us-irs-announcements-irb-2005-44-pdf•Internal Revenue Bulletin 2005-44 (PDF rendition): IRS Announcements
Internal Revenue Bulletin 2005-44 (PDF rendition): IRS Announcements
us-irs-announcements-irb-2005-44-pdfInternal Revenue Bulletin 2005-44 (PDF rendition): IRS AnnouncementsGuidance
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Bulletin No. 200 5-44 October 31, 2005 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. 2005–68, page 853. Real Estate Mortgage Investment Conduit (REMIC) net operating losses (NOLs).This ruling illustrates the interac- tion between the REMIC excess inclusion rules and the net op- erating loss rules. Section 860E(a)(1) of the Code provides that the taxable income of a holder of a residual interest in a REMIC shall not be less than the holder’s “excess inclusion” (generally equivalent to REMIC phantom income) for the taxable year. Effectively this prevents the application of NOLs to offset the excess inclusion income. The statute includes NOL coor- dinating rules in section 860E(a)(3) with the general effect of creating a separate basket for taxing excess inclusion income, so that the amount calculated as an NOL for a year is not re- duced by the excess inclusion income and NOL carryovers are not absorbed by excess inclusion income. The ruling simply illustrates the application of the coordination rules. Rev. Rul . 2005–69, page 852. LIFO; pr ice indexes; department stores.The August 2005 Bureau of Labor Statistics price indexes are accepted for use by depa rtment stores employing the retail inventory and last-in, first- out inventory methods for valuing inventories for tax years ended o n, or with reference to, August 31, 2005. Announcement 2005–78, page 918. The October 2005 revision of Publication 1141,General Rules and Specifications for Substitute Forms W-2 and W-3, originally published as Rev. Proc. 2005–65, 2005–38 I.R.B. 564, is now posted to the IRS website. Also, Section 2.06 of Part A of Publication 1141 reflects a minor change from Rev. Proc. 2005–65. EMPLOYEE PLANS Notice 2005–71, page 863. Weighted average interest rate update; corporate bond indices; 30-year Treasury securities.The weighted aver- age interest rate for October 2005 and the resulting permis- sible range of interest rates used to calculate current liability and to determine the required contribution are set forth. EMPLOYMENT TAX Announcement 2005–78, page 918. The October 2005 revision of Publication 1141,General Rules and Specifications for Substitute Forms W-2 and W-3, originally published as Rev. Proc. 2005–65, 2005–38 I.R.B. 564, is now posted to the IRS website. Also, Section 2.06 of Part A of Publication 1141 reflects a minor change from Rev. Proc. 2005–65. TAX CONV ENTIONS Announc ement 2005–77, page 855. U.S.-Re public of Cape Verde reciprocal exemption agreeme nt.The United States and the Republic of Cape Verde ha ve entered into a diplomatic note evidencing an agreem ent for the reciprocal exemption of income from the intern ational operation of a ship or ships or aircraft for taxable years b eginning on or after January 1, 2005. (Continued on the next page) A nnouncements of Disbarments and Suspensions begin on page 913. Finding Lists begin on page ii. Index for July through October begins on page vi. ADMINISTRATIVE Rev. Proc. 2005–69, page 864. General rules and specifications for private printing of substitute forms.This procedure provides requirements for reproducing paper substitutes and for furnishing substitute re- cipient statements for Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S. It will be reproduced as the next revision of Publi- cation 1179. Rev. Proc. 2004–58 superseded. October 31, 20052005–44 I.R.B. 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 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 Sec- retary (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. 2005–44 I.R.B.October 31, 2005 Part I. Rulings and Decisions Under the Internal Revenue Code of 1986 Section 472.—Last-in, First-out Inventories 26 CFR 1.472–1: Last-in, first-out inventories. LIFO; price indexes; department stores.The August 2005 Bureau of La- bor 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, August 31, 2005. Rev. Rul. 2005–69 The following Department Store Inven- tory Price Indexes for August 2005 were issued by the Bureau of Labor Statistics. The indexes are accepted by the Inter- nal Revenue Service, under § 1.472–1(k) of the Income Tax Regulations and Rev. Proc. 86–46, 1986–2 C.B. 739, for ap- propriate application 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, August 31, 2005. The Department Store Inventory Price Indexes are prepared on a national basis and include (a) 23 major groups of de- partments, (b) three special combinations of the major groups - soft goods, durable goods, and miscellaneous goods, and (c) a store total, which covers all departments, including some not listed separately, ex- cept for the following: candy, food, liquor, tobacco, and contract departments. BUREAU OF LABOR STATISTICS, DEPARTMENT STORE INVENTOR Y PRICE INDEXES BY DEPARTMENT GROUPS (January 1941 = 100, unless otherwise noted) GroupsAug. 2004Aug. 2005 Percent Change from Aug. 2004 to Aug. 2005 1 1. PieceGoods .............................................513.2486.8-5.1 2. DomesticsandDraperies..................................525.7512.2-2.6 3. Women’s andChildren’sShoes ............................ 623.7661.56.1 4. Men’sShoes.............................................838.6875.14.4 5. Infants’Wear ............................................561.1554.0-1.3 6. Women’ sUnderwear...................................... 502.4542.88.0 7. Women’sHosiery ........................................337.5339.10.5 8. Women’sandGirls’Accessories ...........................557.2585.45.1 9. Women ’sOuterwearandGirls’Wear ....................... 341.4331.2-3.0 10. Men’sClothing ..........................................524.4527.10.5 11. Men’sFurnishings........................................564.3557.0-1.3 12. Boys ’ClothingandFurnishings............................ 414.5384.1-7.3 13. Jewelry..................................................902.5888.5-1.6 14. Notions .................................................794.8810.52.0 15. Toil etArticlesandDrugs.................................. 992.7998.00.5 16. FurnitureandBedding ....................................607.8598.5-1.5 17. FloorCoverings..........................................581.5614.05.6 18. Hou sewares.............................................. 709.6708.6-0.1 19. MajorAppliances.........................................196.9203.93.6 20. RadioandTelevision......................................41.238.7-6.1 21 . Re creation and Education 2 ................................. 80.177.3-3.5 22. Home Improvements 2 .....................................129.2136.05.3 23. Automotive Accessories 2 ..................................112.8115.92.7 Groups1–15:SoftGoods .......................................546.4544.8-0.3 Groups16–20:DurableGoods...................................379.2378.6-0.2 Groups 21–23: Misc. Goods 2 ....................................93.192.6-0.5 Store Total 3 ..............................................487.1485.7-0.3 1 Absence of a minus sign before the percentage change in this column signifies a price increase. 2 Indexes on a January 1986 = 100 base. 3 The store total index covers all departments, including some not listed separately, except for the following: candy, food, liquor, tobacco and contract departments. 2005–44 I.R.B.852October 31, 2005 DRAFTING INFORMATION The principal author of this revenue ruling is Michael Burkom of the Office of Associate Chief Counsel (Income Tax and Accounting). For further informa- tion regarding this revenue ruling, contact Mr. Burkom at (202) 622–7924 (not a toll-free call). Section 860E.—Treatment of Income in Excess of Daily Accruals on Residual Interests 26 CFR 1.860E–1: Treatment of taxable income of a residual interest holder in excess of daily accruals. (Also § 172.) Real Estate Mortgage Investment Conduit (REMIC) net operating losses (NOLs).This ruling illustrates the interac- tion between the REMIC excess inclusion rules and the net operating loss rules. Section 860E(a)(1) of the Code provides that the taxable income of a holder of a residual interest in a REMIC shall not be less than the holder’s “excess inclusion” (generally equivalent to REMIC phantom income) for the taxable year. Effectively this prevents the application of NOLs to offset the excess inclusion income. The statute includes NOL coordinating rules in section 860E(a)(3) with the general effect of creating a separate basket for taxing excess inclusion income, so that the amount calculated as an NOL for a year is not reduced by the excess inclu- sion income and NOL carryovers are not absorbed by excess inclusion income. The ruling simply illustrates the application of the coordination rules. Rev. Rul. 2005–68 ISSUES (1) If, during the same taxable year, the holder of a residual interest in a Real Estate Mortgage Investment Conduit (REMIC) both incurs a net operating loss (NOL) and recognizes income from an excess inclu- sion (as defined in section 860E(c)), then how is taxable income determined, and how is any NOL carryback or carryover computed? (2) If an NOL is carried back or carried over to a taxable year in which an excess inclusion is recognized, how is taxable in- come computed? FACTS X, a domestic corporation, is the sole holder of the residual interest in a REMIC. During the 2004 taxable year,Xhas a $25 excess inclusion attributable to its owner- ship of the residual interest. Also during 2004, independent of holding the REMIC residual interest,Xhas $75 in gross rental income and $65 in deductible rental ex- penses. During the 2005 taxable year,X has $25 of excess inclusion income, $75 in gross rental income, and $90 in deductible rental expenses.Xbegan business opera- tions in 2004 and therefore has no income or loss carryover for any prior year. LAW Section 860C(a)(1) provides that each holder of a residual interest in a REMIC shall take into account that holder’s daily portion of the taxable income or net loss of the REMIC for each day during the taxable year on which the holder held the inter- est. Additionally, some or all of a residual holder’s allocable share of a REMIC’s tax- able income may be an excess inclusion. Section 860E embodies a statutory man- date to tax currently a residual holder’s ex- cess inclusion. Rev. Rul. 95–81, 1995–2 C.B. 70. To ensure that the excess inclu- sion is fully taxed, section 860E(a)(1) pro- vides, “The taxable income of any holder of a residual interest in a REMIC for any taxable year shall in no event be less than the excess inclusion for such taxable year.” Section 172 provides for NOL carry- backs and carryovers to prior or future tax- able years. The amount of an NOL is de- termined under section 172(c) for the year in which the loss arises (the “loss year”). Section 172(b)(1) then specifies the tax- able years to which the NOL may poten- tially be carried. Undersection 172(b)(2), the NOL is carried to the earliest of those years. The second sentence of section 172(b)(2) provides, “The portion of such loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of such loss over the sum of the taxable income for each of the prior taxable years to which such loss may be carried.” Section 860E(a)(3) sets forth rules for coordinating the provisions that govern excess inclusions with the net operating loss provisions of section 172. Section 860E(a)(3)(A) provides that any excess inclusion for any taxable year shall not be taken into account “in determining under section 172 the amount of any net oper- ating loss for such taxable year” (that is, in determining the loss for a “loss year”). Section 860E(a)(3)(B) provides that any excess inclusion for a taxable year shall not be taken into account “in determining taxable income for such taxable year for purposes of the 2nd sentence of section 172(b)(2).” ANALYSIS Calculation 1.Calculation for 2004 Re- turn. For its 2004 return,Xhas total tax- able income of $35, calculated as indicated below. Taxable Income 1. Excess Inclusion$25 2. Renta l Gross Income $75 Rental Expenses($ 65) Net Rental Income (Loss)$ 10$ 10 3.X’s Taxable Income$35 October 31, 20058532005–44 I.R.B. Because gross rental income exceeds expenses, Section 860E has no effect on this calculation. Calculation 2.Calculation for 2005. For 2005,Xhas a $15 net rental loss plus a $25 excess inclusion.X’s taxable income of $25 and NOL of $15 are calculated as indicated below. Taxable IncomeNet Operating Loss 1. Excess Inclusion$ 25 2. Rental Gross I ncome $75 Rental Expenses($ 90) Net Rental Income (Loss)($ 15)$ 0$ 15 3.X’s Taxable Income$ 25 4.X’s NOL$15 X’s taxable income cannot be less than the amount of its excess inclusion and is, therefore, $25. Section 860E(a)(3)(B) and § 1.860E–1(a). BecauseX’s $90 of rental expenses exceedsX’s $75 of rental gross income by $15, a $15 NOL is incurred. In calculating the $15 NOL, the current year’s excess inclusion is not taken into ac- count. Calculation 3.Application of NOL Car- ryback to 2004. As indicated in Calcula- tion 1 above, onX’s return as originally filed for the 2004 gain year (now the carry- back year),Xreported $10 of net rental in- come plus $25 of excess inclusion income. The $15 NOL carryback results in taxable income of $25, as shown below. Taxable Income 1. Excess Inclusion$25 2. Rental I ncome $75 Rental Expenses$ 65 Taxable Income for NOL Absorption Purposes$ 10 NOL Carryback$ 150 Excess NOL over Taxable Income for NOL Abs orption Purposes $5 3.X’s Recalculated 2004 Taxable Income$ 25 4.X’s NOL Carryover to 2006$5 The $15 NOL carryback exceeds the carry- back year’s $10 in net rental income. No portion of the net operating loss carryback to 2004 can be used to offset the $25 excess inclusion for 2004. In this case, the $10 in netrentalincomeisX’s taxable income for NOL utilization and absorption purposes. Calculation 4:Determination of NOL Carryover to 2006. Asillustratedinthe table under Calculation 3,X’s NOL carry- over to the 2006 taxable year is $5. For purposes of determining the amount of the NOL carryover, in accordance with the second sentence of section 172(b)(2),X’s excess inclusion for 2004 is not taken into account. In each of the calculations above, the full rental expense is either used to offset gross income (other than the excess inclu- sion) or used in calculating an NOL. No portion of the excess inclusion is offset ei- ther by any of the rental expense or by any NOL. No portion of the excess inclusion reduces the amount of the NOL that may be carried back or carried over. HOLDINGS (1) In computing an NOL for the tax- able year, no excess inclusion is taken into account. If, during the same taxable year, a taxpayer both recognizes an excess inclu- sion and incurs an NOL, the excess inclu- sion may not be offset by the NOL and is not taken into account in determining the amount of the NOL that may be carried to another taxable year. (2) If an NOL is carried back or carried over to a taxable year in which an excess inclusion is recognized, the excess inclu- sion cannot be offset by the NOL carry- back or carry over and is not included in the calculation of taxable income for NOL absorption purposes. DRAFTING INFORMATION The principal author of this revenue rul- ing is Arturo Estrada of the Office of As- sociate Chief Counsel (Financial Institu- tions & Products). For further informa- tion regarding this revenue ruling, con- tact Mr. Estrada at 202–622–3900 (not a toll-free call). 