Internal Revenue Bulletin 2009-32 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 200
9-32
August 10, 2009
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2009–23, page 177.
Certain cost-sharing payments; Forest Health Protection
Program.This ruling states that the Forest Health Protection
Program (FHPP) is substantially similar to the type of programs
described in section 126(a)(1) through (8) of the Code within
the meaning of section 126(a)(9). Consequently, all or a portion
of cost-share payments received under the FHPP is eligible for
exclusion from gross income to the extent permitted by section
126.
Notice 2009–60, page 181.
This notice invites public comments regarding the Service’s
review of issues concerning tax return preparers.
Notice 2009–61, page 181.
This notice informs market participants that for purposes of
sections 871, 881, 1441, and 1442 of the Code, Treasury and
the Service are considering issuing future guidance regarding
the proper treatment of Fails Charges and that the Service will
not challenge a position adopted by a taxpayer or withholding
agentthataFailsChargeisnotsubjecttoaU.S.gross-ba-
sis taxation if that Fails Charge is paid prior to December 31,
2010, unless guidance is issued before that date.
EXEMPT ORGANIZATIONS
T.D. 9454, page 178.
Final regulations under section 6033 of the Code describes
the time and manner in which certain tax-exempt organizations
not currently required to file an annual information return under
section 6033(a)(1) are required to submit an annual electronic
notification (e-Postcard) including certain information required
by section 6033(i)(1)(A) through (F).
ADMINISTRATIVE
T.D. 9454, page 178.
Final regulations under section 6033 of the Code describes
the time and manner in which certain tax-exempt organizations
not currently required to file an annual information return under
section 6033(a)(1) are required to submit an annual electronic
notification (e-Postcard) including certain information required
by section 6033(i)(1)(A) through (F).
REG–152166–05, page 183.
This document withdraws the notice of proposed rulemaking
published on April 19, 1996, in the Federal Register and con-
tains proposed regulations relating to the issuance of Taxpayer
Assistance Orders.
Finding Lists begin on page ii.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d 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
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled 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, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al 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, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents 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.
August 10, 20092009–32 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 126.—
Certain
Cost-Sharing
Payments
26 CFR 16A.126–1: Certain cost-sharing payments
— in general.
Certain cost-sharing payments; For-
est Health Protection Program.This rul-
ing states that the Forest Health Protection
Program (FHPP) is substantially similar to
the type of programs described in section
126(a)(1) through (8) of the Code within
the meaning of section 126(a)(9). Conse-
quently, all or a portion of cost-share pay-
ments received under the FHPP is eligible
for exclusion from gross income to the ex-
tent permitted by section 126.
Rev. Rul. 2009–23
ISSUE
Is the Forest HealthProtection Pro-
gram (FHPP) substantially similar to
the type of programs described in
§ 126 (a)(1) through (8) of the Internal
Revenue Code, so that the FHPP is within
the scope of § 126(a)(9) and, thereby,
all or a portion of cost-sharing payments
received under the FHPP is eligible for
exclusion from gross income to the extent
permitted by § 126?
FACTS
The FHPP, authorized under the
provisions of § 8 of the Coopera-
tive Forestry Assistance Act of 1978,
Pub. L. No. 95–313, 92 Stat. 368,
as amended by Title XII, 1218 of the
International Narcotics Control Act of
1990, Pub. L. No. 101–624, 104 Stat.
3525, 3531, is a program to protect forests,
trees, and wood products, stored wood,
and wood in use directly on the National
Forest System and, in cooperation with
others, on other lands in the United States.
The U.S. Forest Service administers the
FHPP on behalf of the U.S. Department of
Agriculture (USDA), by working in part-
nership with state forestry and agriculture
agencies. The state agencies work with
nonindustrial private forest landowners to
identify and implement appropriate man-
agement practices. The FHPP includes
cost-sharing
assistance to landowners that
volunteer to p
articipate in the program.
A landowner wh
o wishes to participate
in the FHPP mus
t enter into a contract or
cooperative a
greement with the USDA
pursuant to w
hich the landowner agrees
to establish
an acceptable integrated pest
management s
trategy as determined by
the Secretar
y of Agriculture that will pre-
vent, retar
d, control, or suppress gypsy
moth infest
ations, southern pine beetle
infestatio
ns, spruce budworm infestations,
or other maj
or insect infestations and re-
ceives cos
t-sharing payments in exchange.
The cost-s
haring payments under the pro-
gram are no
t less than 50 percent and not
more than 7
5 percent of the cost of imple-
menting th
e pest management strategy.
The Secret
ary of Agriculture has de-
termined
that cost-sharing payments un-
der the FH
PP are primarily for the pur-
pose of co
nserving and restoring wood-
lands res
ources. In addition, the Secretary
of Agricu
lture has informed the Treasury
Departme
nt that the USDA believes that
the FHPP
is a small watershed program.
LAW AND ANALYSIS
Under § 126(a), gross income does not
include the excludable portion of pay-
ments received under certain conservation
programs set forth in § 126(a)(1) through
(8). Section 126(a)(9) provides that a
small watershed program administered by
the Secretary of Agriculture also is eligible
for § 126 treatment if the Secretary of the
Treasury or his delegate determines that
the program is substantially similar to the
type of programs described in § 126(a)(1)
through (8). See § 16A.126–1(d) of the
Temporary Income Tax Regulations Re-
lating to the Partial Exclusion for Certain
Cost-Sharing Payments for rules permit-
ting the Commissioner to make these
determinations and announce them in the
Internal Revenue Bulletin, and for the def-
inition of “small watershed.”
If the Commissioner has determined
that a program is substantially similar
to the type of programs described in
§ 126(a)(1) through (8), taxpayers re-
ceiving cost-sharing payments under that
program must determine what portion (if
any) of the cos
t-sharing payments is ex-
cludable from
gross income under § 126.
Under § 126(b)
, the excludable portion
of a payment i
s limited to the portion
that (1) is de
termined by the Secretary
of Agricultu
re to be made primarily for
the purpose o
f conserving soil and water
resources,
protecting or restoring the envi-
ronment, im
proving forests, or providing
a habitat fo
r wildlife, (2) does not increase
substantia
lly the annual income derived
from the pro
perty, and (3) is not properly
associate
d with a deductible expense. See
§ 126(b) an
d § 16A.126–1, relating to the
partial ex
clusion of certain cost-sharing
payments,
to determine what portion of
the cost-
sharing payments is excludable
from gros
s income under § 126.
HOLDING
The Inter
nal Revenue Service accepts
the USDA’
s conclusion that the FHPP is
asmallwa
tershed program. Accordingly,
the FHPP w
ill be treated for purposes
of § 126 a
s a small watershed program
adminis
tered by the Secretary of Agri-
culture
. In addition, the Commissioner
has dete
rmined that the FHPP is sub-
stantia
lly similar, within the meaning of
§126(a
)(9), to the type of programs de-
scribe
d in § 126(a)(1) through (8).
Paymen
ts received under the FHPP
are lim
ited to a percentage of the cost of
implem
enting an integrated pest manage-
ment st
rategy and qualify as cost-sharing
paymen
ts. The cost-sharing payments
recei
ved under the FHPP are eligible for
exclu
sion from gross income to the extent
permi
tted by § 126.
See § 1
26(b) and § 16A.126–1 to deter-
mine t
he extent to which cost-sharing pay-
ments
under the FHPP are excludable from
gross
income under § 126.
DRAFT
ING INFORMATION
The pr
incipal author of this revenue rul-
ing i
s Jennifer C. Bernardini of the Office
of As
sociate Chief Counsel (Passthroughs
&Spe
cial Industries). For further informa-
tion
regarding this revenue ruling, contact
Ms. B
ernardini at (202) 622–3110 (not a
tol
l-free call).
2009–32 I.R.B.177August 10, 2009

