

002912

Santa Clara County

500902

Shasta County

011200

012000

Siskiyou County

000200

Stanislaus County

000803

001604

001700

001800

002100

002200

003802

003906

003908

Sutter County

050102

050202

Trinity County

000300

Tulare County

000302

000501

000600

000702

001004

001100

001200

001601

002008

002202

002601

002800

002901

003001

003100

003200

003802

003901

003902

004101

004102

004200

004300

004400

Ventura County

002300

004301

004706

005002

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<!-- PageFooter="January 27, 2003" -->
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State and County or County Equivalent

Qualified Census Tracts

CALIFORNIA (cont.)

Yolo County

010101

010203

010501

Yuba County

040100

040300

040400

COLORADO

Adams County

007800

007900

008952

009320

009606

Arapahoe County

004950

006501

007040

007202

007300

Baca County

984600

Boulder County

012300

Chaffee County

000100

Conejos County

974800

Costilla County

982600

982700

Crowley County

989600

Denver County

000600

000702

000800

001101

001600

001900

002403

002701

003602

004101

004404

004502

005103

008313

El Paso County

002200

002300

002800

002900

004009

004400

005201

006100

Huerfano County

980600

Lake County

961600

Larimer County

000600

Las Animas County

000100

Mesa County

000300

000602

000700

Montezuma County

941000

Otero County

987700

988000

Prowers County

000200

000500

Pueblo County

000200

000600

000700

000800

001000

001100

001200

001300

001400

001800

001900

002000

002100

002200

002300

002400

002600

002901

Rio Grande County

976800

Saguache County

977700

Weld County

000100

000200

000500

000600

000701

000800

001002

CONNECTICUT

Fairfield County

022200

044100

070300

070500

070600

070900

071000

071100

071200

071300

071400

071600

071700

071900

073200

073500

073600

073700

073800

073900

074000

074300

074400

Hartford County

415900

416100

416200

416600

417100

417300

480600

490200

500100

500200

500300

500400

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State and County or County Equivalent

Qualified Census Tracts

CONNECTICUT (cont.)

Hartford County (cont.)

500500

500900

501000

501100

501200

501300

501400

501500

501700

501800

502400

502500

502600

502700

502800

502900

503000

503100

503200

503300

503400

503500

503700

503800

504100

504300

504700

504900

Litchfield County

310300

Middlesex County

541100

541600

541800

New Haven County

140200

140300

140400

140500

140600

140700

140800

141300

141500

141600

142100

142300

142400

142500

170100

170200

170300

171000

171500

350100

350200

350300

350400

350500

350800

351200

351400

351700

352200

New London County

690100

690300

690400

690500

696800

702202

702500

Windham County

800600

DELAWARE

New Castle County

000100

000700

000800

000900

001700

001900

002000

002200

002300

014501

DISTRICT OF COLUMBIA

District of Columbia

004700

004901

006002

006400

007200

007401

007404

007406

007408

007504

008803

008804

008904

009602

009801

009802

009806

009808

009904

FLORIDA

Alachua County

000200

000600

000901

000902

001502

001902

Bay County

001800

Brevard County

060700

062600

Broward County

030301

030402

041400

041500

041600

041700

060303

080500

100500

Collier County

011204

011205

Duval County

000400

001000

001300

001500

001600

001700

001800

002600

002901

011500

Escambia County

000400

001500

001700

001800

002000

Hillsborough County

000700

001800

003000

003200

003400

003600

003900

004000

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State and County or County Equivalent

Qualified Census Tracts

FLORIDA (cont.)

Hillsborough County (cont.)

004300

010807

010808

012900

Lee County

000302

000502

000600

Leon County

000500

000600

001001

001101

001200

001400

002001

002002

Marion County

001700

001800

Miami-Dade County

000408

000503

000703

000803

000903

001004

001401

001402

001501

001502

001702

001801

001803

001901

001903

001904

002001

002003

002004

002401

002402

002500

002600

002800

003001

003003

003004

003100

003400

003601

003602

003701

003702

003907

004402

004901

005201

005202

005301

005302

005402

005703

006602

009310

010206

010602

010800

010900

011001

011300

Orange County

010400

010500

010600

011400

011702

011901

014502

Palm Beach County

001404

001909

002200

002400

002600

006801

008201

008202

008301

Pinellas County

020500

020700

020900

021000

021200

021300

021600

Polk County

010100

010200

011000

011201

012004

013300

013701

St. Lucie County

000100

000200

000300

Seminole County

020500

Volusia County

081500

081900

082000

082100

GEORGIA

Ben Hill County

960400

Bibb County

010100

010400

010500

010600

010700

011100

011200

011300

011400

011500

012700

012900

013000

Burke County

950400

950800

Carroll County

990502

Chatham County

000100

000601

001100

001200

001800

001900

002000

002300

002400

002800

003200

004400

010101

Clarke County

000100

000400

000900

001900

030200

Clay County

960100

Cobb County

030800

Colquitt County

970300

Decatur County

970400

<!-- PageFooter="January 27, 2003" -->

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State and County or County Equivalent

Qualified Census Tracts

GEORGIA (cont.)

DeKalb County

020600

022100

023802

Dougherty County.

000100

000200

000300

000800

001200

001300

001401

001402

001500

010302

010601

010700

Evans County

970300

Floyd County

001500

Fulton County

000800

001000

001700

001900

002100

002200

002300

002400

002500

002600

002800

003300

003500

003700

003800

003900

004100

004300

004400

004600

004800

005501

005502

005600

005700

006200

006300

006400

006602

006700

006802

006900

007002

007100

007200

007300

007400

007601

007808

008202

008301

008302

008400

008500

008601

008602

008701

008702

010900

011000

011201

Glynn County

000700

000800

Hall County

000800

Hancock County

980100

980200

Houston County

020400

Laurens County

950300

950900

Liberty County

010100

Lowndes County

010500

010800

010900

011000

011302

Mitchell County

980300

Muscogee County

000300

000500

001300

001400

001500

001600

001800

002200

002400

002500

002700

002800

003000

003200

003400

010800

011000

Richmond County

000200

000300

000600

000700

000900

001300

001400

001500

010300

010400

010504

010600

Screven County

970200

Spalding County

160400

Stewart County

950200

Terrell County

980300

Thomas County

960100

Tift County

990600

Ware County

950400

950700

950800

HAWAII

Honolulu County

003900

005200

005400

005700

005800

006202

006302

008610

009501

009502

009503

009505

010801

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State and County or County Equivalent

Qualified Census Tracts

HAWAII (cont.)

Kalawao County

031900

Kauai County

041000

Maui County

031300

IDAHO

Canyon County

020200

Owyhee County

940300

ILLINOIS

Adams County

000400

000700

000800

Alexander County

957900

Champaign County

000100

000300

000700

005200

005300

006000

Cook County

031200

031500

031600

050400

080500

080800

081900

222300

222600

222800

222900

230100

230200

230300

230900

231100

231500

231600

231700

240100

240600

240700

241000

241100

242700

251700

251900

260100

260300

260400

260500

260600

260700

260800

270200

270300

270500

270600

270700

271100

271200

271300

271400

280400

280500

280600

280800

280900

281000

281300

281400

281500

282700

283500

283600

283800

283900

284000

284100

284200

290200

290300

290400

290500

290600

290700

290900

291000

291100

291200

291300

291400

291500

291600

291700

291800

291900

292000

292200

300100

300200

300400

300700

300800

300900

301000

301200

301300

301400

301500

310100

310500

310600

310800

310900

311000

311200

320400

330300

340400

340600

350200

350400

350600

351100

351400

351500

360100

360200

360300

360400

370100

370200

370400

380100

380200

380500

380600

380700

380800

381300

381400

381500

381600

381700

381800

382000

390300

390400

400100

400200

400300

400500

400600

400700

400800

410400

420400

420500

420600

420700

420800

420900

421100

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

ILLINOIS (cont.)