2005–44 I.R.B.854October 31, 2005 Part II. Treaties and Tax Legislation Subpart A.—Tax Conventions and Other Related Items Cape Verde Reciprocal Exemption Agreement Announcement 2005–77 The Governments of the United States and the Republic of Cape Verde have ex- changed diplomatic notes evidencing a re- ciprocal exemption agreement concerning income from the international operation of a ship or ships or aircraft. The diplomatic notes reproduced herein contain the terms of the reciprocal exemptions available for taxable years beginning on or after January 1, 2005. The text of the agreement is as follows: October 31, 20058552005–44 I.R.B. 2005–44 I.R.B.856October 31, 2005 October 31, 20058572005–44 I.R.B. 2005–44 I.R.B.858October 31, 2005 October 31, 20058592005–44 I.R.B. 2005–44 I.R.B.860October 31, 2005 October 31, 20058612005–44 I.R.B. 2005–44 I.R.B.862October 31, 2005 Part III. Administrative, Procedural, and Miscellaneous Weighted Average Interest Rates Update Notice 2005–71 This notice provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. In ad- dition, it provides guidance as to the interest rate on 30-year Treasury securi- ties under § 417(e)(3)(A)(ii)(II), and the weighted average interest rate and permis- sible ranges of interest rates based on the 30-year Treasury securities rate. CORPORATE BOND WEIGHTED AVERAGE INTEREST RATE Sections412(b)(5)(B)(ii)and 412(l)(7)(C)(i), as amended by the Pen- sion Funding Equity Act of 2004, provide that the interest rates used to calculate cur- rent liability and to determine the required contribution under § 412(l) for plan years beginning in 2004 or 2005 must be within a permissible range based on the weighted average of the rates of interest on amounts invested conservatively in long term in- vestment grade corporate bonds during the 4-year period ending on the last day before the beginning of the plan year. Notice 2004–34, 2004–1 C.B. 848, pro- vides guidelines for determining the cor- porate bond weighted average interest rate and the resulting permissible range of in- terest rates used to calculate current liabil- ity. That notice establishes that the corpo- rate bond weighted average is based on the monthly composite corporate bond rate de- rived from designated corporate bond in- dices. The composite corporate bond rate for September 2005 is 5.44 percent. Pursuant to Notice 2004–34, the Service has de- termined this rate as the average of the monthly yields for the included corporate bond indices for that month. The following corporate bond weighted average interest rate was determined for plan years beginning in the month shown below. For Plan Years Corporate Bond90% to 100% Beginning in:WeightedPermissible MonthYearAverageRange October20055.815.23 to 5.81 30-YEAR TREASURY SECURITIES WEIGHTED AVERAGE INTEREST RATE Section 417(e)(3)(A)(ii)(II) defines the applicable interest rate, which must be used for purposes of determining the minimum present value of a participant’s benefit under § 417(e)(1) and (2), as the annual rate of interest on 30-year Treasury securities for the month before the date of distribution or such other time as the Secretary may by regulations prescribe. Section 1.417(e)–1(d)(3) of the Income Tax Regulations provides that the applica- bleinterestrateforamonthistheannual interest rate on 30-year Treasury securi- ties as specified by the Commissioner for that month in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin. Section 404(a)(1) of the Code, as amended by the Pension Funding Eq- uity Act of 2004, permits an employer to elect to disregard subclause (II) of § 412(b)(5)(B)(ii) to determine the max- imum amount of the deduction allowed under § 404(a)(1). The rate of interest on 30-year Treasury securities for September 2005 is 4.47 per- cent. Pursuant to Notice 2002–26, 2002–1 C.B. 743, the Service has determined this rate as the monthly average of the daily de- termination of yield on the 30-year Trea- surybondmaturinginFebruary2031. The following 30-year Treasury rates were determined for the plan years begin- ning in the month shown below. For Plan Years 30-Year Treasury90% to 105%90% to 110% Beginning in:WeightedPermissiblePermissible MonthYearAverageRangeRange October20054.894.40 to 5.134.40 to 5.38 Drafting Information The principal authors of this notice are Paul Stern and Tony Montanaro of the Employee Plans, Tax Exempt and Government Entities Division. For fur- ther information regarding this notice, please contact the Employee Plans’ tax- payer assistance 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. Stern may be reached at 1–202–283–9703. Mr. Montanaro may be reached at 1–202–283–9714. The tele- phone numbers in thepreceding sentences are not toll-free. October 31, 20058632005–44 I.R.B. NOTE: This revenue procedure will be reproduced as the next revision of IRS Publication 1179,General Rules and Specifica- tions for Substitute Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S. 26 CFR 601.602: Forms and instructions. (Also Part 1, Sections 220, 408, 408A, 529, 530(h), 1441, 6041, 6041A, 6042,6043, 6044, 6045, 6047, 6049, 6050A, 6050B, 6050D, 6050E, 6050H, 6050J, 6050N, 6050P, 6050Q, 6050R, 6050S, 1.408–5, 1.408–7, 1.408A–7, 1.1441–1 through 1.1441–5, 1.6041–1, 7.6041–1, 1.6042–2, 1.6042–4, 1.6044–2, 1.6044–5,1.6045–1, 5f.6045–1, 1.6045–2, 1.6045–4, 1.6047–1, 1.6049–4, 1.6049–6, 1.6049–7, 1.6050A–1, 1.6050B–1, 1.6050D–1, 1.6050E–1, 1.6050H–1, 1.6050H–2, 1.6050J–1T, 1.6050N–1, 1.6050P–1.) Rev. Proc. 2005-69 TABLE OF CONTENTS Part 1 General Information SECTION 1.1 — OVERVIEW OF REVENUE PROCEDURE 2005–69..................................................... 865 SECTION 1.2 — GENERAL REQUIREMENTS FOR ACCEPTABLE SUBSTITUTE FORMS 1096, 1098, 1099, 5498, W-2G, AND 1042-S ................................................................................ 867 SECTION 1.3 — DEFINITIONS..................................................................................... 869 Part 2 Specifications for SubstituteForms 1096 and Copies A of Forms 1098, 1099, and 5498 (All Filed with the IRS) SECTION 2.1 — SPECIFICATIONS.................................................................................. 869 SECTION 2.2 — INSTRUCTIONS FOR PREPARINGPAPER FORMS THAT WILL BE FILED WITH THE IRS .................................................................................................. 872 Part 3 Specifications for Substitute Form W-2G (Filed with the IRS) SECTION 3.1 — GENERAL......................................................................................... 874 SECTION 3.2 — SPECIFICATIONS FOR COPY A OF FORM W-2G..................................................... 874 Part 4 Substitute Statements to Form Recipients and Form Recipient Copies SECTION 4.1 — SPECIFICATIONS.................................................................................. 875 SECTION 4.2 — COMPOSITE STATEMENTS........................................................................ 878 SECTION 4.3 — REQUIRED LEGENDS.............................................................................. 879 SECTION 4.4 — MISCELLANEOUS INSTRUCTIONS FOR COPIES B, C, D, 1, AND 2..................................... 880 SECTION 4.5 — ELECTRONIC DELIVERY OF FORM 1099 AND FORM 5498 PAYEE STATEMENTS....................... 881 Part 5 Additional Instructions for Substitute Forms 1098, 1099, 5498, W-2G, and 1042-S SECTION 5.1 — PAPER SUBSTITUTES FOR FORM 1042-S............................................................ 882 SECTION 5.2 — OMB REQUIREMENTS FOR ALL FORMS IN THIS REVENUE PROCEDURE............................ 884 SECTION 5.3 — REPRODUCIBLE COPIES OF FORMS............................................................... 885 SECTION 5.4 — EFFECT ON OTHER REVENUE PROCEDURES....................................................... 885 Part 6 Exhibits SECTION 6.1 — EXHIBITS OF FORMS IN THE REVENUE PROCEDURE............................................... 885 2005–44 I.R.B.864October 31, 2005 Part 1 General Information Section 1.1 — Overview of Revenue Procedure 2005–69 1.1.1 PurposeThe purpose of this revenue procedure is to set forth the 2005 requirements for: •Using official Internal Revenue Service (IRS) forms to file information returns with the IRS, •Preparing acceptable substitutes of the official IRS forms to file information returns with the IRS, and •Using official or acceptable substitute forms to furnish information to recipients. 1.1.2 Which Forms Are Covered?This revenue procedure contains specifications for these information returns: FormTitle 1096Annual Summary and Transmittal of U.S. Information Returns 1098Mortgage Interest Statement 1098-CContributions of Motor Vehicles, Boats, and Airplanes 1098-EStudent Loan Interest Statement 1098-TTuition Statement 1099-AAcquisition or Abandonment of Secured Property 1099-BProceeds From Broker and Barter Exchange Transactions 1099-CCancellation of Debt 1099-CAPChanges in Corporate Control and Capital Structure 1099-DIVDividends and Distributions 1099-GCertain Government Payments 1099-HHealth Coverage Tax Credit (HCTC) Advance Payments 1099-INTInterest Income 1099-LTCLong-Term Care and Accelerated Death Benefits 1099-MISCMiscellaneous Income 1099-OIDOriginal Issue Discount 1099-PATRTaxable Distributions Received From Cooperatives 1099-QPayments From Qualified Education Programs (Under Sections 529 and 530) 1099-RDistributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1099-SProceeds From Real Estate Transactions 1099-SADistributions From an HSA, Archer MSA, or Medicare Advantage MSA October 31, 20058652005–44 I.R.B. FormTitle 5498IRA Contribution Information 5498-ESACoverdell ESA Contribution Information 5498-SAHSA, Archer MSA, or Medicare Advantage MSA Information W-2GCertain Gambling Winnings 1042-SForeign Person's U.S. Source Income Subject to Withholding 1.1.3 ScopeFor purposes of this revenue procedure, a substitute form or statement is one that is not printed by the IRS. For a substitute form orstatement to be acceptable to the IRS, it must conform to the official form orthe specifications outlined in this revenue procedure. Do not submit any substitute forms or statements listed above to the IRS for approval. Privately printed forms may not state, “This is an IRS approved form.” Filers making payments to certain recipientsduring a calendar year are required by the In- ternal Revenue Code (the Code) to file information returns with the IRS for these payments. These filers must also provide this information to their recipients. In some cases, this also applies to payments received. SeePart 4for specifications that apply to recipient statements (generally Copy B). In general, section 6011 of the Code contains requirements for filers of information returns. A filer must file information returns on magneticmedia, through electronic media, or on paper. A filer who is required to file 250 or more information returns of any one type during a calendar year must file those returns by magnetic media or electronic media. Although not required, small volume filers (fewer than 250 returns during a calendar year) may file the forms on magnetic media or electronically. See the legal requirements for filing information returns (and providing a copy to a payee) in the 2005 General Instructions for Forms 1099, 1098, 5498, and W-2G and the 2005 Instructions for Form 1042-S. In addition, see Revenue Procedure 2005–49 published as Publication 1220,Specifications for Filing Forms 1098, 1099, 5498, and W-2G Electronically or Magnetically. 1.1.4 For More InformationThe IRS prints and provides the forms on which various payments must be reported. Alter- natively, filers may prepare substitute copies of these IRS forms and use such forms to report payments to the IRS. •For copies of the official forms and instructions, call our toll-free number at 1-800-TAX- FORM (1-800-829-3676). •The IRS operates a central call site to answerquestions related to information returns, penalties, and backup withholding. The hours of operation are Monday through Friday from 8:30 a.m. to 4:30 p.m., Eastern time. For your convenience, you may call the toll-free number, 1-866-455-7438. You may still use the original telephone number, 304-263-8700 (not toll-free). For TTY/TDD equipment, call304-267-3367 (not toll-free). The call site can also be reached by email atm ccirp@irs.gov. •For other tax information related to business returns or accounts, call 1-800-829-4933. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax account questions or to order forms and publications. 1.1.5 What’s NewThe following changes have been madeto this year's Revenue Procedure: •Form 1098-C: The American Job Creation Act of 2004 (The Act), P.L. 108–357, added section 170(f)(12) that requires reporting of charitable contributions of motor vehicles, boats, and airplanes after December 31, 2004.A donee organization must provide a writ- ten acknowledgment to the donor and file the same information with the Internal Revenue Service. The new Form 1098-C may be used as a written acknowledgement and must be 2005–44 I.R.B.866October 31, 2005 used when reporting the same information to the IRS. See theCautionunder sec. 4.1.3, later. •Form 1099-G: New Box 5, ATAA Payments, has been added to the form to report payments of eligible individuals under the Demonstration Project for Alternative Trade Adjustments Assistance (ATAA) for Older Workers. Beginning in 2005, the program payments are to be reported on Form 1099-G, not Form 1099-MISC as in previous years. •Form 1099-MISC: New Boxes 15a, Section 409A Deferrals, and 15b, Section 409 Income, have been added to Form 1099-MISC. •Form 1099-PATR: Box 6 of Form 1099-PATR that previously was used to report pass- through credits is revised to report the deduction under section 199. The open box below boxes 8 and 9 is designated as box 10 and will be used to report any pass-through credits not reported in boxes 7 or 8. •P.L. 109–58 requires an additional box to be added to 2005 Form 1099-PATR. Form 1099- PATR, shown as Exhibit Q, is the version available at the time this publication went to print. Please note that the specifications shown for the form will not change as a result of the new box. •Form 1099-SA and Form 5498-SA: Medicare + Choice (M+C) MSA has been replaced by Medicare Advantage (MA) MSA each placeit appears on Form 1099-SA and Form 5498-SA. Section 1.2 — General Requirements for Acceptable Substitute Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S 1.2.1 IntroductionPaper substitutes for Form 1096 and Copy A of Forms 1098, 1099, 5498, W-2G, and 1042-S that totally conform to the specifications listed in this revenue procedure may be privately printed and filed as returns with the IRS. The reference to the Department of the Treasury — Internal Revenue Service should be included on all such forms. If you are uncertain of any specification and want it clarified, you may submit a letter cit- ing the specification, stating your understanding and interpretation of the specification, and enclosing an example of the form (if appropriate) to: Internal Revenue Service Attn: Substitute Forms Program SE:W:CAR:MP:T:T:SP 1111 Constitution Ave., NW Room 6406 Washington, DC 20224 Note.Allow at least 45 days for the IRS to respond. You may also contact the Substitute Forms Program via e-mail at * taxforms@irs.gov. Please enter “Substitute Forms” on the Subject Line. Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S are subject to annual review and possi- ble change. Therefore, filers are cautioned against overstocking supplies of privately printed substitutes. The specificationscontained in this revenue procedure apply to 2005 forms only. 1.2.2 Copy A SpecificationsProposed substitutes of Copy A must be an exact replica of the official IRS form with respect to layout and content. Proposed substitutes forCopy A that do not conform to the specifications in this revenue procedure are not acceptable. Further, if you file such forms with the IRS, you may be subject to a penalty for failure to file a correct information return under section 6721 of the Code. Generally, the penalty is $50 foreach return where such failure occurs (up to $250,000). No IRS office is authorized to allow deviations from this revenue procedure. October 31, 20058672005–44 I.R.B. Caution:Overuse of proportional fonts may causeyou to be subject to penalties and delays in processing. 1.2.3 Copy B and Copy C Specifications Copies B and Copies C of the following forms must contain the information inPart 4to be considered a “statement” or “official form” under the applicable provisions of the Code. The format of this information is at the discretion of the filer with the exception of the location of the tax year, form number, form name, and the information for composite Form 1099 statements as outlined underSection 4.2. Copy B, of the forms below, are for the following recipients. FormRecipient 1098For Payer 1098-CFor Donor 1098-E; 1099-AFor Borrower 1098-TFor Student 1099-CFor Debtor 1099-CAPFor Shareholder 1099-LTCFor Policyholder 1099-R; W-2GIndicates that these forms may require Copy B to be attached to the federal income tax return. 1099-SFor Transferor All other Forms 1099; 1042-S For Recipient 5498; 5498-SAFor Participant 5498-ESAFor Beneficiary Copy C of the following forms are: FormRecipient 1098-CFor Donor’s Records 1099-CAPFor Corporation 1099-LTCFor Insured 1099-RFor Recipient's Records All other Forms 1099SeeSection 4.4.2 5498-ESAFor Trustee W-2GFor Winner's Records Note.On Copy C, Form 1099-LTC, you may reverse the locations of the policyholder's and the insured's name, street address, city, state, and ZIP code for easier mailing. 2005–44 I.R.B.868October 31, 2005 Section 1.3 — Definitions 1.3.1 Form RecipientForm recipient means the person to whom you are required by law to furnish a copy of the official form or information statement. The form recipient may be referred to by different names on various Forms 1099 and related forms (“payer,” “borrower,” “student,” “debtor,” “policyholder,” “insured,” “transferor,” “recipient,” “participant,” “donor,” or, in the case of Form W-2G, the “winner”). SeeSection 1.2.3,earlier. 1.3.2 FilerFiler means the person or organization required by law to file a form listed inSection 1.1.2 with the IRS. As outlined earlier, a filer may be a payer, creditor, recipient of mortgage or stu- dent loan interest payments, educational institution, broker, barter exchange, person reporting real estate transactions, trustee or issuer of any individual retirement arrangement or medical savings account, lender who acquires an interest in secured property or who has reason to know that the property has been abandoned, or certain donees of motor vehicles, boats, and airplanes. 1.3.3 Substitute FormSubstitute form means a paper substitute of Copy A of an official form listed inSection 1.1.2that totally conforms to the provisions in this revenue procedure. 1.3.4 Substitute Form Recipient Statement Substitute form recipient statement means a paper statement of the information reported on a form listed inSection 1.1.2. This statement must be furnished to a person (form recipient), as defined under the applicable provisions of the Code and the applicable regulations. 1.3.5 Composite Substitute Statement Composite substitute statement means one in which two or more required statements (for example, Forms 1099-INT and 1099-DIV) are furnished to the recipient on one document. However, each statement must be designated separately and must contain all the requisite Form 1099 information except as provided underSection 4.2. A composite statement may not be filed with the IRS. Part 2 Specifications for Substitute Forms 1096 and Copies A of Forms 1098, 1099, and 5498 (All Filed with the IRS) Section 2.1 — Specifications 2.1.1 General RequirementsForm identifying numbers (for example, 9191 for Form 1099-DIV) must be printed in non- reflective black carbon-basedink in print positions 15 through 19 using an OCR A font. The checkboxes to the right of the form identifying numbers must be 10-point boxes. The “VOID” checkbox is in print position 25. The “CORRECTED” checkbox is in position 33. Measure- ments are from the left edge of the paper, not including the perforated strip. SeeExhibits Eand N. The substitute form must be an exact replica of the official IRS form with respect to layout and content. To determine the correct form measurements, seeExhibits AthroughZat the end of this publication. October 31, 20058692005–44 I.R.B. Hot wax and cold carbon spots are not permitted on any of the internal form plies. These spots are permitted on the back of a mailer top envelope ply. Use of chemical transfer paper for Copy A is acceptable. The Government Printing Office (GPO) symbol must be deleted. 2.1.2 Color and Paper QualityColor and paper quality for Copy A (cut sheets and continuous pinfeed forms) as specified by JCP Code 0–25, dated November 29, 1978, must be white 100% bleached chemical wood, optical character recognition (OCR) bond produced in accordancewith the following specifi- cations. Note.Reclaimed fiber in any percentage is permitted provided the requirements of this standard are met. • Acidity:Phvalue,average,notlessthan.............................4.5 • BasisWeight:17x22-500cutsheets ...............................18-20 • Metric equivalent–g/m 2 ...........................................75 A tolerance of ±5 pct. is allowed. • Stiffness: Average, each direction, not less than-milligrams............50 • Tearing strength: Average, eachdirection, not less than-grams.........40 • Opacity:Average,notlessthan-percent .............................82 • Thickness:Average-inch .......................................... 0.0038 • Metricequivalent-mm.............................................0.097 A tolerance of +0.0005 inch (0.0127 mm) is allowed. Paper cannot vary more than 0.0004 inch (0.0102 mm) from one edge to the other. • Porosity:Average,notlessthan-seconds ............................10 • Finish (smoothness): Average, each side-seconds.....................20-55 • Forinformationonly,theSheffieldequivalent-units................... 170-100 • Dirt: Average, each side, not to exceed-parts per million...............8 2.1.3 Chemical Transfer PaperChemical transfer paper is permitted for Copy A only if the following standards are met: •Only chemically backed paper is acceptable for Copy A. Front and back chemically treated paper cannot be processed properly by machine. •Carbon-coated forms are not permitted. •Chemically transferred images must be black. All c opies must be clearly legible. Hot wax and cold carbon spots are not permitted for Copy A. Interleaved carbon should be black and must be of good quality to assure legibility on a ll copies and to avoid smudging. Fading must be minimized to assure legibility. 2.1.4 PrintingAll print on Copy A of Forms 1098, 1099, 5498, and the print on Form 1096 above the statement, “Return this entire page to the Internal Revenue Service. Photocopies are not ac- ceptable.” must be in Flint J–6983 red OCR dropout ink or an exact match. However, the four-digit form identifying number must be in nonreflective carbon-based black ink in OCR A font. The shaded areas of any substitute form should generally correspond to the format of the official form. 2005–44 I.R.B.870October 31, 2005 The printing for the Form 1096 statement and the following text may be in any shade or tone of black ink. Black ink should only appear on the lower part of the reverse side of Form 1096, where it will not bleed through and interfere with scanning. Note.The instructions on the front and back of Form 1096, which include filing addresses, must be printed. Separation between fields must be 0.1 inch. Except for Form 1099-R and 1099-MISC, the numbered captions are printed as solid with no shaded background. Other printing requirements are discussed below. 2.1.5 OCR SpecificationsThe contractor must initiate or have a qualitycontrol program to assure OCR ink density. Readings will be made when printed on approved 20 lb. white OCR bond with a reflectance of not less than 80%. Black ink must not have a reflectance greater than 15%. These readings are based on requirements of the “Scan-Optics Series 9000” Optical Scanner using Flint J–6983 red OCR dropout ink or an exact match. The following testers and ranges are acceptable: •MacBeth PCM-II. The tested Print Contrast Signal (PCS) values when using the MacBeth PCM-II tester on the “C” scale must range from .01 minimum to .06 maximum. •Kidder 082A. The tested PCS values when using the Kidder 082A tester on the Infra Red (IR) scale must range from .12 minimum to .21 maximum. White calibration disc must be 100%. Sensitivity must be set at one (1). •Alternative testers. Alternative testers must be approved by the Government so that tested PCS values can be established. You may obtain approval by writing to the following ad- dress: Commissioner of Internal Revenue Attn: SE:W:CAR:MP:P:B:T Business Publishing – Tax Products 1111 Constitution Ave., NW Washington, DC 20224 2.1.6 Typography Type must be substantially identical in size and shape to the official form. All rules are either 1 /2-point or 3 /4-point. Rules must be identicalto those on the official IRS fo rm. Note.The form identifying number must be nonreflective carbon-based black ink in OCR A font. 2.1.7 DimensionsGenerally, three Forms 1098, 1099, or 5498 (Copy A) are contained on a single page, 8 inches wide (without any snap-stubs and/or pinfeed holes) by 11 inches deep. Exceptions.Forms 1098-C, 1099-B, 1099-DIV, 1099-MISC, 1099-R, and 1042-S contain two documents per page. There is a .33 inch top margin from the top of the corrected box, and a .25 inch right margin. There is a 1 /32(0.0313) inch tolerance for the right margin. If the right and top margins are properly aligned, the left margin for all forms will be correct. All margins must be free of print. SeeExhibits AthroughZin this publication for the correct form measurements. These measurements are constant for all Forms 1098, 1099, and 5498. These measurements are shown only once in this publication, on Form 1098 (Exhibit B). Exceptions to these mea- surements are shown on the rest of the exhibits. October 31, 20058712005–44 I.R.B. The depth of the individual trimsize of each form on a page must be 3 2 /3inches, the same depth as the official form. Exceptions.The depth of Forms 1098-C, 1099-B, 1099-DIV, 1099-MISC, 1099-R, and 1042-S is 5 1 /2inches. 