Section 6033.—Returns by
Exempt Organiz
ations
26 CFR 1.6033–6: Notification requirement for enti-
ties not required to file an annual information return
under section 6033(a)(1) (taxable years beginning af-
ter December 31, 2006).
T.D. 9454
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Notification Requirement
for Tax-Exempt Entities Not
Currently Required to File
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains
final regulations as required by section
6033(i)(1) describing the time and manner
in which certain tax-exempt organizations
not currently required to file an annual in-
formation return under section 6033(a)(1)
are required to submitan annual electronic
notice including certain information re-
quired by section 6033(i)(1)(A) through
(F). These regulations affect tax-exempt
organizations whose annual gross receipts
are not normally in excess of $25,000.
DATES:Effective Date:These regulations
are effective on July 23, 2009.
Applicability Date:These regulations
are applicable to annual periods beginning
after 2006.
FOR FURTHER INFORMATION
CONTACT: Monice Rosenbaum at (202)
622–6070 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amend-
ments to the Income Tax Regulations
(26 CFR part 1) under section 6033(i)(1)
relating to the notification requirement
for entities not currently required to
file an annual information return under
section 6033(a)(1). Section 6033(i)(1)
was added by section 1223(a) of the
Pension Protection Act of 2006, Public
Law No. 109–208, 120 Stat. 1090
(2006) (PPA 2006), effective for annual
periods beginning after 2006. Section
6033(i)(1) requires the Treasury Secretary
to promulgate regulations that describe
the time and manner in which certain
tax-exempt organizations not currently
required to file an annual information
return are to submit an annual electronic
notification including information set forth
in section 6033(i)(1)(A) through (F).
On November 15, 2007, temporary reg-
ulations (T.D. 9366, 2007–2 C.B. 1232)
were published in theFederal Register
(72 FR 64147) satisfying the requirement
that the Treasury Secretary promulgate
regulations as described in the preceding
paragraph. Those temporary regulations
were corrected on November 23, 2007
(72 FR 65667) and December 14, 2007
(72 FR 71060). A notice of proposed
rulemaking (REG–104942–07, 2007–2
C.B. 1264) cross-referencing the
temporary regulations was published in
theFederal Register(72 FR 64174) on
November 15, 2007.
The IRS and the Treasury Department
received four written comments from the
public in response to the proposed and
temporary regulations. No hearing was
requested or held. After consideration of
the comments received, it was determined
that the proposed regulations would be
finalized without change. Accordingly,
the proposed regulations are adopted as
amended by this Treasury decision and the
corresponding temporary regulations are
removed. The final regulations retain the
provisions of the proposed and temporary
regulations and make minor typographical
changes.
Explanation of Revisions and Summary
of Comments
One comment pointed out that there is
node minimisrule regarding the amount of
income an organization receives during the
year which would exempt it from having to
submit an electronic notification. Section
6033(i) does not provide ade minimisrule,
nor does it provide discretionary authority
for the IRS and the Treasury Department
to establish ade minimisexception for re-
porting under section 6033(i)(1).
Another comment objected to the re-
quirement that the notification be submit-
ted electronically. The IRS and the Trea-
sury Department note that the statute re-
quires that information be submitted elec-
tronically, and makes no provision for pa-
per notification. However, as stated in
the preamble to the temporary regulations,
if an organization that is required to sub-
mitanannualelectronic notification files
a complete Form 990,“Return of Organi-
zation Exempt From Income Tax,”or Form
990–EZ,“Short Form Return of Organiza-
tion Exempt From Income Tax,”the annual
notification required under section 6033(i)
shall be deemed satisfied. The annual no-
tification requirement is not satisfied if the
Form 990 or Form 990–EZ contains only
those items of information that would have
been required by submitting the notifica-
tion in electronic form.
One comment asked about the intent of
the regulations and the application of the
requirement to submit electronic notifica-
tion to organizations that are local chapters
or clubs of larger organizations. The intent
of the regulations, which were required by
statute, is to provide the public with the
most accurate information about tax-ex-
empt organizations. With respect to orga-
nizations that are local chapters or clubs of
larger organizations, if the organization is
a subordinate of a parent organization and
the subordinate is included on the parent’s
group return, the subordinate need not sub-
mit the electronic notification. However, if
an organization is not part of a group return
and is a separate legal entity that meets the
criteria for submitting the electronic notifi-
cation, it must submit Form 990–N,“Elec-
tronic Notice (e-Postcard) for Tax-Exempt
Organizations Not Required To File Form
990 or 990–EZ.”
Finally, another comment asked about
the applicability of the electronic notifi-
cation requirement to Qualified State and
Local Political Organizations (QSLPOs).
QSLPOs are not organizations described
in section 501(c) that are required to file
a return under section 6033(a); therefore,
the provisions of these final regulations do
not apply to them. However, QSLPOs may
have other reporting requirements under
section 6033(g).
August 10, 20091782009–32 I.R.B.

Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations.
It is hereby certified that the collec-
tion of information in §1.6033–6 will
not have a significant economic impact
on a substantial number of small enti-
ties. Accordingly, a regulatory flexibility
analysis under the Regulatory Flexibil-
ity Act (5 U.S.C. 601) is not required.
The effect of these regulations on small
entities flows directly from the statute
these regulations implement. Section
6033(i)(1) requiresthat certain entities
submit annual notification, in electronic
form, setting forth: the legal name of the
organization; any name under which such
organization operates or does business;
the organization’s mailing address and
Internet Web site address (if any); the
organization’s taxpayer identification
number; the name and address of a
principal officer; and evidence of the
continuing basis for the organization’s
exemption from the filing requirements
under section 6033(a)(1).
Pursuant to section 7805(f) of the Inter-
nal Revenue Code, these regulations were
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on their impact on small busi-
ness.
Drafting Information
The principal author of these regula-
tions is Monice Rosenbaum of the Of-
fice of Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities). However, other personnel from
the IRS and the Treasury Department par-
ticipated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1 — INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section1.6033–6alsoissuedunder
26 U.S.C. 6033(i)(1).***
Par. 2. Section 1.6033–6 is added to
read as follows:
§1.6033–6 Notification requirement
for entities not required to file an
annual information return under section
6033(a)(1) (taxable years beginning after
December 31, 2006)—(a)In general.
Except as otherwise provided in this
paragraph, every organization exempt
from taxation under section 501(a)
that is not required to file a return
described in §1.6033–2(a)(2), other than
an organization described in section
401(a) or 501(d), shall submit annually,
in electronic form, a notification setting
forth the items described in paragraph (c)
of this section and such other information
as may be prescribed in the instructions
and publications issued with respect to the
notification.
(b)Organizations not required to sub-
mit annual electronic notification.(1)An
organization exempt from taxation under
section 501(a) that is required to file or
files an annual information return under
section 6033(a)(1) shall not submit an an-
nual electronic notification under section
6033(i). This includes the following types
of organizations:
(i) Any organization included in a group
return for that year under §1.6033–2(d).
(ii) All private foundations required
to file under §1.6033–2(a)(2)(i) Form
990–PF,“Return of Private Foundation or
Section 4947(a)(1) Nonexempt Charitable
Trust Treated as a Private Foundation.”
(iii) Section 509(a)(3) supporting
organizations required to file under
§1.6033–2(a)(2)(i) Form 990,“Return of
Organization Exempt From Income Tax,”
or Form 990–EZ,“Short Form Return of
Organization Exempt From Income Tax.”
(iv) A section 501(c)(21) black
lung trust required to file under
§1.6033–2(a)(2)(i) Form 990–BL,“In-
formation and Initial Excise Tax Return
for Black Lung Benefit Trusts and Certain
Related Persons.”
(v) Any organization that is required to
file or files an annual information return
under section 6033(a)(1) on any other form
prescribed by the Internal Revenue Service
for that purpose.
(2) An organization exempt from tax-
ation under section 501(a) that is not
required to file a return under section
6033(a)(1) is also not required to submit
an annual electronic notification under
section 6033(i). This includes the follow-
ing types of organizations:
(i) A church, an interchurch organiza-
tion of local units of a church, a conven-
tion or association of churches, or an inte-
grated auxiliary of a church (as defined in
§1.6033–2(h)).
(ii) An exclusively religious activity of
any religious order.
(iii) A mission society sponsored by or
affiliated with one or more churches or
church denominations, more than one-half
of the activities of which society are con-
ducted in, or directed at persons in, foreign
countries.
(iv) An educational organization (be-
low college level) described in sec-
tion 170(b)(1)(A)(ii), that has a pro-
gram of a general academic nature, and
that is affiliated (within the meaning of
§1.6033–2(h)(2)) with a church or oper-
ated by a religious order.
(v) A State institution, the income of
which is excluded from gross income un-
der section 115(a).
(vi) An organization described in sec-
tion 501(c)(1).
(vii) An organization that is a govern-
mental unit or an affiliate of a governmen-
tal unit exempt from Federal income tax
under section 501(a).
(3) If an organization exempt from tax-
ation under section 501(a) is not described
in paragraph (b)(1) or (2) of this section,
the organization must submit an annual
electronic notification. Thus, a black lung
trust that normally has gross receipts of
$25,000 or less is not required to file Form
990–BL but is required to submit an an-
nual electronic notification. A section
509(a)(3) supporting organization of a
religious organization that normally has
gross receipts of $5,000 or less is not re-
quired to file Form 990 or Form 990–EZ
but is required to submit an annual elec-
tronic notification.
(c)Additional notification require-
ments—(1)In general. Any organization
2009–32 I.R.B.179August 10, 2009