Cook County (cont.)

430300

430500

430700

431300

440100

440800

460100

460200

460600

460700

460800

460900

461000

490200

491400

500200

540100

560200

610200

610300

610400

610500

610600

611100

611200

611300

611400

611700

611800

611900

612000

612100

630100

670200

670300

670600

670800

670900

671000

671100

671200

671500

671700

680100

680200

680300

680400

680500

680600

680700

680900

681000

681100

681200

681300

690100

690200

690300

690700

710100

710200

710900

821500

826800

826901

826902

829000

829100

Crawford County

980400

DeKalb County

001000

001100

001200

Franklin County

041000

Greene County

973900

Jackson County

011100

011200

011300

011400

Jefferson County

050900

051000

Kane County

853700

Kankakee County

011000

011600

012300

Lake County

862300

862605

862700

862902

McDonough County

010500

McLean County

000200

Macon County

000100

000300

000600

000700

000800

000900

001000

Madison County

400300

400700

400901

Marion County

952500

Peoria County

000100

000200

000300

000500

000600

000700

000800

000900

001200

001300

001500

Rock Island County

020600

022300

022600

023600

St. Clair County

500400

500500

500600

500900

502200

502401

502500

502700

502800

504201

504500

Saline County

955500

Sangamon County

000800

000900

001400

001500

001600

001700

002400

002802

Stephenson County

000700

Vermilion County

000100

000200

000300

White County

958000

Will County

881900

882000

Winnebago County

001000

001100

001300

002100

002400

002500

002600

002800

<!-- PageFooter="2003-4 I.R.B." -->

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State and County or County Equivalent

Qualified Census Tracts

INDIANA

Allen County

001600

001700

002100

002700

Delaware County

000100

000200

000300

000400

000600

000902

001901

Elkhart County

002600

002800

Floyd County

070200

Henry County

976300

Lake County

010202

011400

011900

012100

012200

020600

030100

030300

031000

LaPorte County

040200

Madison County

000500

Marion County

330801

350300

350700

350800

350900

351100

351600

351700

352800

353100

353500

353600

354400

354700

355000

355600

355700

356900

357200

Monroe County

000201

000600

St. Joseph County

002800

Tippecanoe County

005500

010300

010500

Vanderburgh County

001900

002500

002600

Vigo County

000100

000300

000500

000800

010500

Wayne County

000200

IOWA

Black Hawk County

000100

000900

Dubuque County

000100

Johnson County

002100

Polk County

004900

005000

005200

Scott County

010800

010900

Story County

000500

Webster County

000700

Woodbury County

001500

001600

KANSAS

Douglas County

000400

Geary County

000100

000200

Montgomery County

950500

950900

951200

Reno County

000600

000800

Riley County

000802

001000

Saline County

000200

Sedgwick County

000600

000800

000900

001800

002600

003700

006800

Shawnee County

000400

000500

001100

001200

004000

Wyandotte County

040300

040800

041000

041100

041200

043000

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

KENTUCKY

Bell County

960100

960900

961000

Breathitt County

980400

980700

Campbell County

050100

Clay County

950100

950400

950500

950600

Fayette County

000400

000801

000900

001800

Floyd County

980800

Harlan County

970300

970600

971000

971100

971200

Jefferson County

000600

001800

002300

002400

002700

003000

003500

003700

004301

004302

005900

006200

Knox County

990100

Lawrence County

990300

Letcher County

950300

Lewis County

990400

McCracken County

030100

030200

030300

030400

McCreary County

960100

960200

960400

Madison County

010500

Martin County

950100

950300

Owsley County

990200

Perry County

970700

Warren County

010200

Whitley County

980800

LOUISIANA

Bossier Parish

010400

011300

Caddo Parish

020400

020600

020800

020900

021300

021700

023300

023700

024601

Calcasieu Parish

000400

East Baton Rouge Parish

000200

001000

001104

001300

001500

002100

002200

002800

003102

East Carroll Parish

990300

Evangeline Parish

950500

950600

Iberia Parish

030800

Jefferson Parish

020600

026200

027602

Lafayette Parish

000800

000900

Lincoln Parish

960900

Madison Parish

960300

960400

Natchitoches Parish

990700

Orleans Parish

000200

000300

000601

000603

000901

000902

000903

001301

001304

001500

001600

001714

001733

001900

002000

002700

002800

002900

003000

003305

003306

003500

004401

004402

004500

004800

004900

006000

006700

006800

006900

007100

<!-- PageFooter="2003-4 I.R.B." -->

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<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

LOUISIANA (cont.)

Orleans Parish (cont.)

007200

008101

008500

008600

008700

009200

009301

009302

009400

013100

Ouachita Parish

000600

000700

000900

001100

001500

010700

Rapides Parish

011000

011100

011400

011900

012000

012700

St. Landry Parish

961300

961600

St. Mary Parish

041600

Vermilion Parish

950800

Webster Parish

031700

MAINE

Androscoggin County

010100

020100

020400

Cumberland County

000500

MARYLAND

Allegany County

000300

000500

000700

000800

001000

001503

002100

002200

Anne Arundel County

740105

Baltimore County

401602

421300

450504

450800

490605

491401

Dorchester County

970500

Frederick County

750100

750300

Garrett County

000700

Harford County

302901

Prince George's County

803200

803401

803509

804300

804800

805601

805602

Somerset County

980101

980200

980600

Washington County

000302

000400

000700

000900

Wicomico County

000100

000300

000500

010200

Worcester County

990300

Baltimore City

030100

050100

060100

060200

060300

060500

070100

070200

070300

070400

080102

080200

080301

080302

080400

080500

080600

080700

080800

090400

090500

090600

090700

090800

090900

100100

100200

100400

120400

120500

120700

130100

130200

130300

130400

130804

140200

140300

150100

150200

150300

150400

150500

150600

150800

151200

151300

160100

160200

160300

160400

160500

160600

160700

160802

170100

170200

170300

180100

180300

190100

190300

200100

200200

200300

200400

200500

200600

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or

County Equivalent

Qualified Census Tracts

MARYLAND (cont.)

Baltimore City (cont.)

200701

200702

200800

210100

210200

230300

250203

250204

250207

250301

250302

250402

250500

260202

260303

260401

260402

260404

260501

260604

260700

260800

261000

270701

271700

271801

271802

280301

280404

MASSACHUSETTS

Barnstable County

012300

012400

014100

Berkshire County

900100

900200

900600

901200

921100

921400

Bristol County

640200

640300

640600

640900

641000

641100

641200

641300

641400

641900

642000

650600

650700

650800

650900

651100

651200

651300

651400

651500

651700

651800

651900

652400

652500

652600

652700

Essex County

204300

206000

206800

206900

207000

207200

250100

250300

250400

250500

250600

250700

250900

251000

251100

251200

251300

251500

251600

Hampden County

800100

800600

800700

800800

800900

801101

801102

801200

801300

801401

801700

801800

801900

802000

802200

802300

810800

810901

811400

811500

811600

811700

811800

812300

Hampshire County

820102

820400

Middlesex County

302200

310100

310400

310800

311000

311100

311900

312400

352400

383100

Norfolk County

417802

Plymouth County

510900

511000

Suffolk County

000602

010300

050200

050300

050400

050700

060700

061000

061100

070200

070400

071200

080100

080300

080400

080500

080600

080800

081000

081200

081300

081700

082100

090300

090400

091300

091700

091800

092400

100100

101102

160200

160400

Worcester County

710500

710700

731201

731202

731300

731400

731500

731600

731700

731800

731900

732001

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<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

MASSACHUSETTS (cont.)

Worcester County (cont.)