2.1.8 PerforationCopy A (three per page; two per page for Forms 1098-C, 1099-B, 1099-DIV, 1099-MISC, 1099-R, and 1042-S) of privately printed continuous substitute forms must be perforated at each 11" page depth. No perforations are allowed between the 3 2 /3"forms(5 1 /2"forForms 1098-C, 1099-B, 1099-DIV, 1099-MISC, or 1099-R) on a single copy page of Copy A. The words “Do Not Cut or Separate Forms on This Page” must be printed in red dropout ink (as required by form specifications) betweenthe three forms (two for Forms 1098-C, 1099-B, 1099-DIV, 1099-MISC, or 1099-R). Note.Perforations are required between all th e other individual copies (Copies B and C, and Copies 1 and 2 for Forms 1099-R and 1099-MISC, an d Copy D for Forms 1098-C, 1099-LTC and 1099-R) in the set. 2.1.9 What To IncludeYou must include the OMB Number on Copies A and Form 1096 in the same location as on the official form. The words “For Privacy Act and Paperwork Reduction Act Notice, see the 2005 General Instructions for Forms 1099, 1098, 5498, and W-2G” must be printed on Copy A; “For more information and the Privacy Act and Paperwork Reduction Act Notice, see the 2005 General Instructions for Forms 1099, 1098, 5498, and W-2G” must be printed on Form 1096. A postal indicia may be used if it meets the following criteria: •It is printed in the OCR ink color prescribed for the form, and •No part of the indicia is within one print position of the scannable area. The printer's symbol (GPO) mus t not be printed on substitute Copy A. Instead, the employer identification number (EIN) o f the forms printer must be entered in the bottom margin on the face of each individual form o f Copy A, or on the bottom margin on the back of each Form 1096. The Catalog Number (Cat. No.) shown on the 2005 forms is used for IRS distribution purposes and need not be printed on any substitute forms. The form must not contain the statement “IRS approved” or any similar statement. Section 2.2 — Instructions for Preparing Paper Forms That Will Be Filed with the IRS 2.2.1 Recipient InformationThe form recipient's name, street address, city, state, ZIP code, and telephone number (if required) should be typed or machine printed in black ink in the same format as shown on the official IRS form. The city, state, and ZIP code must be on the same line. The following rules apply to theform recipient's name(s): •The name of the appropriate form recipient must be shown on the first or second name line in the area provided for the form recipient's name. •No descriptive information or other name may precede the form recipient's name. •Only one form recipient's name may appear on the first name line of the form. •If the multiple recipients' names are required on the form, enter on the first name line the re- cipient name that corresponds to the recipient taxpayer identification number (TIN) shown 2005–44 I.R.B.872October 31, 2005 on the form. Place the other form recipients' names on the second name line (only 2 name lines are allowable). Because certain states require that trust accounts be provided in a different format, generally filers should provide information returns reflecting payments to trust accounts with the: •Trust's employer identification number (EIN) in the recipient's TIN area, •Trust's name on the recipient's first name line, and •Name of the trustee on the recipient's second name line. Although handwritten forms will be accepted,the IRS prefers that filers type or machine print data entries. Also, filers should insertdata in the middle of blocks well separated from other printing and guidelines, and take measuresto guarantee clear, dark black, sharp images. Carbon copies and photocopies are not acceptable. 2.2.2 Account Number BoxUse the account number box on all Forms 1098, 1099, 5498, and W-2G for an account number designation when required by the official IRS form. The account number is required if you have multiple accounts for a recipient for whom you are filing more than one information return of the same type. Additionally, the IRS encourages you to include the recipients’ account number on paper forms if your system of records uses the account number rather than the name or TIN for identification purposes. Also, the IRS will include the account number in future notices to you about backup withholding. If you use window envelopes and a reduced rate to mail statements to recipients, be sure theaccount number does not appear in the window. Otherwise, the Postal Service may not accept them for mailing. Exception.Form 1098-T can have third party provider information. 2.2.3 Specifications and Restrictions Machine-printed forms should be printed using a 6 lines/inch option, and should be printed in 10 pitch pica (10 print positions per inch) or12 pitch elite (12 print positions per inch). Proportional spaced fonts are unacceptable. Substitute forms prepared in continuous or strip form must be burst and stripped to conform to the size specified for a single sheet before they are filed with the IRS. The size specified does not include pin feed holes. Pin feed holes must not be present on forms filed with the IRS. Do not: •Use a felt tip marker. The machine used to “read” paper forms generally cannot read this ink type. •Use dollar signs ($), ampersands (&), asterisks (*), commas (,), or other special characters in the numbered money boxes. Exception.Use decimal points to indicate dollars and cents (for example, 2000.00 is acceptable). •Use apostrophes (’), asteriks (*), or otherspecial characters on the payee name line. •Fold Forms 1096, 1098, 1099, or 5498 mailed to the IRS. Mail these forms flat in an ap- propriately sized envelope or box. Folded documents cannot be readily moved through the machine used in IRS processing. •Staple Forms 1096 to the transmitted returns. Any staple holes near the return code number may impair the IRS's ability to machine scan the type of documents. •Type other information on Copy A. •Cut or separate the individual forms on the sheet of forms of Copy A (except Forms W-2G). 2.2.4 Where To FileMail completed paper forms to the IRS service center shown in the Instructions for Form 1096 and in the 2005 General Instructions for Forms 1099, 1098, 5498, and W-2G. Specific information needed to complete the forms mentioned in this revenue procedure are given in the specific form instructions. A chart is included in the 2005 General Instructions for Forms October 31, 20058732005–44 I.R.B. 1099, 1098, 5498, and W-2G giving a quick guide to which form must be filed to report a particular payment. Part 3 Specifications for Substitute Form W-2G (Filed with the IRS) Section 3.1 — General 3.1.1 PurposeThe following specifications give the format requirements for substitute Form W-2G (Copy A only), which is filed with the IRS. A filer may use a substitute Form W-2G to file with the IRS (referred to as “substitute Copy A”). The substitute form must be an exact replica of the official form with respect to layout and content. Section 3.2 — Specifications for Copy A of Form W-2G 3.2.1 Substitute Form W-2G (Copy A) You must follow these specifications when printing substitute Copy A of the Form W-2G. ItemSubstitute Form W-2G (Copy A) Paper Color and Quality Paper for Copy A must be white chemical wood bond, or equivalent, 20 pound (basis 17 x 22-500), plus or minus 5 percent. The paper must consist substantially of bleached chemical wood pulp. It must be free from unbleached or ground wood pulp or post-consumer recycled paper. It also must be suitably sized to accept ink without feathering. Ink Color and Quality All printing must be in a high quality nongloss black ink. TypographyThe type must be substantially identical in size and shape to the official form. All rules on the document are either 1 /2point (.007 inch), 1 point (0.015 inch), or 3 point (0.045). Vertical rules must be parallel to the left edge of the document, horizontal rules to the top edge. DimensionsThe official form is 8 inches wide x 3 2 /3inches deep, exclusive of a 2 /3inch snap stub on the left side of the form. Any substitute Copy A must be the same dimensions. The snap feature is not required on substitutes. All margins must be free of print. The top and right margins must be 1 /4inch plus or minus .0313. If the top and right margins are properly aligned, the left margin for all forms will be correct. If the substitute forms are in continuous or strip form, they must be burst and strippedto conform to the size specified for a single form. Hot Wax and Cold Carbon Spots Hot wax and cold carbon spots are not permitted on any of the internal form plies. These spots are permitted on the back of a mailer top envelope ply. Interleaved carbons, if used, should be black and of good quality to avoid smudging. 2005–44 I.R.B.874October 31, 2005 ItemSubstitute Form W-2G (Copy A) Printer’s SymbolThe Government Printing Office (GPO) symbol must not be printed on substitute Forms W-2G. Instead, the employer identification number (EIN) of the forms printer must be printed in the bottom margin on the face of each individual Copy A on a sheet. The form must not contain the statement “IRS approved” or any similar statement. Catalog NumberThe Catalog Number (Cat. No.) shown on Form W-2G is used for IRS distribution purposes and need not be printed on any substitute forms. Part 4 Substitute Statements to Form Recipients and Form Recipient Copies Section 4.1 — Specifications 4.1.1 IntroductionIf you do not use the official IRS form to furnishstatements to recipients, you must furnish an acceptable substitute statement. To be acceptable, your substitute statement must comply with the rules in this section. If you are furnishing a substitute form, see Regulations sections 1.6042-4, 1.6044-5, 1.6049-6, and 1.6050N-1 to determine how the following statements must be provided to recipients for most Forms 1099-DIV and 1099-INT, all Forms 1099-OID and 1099-PATR, and Form 1099-MISC or 1099-S for royalties. Generally, information returns may be furnished electronically with the consent of the recipient. See Section 4.5.1. Note.A trustee of a grantor-type trust may choose to file Forms 1099 and furnish a state- ment to the grantor under Regulations sections 1.671-4(b)(2)(iii) and (b)(3)(ii). The statement required by those regulations is not subjectto the requirements outlined in this section. 4.1.2 Substitute Statements to Recipients for Certain Forms 1099-INT and 1099-DIV, and for Forms 1099-OID and 1099-PATR The rules in this section apply to Form 1099-INT(except for interest reportable under sec- tion 6041), 1099-DIV (except for section 404(k) dividends), 1099-OID, and 1099-PATR only. You may furnish form recipients with Copy B of the official Form 1099 or a substitute Form 1099 (form recipient statement) if it contains the same language as the official IRS form (such as aggregate amounts paid to the form recipient, any backup withholding, the name, address, and TIN of the person making the return, and any other information required by the official form). Except for state income tax withholding information, information not required by the official form should not be included on the substitute form. You may enter a total of the individual accounts listed on the form only if they have been paid by the same payer. For example, if you are listing interest paid on several accounts by one financial institution on Form 1099-INT, you may also enter the total interest amount. You may also enter a date next to the corrected box if that box is checked. A substitute form recipient statement for Forms 1099-INT, 1099-DIV, 1099-OID, or 1099-PATR must comply with the following requirements: (1) Box captions and numbers that are applicable must be clearly identified, using the same wordingandnumberingasontheofficialform. Note.For Form 1099-INT, if box 3 is not on your substitute form, you may drop “not included in box 3” from the box 1 caption. (2) The form recipient statement (Copy B) must contain all applicable form recipient in- structions provided on the front and back of the official IRS form. You may provide those instructions on a separate sheet of paper. (3) The form recipient statement must contain the following in bold and conspicuous type: October 31, 20058752005–44 I.R.B. This is important tax information and is being furnished to the Internal Revenue Ser- vice. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. (4) The box caption“Federal income tax withheld”must be in boldface type on the form recipient statement. (5) The form recipient statement must contain the Office of Management and Budget (OMB) number as shown on the official IRS form. SeePart 5. (6) The form recipient statement must contain the tax year (for example, 2005), form num- ber (for example, Form 1099-INT), and form name (for example, Interest Income) of the offi- cial IRS Form 1099. This information must be displayed prominently together in one area of the statement. For example, the tax year, form number, and form name could be shown in the upper right part of the statement. Each copy must be appropriately labeled (such as Copy B, For Recipient). SeeSection 4.4for applicable labels and arrangement of assembly of forms. Note.Do not include the words “Substitute for” or “In lieu of” on the form recipient statement. (7) Layout and format of the form is at the discretion of the filer. However, the IRS en- courages the use of boxes so that the statement has the appearance of a form and can be easily distinguished from other nontax statements. (8) Each recipient statement of Forms 1099-DIV, 1099-INT, 1099-OID, and 1099-PATR must include the direct access telephone number of an individual who can answer questions about the statement. Include that telephone number conspicuously anywhere on the recipient statement. (9) Until new regulations are issued, the IRS will not assess penalties for use of a logo (for example, the name of the payer in any typeface, font, or style, and/or a symbolic icon) or slogan on a recipient statement if the logo or slogan is used by the payer in the ordinary course of its trade or business. In addition, use of the logo or slogan must not make it less likely for a reasonable payee to recognize the importance of the statement for tax reporting purposes. (10) A mutual fund family may state separatelyononedocument(for example, one piece of paper) the dividend income earned by a recipient from each fund within the family of funds as required by Form 1099-DIV. However, each fundand its earnings must be stated separately. The form must contain an instruction to the recipient that each fund’s dividends and name, not thenameofthemutualfundfamily,mustbereported on the recipient’s tax return. The form cannot contain an aggregate total of all funds. In addition, a mutual fund family may furnish a single statement (as a single filer) for Forms 1099-INT, 1099-DIV, and 1099-OID information. Each fund and its earnings must be stated separately. The form must contain an instruction to the recipient that each fund’s earnings and name, not the name of the mutual fund family, must be reported on the recipient’s tax return. The form cannot contain an aggregate total of all funds. 