described in paragraph (a) of this section
shall submit an annual electronic notifica-
tiondescribedinsection6033(i)(1). The
annual electronic notification shall—
(i) Be in electronic form; and
(ii) Set forth—
(A) The legal name of the organization;
(B) Any name under which the organi-
zation operates or does business;
(C) The organization’s mailing address
and Internet Web site address (if any);
(D) The organization’s taxpayer identi-
fication number;
(E) The name and address of a principal
officer;
(F) Evidence of the continuing basis for
the organization’s exemption from the fil-
ing requirements under section 6033(a)(1);
and
(G) Additional information necessary
to process the notification.
(2) The mailing address required by
section 6033(i)(1)(C) and submitted in the
annual electronic notification shall be the
organization’s last known address as pro-
vided by §301.6212–2(a) of this chapter.
This last known address may be updated
as provided under §301.6212–2 of this
chapter, or by clear and concise notifica-
tion. The Internal Revenue Service will
use this last known address as the organi-
zation’s address of record and will direct
all mailings to this address.
(3) By submitting the annual electronic
notification describedin paragraph (c)(1)
of this section, an organization acknowl-
edges that it is not required to file a re-
turn under section 6033(a) because its an-
nual gross receipts are not normally in ex-
cess of $25,000. In order to make this
determination, the organization must keep
records that enable it to calculate its gross
receipts. All organizations are required
to maintain records under section 6001.
These records will provide evidence of the
continuing basis for the organization’s ex-
emption from the filing requirements un-
der section 6033(a)(1).
(4) If an organization that is required
to submit an annual electronic notifica-
tion files a complete Form 990 or Form
990–EZ, the annual electronic notification
requirement shall be deemed satisfied.
The annual electronic notification require-
ment is not satisfied if the Form 990 or
Form 990–EZ contains only those items of
information that would have been required
by submitting the notification in elec-
tronic form. Also, the filing of a complete
Form 990 or Form 990–EZ, rather than the
submission of an annual electronic notifi-
cation, is the filing of a return that starts
the period of limitations for assessment
under section 6501(g)(2).
(d)No effect on other filing require-
ments. An organization that is relieved
from filing an information return under
section 6033(a) is still subject to the re-
quirements of §§1.6033–2(i) and (j), con-
cerning: notice regarding changes in char-
acter, operations, or purpose; provision of
additional information; duty to file other
returnsofinformation;anddutytofileun-
related business tax returns. If an organi-
zation is required to file an unrelated busi-
ness tax return, Form 990–T,“Exempt Or-
ganization Business Income Tax Return,”
the filing of that return does not relieve
the organization from the requirement of
submitting an annual electronic notifica-
tion under section 6033(i).
(e)Accounting period for submitting
annual electronic notification. An annual
electronic notification required by this sec-
tion shall be on the basis of the established
annual accounting period of the organiza-
tion. If the organization has no established
accounting period, the annual electronic
notification shall be on the basis of the cal-
endar year.
(f)Time and place for submitting an-
nual electronic notification. The annual
electronic notification required by this sec-
tion shall be submitted on or before the
15th day of the fifth calendar month fol-
lowing the close of the period for which
the notification is required to be submitted.
Thus, an organization with an accounting
period ending December 31, 2007, is re-
quired to submit an annual electronic no-
tification by May 15, 2008. The notifi-
cation shall be submitted in accordance
with instructions and publications, includ-
ing those provided at the Internal Revenue
Service Web site for exempt organizations.
(g)Effective/applicability date.These
regulations are applicable to annual peri-
ods beginning after 2006.
§1.6033–6T [Removed].
Par. 3. Section 1.6033–6T is removed.
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved July 15, 2009.
Michael Mundaca,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on July 22, 2009,
8:45 a.m., and published in the issue of the Federal Register
for June 23, 2009, 74 F.R. 36395)
August 10, 20091802009–32 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Standards of Conduct for
the Tax Return Preparer
Community and Increased
Taxpayer Compliance
Notice 2009–60
PURPOSE
This notice invites public comments
regarding the Internal Revenue Service’s
review of issues concerning tax return
preparers. In June 2009, the Service an-
nounced plans to propose a comprehensive
set of recommendations by the end of
2009 regarding how the tax return preparer
community can help increase taxpayer
compliance and how to ensure that tax
return preparers meet both uniform and
high ethical standards of conduct. See
IR–2009–57 (June 4, 2009). The Service
is seeking the input of tax preparers, the
associated industry, consumer groups, and
taxpayers before any recommendations
are made.
To assist in developing its proposals
and to ensure that input is received from
a broad range of stakeholders, the Service
has scheduled a number of meetings in
Washington, D.C., and around the country
with constituent groups. See IR–2009–66
(July 14, 2009). In this notice, the Ser-
vice is requesting written comments from
all affected persons and entities. The in-
formation collected will assist the Service
in drafting recommendations.
REQUESTS FOR PUBLIC COMMENT
The Service requests comments
on 1) how the tax return preparer
community can assist in increasing
taxpayer compliance and 2) how to ensure
that tax return preparers meet both uniform
and high ethical standards of conduct. The
Service is particularly interested in any
comments regarding:
•What types of individuals, entities,
and professionals currently work as
tax return preparers? How are their tax
return preparation services currently
monitored or regulated by professional
organizations or the government?
How could this monitoring and regu-
lation be improved?
•Howdodifferenceinregulationand
oversight affect how the various
groups of tax return preparers interact
with the Service and taxpayers?
•Is there a minimum level of education
and training necessary to provide tax
return preparation services? If so, who
should be responsible for ensuring that
a tax return preparer meets this min-
imum level and how should that be
done?
•What, if any, service and outreach
should be provided to tax return pre-
parers and taxpayers? Who should
provide (and bear the costs for) these
needed services?
•Should tax return preparers be subject
to a code of ethics, and, if so, what
specific behavior should that code pro-
mote or prohibit? How would that
code of ethics interact with existing
ethical standards that may already be
applicable?
•What, if any, responsibility should the
firms or businesses that employ tax re-
turn preparers have for the conduct of
the individuals they employ?
•What, if any, responsibility should tax
return preparer professional organiza-
tions have for the education, training,
and conduct of their members?
•If tax return preparation services
should be regulated, what, if any, spe-
cial regulatory provisions should be
made for individuals who are already
tax return preparers, licensed attor-
neys, certified public accountants,
enrolled agents, or software providers?
•What, if any, additional legislative,
regulatory, or administrative rules
should the Service consider recom-
mending as part of its proposals with
respect to the tax return preparer com-
munity?
Written comments should be sent to:
CCPA:LPD:PR (Notice 2009–60), Room
5203, Internal Revenue Service, P.O. Box
7604, Ben Franklin Station, Washing-
ton, D.C. 20044. Alternatively, com-
ments may be hand delivered between
the hours of 8:00 a.m. and 4:00 p.m.
MondaytoFridaytoCC:PA:LPD:PR
(Notice 2009–60), Courier’s Desk, Inter-
nal Revenue Service, 1111 Constitution
Avenue, NW, Washington, D.C. Com-
ments may also be transmitted electron-
ically via the following e-mail address:
Notice.Comments@irscounsel.treas.gov.
Please include “Notice 2009–60” in
the subject line of any electronic
communications.
All comments will be available for pub-
lic inspection and copying. Because the
Service intends to make recommendations
by December 31, 2009, comments, if any,
must be received by August 31, 2009.
DRAFTING INFORMATION
The principal author of this notice
is Richard S. Goldstein of the Office
of Associate Chief Counsel (Procedure
& Administration). For further infor-
mation regarding this notice, contact
Richard S. Goldstein at (202) 622–3400
(not a toll-free call).
Treatment of Fails Charges
forPurposesofSections871,
881, 1441 and 1442
Notice 2009–61
In response to persistent delivery fail-
ures in the pay-for-delivery market for
U.S. Treasury securities (U.S. Treasuries)
during the fall of 2008, a new trading prac-
tice governing failed deliveries of U.S.
Treasuries has been voluntarily adopted
by many market participants (including
the Federal Reserve Bank of New York
and most dealers, custodians, and asset
managers of U.S. Treasuries).
Under the new practice, if one party
(the “Failing Party”) fails to deliver U.S.
Treasuries to another party (the “Non-Fail-
ing Party”) by the date previously agreed
to by the parties, the Failing Party will pay
an amount (called a “Fails Charge”) to
the Non-Failing Party. The Fails Charge
accrues daily and, if properly claimed by
the Non-Failing Party, is due and payable
in the month following the month in which
the Failing Party actually delivers the
2009–32 I.R.B.181August 10, 2009

promised U.S. Treasury.
1
The new Fails
Charge practice was adopted by market
participants to preserve and enhance the
efficiency of the secondary market for U.S.
Treasuries by reducing the incidence of
delivery failures, especially in low interest
rate environments, where the economic
incentive to deliver timely is reduced.
Many market participants have indi-
cated that there is a lack of clarity regard-
ing the treatment of these Fails Charges
for purposes of sections 871, 881, 1441,
and 1442 of the Internal Revenue Code
(the “Code”), which relate to gross-basis
taxation of foreign persons not otherwise
subject to U.S. net-basis taxation. As a re-
sult, these market participants suggest that
unless guidance is provided, there may be
disruptions in the secondary market for
U.S. Treasuries as various withholding
agents take various positions with respect
to the proper characterization of Fails
Charges for those purposes.
This notice announces that the Trea-
sury Department and the Internal Revenue
Service (Service) are considering issuing
guidance regarding the circumstances, if
any, in which Fails Charges are subject
to U.S. gross-basis taxation. Any such
guidance regarding the treatment of a Fails
Charge under sections 871, 881, 1441, and
1442oftheCodewillbeprospectiveinef-
fect. In light of the complexity of the is-
sues raised by the proper treatment of Fails
Charges for U.S. federal tax purposes and
the need for guidance, the Service will not
challenge a position taken by a taxpayer or
a withholding agent that a Fails Charge that
is paid on or before December 31, 2010, is
not subject to U.S. gross-basis taxation un-
less contrary guidance has been issued ef-
fective before that date.
DRAFTING INFORMATION
The principal author of this notice is
Anthony J. Marra of the Office of Asso-
ciate Chief Counsel (International). How-
ever, other personnel from the IRS and
Treasury participated in its development.
For further information regarding this no-
tice, contact Anthony J. Marra at (202)
622–3870 (not a toll-free call).
1
More information about this new Fails Charge trading practice can be found athttp://www.newyorkfed.org/tmpg/orhttp://www.ny.frb.org/tmpg/newsandevents.html
August 10, 20091822009–32 I.R.B.