732400

732500

732600

732700

757200

757300

MICHIGAN

Bay County

280100

280200

Berrien County

000300

000400

000500

000600

002100

002200

002300

Calhoun County

000400

000600

000700

Clare County

980100

Genesee County

000200

000400

000700

000800

001000

001100

001400

001500

001700

001800

001900

002000

002200

002300

002500

002600

002800

003200

003400

003800

010304

012202

Gladwin County

990800

Houghton County

990300

Ingham County

000700

001300

001500

002000

004200

004302

004402

Jackson County

000200

000600

001100

Kalamazoo County

000202

001504

001507

Kent County

001400

002000

002600

002800

003100

003600

003800

Lake County

960600

Marquette County

000500

002400

Muskegon County

000200

000300

000500

000602

001200

001300

001402

Oakland County

141200

141700

142300

142500

172400

Ogemaw County

950700

950800

Oscoda County

970300

Roscommon County

970200

970800

Saginaw County

000100

000200

000400

000600

000700

000800

000900

001000

001100

001300

001800

St. Clair County

624000

625000

St. Joseph County

040200

Shiawassee County

030600

Washtenaw County

400200

402200

410600

411000

411100

411200

Wayne County

500400

501700

503400

503600

503700

503900

504100

504500

504600

504700

504800

507400

507600

507700

507800

508000

510400

510500

510700

510800

510900

511200

511600

512100

512200

512300

512400

512600

512900

513600

513900

514000

514100

514300

514500

514600

<!-- PageFooter="January 27, 2003" -->

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<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

MICHIGAN (cont.)

Wayne County (cont.)

514700

514800

514900

515100

515200

516100

516300

516600

516800

517200

517600

517800

518400

518500

518600

518800

520100

520300

520400

520500

520600

521300

521800

522100

522200

522300

522400

523100

523200

523500

523600

523700

524000

524300

525100

525200

525300

525400

525500

525700

526000

526400

526500

530700

530800

531100

531500

531600

531700

531800

531900

532400

532500

532700

533000

533100

533300

533500

533600

533700

534100

534500

537200

537800

543500

543600

543700

543800

543900

544200

545100

545200

545300

545400

552100

552300

553200

553300

553400

553800

573500

584800

586000

MINNESOTA

Beltrami County

950800

Hennepin County

002200

003300

003501

005901

005902

006800

007301

007700

007801

007802

007900

008300

008400

101400

101500

101600

102100

102800

102900

103400

104100

104800

105400

105700

106000

106900

107000

107100

107200

Itasca County

980200

Mower County

000410

Polk County

020200

Ramsey County

030500

032700

032900

033100

033700

040802

St. Louis County

001300

001400

001600

001700

001800

001900

002500

002800

003200

012200

Stearns County

000100

MISSISSIPPI

Adams County

000400

Coahoma County

950600

Forrest County

000100

000500

Hinds County

001100

001800

002000

002700

010801

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State and County or

Qualified Census Tracts

County Equivalent

MISSISSIPPI (cont.)

Jackson County

041200

Lauderdale County

000100

000400

000600

Leflore County

950200

950800

950900

Pike County

950300

Washington County

000400

001100

Yazoo County

950500

MISSOURI

Adair County

951000

Boone County

000100

000401

000402

000500

000800

000900

Buchanan County

001000

Butler County

950500

950700

Cape Girardeau County

981400

Clay County

020000

Cole County

010100

Dunklin County

960100

Greene County

000100

000200

000500

000800

001900

005500

Hickory County

970300

Howell County

990200

990700

Jackson County

001400

001500

001600

001700

002100

002200

002400

002900

003200

003502

003602

005500

005801

005901

006300

Marion County

960800

Oregon County

980100

Pemiscot County

970200

970400

St. Louis County

213900

214100

Shannon County

970200

St. Louis City

105400

106100

106200

106300

106600

109700

110200

110500

111200

111400

111500

112300

116400

118100

119300

120100

120300

121100

121200

121300

122400

124100

124200

124600

125700

126600

126700

MONTANA

Blaine County

940200

Cascade County

000600

Chouteau County

940100

Daniels County

940200

Sheridan County

940200

000300

NEBRASKA

Blaine County

972400

Douglas County

000500

000700

000800

001100

001200

001600

001900

005200

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<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

NEBRASKA (cont.)

Douglas County (cont.)

005300

Lancaster County

000700

010302

NEVADA

Clark County

000400

000503

000504

000700

000800

000900

001100

002204

002404

002405

002406

002506

002706

002955

004300

004400

004707

004710

004713

Elko County

940300

Washoe County

000100

000900

001004

NEW HAMPSHIRE

Hillsborough County

001400

001500

001600

001900

010700

NEW JERSEY

Atlantic County

000100

000400

001100

001400

001500

001900

002300

002400

002500

Burlington County

701204

702101

702109

Camden County

600100

600200

600300

600400

600500

600700

600800

600900

601000

601101

601102

601200

601300

601400

601500

601600

601700

601800

601900

602000

605000

607701

608204

Cape May County

020500

021400

021500

Cumberland County

010200

020100

020200

020300

020501

040100

040200

040500

Essex County

000200

000300

000700

000900

001000

001300

001400

001500

001600

001700

001800

001900

002600

002700

002800

002900

003000

003100

003400

003500

003800

003900

004000

004100

004200

004300

004600

004801

004802

004900

005000

005300

005400

005700

005800

006200

006600

006700

006800

006900

007501

007502

008000

008100

008200

008600

008700

008800

008900

009000

009100

009200

009300

009600

009700

010600

010900

011100

011300

013100

013200

013300

018300

018400

018600

022700

022800

Gloucester County

501402

Hudson County

000200

001202

001601

001700

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

NEW JERSEY (cont.)

Hudson County (cont.)

001800

003000

003100

003300

004102

004200

004400

004600

005100

005500

005801

015100

015300

015500

015600

015900

016000

016200

016300

016400

016500

016600

016700

016800

016900

017000

017200

017400

017500

017600

017700

019000

032400

Mercer County

000800

000900

001000

001100

001401

001402

001500

001600

001700

001900

002000

Middlesex County

004600

005300

005500

005600

005800

005900

Monmouth County

805600

805800

807003

807200

807300

807600

809903

Morris County

045601

Ocean County

715200

715302

715402

720101

720102

720103

722200

731201

731202

731203

731204

731205

731206

Passaic County

125100

175200

175300

175400

175500

175800

175900

180400

180500

180700

180800

180900

181200

181300

181400

181500

181702

181800

182000

182200

182300

182800

182900

183000

183200

Salem County

020300

022000

022100

Union County

030200

030300

030400

030600

030801

031000

031100

031200

031901

039300

NEW MEXICO

Bernalillo County

000901

940300

Cibola County

945900

Curry County

000100

Dona Ana County

001000

001704

Lea County

000300

Luna County

000600

Mckinley County

940200

943400

Rio Arriba County

000600

943300

Sandoval County

940900

943300

San Juan County

942900

Socorro County

946100

NEW YORK

Albany County

000200

000600

000800

002100

002500

002600

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

NEW YORK (cont.)

Bronx County

001500

001700

002000

002300

002500

002701

002702

003100

003300

003500

003700

003900

004100

004300

004400

004600

004700

004800

004900

005000

005200

005302

005400

005600

005800

005901

006000

006200

006500

006600

006700

006900

007300

007500

007700

007900

008300

008500

008600

008700

008900

009100

009900

010500

011000

011501

011502

011900

012101

012102

012300

012701

012901

012902

013100

013300

013500

013700

013900

014100

014300

014500

014700

014900

015100

015300

015500

015700

016100

016500

016700

016900

017300

017500

017700

017900

018100

018900

019300

019500

019600

019700

019900

020100

020500

021100

021301

021302

021501

021502

021701

021702

021900

022000

022100

022300

022500

022701

022702

022901

022902

023100

023301

023302

023501

023502

023701

023702

023900

024100

024200

024300

024500

025300

025500

026300

026500

026700

027101

027700

032400

033400

035900

036100

036300

036501

036502

036700

036901

036902

037100

037300

037400

037501

037502

037503

037700

037900

038100

038300

038500

038700

038900

039100

039300

039700

039901

039902

040100

040302

040500

040701

041900

042500

045800

Broome County

000300

000500

000600

001100

001200

001300

013500

013900

Cattaraugus County

940000

940200

961700

Chautauqua County

030300

030500

940000

Chemung County

000100

000700

000800

001000

Clinton County

101600

Columbia County

991200

Dutchess County

220300

220400

220700

Erie County

000300

000400

000500

001302

001402

001500

001600

001800

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

NEW YORK (cont.)