4.1.3 Substitute Statements to Recipients for Certain Forms 1098, 1099, 5498, and W-2G Statements to form recipients for Forms 1098, 1098-C, 1098-E, 1098-T, 1099-A, 1099-B, 1099-C, 1099-CAP, 1099-G, 1099-H, 1099-LTC, 1099-MISC, 1099-Q, 1099-R, 1099-S, 1099-SA, 5498, 5498-ESA, 5498-SA, W-2G, 1099-DIV (only for section 404(k) dividends reportable under section 6047), and 1099-INT (only for interest of $600 or more made in the course of a trade or business reportable under section 6041) can be copies of the official forms or an acceptable substitute. Caution.The IRS does not require a donee to use Form 1098-C as the written acknowledg- ment for contributions of motor vehicles, boats, and airplanes. However, if you choose to use copies of Form 1098-C or an acceptable substitute as the written acknowledgment, then you must follow the requirements of this section 4.1.3. To be acceptable, a substitute form recipient statement must meet the following require- ments. (1) The tax year, form number, and form name must be the same as the official form and must be displayed prominently together in onearea on the statement. For example, they may be shown in the upper right part of the statement. 2005–44 I.R.B.876October 31, 2005 (2) The filer’s and the form recipient’s identifying information required on the official IRS form must be included. (3) Each substitute recipient statement for Forms W-2G, 1098, 1098-C, 1098-E, 1098-T, 1099-A, 1099-B, 1099-CAP, 1099-DIV, 1099-G (excluding state and local income tax refunds), 1099-H, 1099-INT, 1099-LTC, 1099-MISC (excluding fishing boat proceeds), 1099-OID, 1099-PATR, 1099-Q, and 1099-S must includethe direct access telephone number of an individual who can answer questions about the statement. Include the telephone number conspicuously anywhere on the recipient statement. Although not required, payers reporting on Forms 1099-C, 1099-R, 1099-SA, 5498, 5498-ESA, and 5498-SA are encouraged to furnish telephone numbers. (4) All applicable money amounts and information, including box numbers, required to be reported to the form recipient must be titled on the form recipient statement in substantially the same manner as those on the official IRS form.The box caption “Federal income tax withheld” must be in boldface type on the form recipient statement. Exception.If you are reporting a payment as “Other income” in box 3 of Form 1099-MISC, you may substitute appropriate language for the box title. For example, for payments of ac- crued wages and leave to a beneficiary of a deceased employee, you might change the title of box 3 to “Beneficiary payments” or something similar. Note.You cannot make this change on Copy A. Note.If federal income tax is withheld and shown on Form 1099-R or W-2G, Copy B and Copy C must be furnished to the recipient. If federal income tax is not withheld, only Copy C of Form 1099-R and W-2G must be furnished. However, for Form 1099-R, instructions similar to those on the back of the official Copy B and Copy C of Form 1099-R must be furnished to the recipient. For convenience, you may choose to provide both Copies B and C of Form 1099-R to the recipient. (5) You must provide appropriate instructionsto the form recipient similar to those on the official IRS form, to aid in the proper reporting on the form recipient’s income tax return. For payments reported on Forms 1099-B, and 1099-CAP, the requirement to include instructions substantially similar to those on the official IRS form may be satisfied by providing form recip- ients with a single set of instructions for all Forms 1099-B and 1099-CAP statements required to be furnished in a calendar year. (6) If you use carbonless sets to produce recipient statements, the quality of each copy in the set must meet the following standards: •All copies must be clearly legible, •All copies must be able to be photocopied, and •Fading must not diminish legibility and the ability to photocopy. In general, black chemical transfer inks are preferred, but other colors are permitted if the above standards are met. Hot wax and cold carbon spots are not permitted on any of the internal form plies. The back of a mailer top envelope ply may contain these spots. (7) A mutual fund family may state separately on one document (for example, one piece of paper) the Form 1099-B information for a recipient from each fund as required by Form 1099-B. However, the gross proceeds, etc., from each transaction within a fund must be stated separately. The form must contain an instruction to the recipient that each fund’s (not the mutual fund family’s) name and amount must be reported on the recipient’s tax return. The form cannot contain an aggregate total of all funds. (8) You may use a Uniform Settlement Statement (under the Real Estate Settlement Proce- dures Act of 1974 (RESPA)) for Form 1099-S. The Uniform Settlement Statement is acceptable as the written statement to the transferorif you include the legend for Form 1099-S inSection 4.3.2and indicate which information on the Uniform Settlement Statement is being reported to the IRS on Form 1099-S. (9) For reporting state income tax withholding and state payments, you may add an addi- tional box(es) to recipient copies as appropriate. Note.You cannot make this change on Copy A. (10) On Copy C of Form 1099-LTC, you may reverse the location of the policyholder’s and the insured’s name, street address, city, state, and ZIP code for easier mailing. October 31, 20058772005–44 I.R.B. (11) If an institution insurer uses a third party service provider to file Form 1098-T, then in addition to the institution or insurers name, address, and telephone number, the same informa- tion may be included for the third party service provider in the space provided on the form. (12) Logos are permitted on substitute recipient statements for the forms listed in this section (Section 4.1.3). Section 4.2 — Composite Statements 4.2.1 Composite Substitute Statements for Certain Forms 1099-INT, 1099-DIV, 1099-MISC, and 1099-S, and for Forms 1099-OID and 1099-PATR A composite form recipient statement is permitted for reportable payments of interest, div- idends, original issue discount, patronage dividends, and royalties (Forms 1099-INT (except for interest reportable under section 6041), 1099-DIV (except for section 404(k) dividends), 1099-MISC or 1099-S (for royalties only),1099-OID, or 1099-PATR) when one payer is re- porting more than one of these payments during a calendar year to the same form recipient. Generally, do not include any other Form 1099 information (for example, 1098 or 1099-A) on a composite statement with the information required on the forms listed in the preceding sentence. Exception.A filer may include Form 1099-B information on a composite form with the forms listed above. Although the composite form recipient statement may be on one sheet, the format of the composite form recipient statement must satisfy the following requirements in addition to the requirements listed earlier inSection 4.1.2. •All information pertaining to a particular type of payment must be located and blocked together on the form and separate from any information covering other types of payments included on the form. For example, if you are reporting interest and dividends, the Form 1099-INT information must be presented separately from the Form 1099-DIV information. •The composite form recipient statement must prominently display the tax year, form num- ber, and form name of the official IRS form together in one area at the beginning of each appropriate block of information. •Any information required by the official IRS forms that would otherwise be repeated in each information block is required to be listed only once in the first information block on the composite form. For example, there is no requirement to report the name of the filer in each information block. This rule does notapply to any money amounts (for example, federal income tax withheld) or to any other information that applies to money amounts. •A composite statement is an acceptable substitute only if the type of payment and the recip- ient’s tax obligation with respect to the payment are as clear as if each required statement were furnished separately on an official form. 4.2.2 Composite Substitute Statements to Recipients for Forms Specified in Section 4.1.3 A composite form recipient statement for the forms specified inSection 4.1.3is permitted when one filer is reporting more than one type of payment during a calendar year to the same form recipient. A composite statement is not allowed for a combination of forms listed in Section 4.1.3and forms listed inSection 4.1.2. Exceptions: •Substitute payments in lieu of dividends reported in Box 8 of Form 1099-MISC may be reported on a composite substitute statement with Form 1099-DIV. •Form 1099-B information may be reported on a composite form with the forms specified inSection 4.1.2as described inSection 4.2.1. •Forms 1099-A and 1099-C transactions, if related, may be combined on Form 1099-C. •Royalties reported on Form 1099-MISC or 1099-S may be reported on a composite form only with the forms specified in Section 4.1.2. Although the composite form recipient statement may be on one sheet, the format of the composite form recipient statement must satisfy the requirements listed inSection 4.2.1as well 2005–44 I.R.B.878October 31, 2005 as the requirements inSection 4.1.3. A composite statement of Forms 1098 and 1099-INT (for interest reportable under section 6049) is not allowed. Section 4.3 — Required Legends 4.3.1 Required Legends for Forms 1098 Form 1098 recipient statements (Copy B) must contain the following legends: •Form 1098— (1) “The information in boxes 1, 2, and 3 is important tax information and is being fur- nished to the Internal Revenue Service. If you arerequired to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for this mortgage interest or for these points or be- cause you did not report this refund of interest on your return.” (2) “Caution.The amount shown may not be fully deductible by you. Limits based on the loan amount and the cost and value of the secured property may apply. Also, you may only deduct interest to the extent it was incurred by you, actually paid by you, and not reimbursed by another person.” •Form 1098-C: Copy B — “In order to take a deduction for this contribution you must attach this copy to your federal tax return.” Copy C — “This information is being furnished to the Internal Revenue Service.” •Form 1098-E — “This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for student loan interest.” •Form 1098-T — “This is important tax information and is being furnished to the Internal Revenue Service.” 4.3.2 Required Legends for Forms 1099 and W-2G •Forms 1099-A, 1099-C, and 1099-CAP: Copy B — “This is important tax information and is being furnished to the Internal Rev- enue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if taxable income results from this transaction and the IRS determines that it has not been reported.” •Forms 1099-B, 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, 1099-PATR, and 1099-Q: Copy B — “This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported.” •Forms 1099-H: Copy B — “This is important tax information and is being furnished to the Internal Revenue Service.” •Form 1099-LTC: Copy B — “This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this item is required to be reported and the IRS determines that it has not been reported.” Copy C — “Copy C is provided to you for information only. Only the policyholder is required to report this information on a tax return.” •Form 1099-R: Copy B — “Report this income on your federal tax return. If this form shows federal income tax withheld in box 4, attach this copy to your return.” Copy C — “This information is being furnished to the Internal Revenue Service.” October 31, 20058792005–44 I.R.B. •Form 1099-S: Copy B — “This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this item is required to be reported and the IRS determines that it has not been reported.” •Form 1099-SA: Copy B — “This information is being furnished to the Internal Revenue Service.” •Form W-2G: Copy B — “This information is being furnished to the Internal Revenue Service. Report this income on your federal tax return. If this form shows federal income tax withheld in box 2, attach this copy to your return.” Copy C — “This is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported.” 