Part IV. Items o
fGeneralInterest
Withdrawal of
Notice of
Proposed Rule
making
andNoticeofP
roposed
Rulemaking
Taxpayer Ass
istance Orders
REG–152166–
05
AGENCY: Inte
rnal Revenue Service
(IRS), Treas
ury.
ACTION: Wit
hdrawal of notice of pro-
posed rulem
aking and notice of proposed
rulemaking
.
SUMMARY: Th
is document withdraws
the notice o
f proposed rulemaking pub-
lished on Ap
ril 19, 1996, in the Federal
Register a
nd contains proposed regula-
tions rela
ting to the issuance of Taxpayer
Assistanc
e Orders (TAOs). The IRS is
issuing th
ese proposed regulations to pro-
vide guida
nce relating to the issuance of
aTAO.The
se proposed regulations are
necessar
y because the existing regulations
do not ref
lect changes to the law made by
the Taxpa
yerBillofRightsII(TBOR2),
the Inte
rnal Revenue Service Restructur-
ing and R
eform Act of 1998 (RRA 98),
the Comm
unity Renewal Tax Relief Act
of 2000,
and the American Jobs Creation
Act of 20
04 (AJCA). The action taken in
these p
roposed regulations will affect IRS
employ
ees in cases where a TAO is being
consid
ered or issued.
DATES:
Written or electronic comments
and req
uests for a public hearing must be
receiv
ed by October 26, 2009.
ADDRES
SES: Send submissions to:
CC:PA
:LPD:PR (REG–152166–05), room
5205,
Internal Revenue Service, P.O. Box
7604,
Ben Franklin Station, Washing-
ton, D
C 20224. Submissions may be
hand d
elivered Monday through Friday
betwe
en the hours of 8 a.m. and 4 p.m.
to CC
:PA:LPD:PR (REG–152166–05),
Cour
ier’s Desk, Internal Revenue Ser-
vice
, 1111 Constitution Avenue NW,
Wash
ington, DC 20044, or sent elec-
tron
ically via the Federal eRulemaking
Por
tal athttp://www.regulations.gov/(IRS
REG
–152166–05).
FOR FURTHER IN
FORMATION
CONTACT: Conc
erning the pro-
posed regulat
ions, Janice R. Feldman,
(202)622–848
8;concerning
submissionso
fcomments,
Richard.A.H
urst@irscounsel.treas.gov
(202) 622–71
80 (not toll-free numbers).
SUPPLEMENTA
RY INFORMATION:
Background
Section 7811
of the Internal Revenue
Code (Code) a
uthorizes the NTA to issue
a TAO when a t
axpayer is suffering or is
about to suf
fer a significant hardship as a
result of th
e manner in which the internal
revenue law
s are being administered by the
IRS and the l
aw and the facts support re-
lief. A TAO
may be issued to direct that
the operat
ing division or function take a
specific a
ction, cease a specific action, or
refrain fr
om taking a specific action or to
order the I
RS to review at a higher level,
expedite
consideration of, or reconsider a
taxpayer
’s case. The IRS will comply with
aTAOunle
ss it is appealed and then modi-
fied or re
scinded by the Commissioner, the
Deputy C
ommissioner, or the NTA. Ap-
peal pro
cedures are provided in the Inter-
nal Reve
nue Manual (IRM).
Propose
d regulations were published
on April
19, 1996, in theFederal Regis-
ter(GL–
1-96, 1996–1 C.B. 769 [61 FR
17265])
. The proposed regulations limited
the aut
hority to modify or rescind TAOs to
the Omb
udsman, the Commissioner, and
the Dep
uty Commissioner, and, with the
writte
n authorization of one of these of-
ficial
s, a district director, a service center
direc
tor, a compliance center director, a
regio
nal director of appeals (director), or
the su
periors of a director. Following the
publi
cation of the proposed regulations,
Congr
ess enacted TBOR 2, Public Law
104–1
68, 110 Stat. 1452 (1996), which,
amon
g other things, authorized only the
Taxp
ayer Advocate, the Commissioner, or
the D
eputy Commissioner to modify or
resc
ind a TAO. In light of the enactment
of TB
OR 2, this document withdraws
the
proposed regulations published in the
Fed
eral Registeron April 19, 1996.
Thi
s document also contains proposed
ame
ndments to the Procedure and Admin-
ist
ration Regulations (26 CFR part 301)
relating to TA
Os under section 7811. Tem-
porary regula
tions (T.D. 8246, 1989–1
C.B. 320) were
published on March 22,
1989, in theFe
deral Register(54 FR
11699). Final
regulations (T.D. 8403,
1992–1 C.B. 4
36) were published on
March 23, 199
2, in theFederal Register
(57 FR 9975).
After the final regulations
were publish
ed, sections 101 and 102 of
TBOR 2, Publ
ic Law 104–168, 110 Stat.
1452 (1996)
,amendedsection7811by
changing th
enameoftheOmbudsman
to the Taxpa
yer Advocate, providing that
TAOs may or
der the IRS to take certain
affirmati
ve actions, and restricting who
may modify
or rescind a TAO. Section
1102 of RRA
98, Public Law 105–206,
112 Stat. 6
85 (1998), further amended
section 7
811, by providing examples of
signific
ant hardship and replacing “Tax-
payer Adv
ocate” with “National Taxpayer
Advocate
.” Section 881(c) of AJCA, Pub-
lic Law 1
08–357, 118 Stat. 1418 (2004)
clarifi
ed that a TAO applies to person-
nel perf
orming services under a qualified
tax coll
ection contract to the same ex-
tent as i
t applies to IRS personnel. Thus,
this do
cument contains a new notice of
propos
ed rulemaking implementing the
amendm
ents under section 7811 pursuant
to the e
nactment of TBOR 2, RRA 98,
the Com
munity Renewal Tax Relief Act
of 200
0, and AJCA and also to provide
guida
nce on issues that have arisen in the
admin
istration of section 7811. Section
301.7
811–1(e) of the existing regulations,
which
concerns the suspension of statutes
of li
mitations, is not being revised as part
of th
is proposed rulemaking as changes to
that
section may involve changes to IRS
comp
uter processing systems and will be
deal
t with at a later date.
Expl
anation of Provision
1.Sig
nificant Hardship
Under
Section 301.7811–1(a)(4)(ii)
of the
existing regulations,significant
hard
shipmeans “serious privation caused
or ab
out to be caused to the taxpayer
as th
e result of the particular manner in
whic
h the internal revenue laws are being
admi
nistered by the Internal Revenue Ser-
vice
.” RRA 98 clarified the meaning of
the
termsignificant hardshipby provid-
2009–32 I.R.B.183August 10, 2009