Erie County (cont.)

002000

002502

002600

002701

002702

002800

002900

003100

003201

003202

003301

003302

003400

003500

003600

003700

003901

004002

004402

005600

006000

006100

006900

007000

007101

007102

008300

012100

016100

940000

Fulton County

990800

Genesee County

940100

Herkimer County

010600

Jefferson County

062100

Kings County

001100

001800

002000

002300

002500

002901

003700

005900

008500

009000

010400

011200

012700

018501

022500

022600

022800

023500

023900

024100

025500

025901

025902

026100

027700

028100

028300

028502

028700

030300

030700

031100

031300

032600

033000

033100

034000

034200

034300

034700

034802

035200

035300

035700

035900

036002

036100

036200

036300

036900

038100

038200

038900

039100

039500

039700

039900

040100

040900

041100

041300

041500

041700

041900

042100

042300

042500

042700

042900

043100

043300

043900

044100

044300

044700

045300

046500

048900

049300

050800

050900

051600

052300

052500

052700

052900

053100

053300

053500

053700

053900

054500

054700

057200

057900

089000

089200

090000

090200

090600

090800

091000

091200

091400

091600

094402

098200

103400

110600

111000

111400

112000

112600

113000

113200

113400

113600

113800

114000

114800

115000

115200

115400

115600

118800

119000

119400

121000

121400

Monroe County

000200

000700

001300

001500

002200

002300

002400

002700

003200

003900

004000

004100

004602

004800

004900

005000

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

NEW YORK (cont.)

Monroe County (cont.)

005100

005200

005300

005500

005600

005700

005900

006400

006500

006600

006900

007900

008000

008900

009200

009301

009302

009400

009601

009602

009603

009604

Montgomery County

070900

New York County

000201

000600

000800

001002

001600

001800

002000

002400

002500

002900

004100

011700

015602

016200

016400

016600

017201

017202

017401

017800

018000

018200

018400

018600

018800

019000

019200

019400

019600

020200

020400

020901

020902

021301

021302

021702

021900

022200

022301

022400

022600

022702

022900

023000

023102

023200

023300

023400

023501

023502

023900

024301

024302

024500

024900

025100

026100

026700

026900

027700

028300

028500

028900

029100

029300

Niagara County

020200

020600

020900

021100

021200

021300

Oneida County

020100

020300

020701

020802

020803

020900

021000

021101

021201

021404

021500

021800

022000

022600

Onondaga County

000500

001300

001400

001600

002000

002100

002200

002300

002400

003000

003200

003400

003500

003900

004000

004200

004300

005200

005300

005400

005500

005602

005800

006101

Ontario County

051800

Orange County

000400

000500

001700

015001

015002

Queens County

002500

002900

003700

004300

008700

010700

024800

025000

026000

054500

054900

086500

087100

095200

097201

097202

122702

156700

Rensselaer County

040400

Richmond County

002900

013301

018500

Rockland County

011503

St. Lawrence County

991100

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

NEW YORK (cont.)

Schenectady County

020800

020900

021001

021002

021400

021500

021700

Warren County

070200

Westchester County

000103

000500

001000

001101

003100

NORTH CAROLINA

Buncombe County

000100

000200

000900

Cumberland County

000200

001000

001300

Davidson County

061400

Durham County

000500

000900

001100

001201

001202

001400

001501

Edgecombe County

020100

Forsyth County

000400

000500

000700

000801

000802

001602

Gaston County

031900

Guilford County

011000

011101

011400

013900

014408

Lee County

030300

Lenoir County

010300

010400

010500

Mecklenburg County

000600

000700

002300

003700

003901

004500

004700

005000

005100

005200

Nash County

010100

New Hanover County

011000

011100

011400

Onslow County

000800

000900

001900

002000

Orange County

011600

Pasquotank County

960300

Pitt County

000701

000702

Robeson County

960800

Surry County

990400

Vance County

960600

960700

Wake County

050800

050900

051100

052405

Wayne County

001600

001700

001800

Wilson County

000200

000801

NORTH DAKOTA

Grand Forks County

010300

Mercer County

940300

Sioux County

940100

940200

Ward County

940300

OHIO

Allen County

012500

012800

012900

013400

013600

013700

013800

Athens County

973101

973102

Belmont County

011500

011600

012100

Butler County

000300

000400

000702

010104

012900

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

OHIO (cont.)

Clark County

000100

000200

000901

Columbiana County

952100

Cuyahoga County

101200

101800

102600

102700

102800

103100

103300

103400

103500

103800

103900

104100

104200

104400

104500

104600

104701

104800

104900

105100

106400

107200

107500

107700

107900

108200

108300

108400

108600

108700

108800

108900

109300

109600

109700

109800

110500

110800

111100

111200

111300

111401

111402

111500

111600

111700

111800

111901

111902

112100

112200

112400

112600

112700

112900

113100

113200

113300

113500

113600

113700

113800

113900

114100

114200

114300

114400

114500

114600

114700

114800

114900

115200

115300

115500

116100

116500

116600

116700

116800

116900

117300

118601

118602

118700

119202

119300

119402

119502

119600

119702

119800

119900

120100

120200

120802

121300

121401

121600

150300

150400

151400

151500

151800

Fairfield County

031700

Franklin County

000720

000730

000910

000920

001110

001200

001300

001400

001500

001600

001700

001810

002300

002600

002710

002800

002900

003000

003600

004200

005000

005100

005300

005410

005610

006000

006100

007410

009326

009331

Guernsey County

977600

Hamilton County

000200

000301

000302

000900

001000

001100

001500

001600

001700

002100

002300

002800

003200

003400

003500

003600

003700

003800

004702

006700

007400

007700

008000

008502

008601

008700

008900

009100

010002

Jefferson County

000200

000800

000900

Lawrence County

050600

Licking County

750100

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

OHIO (cont.)

Lorain County

070800

Lucas County

000800

001202

001700

001800

002200

002300

002500

002700

002900

003000

003300

003400

003500

003600

003700

003800

004100

004200

004301

005100

005400

Mahoning County

800200

800500

800600

800700

800900

801000

801600

801700

801900

802000

802100

802200

802300

802400

803100

803400

803500

803700

804400

810300

Montgomery County

000300

001200

001700

002200

002300

003500

003600

003700

004000

004100

004300

060200

070201

Muskingum County

981900

Portage County

601502

Richland County

000100

000200

000300

000600

000700

Ross County

956500

Scioto County

993500

993600

Stark County

700100

700500

701800

702300

710400

713800

Summit County

501100

501200

501301

501302

501700

501800

502500

503400

504200

504400

505300

505600

506700

506800

506900

507400

510100

Trumbull County

920100

920500

920600

920800

932400

Washington County

020500

Wood County

021800

OKLAHOMA

Bryan County

996400

Canadian County

300400

Cleveland County

201201

Comanche County

001200

001300

001700

Grady County

000100

Jackson County

968700

Muskogee County

000600

Oklahoma County

102500

102600

102800

102900

103000

103500

103602

103700

103800

103900

104100

104200

104700

105400

105600

105800

Payne County

010400

010500

Pittsburg County

986300

Pontotoc County

989100

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

OKLAHOMA (cont.)