4.3.3 Required Legends for Forms 5498 Form 5498 recipient statements (Copy B) must contain the following legends: •Form 5498 — “This information is being furnished to the Internal Revenue Service.” Note.If you do not furnish another statement to the participant because no contributions were made for the year, the statement of the fair market value and any required minimum distribution, of the account must contain this legend and a designation of which information is being furnished to the IRS. •Form 5498-ESA — “The information in boxes 1 and 2 is being furnished to the Internal Revenue Service.” •Form 5498-SA — “The information in boxes 1 through 6 is being furnished to the Internal Revenue Service.” Section 4.4 — Miscellaneous Instructions for Copies B, C, D, 1, and 2 4.4.1 CopiesCopies B, C, and in some cases, D, 1, and 2 are included in the official assembly for the convenience of the filer. You are not legally required to include all these copies with the pri- vately printed substitute forms. Furnishing Copies B and, in some cases, C will satisfy the legal requirement to provide statements of information to form recipients. Note.If an amount of federal income tax withheld is shown on Form 1099-R or W-2G, Copy B (to be attached to the tax return) and Copy C must be furnished to the recipient. Copy D (Forms 1099-R and W-2G) may be used for filer records. Only Copy A should be filed with the IRS. 4.4.2 Arrangement of AssemblyCopy A (“For Internal Revenue Service Center”) of all forms must be on top. The rest of the assembly must be arranged, from top to bottom, as follows. For: •Form 1098 — Copy B “For Payer”; Copy C “For Recipient.” •Form 1098-C — Copy B “For Donor”; Copy C “For Donor’s Records”; Copy D “For Donee.” •Form 1098-E — Copy B “For Borrower”; Copy C “For Recipient.” •Form 1098-T — Copy B “For Student”; Copy C “For Filer.” •Form 1099-A — Copy B “For Borrower”; Copy C “For Lender.” •Forms 1099-B, 1099-DIV, 1099-G, 1099-H,1099-INT, 1099-OID, 1099-PATR, 1099-Q, and 1099-SA — Copy B “For Recipient”; Copy C “For Payer.” •Form 1099-C — Copy B “For Debtor”; Copy C “For Creditor.” •Form 1099-CAP — Copy B “For Shareholder”; Copy C “For Corporation.” •Form 1099-LTC — Copy B “For Policyholder”; Copy C “For Insured”; and Copy D “For Payer.” 2005–44 I.R.B.880October 31, 2005 •Form1099-MISC—Copy1“ForStateTaxDepartment”; Copy B “ForRecipient”; Copy 2 “To be filed with recipient’s state incometax return, when required”; and Copy C “For Payer.” •Form 1099-R — Copy 1 “For State, City, or Local Tax Department”; Copy B “Report this income on your federal tax return. If this form shows federal income tax withheld in box 4, attach this copy to your return”; Copy C “For Recipient’s Records”; Copy 2 “File this copy with your state, city, or local income tax return, when required”; Copy D “For Payer.” •Form 1099-S — Copy B “For Transferor”; Copy C “For Filer.” •Form 5498 — Copy B “For Participant”; Copy C “For Trustee or Issuer.” •Form 5498-ESA — Copy B “For Beneficiary”; Copy C “For Trustee.” •Form 5498-SA — Copy B “For Participant”; Copy C “For Trustee.” •Form W-2G — Copy 1 “For State Tax Department”; Copy B “Report this income on your federal tax return. If this form shows federal income tax withheld in box 2, attach this copy to your return”; Copy C “For Winner’s Records”; Copy 2 “Attach this copy to your state income tax return, if required.”; Copy D “For Payer.” 4.4.3 PerforationsPerforations are required between forms on all copies except Copy A to make separating the forms easier. (Copy A of Form W-2G may be perforated.) Section 4.5 — Electronic Delivery of Form 1099 and Form 5498 Payee Statements 4.5.1 Electronic Recipient Statements If you are required to furnish a written statement (Copy B or an acceptable substitute) to a recipient, then you may furnish the statement electronically instead of on paper. This includes furnishing the statement to recipients of Forms 1098, 1098-E, 1098-T, 1099-A, B, C, CAP, DIV, H, INT, G, LTC, MISC, OID, PATR, Q, R, S, SA, 5498, 5498-ESA, and 5498-SA. It also includes Form W-2G (except for horse and dog racing, jai alai, sweepstakes, wagering pools, and lotteries). Note.Until further guidance is issued, you can not furnish Form 1098-C electronically. If you meet the requirements listed below, you are treated as furnishing the statement timely. ConsentThe recipient must consent in the affirmative and not have withdrawn the consent before the statement is furnished. The consent by therecipient must be made electronically in a way that shows that he or she can access the statement in the electronic format in which it will be furnished. You must notify the recipient of any hardware or software changes prior to furnishing the statement. A new consent to receive the statement electronically is required after the new hardware or software is put into service. Prior to furnishing the statements electronically, you must provide the recipient a statement with the following statements prominently displayed: •If the recipient does not consent to receive the statement electronically, a paper copy will be provided. •The scope and duration of the consent. For example, whether the consent applies to every year the statement is furnished or only for the January 31 immediately following the date of the consent. •How to obtain a paper copy after giving consent. •How to withdraw the consent. The consent may be withdrawn at any time by furnishing the withdrawal in writing (electronically oron paper) to the person whose name appears on the statement. Confirmation of the withdrawal also will be in writing (electronically or on paper). •Notice of termination. The notice must state under what conditions the statements will no longer be furnished to the recipient. October 31, 20058812005–44 I.R.B. •Procedures to update the recipient’s information. •A description of the hardware and software required to access, print and retain a statement, and a date the statement will no longer be available on the website. Format, Posting, and NotificationAdditionally, you must: •Ensure the electronic format contains all therequired information and complies with the guidelines in this document. •Post, on or before the January 31 due date, theapplicable statement on a website accessible to the recipient through October 15 of that year. •Inform the recipient, electronically or by mail, of the posting and how to access and print the statement. For more information, see Regulations section 31.6051-1. For electronic furnishing of Forms 1098-E and 1098-T, see Regulations section 1.6050S-2. For electronic furnishing of Forms 1099-R, 1099-SA, 1099-Q, 5498, 5498-ESA, and 5498-SA, see Notice 2004-10, 2004-1 C.B. 433. Part 5 Additional Instructions for Substitute Forms 1098, 1099, 5498, W-2G, and 1042-S Section 5.1 — Paper Substitutes for Form 1042-S 5.1.1 Paper SubstitutesPaper substitutes of Copy A for Form 1042-S,Foreign Person’s U.S. Source Income Subject to Withholding, that totally conform to the specifications contained in this procedure may be privately printed without prior approval from the Internal Revenue Service. Proposed substi- tutes not conforming to these specifications must be submitted for consideration. Note.Copies B, C, D, and E of Form 1042-S may contain multiple income entries for the same recipient, that is multiple rows of the top boxes 1-8 of the Form. 5.1.2 Time Frame For Submission of Form 1042-S The request should be submitted by November 15 of the year prior to the year the form is to be used. This is to allow the Service adequate time to respond and the submitter adequate time to make any corrections. These requests should contain a copy of the proposed form, the need for the specific deviation(s), and the number of information returns to be printed. 5.1.3 RevisionsForm 1042-S is subject to annual review and possible change. Withholding agents and form suppliers are cautioned against overstocking supplies of the privately printed substitutes. 5.1.4 Obtaining CopiesCopies of the official form for the reporting year may be obtained from most Service offices. The Service provides only cut sheets (no carbon interleaves) of these forms. Continuous fan- fold/pin-fed forms are not provided. 5.1.5 Instructions For Withholding Agents Instructions for withholding agents: •Only original copies may be filed with the Service. Carbon copies and reproductions are not acceptable. •The term “Recipient’s U.S. TIN” for an individual means the social security number (SSN) or IRS individual taxpayer identification number (ITIN), consisting of nine digits sepa- rated by hyphens as follows: 000-00-0000. For all other recipients, the term means em- ployer identification number (EIN) or qualified intermediary employer identification num- ber (QI-EIN). The QI-EIN designation includes a withholding foreign partnership employer identification number (WP-EIN) and a withholding foreign trust employer identification 2005–44 I.R.B.882October 31, 2005 number (WT-EIN). The EIN and QI-EIN consist of nine digits separated by a hyphen as follows: 00-0000000. The taxpayer identification number (TIN) must be in one of these formats. •Withholding agents are requested to type or machine print whenever possible, provide qual- ity data entries on the forms (that is, use black ribbon and insert data in the middle of blocks well separated from other printing and guidelines), and take other measures to guarantee a clear, sharp image. Withholding agents are notrequired, however, to acquire special equip- ment solely for the purpose of preparing these forms. •The “VOID,” “CORRECTED,” and “PRO-RATA BASIS REPORTING” boxes must be printed at the top center of the form underthe title and checked, if applicable. •Substitute forms prepared in continuous or strip form must be burst and stripped to conform to the size specified for a single form beforethey are filed with the Service. The dimen- sions are found below. Computer cards are acceptable provided they meet all requirements regarding layout, content, and size. 5.1.6 Substitute Form 1042-S Format RequirementsPropertySubstitute Form 1042-S Format Requirements PrintingPrivately printed substitute Forms 1042-S must be exact replicas of the official forms with respect to layout and content. Only the dimensions of the substitute form may differ. The Government Printing Office (GPO) symbol must be deleted. The exact dimensions are found below. Box EntriesOnly one item of income may be represented on the copy submitted to the Service (Copy A). Multiple income items may be shown on copies provided to recipients or retained by withholding agent. All boxes appearing on the official form must be present on the substitute form, with appropriate captions. Color and Quality of Ink All printing must be in high quality non-gloss black ink. Bar codes should be free from picks and voids. TypographyType must be substantially identical in size and shape to corresponding type on the official form. All rules on the document are either 1 point (0.015") or 3 point (0.045"). Vertical rules must be parallel to the left edge of the document; horizontal rules must be parallel to the top edge. CarbonsCarbonized forms or “spot carbons” are not permissible. Interleaved carbons, if used, must be of good quality to preclude smudging and should be black. AssemblyIf all five parts are present, theparts of the assembly shall be arranged from top to bottom as follows: Copy A (Original) “for Internal Revenue Service,” Copies B, C, and D “for Recipient,” and Copy E “for Withholding Agent.” • Paper for Copy A must be white chemical wood bond, or equivalent, 20 pound (basis 17 x 22–500), plus or minus 5 percent; or offset book paper, 50 pound (basis 25 x 38–500). No optical brighteners may be added to the pulp or paper during manufacture. The paper must consist of principally bleach chemical wood pulp or recycled printed paper. It also must be suitably sized to accept ink without feathering. Color Quality of Paper • Copies B, C, D (for Recipient), and E (For Withholding Agent) are provided in the official assembly solely for the convenience of the withholding agent. Withholding agents may choose the format, design, color, and quality of the paper used for these copies. October 31, 20058832005–44 I.R.B. PropertySubstitute Form 1042-S Format Requirements • The official form is 8 inches wide x 5 1 /2inches deep, exclusive of a 1 /2inch snap stub on the left side of the form. The snap feature is not required on substitutes. • The width of a substitute Copy A must be a minimum of 7 inches and a maximum of 8 inches, although adherence to the size of the official form is preferred. If the width of substitute Copy A is reduced from that of the official form, the width of each field on the substitute form must be reduced proportionately. The left margin must be 1 /2inch and free of all printing other than that shown on the official form. Dimensions • The depth of a substitute Copy A must be a minimum of 5 1 /6 inches and a maximum of 5 1 /2inches. Other CopiesCopies B, C, and D must be furnished for the convenience of payees who must send a copy of the form with other federal and state returns they file. Copy E may be used as a withholding agent’s record/copy. Section 5.2 — OMB Requirements for All Forms in This Revenue Procedure 5.2.1 OMB RequirementsThe Paperwork Reduction Act (the Act) of 1995 (Public Law 104-13) requires that: •OMB approves all IRS tax forms that are subject to the Act. Each IRS form contains (in or near the upper right corner) the OMB approval number, if any. (The official OMB numbers may be found on the official IRS printed forms and are also shown on the forms in the exhibits inPart 6.) •Each IRS form (or its instructions) states: (1) Why the IRS needs the information, (2) How it will be used, and (3) Whether or not the information is required to be furnished to the IRS. This information must be provided to any users of official or substitute IRS forms or in- structions. 5.2.2 Substitute Form Requirements The OMB requirements for substitute IRS forms are: •Any substitute form or substitute statement to a recipient must show the OMB number as it appears on the official IRS form. •For Copy A, the OMB number must appear exactly as shown on the official IRS form. •For any copy other than Copy A, the OMB number must use one of the following formats. (1) OMB No. XXXX-XXXX (preferred) or (2) OMB # XXXX-XXXX (acceptable). 