ing a nonexclusive list of types. Section
7811(a)(2) provides thatsignificant hard-
shipincludes: (1) an immediate threat of
adverse action; (2) a delay of more than 30
days in resolving taxpayer account prob-
lems; (3) the incurring by the taxpayer of
significant costs (including fees for pro-
fessional representation) if relief is not
granted; or (4) irreparable injury to, or a
long-term adverse impact on, the taxpayer
if relief is not granted. Thus, the proposed
regulations list the statutory types and
also provide guidance with regard to what
constitutes significant hardship under the
delay standard and other criteria. Sig-
nificant hardship under the 30-day delay
standard is met when a taxpayer does not
receive a response by the date promised by
the IRS, or when the IRS has established
a normal processing time for taking an ac-
tion and the taxpayer experiences a delay
of more than 30 days beyond the normal
processing time.
2.Distinction Between Significant
Hardship and Issuance of TAO
The proposed regulations discuss the
distinction betweena finding of “signif-
icant hardship” and “the issuance of a
TAO.” The proposed regulations are de-
signed to clarify that a finding by the NTA
that a taxpayer is suffering or about to suf-
fer a significant hardship as a result of the
manner in which the internal revenue laws
are being administered by the IRS will
not automatically result in the issuance of
a TAO. After making a determination of
significant hardship, the NTA must deter-
mine whether the facts and the law support
relief.
3.Compliance with the TAO
The proposed regulations explain that a
TAO is an order by the NTA to the IRS and
that the IRS will comply with the terms
of the TAO unless it is appealed and then
modified or rescinded by the Commis-
sioner, the Deputy Commissioner, or the
NTA. If a TAO is modified or rescinded
by the Commissioner or Deputy Commis-
sioner, a written explanation of the reasons
for the modification or rescission must be
provided to the NTA. Furthermore, the
proposed regulations clarify that a TAO
is not intended to be a substitute for an
established administrative or judicial re-
view procedure, but rather is intended to
supplement these procedures if a taxpayer
is about to suffer or is suffering a signifi-
cant hardship. Thus, a taxpayer’s right to
administrative or judicial review will not
be diminished or expanded in any way as
a result of the taxpayer’s seeking assis-
tance from the Taxpayer Advocate Service
(TAS).
4.Form of Request
The proposed regulations provide that a
request for a TAO shall be made on a Form
911,“Request for Taxpayer Advocate Ser-
vice Assistance (And Application for Tax-
payer Assistance Order)”(or other spec-
ified form) or in a written statement that
provides sufficient information for TAS to
determine the nature of the harm or the
need for assistance.
5.Scope of the TAO
The proposed regulations provide that
the NTA can issue a TAO directing an ac-
tion in the circumstances outlined in sec-
tion 7811(b). Section 7811(b) provides
that the NTA may issue a TAO ordering
the IRS within a specified time to (i) re-
lease levied property, or (ii) cease any ac-
tion, take any action as permitted by law, or
refrain from taking any action with respect
to a taxpayer under: (A) chapter 64 (re-
lating to collection); (B) chapter 70, sub-
chapter B (relating to bankruptcy and re-
ceiverships); (C) chapter 78 (relating to
discovery of liability and enforcement of
title); or (D) any other provision of law
specifically described by the NTA in the
TAO. Consistent with the list of specific
subchapter and chapters of the Code in sec-
tion 7811(b), the proposed regulations pro-
vide that the phrase “any provision of law”
refers to other provisions of the internal
revenue laws similar to the provisions enu-
meratedinthestatute.
The proposed regulations further pro-
vide that in circumstances where the
statute does not authorize the issuance of a
TAO to order a specific action, if the NTA
determines that the taxpayer is suffering or
about to suffer a significant hardship and
that the issuance of a TAO is appropriate,
theNTAmayissueaTAOseekingtoex-
pedite, review, or reconsider an action at a
higher level. Although the statute does not
expressly state that a TAO may be issued
to request that the IRS expedite, review, or
reconsider at a higher level an action, the
statuteandthelegislative history support
this interpretation.
As initially enacted, section 7811(b) did
not grant the Ombudsman (the predecessor
to the NTA) the authority to order affirma-
tive actions. At that time, section 7811(b)
provided that a TAO could order either the
release of levy or could order the IRS to
cease or refrain from taking an action un-
der the three enumerated chapters of the
Code listed in the statute. Thus, under the
initial version of section 7811(b)(2), ex-
cept for releasing levies, TAOs could not
be issued to take affirmative actions. For
example, a TAO could order the IRS to re-
frain from filing a Notice of Federal Tax
Lien (NFTL), but it could not require the
IRS to release an NFTL. Delegation Order
(DO) 239 (01–31–92) remedied this prob-
lem by delegating to the Ombudsman the
authority to order affirmative acts. Con-
gress also recognized the deficiency in the
law and amended section 7811(b) as part
ofTBOR2toallowTAOstobeissued
with respect to affirmative acts by insert-
ing the words “take any action as permit-
ted by law” into the statute. The Com-
mittee Report to TBOR 2, H. Rep. No.
104–506, 104
th
Cong., 2
nd
Sess., at 1148
(1996), explains how the existing law was
deficient in that, for example, it did not al-
low a TAO to be issued to expedite a re-
fund or review the validity of a tax defi-
ciency. The report explains that the rea-
son for amendment to section 7811(b) was
to allow a TAO to be issued “for a review
of the appropriateness of the proposed ac-
tion.” Thus, consistent with the legislative
history and the statutory amendments, the
proposed regulations provide that where
the statute does not authorize the issuance
of a TAO to order a specific action, if the
NTA determines that a taxpayer is suffer-
ing or about to suffer a significant hardship
and that relief is appropriate, the NTA may
issue a TAO seeking to expedite, review, or
reconsider an action at a higher level.
6.WhoisSubjecttoaTAO
The proposed regulations provide rules
regarding who is subject to a TAO. Gener-
ally, a TAO can be issued to any operating
division or function of the IRS. Due to the
sensitivity and importance of criminal in-
vestigations, the proposed regulations pro-
vide that a TAO may not be issued if the ac-
tion ordered in the TAO could reasonably
August 10, 20091842009–32 I.R.B.