Pottawatomie County

500200

Tulsa County

000500

000600

001300

002100

004600

008001

OREGON

Jackson County

000100

000202

Josephine County

360701

Klamath County

971600

Lane County

003800

Malheur County

970400

Multnomah County

003301

003402

PENNSYLVANIA

Allegheny County

010300

020300

040600

050100

050700

050900

051000

051100

101600

101700

111500

120300

120400

120800

130100

130300

130400

150400

160400

160600

192100

220400

250300

250700

250900

260900

280800

464400

486700

486900

505000

512900

513800

514000

551900

552100

560400

561000

561100

Beaver County

604500

Berks County

000100

000200

001200

002200

002300

002500

002600

Blair County

100700

101900

Cambria County

000100

000200

000300

000800

000900

001000

001100

001300

001400

Centre County

012100

012500

Clinton County

970600

Dauphin County

020600

020700

021300

021400

Delaware County

405200

405800

Erie County

000100

000700

000800

001200

001300

001400

001500

001800

Fayette County

262300

Lackawanna County

100200

Lancaster County

000100

000800

000900

001400

001500

001600

Lawrence County

000400

000600

000900

Lebanon County

000300

Lehigh County

000800

000900

001000

001100

001200

001300

Luzerne County

201000

214100

217400

Lycoming County

000400

000800

Mercer County

030200

030600

030700

030800

Northampton County

010500

Northumberland County

961700

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

PENNSYLVANIA (cont.)

Philadelphia County

000200

001900

002000

002100

002800

003000

003100

003200

003400

003500

003600

004600

005100

005600

006600

006700

006900

007400

007700

008900

009200

009300

009500

010200

010500

010600

010700

010800

010900

012700

013100

013800

013900

014000

014100

014500

014700

014800

015100

015200

015300

015500

015700

016100

016200

016300

016400

016500

016600

016700

016800

016901

017100

017200

017400

017500

017601

017602

017700

017800

018200

018900

019000

019200

019300

019400

019500

019600

019700

019800

019900

020300

020500

024100

024500

024600

028700

028800

029300

032200

Venango County

200700

Washington County

704100

Westmoreland County

800100

800700

York County

000200

000300

000700

001000

001100

001500

001600

RHODE ISLAND

Newport County

041200

Providence County

000200

000300

000500

000600

000700

000900

001000

001200

001300

001400

001700

001900

002000

002200

002500

002600

002700

010800

011100

015100

015200

015300

015400

016600

018000

018100

SOUTH CAROLINA

Charleston County

000900

001000

001100

001300

001400

003300

003400

003600

003700

004300

004500

Darlington County

010700

Florence County

000700

Greenville County

000800

000900

002108

002303

002304

Lancaster County

010700

Orangeburg County

011200

011300

Richland County

000500

000900

001000

001300

001400

002002

002800

010900

Spartanburg County

020301

020400

020500

020800

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or

County Equivalent

Qualified Census Tracts

SOUTH CAROLINA (cont.)

021001

000898

001500

Spartanburg County (cont.)

Sumter County

000897

SOUTH DAKOTA

Bennett County

940600

940800

Buffalo County

940100

Corson County

940500

940700

940800

940900

Dewey County

941600

Jackson County

940100

940200

Lyman County

940100

Shannon County

940300

940400

940600

940700

Todd County

940100

940200

Ziebach County

941200

941400

941500

TENNESSEE

Anderson County

020700

Bradley County

010400

010700

Campbell County

950300

Claiborne County

970400

Coffee County

970900

Davidson County

011800

012400

012500

013600

013900

014000

014200

014300

014400

014800

016200

Hamblen County

100300

000300

001200

001500

001600

001900

002000

Hancock County

960100

960300

Knox County

000200

000400

000600

000700

001200

001300

001400

002400

002800

Madison County

000500

000800

001000

001100

Montgomery County

100400

100900

Scott County

975300

Shelby County

000200

000300

000400

000500

000800

000900

001800

001900

002000

002100

002200

002300

002400

002800

003700

003800

004000

004100

004400

004500

004600

004700

004800

004900

005000

005100

005400

005700

005800

005900

006000

006700

007810

008110

008400

010300

010420

022022

Washington County

060700

060900

TEXAS

Bee County

950500

Bell County

020702

020900

022600

022801

022900

023500

Bexar County

110200

110500

110600

110700

2003-4 I.R.B.

352

January

27, 2003

<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

TEXAS (cont.)

Bexar County (cont.)

110800

110900

111000

130100

130300

130500

130600

130700

141000

150300

150800

160100

160900

170101

170102

170200

170300

170401

170900

171000

171200

181003

191004

Bowie County

010500

010600

Brazos County

001400

Brewster County

950400

Brooks County

950200

Brown County

950600

950700

Cameron County

010500

010900

011000

011100

011600

011700

011903

012200

012303

012304

012507

012604

012609

012610

012700

013203

013207

013208

013305

013306

013307

013308

013309

013401

013402

013700

013801

013802

013901

013902

013903

014001

014002

Cherokee County

950400

950500

950700

Dallas County

000405

001503

002000

002701

002702

002900

003400

003500

003800

003901

003902

004000

004100

004800

007201

007202

008603

008604

008703

008704

008900

009304

009804

010200

010400

011401

011500

012208

019013

019209

Dimmit County

950100

Ector County

001100

001200

001500

001800

001900

002000

El Paso County

000301

000302

000404

000800

000900

001203

001400

001600

001700

001800

001900

002000

002100

002201

002202

002600

002800

002900

003000

003200

003602

003701

003702

003901

003903

004105

010102

010208

010309

010319

010403

010404

010501

010502

010503

010504

Falls County

990400

Frio County

950300

Galveston County

724000

724600

Gray County

950600

950800

Gregg County

001400

Grimes County

180104

Hale County

950200

Harris County

210400

210800

210900

211000

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

TEXAS (cont.)

Harris County (cont.)

211100

211200

211300

211400

211700

220500

220800

220900

222600

222700

230300

230400

230700

230900

231000

233600

240500

310200

310500

310900

311600

312200

312300

312400

312800

313500

313600

321500

322000

331200

331400

332100

420100

420500

421200

421400

421500

421600

422200

423100

433100

433500

453100

533300

Hidalgo County

020100

020202

020501

020503

020600

020723

021100

021301

021302

021303

021500

021600

021801

021802

021901

021902

022002

022101

022102

022202

022501

022502

022600

022702

022800

023000

023101

023102

023503

023506

023508

023700

024101

024102

024103

024104

024105

024201

024202

024301

024302

024401

024402

024500

024600

Hill County

960900

961000

Hockley County

950400

Howard County

950300

Hudspeth County

950100

Jefferson County

000600

000700

000900

005300

005900

006100

006300

Jim Wells County

950500

Kleberg County

020200

Lamar County

000600

Lamb County

950500

La Salle County

950100

950200

Limestone County

970400

Lubbock County

000202

000301

000500

000603

000605

000607

001000

001200

002400

McLennan County

000400

000598

001100

001200

001400

001500

001900

003300

Maverick County

950100

950201

950202

950203

950500

950601

950602

Midland County

000900

001400

001600

001700

Montgomery County

693400

Nacogdoches County

950700

950900

Nolan County

950300

Nueces County

000400

000500

000900

001000

001100

001200

001300

001500

001601

005602

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

TEXAS (cont.)

Potter County

010600

012000

012200

012800

013000

014600

014800

Presidio County

950200

Reeves County

950100

950200

950300

950500

Smith County

000202

000300

000400

000700

Starr County

950102

950103

950201

950202

950400

950500

950600

950701

950702

Tarrant County

100300

101000

101100

101600

101700

102500

103100

103500

103601

103701

103800

103900

104000

104604

106516

122200

Taylor County

010700

010800

011700

011900

Terry County

950300

Titus County

950600

950700

Tom Green County

000500

000700

000900

Travis County

000604

000802

000804

001000

002311

002316

Val Verde County

950601

950602

Walker County

790600

Webb County

000103

000104

000300

000400

000500

000600

000700

000902

001002

001200

001300

001801

001804

001805

Wharton County

740300

Wichita County

010100

010400

011100

011300

Willacy County

950300

950700

Zapata County

950200

Zavala County

950100

950200

950301

950302

UTAH

Cache County

000702

000800

Davis County

125600

Salt Lake County

100302

101400

102100

102400

111500

San Juan County

942000

942100

Utah County

001601

001602

001603

001801

001802

001803

001900

002300

002400

002500

002800

Wasatch County

940300

Weber County

200900

201200

201800

201900

VERMONT

Chittenden County

000400

VIRGINIA

Albemarle County

010902

Amherst County

010502

Buchanan County

990100

990200

990300

990700

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

VIRGINIA (cont.)