2005–44 I.R.B.884October 31, 2005 5.2.3 Required Explanation to Users All substitute forms (Copy A only) must state “For Privacy Act and Paperwork Reduction Act Notice, see the 2005 General Instructions for Forms 1099, 1098, 5498, and W-2G.” (or “For Privacy Act and Paperwork Reduction Act Notice, see separate instructions.” for Copy A of Form 1042-S). If no instructions are provided to users of your forms, you must furnish them with the exact text of the Privacy Act and Paperwork Reduction Act Notice. Section 5.3 — Reproducible Copies of Forms 5.3.1 IntroductionYou can order official IRS forms and publications24hoursaday,7daysaweek,bycalling 1-800-TAX-FORM (1-800-829-3676). Other ways to get federal tax material include: •The Internet. •CD-ROM. •GPO Superintendent of Documents Bookstores. Note.Several IRS forms are provided electronically on the IRS home page and on the Federal Tax Forms CD-ROM, but Copy A of Forms 1096, the 1098 series, 1099 series, and 5498 series cannot be used for filing with the IRS when printed from a conventional printer. These forms contain drop-out ink requirements as described in Part 2 of this publication. 5.3.2 InternetYou can download tax mat erials from the Internet by visiting the IRS web site at w ww.irs.gov. 5.3.3 IRS Federal Tax Forms CD-ROM The IRS also offers an alternative to downloading electronic files and provides current and prior-year access to tax forms and instructions through itsFederal Tax Forms CD-ROM.The CD, Pub. 1796,Federal Tax Products on CD-ROM, will be available for the upcoming fil- ing season. You may buy the CD-ROM on the Internet atw ww.irs.gov/cdordersor by calling 1-877-CDFORMS (1-877-233-6767). 5.3.4 GPO Supt. of Documents Bookstores The Government Printing Office (GPO) Superintendent of Documents Bookstores also sell individual copies of tax forms, instructions, and publications. Section 5.4 — Effect on Other Revenue Procedures 5.4.1 Other Revenue ProceduresRevenue Procedure 2004-58, 2004-2 C.B. 602, which provides rules and specifications for private printing of 2004 substitute forms andstatements to recipients, is superseded. Part 6 Exhibits Section 6.1 — Exhibits of Forms in the Revenue Procedure 6.1.1 PurposeExhibits A through Z illustrate some of the specifications t hat were discussed earlier in this revenue procedure. The dimensions apply to the actual size f orms, but the exhibits have been reduced in size. Generally, the illustrated dimensions apply to all like forms. For example, Exhibit B shows 11.00" from the top edge to the bottom edge of Form 1098 and .85" between the bottom rule October 31, 20058852005–44 I.R.B. of the top form and the top rule of the second form on the page. These dimensions apply to all forms that are printed three to a page. 6.1.2 GuidelinesKeep in mind the following guidelines when printing substitute forms. •Closely follow the specifications to avoid delays in processing the forms. •Always use the specifications as outlined in this revenue procedure and illustrated in the exhibits. •Do not add the text line “Do Not Cut or Separate Forms on This Page” to the bottom form. This will cause inconsistency with the specifications. 2005–44 I.R.B.886October 31, 2005 October 31, 20058872005–44 I.R.B. 2005–44 I.R.B.888October 31, 2005 October 31, 20058892005–44 I.R.B. 2005–44 I.R.B.890October 31, 2005 October 31, 20058912005–44 I.R.B. 2005–44 I.R.B.892October 31, 2005 October 31, 20058932005–44 I.R.B. 2005–44 I.R.B.894October 31, 2005 October 31, 20058952005–44 I.R.B. 2005–44 I.R.B.896October 31, 2005 October 31, 20058972005–44 I.R.B. 2005–44 I.R.B.898October 31, 2005 October 31, 20058992005–44 I.R.B. 2005–44 I.R.B.900October 31, 2005 October 31, 20059012005–44 I.R.B. 2005–44 I.R.B.902October 31, 2005 October 31, 20059032005–44 I.R.B. 2005–44 I.R.B.904October 31, 2005 October 31, 20059052005–44 I.R.B. 2005–44 I.R.B.906October 31, 2005 October 31, 20059072005–44 I.R.B. 2005–44 I.R.B.908October 31, 2005 October 31, 20059092005–44 I.R.B. 2005–44 I.R.B.910October 31, 2005 October 31, 20059112005–44 I.R.B. 2005–44 I.R.B.912October 31, 2005 Part IV. Items of General Interest Announcement of Disciplinary Actions Involving Attorneys, Certified Public Accountants, Enrolled Agents, and Enrolled Actuaries — Suspensions, Censures, Disbarments, and Resignations Announcement 2005-76 Under Title 31, Code of Federal Regu- lations, Part 10, attorneys, certified public accountants, enrolled agents, and enrolled actuaries may not accept assistance from, or assist, any person who is under disbar- ment or suspension from practice before the Internal Revenue Service if the assis- tance relates to a matter constituting prac- tice before the Internal Revenue Service and may not knowingly aid or abet another person to practice before the Internal Rev- enue Service during a period of suspen- sion, disbarment, or ineligibility of such other person. To enable attorneys, certified public accountants, enrolled agents, and enrolled actuaries to identify persons to whom these restrictions apply, the Director, Of- fice of Professional Responsibility, will announce in the Internal Revenue Bulletin their names, their city and state, their pro- fessional designation, the effective date of disciplinary action, and the period of suspension. This announcement will ap- pear in the weekly Bulletin at the earliest practicable date after such action and will continue to appear in the weekly Bulletins for five successive weeks. Consent Suspensions From Practice Before the Internal Revenue Service Under Title 31, Code of Federal Regu- lations, Part 10, an attorney, certified pub- lic accountant, enrolled agent, or enrolled actuary, in order to avoid the institution or conclusion of a proceeding for his or her disbarment or suspension from prac- tice before the Internal Revenue Service, may offer his or her consent to suspension from such practice. The Director, Office of Professional Responsibility, in his dis- cretion, may suspend an attorney, certified public accountant, enrolled agent, or en- rolled actuary in accordance with the con- sent offered. The following individuals have been placed under consent suspension from practice before the Internal Revenue Ser- vice: NameAddressDesignationDate of Suspension Reagan, JohnCortland, NYCPAIndefinite from June 24, 2005 Harris, Alexander W.Chicago, ILAttorneyJuly 1, 2005 to December 31, 2005 Belush, Glen J.Monroe, CTCPAIndefinite from July 15, 2005 Lamont, AliceAtlanta, GACPAIndefinite from July 15, 2005 Morse, Kyle K.Bedford, TXCPAIndefinite from July 22, 2005 October 31, 20059132005–44 I.R.B. NameAddressDesignationDate of Suspension Duggan Jr., Joseph A.Jacksonville, OREnrolled AgentIndefinite from August 1, 2005 Harper, IvanBrooklyn, NYCPAIndefinite from August 15, 2005 Bandy, Robert M.Tyler, TXAttorneyIndefinite from August 24, 2005 Peterson, StanleySpringfield, PACPAIndefinite from August 26, 2005 Shorten, JudyVacaville, CAEnrolled AgentIndefinite from September 1, 2005 Watkins, David E.Shelbyville, INEnrolled AgentIndefinite from September 1, 2005 Expedited Suspensions From Practice Before the Internal Revenue Service Under Title 31, Code of Federal Regu- lations, Part 10, the Director, Office of Pro- fessional Responsibility, is authorized to immediately suspend from practice before the Internal RevenueService any practi- tioner who, within five years from the date the expedited proceeding is instituted (1) has had a license to practice as an attor- ney, certified public accountant, or actuary suspended or revoked for cause or (2) has been convicted of certain crimes. The following individuals have been placed under suspension from practice be- fore the Internal Revenue Service by virtue of the expedited proceeding provisions: NameAddressDesignationDate of Suspension Leong, Thomas S.Honolulu, HIAttorneyIndefinite from July 11, 2005 Clark, Mark S.Tucson, AZAttorneyIndefinite from July 11, 2005 Hudspeth, George E.St. Louis, MOAttorneyIndefinite from July 11, 2005 Dodd, Alan F.Westborough, MAAttorneyIndefinite from July 11, 2005 Crews, James F.Tipton, MOAttorneyIndefinite from July 11, 2005 2005–44 I.R.B.914October 31, 2005 NameAddressDesignationDate of Suspension Luparella, JosephHoboken, NJCPAIndefinite from July 13, 2005 Deutchman, MurrayBarnesville, MDAttorneyIndefinite from July 13, 2005 Cozier, Clifford G.Englewood, COAttorneyIndefinite from July 13, 2005 Segall, Steven M.Denver, COAttorneyIndefinite from July 14, 2005 Richardson, BruceReisterstown, MDAttorneyIndefinite from July 15, 2005 Parsley, Jeffrey A.Englewood, COAttorneyIndefinite from July 15, 2005 Wyrick, Richard L.Hanford, CAAttorneyIndefinite from July 15, 2005 Coates, Marsden S.Baltimore, MDAttorneyIndefinite from July 15, 2005 McCampbell, DanielChico, CAAttorneyIndefinite from July 15, 2005 Ralston, Ronald G.Fairmount, GACPAIndefinite from July 18, 2005 Friemann, Robert F.Huntington Bay, NYCPAIndefinite from July 18, 2005 Friedman, Milton G.Ft. Lauderdale, FLCPAJuly 25, 2005 to January 24, 2007 Acheampong, RobertColumbus, OHCPAIndefinite from July 26, 2005 Elias, Robert F.Canfield, OHAttorneyIndefinite from July 27, 2005 Stover, Kathy A.Topeka, KSAttorneyIndefinite from July 29, 2005 October 31, 20059152005–44 I.R.B. NameAddressDesignationDate of Suspension Leffler, Fredric D.Columbia, MDAttorneyIndefinite from July 29, 2005 Harmon, Anthony N.Batavia, ILAttorneyIndefinite from July 29, 2005 Hames, David H.Dallas, TXCPAIndefinite from August 2, 2005 Au, Ronald G.S.Honolulu, HIAttorneyIndefinite from August 9, 2005 Tilton Jr., George H.Denver, COAttorneyIndefinite from August 12, 2005 Spalsbury Jr., ClarkEstes Park, COAttorneyIndefinite from August 12, 2005 Brockman, Louis R.Dallas, TXCPAIndefinite from August 12, 2005 Hill, Richard B.Kernersville, NCCPAIndefinite from August 12, 2005 Rosenberg, Jeffrey P.Morgan Hill, CAAttorneyIndefinite from August 12, 2005 Link, Robert A.Waupaca, WICPAIndefinite from August 15, 2005 Halcrow, David S.Taft, CACPAIndefinite from September 9, 2005 Lieber, Daniel M.Edna, MOAttorneyIndefinite from September 9, 2005 Kirchoff, William W.Jefferson City, MOAttorneyIndefinite from September 9, 2005 Lauby, Gregory C.Lexington, NEAttorneyIndefinite from September 9, 2005 Early, Michael J.Newburyport, MAAttorneyIndefinite from September 9, 2005 Mickiewicz, RobertDorchester, MAAttorneyIndefinite from September 9, 2005 2005–44 I.R.B.916October 31, 2005 NameAddressDesignationDate of Suspension Conant, Jon F.Gloucester, MAAttorneyIndefinite from September 9, 2005 Pennington, JillChevy Chase, MDAttorneyIndefinite from September 9, 2005 Randolph, Robert E.Denham Springs, LAAttorneyIndefinite from September 9, 2005 Carillo, DonaldChicago, ILAttorneyIndefinite from September 9, 2005 Sloan Jr., DeweySioux City, IAAttorneyIndefinite from September 9, 2005 Vogel, GarrettDallas, TXCPAIndefinite from September 13, 2005 Becker, JosephHouston, TXCPAIndefinite from September 13, 2005 Winick, Robert M.Sarasota, FLAttorneyIndefinite from September 19, 2005 Hunsaker Jr., WilliamGolden, COAttorneyIndefinite from September 19, 2005 Wheatley, Jay D.Boca Raton,FLAttorneyIndefinite from September 19, 2005 Clark, Carroll A.Mesa, AZAttorneyIndefinite from September 19, 2005 Suspensions From Practice Before the Internal Revenue Service After Notice and an Opportunity for a Proceeding Under Title 31, Code of Federal Reg- ulations, Part 10, after notice and an op- portunity for a proceeding before an ad- ministrative law judge, the following indi- viduals have been placed under suspension from practice before the Internal Revenue Service: NameAddressDesignationEffective Date Sobel, Herbert L.Elkins Park, PACPAMay 4, 2005 to February 3, 2007 October 31, 20059172005–44 I.R.B. NameAddressDesignationEffective Date Rubesh, LelandGillette, WYCPAAugust 1, 2005 to January 31, 2007 Gregory, Carolyn S.Cathedral City, CAEnrolled AgentAugust 12, 2005 to November 11, 2007 Censure Issued by Consent Under Title 31, Code of Federal Reg- ulations, Part 10, in lieu of a proceeding being instituted or continued, an attorney, certified public accountant, enrolled agent, or enrolled actuary, may offer his or her consent to the issuance of a censure. Cen- sure is a public reprimand. The following individuals have con- sented to the issuance of a Censure: NameAddressDesignationDate of Censure Pugno, ThomasRockwood, MIEnrolled AgentJune 29, 2005 Barrett, RichardTyler, TXCPAAugust 1, 2005 Kelly, Michael G.Odessa, TXAttorneyAugust 1, 2005 Volstad, Paul S.Plymouth, MNCPAAugust 18, 2005 Quackenbush, Gary A.San Diego, CAAttorneySeptember 2, 2005 Flores, Fred A.Laredo, TXCPASeptember 2, 2005 Velasquez, FelixLaredo, TXCPASeptember 2, 2005 Release of Publication 1141 and Correction to Revenue Procedure 2005–65 Announcement 2005–78 The October 2005 revision of Publi- cation 1141,General Rules and Speci- fications for Substitute Forms W–2 and W–3, is now posted to the IRS website. It was first published as Revenue Proce- dure 2005–65 in Internal Revenue Bulletin (IRB) 2005–38. Revenue Procedure 2005–65 incor- rectly states in Section 2.06 of Part A that “Form W–3PR is 7.0inches wide...” This has been corrected in Publication 1141 with “Form W–3PR is 7.3inches wide...” 2005–44 I.R.B.918October 31, 2005 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 rul- ings 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. October 31, 2005i2005–44 I.R.B. Numerical Finding List 1 Bulletins 2005–27 through 2005–44 Announcements: 2005-46, 2005-27 I.R.B.63 2005-47, 2005-28 I.R.B.71 2005-48, 2005-29 I.R.B.111 2005-49, 2005-29 I.R.B.119 2005-50, 2005-30 I.R.B.152 2005-51, 2005-32 I.R.B.283 2005-52, 2005-31 I.R.B.257 2005-53, 2005-31 I.R.B.258 2005-54, 2005-32 I.R.B.283 2005-55, 2005-33 I.R.B.317 2005-56, 2005-33 I.R.B.318 2005-57, 2005-33 I.R.B.318 2005-58, 2005-33 I.R.B.319 2005-59, 