be expected to impede a criminal inves-
tigation. The IRS Criminal Investigation
division (CI) will determine whether the
action ordered in the TAO could reason-
ably be expected to impede an investiga-
tion. Procedures for handling cases where
the NTA questions CI’s initial determina-
tion will be added to the IRM.
TheruleforissuingaTAOtotheOffice
of Chief Counsel has been updated to re-
flect the reorganization of the IRS as well
as statutory changes. The existing regu-
lations provide that: “[a] taxpayer assis-
tance order may generally not be issued
...toenjoinanactoftheOfficeof
Chief Counsel (with the exception of Ap-
peals).” Due to a reorganization of the Of-
fice of Chief Counsel, effective October 1,
1995, Appeals is no longer a component
of the Office of Chief Counsel. Accord-
ingly, the proposed regulations eliminate
the parenthetical reference to Appeals in
§301.7811–1(c)(3). The NTA continues to
have the authority to issue TAOs to Ap-
peals. Additionally, at the time that the ex-
isting regulations were finalized, the Om-
budsman could not issue a TAO to order
an affirmative act, other than a release of
levy. As discussed in this preamble, under
the current version of the statute, the NTA
has much broader authority regarding the
ability to order an affirmative act. Thus,
the term “enjoin” has also been eliminated,
and the rule under the proposed regulations
is that: “[g]enerally a TAO may not be is-
sued to the Office of Chief Counsel.”
Special Analyses
This notice of proposed rulemaking
is not a significant regulatory action as
defined in Executive Order 12866. There-
fore, a regulatory assessment is not re-
quired. It has also been determined that
section 553(b) of the Administrative Pro-
cedure Act (5 U.S.C. chapter 5) does not
apply to these regulations. Pursuant to
the Regulatory Flexibility Act (5 U.S.C.
chapter 6), it is hereby certified that these
regulations will not have a significant eco-
nomic impact on a substantial number of
small entities. The information required
under these proposed regulations is al-
ready required by the current regulations
and the Form 911,“Request for Taxpayer
Advocate Service Assistance (And Appli-
cation for Taxpayer Assistance Order).”In
addition, the Form 911 takes minimal time
and expense to prepare, and the filing of a
Form 911 is optional. Therefore, prepar-
ing the Form 911 does not significantly
increase the burden on taxpayers. Based
on these facts, the Treasury Department
and the IRS have determined that these
proposed regulations will not have a sig-
nificant economic impact on a substantial
number of small entities. Furthermore,
the substance of the regulations does not
concern the Form 911, but the procedures
the Taxpayer Advocate Service (TAS) or
the Internal Revenue Service (IRS) must
follow with respect to taxpayer assistance
orders. Therefore, any burden created by
these regulations is on the TAS or IRS,
not taxpayers. Pursuant to section 7805(f)
of the Code, this notice of proposed rule-
making has been submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comment on its
impact on small business.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written or electronic
comments that are submitted timely to the
IRS. All comments will be available for
public inspection and copying. A public
hearing may be scheduled if requested in
writing by any person who timely submits
written comments. If a public hearing is
scheduled, notice of the date, time, and
place for the public hearing will be pub-
lished in theFederal Register.
Drafting Information
The principal author of these regula-
tions is Janice R. Feldman, Office of the
Special Counsel (National Taxpayer Ad-
vocate Program) (CC:NTA).
*****
Withdrawal of Proposed Regulations
Accordingly, under the authority of
26 U.S.C. 7805, the notice of proposed
rulemaking that was published in the
Federal Registeron April 19, 1996 (61
FR 17265) is withdrawn.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.7811–1 is amended
by revising paragraphs (a), (b), (c) and (d),
removing paragraphs (f), (g), (h) and re-
designating paragraph (h) as (f) and revis-
ing newly designated paragraph (f) to read
as follows:
§301.7811–1 Taxpayer Assistance Orders
(a)Authority to issue—(1)In general.
When an application for a Taxpayer Assis-
tance Order (TAO) is filed by the taxpayer
or the taxpayer’s authorized representative
in the form, manner and time specified
in paragraph (b) of this section, the Na-
tional Taxpayer Advocate (NTA) may is-
sue a TAO if, in the determination of the
NTA, the taxpayer is suffering or is about
to suffer a significant hardship as a result of
the manner in which the internal revenue
laws are being administered by the Inter-
nal Revenue Service (IRS), including ac-
tion or inaction on the part of the IRS.
(2)The National Taxpayer Advocate
defined.ThetermNational Taxpayer Ad-
vocateincludes any designee of the NTA,
such as a Local Taxpayer Advocate.
(3)Issuance without a written applica-
tion.TheNTAmayissueaTAOintheab-
sence of a written application by the tax-
payer under section 7811(a).
(4)Significant hardship—(i)Determi-
nation required. Before a TAO may be is-
sued, the NTA is required to make a deter-
mination regarding significant hardship.
(ii)Term Defined.Thetermsignificant
hardshipmeans a serious privation caused
or about to be caused to the taxpayer as
the result of the particular manner in which
the revenue laws are being administered by
the IRS. Significant hardship includes situ-
ations in which a system or procedure fails
to operate as intended or fails to resolve
the taxpayer’s problem or dispute with the
IRS. A significant hardship also includes,
but is not limited to:
2009–32 I.R.B.185August 10, 2009

(A) An immediate threat of adverse ac-
tion;
(B) A delay of more than 30 days in
resolving taxpayer account problems;
(C) The incurring by the taxpayer of
significant costs (including fees for pro-
fessional representation) if relief is not
granted; or
(D) Irreparable injury to, or a long-term
adverse impact on, the taxpayer if relief is
not granted.
(iii)A delay of more than 30 days in re-
solving taxpayer account problems is fur-
ther defined. A delay of more than 30
days in resolving taxpayer account prob-
lems exists under the following conditions:
(A) When a taxpayer does not receive a
response by the date promised by the IRS;
or
(B) When the IRS has established a nor-
mal processing time for taking an action
and the taxpayer experiences a delay of
more than 30 days beyond the normal pro-
cessing time.
(iv)Examples of significant hardship.
The provisions of this section are illus-
trated by the following examples:
Example 1.Immediate threat of adverse action.
The IRS serves a levy on A’s bank account. A needs
the bank funds to pay for a medically necessary sur-
gical procedure that is scheduled to take place in one
week. If the levy is not released, A will lack the funds
necessary to have the procedure. A is experiencing an
immediate threat of adverse action.
Example 2.Delay of more than 30 days. B files
a Form 4506, “Request for Copy of Tax Return.” B
does not receive the photocopy of the tax return after
waiting more than 30 days beyond the normal time for
processing. B is experiencing a delay of more than 30
days.
Example 3.Significant costs. The IRS sends
XYZ, Inc. several notices requesting payment of the
outstanding employment taxes owed by XYZ, Inc.
and four of its subsidiaries. The IRS contends that
XYZ, Inc. and the four subsidiaries have small em-
ployment tax balances with respect to 12 employment
tax quarters totaling $10X. XYZ, Inc. provides doc-
umentation to the IRS which it contends shows that
if all payments were applied to each entity correctly,
there would be no balance due. The IRS requests ad-
ditional records and documentation. Because there
are 60 tax periods (12 quarters for each of the five
entities) involved, to comply with this request XYZ,
Inc. will need to hire an accountant, who estimates
he will charge at least $5X to organize all the records
and provide a detailed analysis of the how the pay-
ments should have been applied. XYZ, Inc. is facing
significant costs.
Example 4.Irreparable injury. D has arranged
with a bank to refinance his mortgage to lower his
monthly payment. D is unable to make the current
monthly payment. Unless the monthly payment
amount is lowered, D will lose his residence to fore-
closure. The IRS refuses to subordinate the federal
tax lien, as permitted by IRC section 6325(d), or dis-
charge the property subject to the lien, as permitted
by IRC section 6325(b). As a result, the bank will
not allow D to refinance. D is facing an irreparable
injury if relief is not granted.
(5)Distinction Between Significant
Hardship and the Issuance of a TAO.A
finding that a taxpayer is suffering or
about to suffer a significant hardship as a
result of the manner in which the internal
revenue laws are being administered by
the IRS will not automatically result in
theissuanceofaTAO.Aftermakinga
determination of significant hardship, the
NTA must determine whether the facts
and the law support relief for the taxpayer.
In cases where any IRS employee is not
following applicable published adminis-
trative guidance (including the Internal
Revenue Manual), the NTA shall construe
the factors taken intoaccount in determin-
ing whether to issue a TAO in the manner
most favorable to the taxpayer.
(b)Generally.ATAOisanorderby
the NTA to the IRS. The IRS will comply
with a TAO unless it is appealed and then
modified or rescinded by the NTA, Com-
missioner or the Deputy Commissioner. If
a TAO is modified or rescinded by the
Commissioner or Deputy Commissioner,
a written explanation of the reasons for
the modification or rescission must be pro-
vided to the NTA. The NTA may not make
a substantive determination of any tax li-
ability. A TAO is also not intended to
be a substitute for an established admin-
istrative or judicial review procedure, but
rather is intended to supplement existing
procedures if a taxpayer is about to suffer
or is suffering a significant hardship. A re-
quest for a TAO shall be made on a Form
911,“Request for Taxpayer Advocate Ser-
vice Assistance (And Application for Tax-
payer Assistance Order)”(or other spec-
ified form) or in a written statement that
provides sufficient information for TAS to
determine the nature of the harm or the
need for assistance. A taxpayer’s right to
administrative or judicial review will not
be diminished or expanded in any way as a
result of the taxpayer’s seeking assistance
from TAS.
(c)Contents of Taxpayer Assistance Or-
ders. After establishing that the taxpayer is
facing significant hardship and determin-
ing that the facts and law support relief to
thetaxpayer,theNTAmayissueaTAOor-
dering the IRS within a specified time to—
(1)Release a Levy. Release levied
property (to the extent that the IRS may
by law release such property); or
(2)Take Certain Other Actions. Cease
any action, take any action as permitted by
law, or refrain from taking any action with
respect to a taxpayer pursuant to—
(i) Chapter 64 (relating to collection);
(ii) Chapter 70, subchapter B (relating
to bankruptcy and receiverships);
(iii) Chapter 78 (relating to discovery of
liability and enforcement of title); or
(iv) Any other provision of the internal
revenue laws specifically described by the
NTA in the TAO.
(3)Expedite, Review or Reconsider an
Action at a Higher Level. Although the
NTA may not make the substantive deter-
mination, a TAO may be issued to require
the IRS to expedite, reconsider, or review
at a higher level an action taken with re-
spect to a determination or collection of a
tax liability.
(4)Examples. The following examples
assume the existence of significant hard-
ship:
Example 1. J contacts a local taxpayer advocate
because a wage levy is causing financial difficul-
ties. The NTA determines that the levy should be
released as it is causing economic hardship (within
the meaning of section 6343(a) and Treas. Reg.
§301.6343–1(b)(4)). The NTA may issue a TAO
ordering the IRS to release the levy in whole or in
part by a specified date.
Example 2. The IRS rejects K’s offer in compro-
mise. K files a Form 911, “Request for Taxpayer Ad-
vocate Service Assistance (and Application for Tax-
payer Assistance Order).” The NTA discovers facts
that support acceptance of the offer in compromise.
TheNTAmayissueaTAOorderingtheIRStore-
consider its rejection of the offer or to review the re-
jection of the offer at a higher level. The TAO may
include NTA analysis of and recommendation for re-
solving the case.
Example 3. L files a protest requesting Appeals
consideration of IRS’s proposed denial of L’s request
for innocent spouse relief. Appeals advises L that it is
going to issue a Final Determination denying the re-
quest for innocent spouse relief. L files a Form 911,
“Request for Taxpayer Advocate Service Assistance
(and Application for Taxpayer Assistance Order).”
The NTA reviews the administrative record and con-
cludes that the facts support granting innocent spouse
relief. The NTA may issue a TAO ordering Appeals
to refrain from issuing a Final Determination and re-
consider or review at a higher level its decision to
deny innocent spouse relief. The TAO may include
TAS analysis of and recommendation for resolving
the case.
(d)Issuance. A TAO may be issued
to any office, operating division, or func-
tion of the IRS. A TAO shall apply to per-
sons performing services under a qualified
August 10, 20091862009–32 I.R.B.