Chesterfield County

100406

Dickenson County.

990100

990200

990300

990400

Halifax County

990100

Henrico County

200805

James City County

080102

Lee County

990100

990500

990600

Prince William County

900903

Russell County

990100

990600

Scott County

030200

030300

Smyth County

990600

Tazewell County

990500

991000

Wise County

991100

991500

York County

050500

Bristol City

020100

020300

Chesapeake City

020100

020502

Danville City

000300

000400

000500

000600

001000

001300

Franklin City

090200

Hampton City

010502

010602

011400

Hopewell City

820300

820700

Lynchburg City

000203

000400

000600

000700

001200

001300

001400

Martinsville City

000200

000400

Newport News City

030100

030400

030600

030800

030900

032300

Norfolk City

000900

001100

001300

001600

002500

002600

002700

002900

003501

003502

004100

004200

004300

004400

004600

004700

004800

005000

005200

005300

005901

006501

006502

007001

Petersburg City

810100

810200

810600

810700

810800

Portsmouth City

210500

211400

211800

211900

212000

212100

212400

212600

213101

Richmond City

010300

010900

011000

020100

020200

020400

020700

021000

030100

030200

030500

060100

060200

060300

060400

060700

060800

060900

070600

Roanoke City

000200

000700

000800

000900

001000

001300

001400

Suffolk City

065100

065400

065500

Virginia Beach City

040600

043200

045810

Waynesboro City

003100

003300

WASHINGTON

Adams County

950400

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

WASHINGTON (cont.)

Asotin County

980400

Benton County

011200

012000

Clark County

041005

041600

041700

042400

042700

Cowlitz County

000300

000502

001000

Franklin County

020100

020200

Grays Harbor County

000100

Island County

970200

970900

King County

005301

007300

008500

009100

009200

026500

029004

030501

Kitsap County

080500

080800

090300

Okanogan County

970200

Pierce County

061400

061602

062200

062801

071703

071704

071805

071806

072000

072904

Snohomish County

040200

040700

041904

Spokane County

000200

000400

001400

001600

002300

002400

002600

003000

003300

003500

003600

011101

013800

Stevens County

951000

Walla Walla County

920500

Whitman County

000500

000600

Yakima County

000100

000200

000600

001500

002001

002300

002500

002701

WEST VIRGINIA

Cabell County

000500

000600

Kanawha County

000900

McDowell County

953600

953900

Ohio County

000100

000700

000800

WISCONSIN

Dane County

001100

001601

001602

003200

Douglas County

020100

020200

La Crosse County

000200

000400

Milwaukee County

001100

001200

002000

002100

002500

002800

004000

004400

004600

004700

006300

006400

006500

006600

006700

006800

006900

007000

007900

008000

008100

008200

008300

008400

008500

008600

008700

008800

008900

009000

009100

009600

009700

009800

009900

010000

010100

010200

010300

010400

010500

010600

010700

011500

011600

011700

011800

012000

012200

012300

013400

013500

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

State and County or County Equivalent

Qualified Census Tracts

WISCONSIN (cont.)

Milwaukee County (cont.)

013600

013700

013800

014000

014100

014600

014700

014800

014900

015000

015400

015600

015700

015800

016300

016400

016500

016600

016700

016800

016900

017400

017500

017600

017700

017800

018800

Racine County

000400

000500

WYOMING

Albany County

963500

Natrona County

000200

PUERTO RICO

Cataño Municipio

020404

Lofza Municipio

110101

110400

Mayagnez Municipio

081200

Orocovis Municipio

954902

Ponce Municipio

070400

070800

071300

San Juan Municipio

001300

003501

004400

004800

005402

008201

Yauco Municipio

750101

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

# SECTION 4. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 93-38 is obsolete except as
provided in section 5 of this revenue pro-
cedure.

## SECTION 5. EFFECTIVE DATE

.01 An issuer may rely on the list of
qualified census tracts contained in this rev-
enue procedure with respect to a commit-
ment to provide financing if, in the case of
a commitment made on or before the date
of purchase of the residence, the commit-
ment is made during the period specified
in this section 5.01 or, in the case of a com-
mitment made after the purchase date, the
residence was purchased during the pe-
riod specified in this section 5.01. The pe-
riod begins January, 27, 2003, the date of
publication of this revenue procedure in the
Internal Revenue Bulletin, and ends on the
date as of which the list of qualified cen-
sus tracts is rendered obsolete by a new rev-
enue procedure.

.02 Notwithstanding section 5.01 of this
revenue procedure, issuers may continue to
rely on the list of qualified census tracts
contained in Rev. Proc. 93-38 for mort-
gages financed with proceeds of bonds that
were sold or for certificates that were is-
sued with respect to bond authority that was
exchanged, on or before April 27, 2003, the
date that is 3 months after publication of
this revenue procedure in the Internal Rev-
enue Bulletin, if the commitments to pro-
vide financing for the mortgages or to issue
certificates are made on or before June 27,
2003, the date that is 5 months after pub-
lication of this revenue procedure in the In-
ternal Revenue Bulletin.

## SECTION 6. DRAFTING INFOR- MATION

The principal authors of this revenue
procedure are Laura Waugh and Timothy
Jones of the Office of Chief Counsel. For
further information regarding this revenue
procedure, contact Laura Waugh at (202)
622-3890 (not a toll-free call).

26 CFR 601.201: Rulings and determination letters.
(Also, Part I, §§ 402 and 408.)

## Rev. Proc. 2003-16

# SECTION 1. PURPOSE

This revenue procedure provides guid-
ance on applying to the Internal Revenue
Service for a waiver of the 60-day roll-
over requirement contained in §§ 402(c)(3)
and 408(d)(3) of the Internal Revenue Code.
It also provides for an automatic waiver un-
der certain circumstances.

# SECTION 2. BACKGROUND AND GENERAL INFORMATION

.01 Section 401(a)(31) of the Code re-
quires that a qualified trust provide for the
direct transfer of eligible rollover distribu-
tions. A similar rule applies to § 403(a) an-
nuity plans, § 403(b) tax-sheltered annuities
and § 457 eligible governmental plans. (See
§§ 403(a)(1), 403(b)(10) and 457(d)(1)(C).)
If a distributee fails to elect to have an eli-
gible rollover distribution paid directly to
an eligible retirement plan, section 3405(c)
provides that the payor of a designated dis-
tribution that is an eligible rollover distri-
bution must withhold from such distribution
an amount equal to 20 percent of such dis-
tribution.

.02 Sections 402(c)(3) and 408(d)(3) of
the Code require generally that any amount
distributed from a qualified trust or indi-
vidual retirement plan must be transferred
to an eligible retirement plan no later than
the 60th day following the day of receipt
in order to avoid inclusion in the distribu-
tee's gross income. A similar rule applies
to § 403(a) annuity plans, § 403(b) tax-
sheltered annuities and § 457 eligible gov-
ernmental plans. (See §§ 403(a)(4)(B),
403(b)(8)(B) and 457(e)(16)(B).)

.03 Section 72(t) of the Code imposes
an additional tax on a distribution from a
qualified retirement plan equal to 10-percent
of the amount of the distribution included
in the distributee's gross income, subject to
certain exceptions.

.04 Section 644 of the Economic Growth
and Tax Relief Reconciliation Act of 2001
("EGTRRA"), Pub. L. 107-16, amended
§ 402(c)(3) of the Code and added new
§ 408(d)(3)(I) to permit the Secretary to
waive the 60-day rollover requirement
"where the failure to waive such require-
ment would be against equity or good con-

science, including casualty, disaster, or other
events beyond the reasonable control of the
individual subject to such requirement." The
Conference Report to EGTRRA provides
examples of situations that may justify
waiver of the 60-day rollover requirement,
such as during a period in which a distri-
bution in the form of a check was not
cashed, or for errors committed by a fi-
nancial institution, or in cases of inability
to complete a rollover due to death, dis-
ability, hospitalization, incarceration, re-
strictions imposed by a foreign country or
postal error. (H.R. Rep. No. 84, 107th
Cong., 1st Sess. 252 (2001).) The amend-
ments made by § 644 of EGTRRA apply
to distributions after December 31, 2001.

.05 Under §§ 7508 and 7508A of the
Code, the time for making a rollover may
be postponed in the event of service in a
combat zone or in the case of a Presiden-
tially declared disaster or a terroristic or
military action. See Regulations
§ 301.7508-1 and Rev. Proc. 2002-71,
2002-46 I.R.B. 850.

.06 Rev. Proc. 2003-4, 2003-1 I.R.B.
123 (January 6, 2003), provides the pro-
cedures for issuing letter rulings, informa-
tion letters, etc., on matters under the
jurisdiction of the Commissioner, Tax Ex-
empt and Government Entities Division.

.07 Rev. Proc. 2003-8, 2003-1 I.R.B.
236 (January 6, 2003), provides guidance
for complying with the user-fee program as
it pertains to requests for letter rulings, in-
formation letters, etc., on matters under the
jurisdiction of the Commissioner, Tax Ex-
empt and Government Entities Division.

# SECTION 3. REQUIREMENTS FOR HARDSHIP EXCEPTION TO 60-DAY RULE

.01 Application to the Service. Except as
provided in Section 3.03 below, a taxpayer
must apply for a hardship exception to the
60-day rollover requirement using the same
procedure as that outlined in Rev. Proc.
2003-4 for letter rulings, accompanied by
the user fee set forth in Rev. Proc. 2003-8.

.02 Requirements for favorable ruling.
The Service will issue a ruling waiving the
60-day rollover requirement in cases where
the failure to waive such requirement would
be against equity or good conscience, in-
cluding casualty, disaster or other events be-
yond the reasonable control of the taxpayer.
In determining whether to grant a waiver,
the Service will consider all relevant facts

<!-- PageFooter="January 27, 2003" -->

<!-- PageFooter="2003-4 I.R.B." -->
<!-- PageBreak -->

and circumstances, including: (1) errors
committed by a financial institution, other
than as described in Section 3.03 below; (2)
inability to complete a rollover due to death,
disability, hospitalization, incarceration, re-
strictions imposed by a foreign country or
postal error; (3) the use of the amount dis-
tributed (for example, in the case of pay-
ment by check, whether the check was
cashed); and (4) the time elapsed since the
distribution occurred.

.03 Automatic approval. No applica-
tion to the Service is required if a finan-
cial institution receives funds on behalf of
a taxpayer prior to the expiration of the 60-
day rollover period, the taxpayer follows all
procedures required by the financial insti-
tution for depositing the funds into an eli-
gible retirement plan within the 60-day
period (including giving instructions to de-
posit the funds into an eligible retirement
plan) and, solely due to an error on the part
of the financial institution, the funds are not
deposited into an eligible retirement plan
within the 60-day rollover period. Auto-

matic approval is granted only: (1) if the
funds are deposited into an eligible retire-
ment plan within 1 year from the begin-
ning of the 60-day rollover period; and (2)
if the financial institution had deposited the
funds as instructed, it would have been a
valid rollover.

.04 General rules. To be eligible for a
waiver of the 60-day rollover period, ei-
ther automatic or through application to the
Service, the distribution must have oc-
curred after December 31, 2001, and the
rules regarding the amount of money or
other property that can be rolled over into
an eligible retirement plan within the 60-
day rollover period (including § 402(c)(6)
relating to sales of distributed property) ap-
ply to deposits made pursuant to a waiver
of the 60-day rollover period (thus, if a tax-
payer received $6,000 in cash from the tax-
payer's IRA, the most that could be
deposited into an eligible retirement plan
pursuant to a waiver of the 60-day roll-
over period is $6,000). Also, the rules for
waiver of the 60-day rollover period in this

revenue procedure apply to distributions
from an individual retirement plan described
in § 408(a) or (b), a plan qualified under
§ 401(a), a § 403(a) annuity plan, a § 403(b)
tax-sheltered annuity and a § 457 eligible
governmental plan.

# SECTION 4. EFFECTIVE DATE

This revenue procedure is effective on
January 27, 2003.

# DRAFTING INFORMATION

The principal author of this revenue pro-
cedure is Roger Kuehnle of the Employee
Plans, Tax Exempt and Government Enti-
ties Division. For further information re-
garding this revenue procedure, please
contact Employee Plans' taxpayer assis-
tance telephone service at 1-877-829-
5500 (a toll-free number), between the hours
of 8:00 a.m. and 6:30 p.m. Eastern Time,
Monday through Friday.

<!-- PageFooter="2003-4 I.R.B." -->

<!-- PageFooter="January 27, 2003" -->
<!-- PageBreak -->

# Part IV. Items of General Interest

Qualified List of Neutrals for
Arbitration Under Rev. Proc.
2002-67

## Announcement 2003-3

The Internal Revenue Service has se-
lected thirty individuals to serve as quali-
fied neutrals available to taxpayers for
arbitration under the provisions of Rev.
Proc. 2002-67, 2002-43 I.R.B. 733.

### BACKGROUND

The settlement initiative in Rev. Proc.
2002-67 prescribes two optional settle-
ment methodologies for resolving cases in-
volving Contingent Liability Transactions
that are the same as or substantially simi-
lar to those described in Notice 2001-17,
2001-1 C.B. 730. Section 6 of Rev. Proc.
2002-67 provides that eligible taxpayers
who have chosen the second settlement
methodology, called Fast Track Dispute
Resolution Procedure-Contingent Liabil-
ity Cases, are obligated to proceed to bind-
ing arbitration to resolve any issues not
resolved during the accelerated settlement
negotiations. Section 7.05 of Rev. Proc.
2002-67 states that the Service will de-
velop a qualified list of neutrals available
to serve as arbitrators. Taxpayers entering
into binding arbitration are required to se-
lect three candidates from the qualified list
and rank them in order of preference. The
Administrator of the arbitration process will
then arrange for the hiring of one of the
candidates chosen by the taxpayer, based
on availability and order of preference.

## QUALIFIED LIST OF NEUTRALS

Working closely with the American Ar-
bitration Association, the Internal Rev-
enue Service has determined that the
qualified list of neutrals, as described in
Section 7.05 of Rev. Proc. 2002-67 shall
consist of the following individuals:

Scott Adams of Scott G. Adams, Esq., P.C.,
East Boothbay, Maine
Loretta Argrett of Howard Law School,
Washington, D.C.

Jerald Beer of Boose, Casey, Ciklin,
Lubitz, Martens, McBane &
O'Connell, West Palm Beach, Florida
Iris June Brown of Rogin, Nassau,
Caplan, Lassman & Hirtle, LLC,
Hartford, Connecticut
James E. Bye of Holme Roberts &
Owen, Denver, Colorado
William Chandler of Urbach Kahn &
Werlin Advisors, Inc.,
New York, New York
William Cooney of the Cooney Law
Firm, Augusta, Georgia
Michael S. Feldman of
Michael S. Feldman, P.C.,
Farmington Hills, Michigan
Ronald Fiedelman of Philip Vogel &
Co., P.C., Dallas, Texas
Charles Froehlich, Jr. of the Charles W.
Froehlich Corp.,
San Diego, California
Robert Glaser of Arter & Hadden
(retired), Cleveland, Ohio
Larry Ray Green of Charlotte, North
Carolina, Self-employed
Daniel Gulden of Atlanta, Georgia,
Self-employed
Paul Gutterman of the University of
Minnesota, Minneapolis, Minnesota
Robert S. Haft of Mercedes Medical,
Inc., Sarasota, Florida
Stewart Hancock, Jr. of Hancock &
Estabrook, LLP, Syracuse, New York
Lawrence Kaplan of Solomon, Ward,
Seidenwurm & Smith, LLP,
San Diego, California
Gordon Klein of the University of
California at Los Angeles,
Calabasas, California
Donald Korb of Thompson Hine LLP,
Cleveland, Ohio
Bruce Lane of Nixon Peabody, LLP,
Washington, D.C.