tax collection contract (as defined in sec-
tion 6306(b)) to the same extent and in the
same manner as the order applies to IRS
employees. A TAO will not be issued to
IRS Criminal Investigation division (CI),
or any successor IRS division responsible
for the criminal investigation function, if
the action ordered in the TAO could rea-
sonably be expected to impede a criminal
investigation. CI will determine whether
the action ordered in the TAO could rea-
sonably be expected to impede an investi-
gation. Generally, a TAO may not be is-
sued to the Office of Chief Counsel.
*****
(f)Effective applicability date.These
regulations are applicable for TAOs issued
on or after the date of publication of the
Treasury decision adopting these rules as
final regulations in theFederal Register,
except that paragraph (e) is applicable be-
ginning March 20, 1992.
LindaE.Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on July 24, 2009,
8:45 a.m., and published in the issue of the Federal Register
for July 27, 2009, 74 F.R. 36973)
2009–32 I.R.B.187August 10, 2009

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 ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
August 10, 2009i2009–32 I.R.B.

Numerical Finding List
1
Bulletins 2009–27 through 2009–32
Announcements:
2009-56, 2009-28 I.R.B.145
2009-57, 2009-29 I.R.B.158
2009-58, 2009-29 I.R.B.158
2009-59, 2009-29 I.R.B.158
2009-60, 2009-30 I.R.B.166
Notices:
2009-51, 2009-28 I.R.B.128
2009-55, 2009-31 I.R.B.170
2009-57, 2009-29 I.R.B.147
2009-58, 2009-30 I.R.B.163
2009-59, 2009-31 I.R.B.170
2009-60, 2009-32 I.R.B.181
2009-61, 2009-32 I.R.B.181
Proposed Regulations:
REG-152166-05, 2009-32 I.R.B.183
REG-112994-06, 2009-28 I.R.B.144
REG-130200-08, 2009-31 I.R.B.174
Revenue Procedures:
2009-30, 2009-27 I.R.B.27
2009-31, 2009-27 I.R.B.107
2009-32, 2009-28 I.R.B.142
2009-33, 2009-29 I.R.B.150
Revenue Rulings:
2009-18, 2009-27 I.R.B.1
2009-19, 2009-28 I.R.B.111
2009-20, 2009-28 I.R.B.112
2009-21, 2009-30 I.R.B.162
2009-22, 2009-31 I.R.B.167
2009-23, 2009-32 I.R.B.177
Treasury Decisions:
9452, 2009-27 I.R.B.1
9453, 2009-28 I.R.B.114
9454, 2009-32 I.R.B.178
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin
2009–26, dated June 29, 2009.
2009–32 I.R.B.iiAugust 10, 2009

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2009–27 through 2009–32
Notices:
2004-67
Supplemented and superseded by
Notice 2009-59, 2009-31 I.R.B.170
2006-70
Obsoleted by
T.D. 9453, 2009-28 I.R.B.114
2006-109
Superseded in part by
Rev. Proc. 2009-32, 2009-28 I.R.B.142
Revenue Procedures:
97-49
Modified and superseded by
Rev. Proc. 2009-31, 2009-27 I.R.B.107
2008-38
Superseded by
Rev. Proc. 2009-30, 2009-27 I.R.B.27
2008-65
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
2009-16
Modified by
Rev. Proc. 2009-33, 2009-29 I.R.B.150
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–1 through 2009–26 is in Internal Revenue Bulletin 2009–26, dated June 29, 2009.
August 10, 2009iii2009–32 I.R.B.

2009–32 I.R.B.August 10, 2009

August 10, 20092009–32 I.R.B.

INTERNAL REVENUE BULLETIN
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