Robert Lord of Berens, Kozub & Lord
PLC, Scottsdale, Arizona
Julie McGuire of Hull McGuire, P.C.,
Pittsburgh, Pennsylvania
Hugh Morgan of Morgan & Associates,
Inc., Cleveland, Ohio
Michael O'Brien of Leonard, O'Brien,
Wilford, Spencer & Gale, Ltd.,
St. Paul, Minnesota
Michele O'Brien of the Law Office of
Michele O'Brien, P.C.,
Houston, Texas
William Raby of the Raby Law Office,
Tempe, Arizona
Rufus Rhoades of Los Angeles, Califor-
nia, Self-employed
Gregory Rockwell of
Bellevue, Washington, Self-employed
Albert Sturtevant of
Washington, D.C., Self-employed
Bruno Tassone of
Chicago, Illinois, Self-employed

## CONTACT INFORMATION

For information regarding this announce-
ment, including further information about
the selected neutrals, call Jo Ann Prager,
Manager at (202) 283-8445 (not a toll-
free call) or Sandy Cohen, Appeals Pro-
gram Analyst at (202) 694-1818 (not a toll-
free call). Ms. Prager may also be reached
by fax at (202) 283-8406, electronically at
otsa@irs.gov, or by mail at Office of Tax
Shelter Analysis ("OTSA"), LM:PFTG:
OTSA, Attn: 351, 1111 Constitution Ave.,
N.W., Washington, DC 20224. Please in-
clude "Revenue Procedure 2002-67" in the
subject line of any electronic communica-
tion.

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# 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
applied 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
published ruling and points out an essen-
tial 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 pub-
lished 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
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.

Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the 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
period of time in separate rulings. If the

new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished 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 super-
seded.

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
material published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

FPH-Foreign Personal Holding Company.

F.R .- Federal Register.

FUTA-Federal Unemployment Tax Act.

FX-Foreign Corporation.

G.C.M .- Chief Counsel's Memorandum.

GE-Grantee.

GP-General Partner.

GR-Grantor.

IC-Insurance Company.

I.R.B .- Internal Revenue Bulletin.

D-Decedent.

LE-Lessee.

DC-Dummy Corporation.

LP-Limited Partner.

LR-Lessor.

TT-Trustee.

U.S.C .- United States Code.

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.

Rev. Rul .- Revenue Ruling.

S Subsidiary.

S.P.R .- Statements of Procedural Rules.

Stat .- Statutes at Large.

T-Target Corporation.

T.C .- Tax Court.

T.D .- Treasury Decision.

TFE-Transferee.

TFR-Transferor.

T.I.R .- Technical Information Release.

TP-Taxpayer.

TR-Trust.

DE-Donee.

Del. Order-Delegation Order.

M-Minor.

Nonacq .- Nonacquiescence.

X-Corporation.

O Organization.

Y-Corporation.

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.

BK-Bank.

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

C-Individual.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

CI-City.

COOP-Cooperative.

Ct.D .- Court Decision.

CY-County.

Z-Corporation.

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### Numerical Finding List1 Bulletins 2003-1 through 2003-3

Announcements:

2003-1, 2003-2 I.R.B. 281
2003-2, 2003-3 I.R.B. 301

Notices:

2003-1, 2003-2 I.R.B. 257
2003-2, 2003-2 I.R.B. 257
2003-3, 2003-2 I.R.B. 258
2003-4, 2003-3 I.R.B. 294
2003-5, 2003-3 I.R.B. 294
2003-6, 2003-3 I.R.B. 298

Proposed Regulations:

REG-209500-86, 2003-2 I.R.B. 262
REG-151043-02, 2003-3 I.R.B. 300
REG-164464-02, 2003-2 I.R.B. 262

Revenue Procedures:

2003-1, 2003-1, I.R.B. 1
2003-2, 2003-1, I.R.B. 76
2003-3, 2003-1, I.R.B. 113
2003-4, 2003-1, I.R.B. 123
2003-5, 2003-1, I.R.B. 163
2003-6, 2003-1, I.R.B. 191
2003-7, 2003-1, I.R.B. 233
2003-8, 2003-1, I.R.B. 236
2003-10, 2003-2 I.R.B. 259

#### Revenue Rulings:

2003-1, 2003-3 I.R.B. 291
2003-2, 2003-2 I.R.B. 251
2003-3, 2003-3 I.R.B. 252
2003-4, 2003-4 I.R.B. 253
2003-5, 2003-5 I.R.B. 254
2003-6, 2003-3 I.R.B. 286
2003-8, 2003-3 I.R.B. 290
2003-10, 2003-3 I.R.B. 288
2003-11, 2003-3 I.R.B. 285
2003-12, 2003-3 I.R.B. 283

1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2002-26 through 2002-52 is
in Internal Revenue Bulletin 2003-1, dated January 6, 2003.

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#### Finding List of Current Actions on Previously Published Items2

Bulletins 2003-1 through 2003-3

Notices:

97-19
Modified by
Rev. Proc. 2003-1, 2003-1 I.R.B. 1

2001-46
Modified by
Notice 2003-6, 2003-3 I.R.B. 298

2001-69
Modified and superseded by
Notice 2003-1, 2003-2 I.R.B. 257

2002-27
Clarified by
Notice 2003-3, 2003-2 I.R.B. 258

Revenue Procedures:

84-37
Modified by
Rev. Proc. 2003-1, 2003-1 I.R.B. 1
2002-1
Superseded by
Rev. Proc. 2003-1, 2003-1 I.R.B. 1
2002-2
Superseded by
Rev. Proc. 2003-2, 2003-1 I.R.B. 76
2002-3
Superseded by
Rev. Proc. 2003-3, 2003-1 I.R.B. 113
2002-4
Superseded by
Rev. Proc. 2003-4, 2003-1 I.R.B. 123
2002-5
Superseded by
Rev. Proc. 2003-5, 2003-1 I.R.B. 163
2002-6
Superseded by
Rev. Proc. 2003-6, 2003-1 I.R.B. 191
2002-7
Superseded by
Rev. Proc. 2003-7, 2003-1 I.R.B. 233
2002-8
Superseded by
Rev. Proc. 2003-8, 2003-1 I.R.B. 236
2002-9
Modified and amplified by
Rev. Rul. 2003-3, 2003-2 I.R.B. 252
2002-22
Modified by
Rev. Proc. 2003-3, 2003-1 I.R.B. 113

2002-29
Modified by
Rev. Proc. 2003-10, 2003-2 I.R.B. 259

Revenue Procedures-Continued:

2002-52
Modified by
Rev. Proc. 2003-1, 2003-1 I.R.B. 1

2002-75
Superseded by
Rev. Proc. 2003-3, 2003-1 I.R.B. 113

Revenue Rulings:

53-131
Modified by
Rev. Rul. 2003-12, 2003-3 I.R.B. 283
65-190
Revoked by
Rev. Rul. 2003-3, 2003-2 I.R.B. 252
69-372
Revoked by
Rev. Rul. 2003-3, 2003-2 I.R.B. 252

2 A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2002-26 through 2002-52 is in Internal Revenue
Bulletin 2003-1, dated January 6, 2003.

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