2005-37 I.R.B.524 2005-60, 2005-35 I.R.B.455 2005-61, 2005-36 I.R.B.495 2005-62, 2005-36 I.R.B.495 2005-63, 2005-36 I.R.B.496 2005-64, 2005-37 I.R.B.537 2005-65, 2005-38 I.R.B.587 2005-66, 2005-39 I.R.B.613 2005-67, 2005-40 I.R.B.678 2005-68, 2005-39 I.R.B.613 2005-69, 2005-40 I.R.B.681 2005-70, 2005-40 I.R.B.682 2005-71, 2005-41 I.R.B.714 2005-72, 2005-41 I.R.B.692 2005-73, 2005-41 I.R.B.715 2005-74, 2005-42 I.R.B.764 2005-75, 2005-42 I.R.B.764 2005-76, 2005-42 I.R.B.765 2005-77, 2005-44 I.R.B.855 2005-78, 2005-44 I.R.B.918 Notices: 2005-48, 2005-27 I.R.B.9 2005-49, 2005-27 I.R.B.14 2005-50, 2005-27 I.R.B.14 2005-51, 2005-28 I.R.B.74 2005-52, 2005-28 I.R.B.75 2005-53, 2005-32 I.R.B.263 2005-54, 2005-30 I.R.B.127 2005-55, 2005-32 I.R.B.265 2005-56, 2005-32 I.R.B.266 2005-57, 2005-32 I.R.B.267 2005-58, 2005-33 I.R.B.295 2005-59, 2005-35 I.R.B.443 2005-60, 2005-39 I.R.B.606 2005-61, 2005-39 I.R.B.607 2005-62, 2005-35 I.R.B.443 2005-63, 2005-35 I.R.B.448 Notices— Continued: 2005-64, 2005-36 I.R.B.471 2005-65, 2005-39 I.R.B.607 2005-66, 2005-40 I.R.B.620 2005-67, 2005-40 I.R.B.621 2005-68, 2005-40 I.R.B.622 2005-69, 2005-40 I.R.B.622 2005-70, 2005-41 I.R.B.694 2005-71, 2005-44 I.R.B.863 2005-73, 2005-42 I.R.B.723 2005-74, 2005-42 I.R.B.726 Proposed Regulations: REG-106030-98, 2005-42 I.R.B.739 REG-144615-02, 2005-40 I.R.B.625 REG-150088-02, 2005-43 I.R.B.774 REG-150091-02, 2005-43 I.R.B.780 REG-131739-03, 2005-36 I.R.B.494 REG-130241-04, 2005-27 I.R.B.18 REG-138362-04, 2005-33 I.R.B.299 REG-138647-04, 2005-41 I.R.B.697 REG-149436-04, 2005-35 I.R.B.454 REG-156518-04, 2005-38 I.R.B.582 REG-158080-04, 2005-43 I.R.B.786 REG-104143-05, 2005-41 I.R.B.708 REG-111257-05, 2005-42 I.R.B.759 REG-121584-05, 2005-37 I.R.B.523 REG-122857-05, 2005-39 I.R.B.609 REG-129782-05, 2005-40 I.R.B.675 REG-133578-05, 2005-39 I.R.B.610 Revenue Procedures: 2005-35, 2005-28 I.R.B.76 2005-36, 2005-28 I.R.B.78 2005-37, 2005-28 I.R.B.79 2005-38, 2005-28 I.R.B.81 2005-39, 2005-28 I.R.B.82 2005-40, 2005-28 I.R.B.83 2005-41, 2005-29 I.R.B.90 2005-42, 2005-30 I.R.B.128 2005-43, 2005-29 I.R.B.107 2005-44, 2005-29 I.R.B.110 2005-45, 2005-30 I.R.B.141 2005-46, 2005-30 I.R.B.142 2005-47, 2005-32 I.R.B.269 2005-48, 2005-32 I.R.B.271 2005-49, 2005-31 I.R.B.165 2005-50, 2005-32 I.R.B.272 2005-51, 2005-33 I.R.B.296 2005-52, 2005-34 I.R.B.326 2005-53, 2005-34 I.R.B.339 2005-54, 2005-34 I.R.B.353 2005-55, 2005-34 I.R.B.367 2005-56, 2005-34 I.R.B.383 2005-57, 2005-34 I.R.B.392 2005-58, 2005-34 I.R.B.402 Revenue Procedures— Continued: 2005-59, 2005-34 I.R.B.412 2005-60, 2005-35 I.R.B.449 2005-61, 2005-37 I.R.B.507 2005-62, 2005-37 I.R.B.507 2005-63, 2005-36 I.R.B.491 2005-64, 2005-36 I.R.B.492 2005-65, 2005-38 I.R.B.564 2005-66, 2005-37 I.R.B.509 2005-67, 2005-42 I.R.B.729 2005-68, 2005-41 I.R.B.694 2005-69, 2005-44 I.R.B.864 Revenue Rulings: 2005-38, 2005-27 I.R.B.6 2005-39, 2005-27 I.R.B.1 2005-40, 2005-27 I.R.B.4 2005-41, 2005-28 I.R.B.69 2005-42, 2005-28 I.R.B.67 2005-43, 2005-29 I.R.B.88 2005-44, 2005-29 I.R.B.87 2005-45, 2005-30 I.R.B.123 2005-46, 2005-30 I.R.B.120 2005-47, 2005-32 I.R.B.261 2005-48, 2005-32 I.R.B.259 2005-49, 2005-30 I.R.B.125 2005-50, 2005-30 I.R.B.124 2005-51, 2005-31 I.R.B.163 2005-52, 2005-35 I.R.B.423 2005-53, 2005-35 I.R.B.425 2005-54, 2005-33 I.R.B.289 2005-55, 2005-33 I.R.B.284 2005-56, 2005-35 I.R.B.427 2005-57, 2005-36 I.R.B.466 2005-58, 2005-36 I.R.B.465 2005-59, 2005-37 I.R.B.505 2005-60, 2005-37 I.R.B.502 2005-61, 2005-38 I.R.B.538 2005-62, 2005-38 I.R.B.557 2005-63, 2005-39 I.R.B.603 2005-64, 2005-39 I.R.B.600 2005-65, 2005-41 I.R.B.684 2005-66, 2005-41 I.R.B.686 2005-67, 2005-43 I.R.B.771 2005-68, 2005-44 I.R.B.853 2005-69, 2005-44 I.R.B.852 Tax Conventions: 2005-47, 2005-28 I.R.B.71 2005-72, 2005-41 I.R.B.692 2005-77, 2005-44 I.R.B.855 Treasury Decisions: 9208, 2005-31 I.R.B.157 9209, 2005-31 I.R.B.153 9210, 2005-33 I.R.B.290 1 A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2005–1 through 2005–26 is in Internal Revenue Bulletin 2005–26, dated June 27, 2005. 2005–44 I.R.B.iiOctober 31, 2005 Treasury Decisions— Continued: 9211, 2005-33 I.R.B.287 9212, 2005-35 I.R.B.429 9213, 2005-35 I.R.B.440 9214, 2005-35 I.R.B.435 9215, 2005-36 I.R.B.468 9216, 2005-36 I.R.B.461 9217, 2005-37 I.R.B.498 9218, 2005-37 I.R.B.503 9219, 2005-38 I.R.B.538 9220, 2005-39 I.R.B.596 9221, 2005-39 I.R.B.604 9222, 2005-40 I.R.B.614 9223, 2005-39 I.R.B.591 9224, 2005-41 I.R.B.688 9225, 2005-42 I.R.B.716 9226, 2005-43 I.R.B.772 October 31, 2005iii2005–44 I.R.B. Finding List of Current Actions on Previously Published Items 1 Bulletins 2005–27 through 2005–44 Announcements: 84-26 Obsoleted by REG-149436-04, 2005-35 I.R.B.454 2004-72 Updated and superseded by Ann. 2005-59, 2005-37 I.R.B.524 2005-36 Modified by Rev. Proc. 2005-66, 2005-37 I.R.B.509 2005-53 Corrected by Ann. 2005-61, 2005-36 I.R.B.495 Notices: 89-111 Amplified by Notice 2005-61, 2005-39 I.R.B.607 2001-42 Modified by Rev. Proc. 2005-66, 2005-37 I.R.B.509 2005-4 Modified by Notice 2005-62, 2005-35 I.R.B.443 2005-10 Clarified by Notice 2005-64, 2005-36 I.R.B.471 2005-38 Modified by Notice 2005-64, 2005-36 I.R.B.471 2005-51 Modified and superseded by Notice 2005-57, 2005-32 I.R.B.267 Proposed Regulations: REG-108524-00 Corrected by Ann. 2005-68, 2005-39 I.R.B.613 REG-142686-01 Withdrawn by Ann. 2005-55, 2005-33 I.R.B.317 REG-100420-03 Corrected by Ann. 2005-57, 2005-33 I.R.B.318 REG-102144-04 Corrected by Ann. 2005-56, 2005-33 I.R.B.318 Revenue Procedures: 64-54 Obsoleted by Rev. Rul. 2005-43, 2005-29 I.R.B.88 66-33 Obsoleted by Rev. Rul. 2005-43, 2005-29 I.R.B.88 69-13 Obsoleted by Rev. Rul. 2005-43, 2005-29 I.R.B.88 70-8 Modified by Rev. Proc. 2005-46, 2005-30 I.R.B.142 71-1 Obsoleted by Rev. Rul. 2005-43, 2005-29 I.R.B.88 72-22 Obsoleted by Rev. Rul. 2005-43, 2005-29 I.R.B.88 83-77 Superseded by Rev. Proc. 2005-63, 2005-36 I.R.B.491 87-8 Obsoleted by Rev. Proc. 2005-44, 2005-29 I.R.B.110 87-9 Obsoleted by Rev. Proc. 2005-44, 2005-29 I.R.B.110 89-20 Superseded by Rev. Proc. 2005-52, 2005-34 I.R.B.326 90–11 Modified by Rev. Proc. 2005-40, 2005-28 I.R.B.83 90-30 Section4supersededby Rev. Proc. 2005-54, 2005-34 I.R.B.353 Section5supersededby Rev. Proc. 2005-55, 2005-34 I.R.B.367 Section6supersededby Rev. Proc. 2005-56, 2005-34 I.R.B.383 Section7supersededby Rev. Proc. 2005-58, 2005-34 I.R.B.402 Section8supersededby Rev. Proc. 2005-59, 2005-34 I.R.B.412 90-31 Section4supersededby Rev. Proc. 2005-52, 2005-34 I.R.B.326 Section5supersededby Rev. Proc. 2005-54, 2005-34 I.R.B.353 Section6supersededby Rev. Proc. 2005-55, 2005-34 I.R.B.367 Revenue Procedures— Continued: Section7supersededby Rev. Proc. 2005-56, 2005-34 I.R.B.383 Section8supersededby Rev. Proc. 2005-58, 2005-34 I.R.B.402 Section9supersededby Rev. Proc. 2005-59, 2005-34 I.R.B.412 93-22 Obsoleted by Rev. Proc. 2005-44, 2005-29 I.R.B.110 98-18 Obsoleted by Rev. Proc. 2005-45, 2005-30 I.R.B.141 99-39 Superseded by Rev. Proc. 2005-60, 2005-35 I.R.B.449 2000-27 Modified and superseded by Rev. Proc. 2005-66, 2005-37 I.R.B.509 2000-31 Superseded by Rev. Proc. 2005-60, 2005-35 I.R.B.449 2000-49 Superseded by Rev. Proc. 2005-41, 2005-29 I.R.B.90 2001-9 Superseded by Rev. Proc. 2005-60, 2005-35 I.R.B.449 2001-16 Superseded by Rev. Proc. 2005-42, 2005-30 I.R.B.128 2002-9 Modified and amplified by Rev. Rul. 2005-42, 2005-28 I.R.B.67 Rev. Proc. 2005-35, 2005-28 I.R.B.76 Rev. Proc. 2005-43, 2005-29 I.R.B.107 Rev. Proc. 2005-47, 2005-32 I.R.B.269 2002-49 Modified, amplified, and superseded by Rev. Proc. 2005-62, 2005-37 I.R.B.507 2004-50 Superseded by Rev. Proc. 2005-49, 2005-31 I.R.B.165 2004-54 Superseded by Rev. Proc. 2005-65, 2005-38 I.R.B.564 2004-58 Superseded by Rev. Proc. 2005-69, 2005-44 I.R.B.864 2004-64 Modified by Ann. 2005-71, 2005-41 I.R.B.714 1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2005–1 through 2005–26 is in Internal Revenue Bulletin 2005–26, dated June 27, 2005. 2005–44 I.R.B.ivOctober 31, 2005 Revenue Procedures— Continued: 2005-1 Amplified by Rev. Proc. 2005-68, 2005-41 I.R.B.694 2005-3 Amplified by Rev. Proc. 2005-61, 2005-37 I.R.B.507 Rev. Proc. 2005-68, 2005-41 I.R.B.694 2005-6 Modified by Rev. Proc. 2005-66, 2005-37 I.R.B.509 2005-10 Superseded by Rev. Proc. 2005-67, 2005-42 I.R.B.729 2005-16 Modified by Rev. Proc. 2005-66, 2005-37 I.R.B.509 2005-65 Corrected by Ann. 2005-78, 2005-44 I.R.B.918 Revenue Rulings: 65-109 Obsoleted by Rev. Rul. 2005-43, 2005-29 I.R.B.88 68-549 Obsoleted by Rev. Rul. 2005-43, 2005-29 I.R.B.88 74-203 Revoked by Rev. Rul. 2005-59, 2005-37 I.R.B.505 82-29 Modified and clarified by Rev. Proc. 2005-39, 2005-28 I.R.B.82 2005-41 Corrected by Ann. 2005-50, 2005-30 I.R.B.152 Treasury Decisions: 9149 Removed by T.D. 9221, 2005-39 I.R.B.604 9186 Corrected by Ann. 2005-53, 2005-31 I.R.B.258 9193 Corrected by Ann. 2005-62, 2005-36 I.R.B.495 9205 Corrected by Ann. 2005-63, 2005-36 I.R.B.496 9206 Corrected by Ann. 2005-49, 2005-29 I.R.B.119 Treasury Decisions— Continued: 9207 Corrected by Ann. 2005-52, 2005-31 I.R.B.257 9210 Corrected by Ann. 2005-64, 2005-37 I.R.B.537 October 31, 2005v2005–44 I.R.B. INDEX Internal Revenue Bulletins 2005–27 through 2005–44 The abbreviation and number in parenthesis following the index entry refer to the specific item; numbers in roman and italic type following the parentheses refer to the Internal Revenue Bulletin in which the item may be found and the page number on which it appears. Key to Abbreviations: AnnAnnouncement CDCourt Decision DODelegation Order EOExecutive Order PLPublic Law PTEProhibited Transaction Exemption RPRevenue Procedure RRRevenue Ruling SPRStatement of Procedural Rules TCTax Convention TDTreasury Decision TDOTreasury Department Order EMPLOYEE PLANS Disaster relief: Minimum funding standards (Notice 60) 39,606 Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 Section 401(k) hardship distributions, Hurricane Katrina (Ann 70) 40,682 Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Electronic technologies, use for providing employee benefit no- tices and transmitting employee benefit elections and consents (REG–138362–04) 33,299 Federal credit unions, section 457, nonqualified deferred com- pensation plans (Notice 58) 33,295 Full funding limitations, weighted average interest rate for: July 2005 (Notice 54) 30,127 August 2005 (Notice 63) 35,448 September 2005 (Notice 67) 40,621 October 2005 (Notice 71) 44,863 IRA annuity, converting to Roth IRA (TD 9220) 39,596; (REG–122857–05) 39,609 Letter rulings and determinationletters, areas from which Asso- ciates Chief Counsel and Division Counsel will not issue (RP 61) 37,507 Nonbank trustee and nonbank custodian, approval list (Ann 59) 37,524 Prescription drug coverage, section 420, minimum cost require- ment (RR 60) 37,502 Proposed Regulations: 26 CFR 1.72(p)–1, amended; 1.401(a)–21, added; 1.402(f)–1, amended; 1.411(a)–11, amended; 1.417(a)(3)–1, amended; EMPLOYEE PLANS—Cont. 1.7476–2, amended; use of electronic technologies for pro- viding employee benefit notices and transmitting employee benefit elections and consents (REG–138362–04) 33,299 26 CFR 1.162(k)–1, added; 1.404(k)–2, –3, added; dividends paid deduction for stock held in employee stock ownership plan (ESOP) (REG–133578–05) 39,610 26 CFR 1.401(a)(9)–6, revised; 1.401(k)–1, amended; 1.403(b)–3(b)(4)(ii), revised; 1.415–1 thru –10, removed; 1.415(a)–1, (b)–1, (b)–2, (c)–1, (c)–2, (d)–1, (f)–1, (g)–1, (j)–1, added; 1.457–4, –5, –6, –10, amended; 11.415(c)(4)–1, removed; limitations on benefits and con- tributions under qualified plans (REG–130241–04) 27,18 26 CFR 1.408A–4, amended; converting an IRA annuity to a Roth IRA (REG–122857–05) 39,609 26 CFR 1.411(d)–3, amended;section 411(d)(6) protected benefits (REG–156518–04) 38,582 Qualified retirement plans: Determination letters, staggered remedial amendments (RP 66) 37,509 Limitations on benefits and contributions (REG–130241–04) 27,18 Profit-sharing plan, retiree health accounts (RR 55) 33,284 Section 411(d)(6) protected benefits, anti-cutback rules (REG–156518–04) 38,582 Section 411(d)(6) protected benefits, anti-cutback rules, noti- fication requirements (TD 9219) 38,538 Value of life insurance contracts when distributed from qual- ified retirement plan (TD 9223) 39,591 Regulations: 26 CFR 1.79–1, amended; 1.83–3, amended; 1.402(a)–1, amended; value of life insurance contracts when distributed from a qualified retirement plan (TD 9223) 39,591 26 CFR 1.408A–4, amended; 1.408A–4T, added; converting an IRA annuity to a Roth IRA (TD 9220) 39,596 26 CFR 1.411(d)–3, revised; 1.411(a)–4, (d)–4, amended; 54.4980F–1, amended; section 411(d)(6) protected benefits (TD 9219) 38,538 Stocks, disallowance of deduction for reacquisition payments, dividends paid by corporation not maintaining employee stock ownership plan (ESOP) (REG–133578–05) 39,610 EMPLOYMENT TAX Alternative signature methods, facsimile signatures (RP 39) 28, 82 Collection due process hearings, clarification of the way con- ducted: Federal tax lien (REG–150088–02) 43,774 Levy (REG–150091–02) 43,780 Disaster relief: Leave-based donation programs,Hurricane Katrina (Notice 68) 40,622 Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 2005–44 I.R.B.viOctober 31, 2005 EMPLOYMENT TAX—Cont. Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Electronic technologies, use for providing employee benefit no- tices and transmitting employee benefit elections and consents (REG–138362–04) 33,299 Industry Issue Resolution (IIR) program, additional criteria for considering specific industries’ proposals regarding account- able plan rules (Notice 59) 35,443 Penalties, disclosure on reports filed with Securities and Ex- change Commission (SEC) (RP 51) 33,296 Proposed Regulations: 26 CFR 31.3102–1, amended; 31.3121(a)–2, amended; 31.3121(a)(7)–1, (a)(8)–1, amended; 31.3121(a)(10)–1, revised; 31.3121(i)–1, amended; application of the Federal Insurance Contributions Act (FICA) to payments made for certain services (REG–104143–05) 41,708 26 CFR 35.3405–1, amended; use of electronic tech- nologies for providing employee benefit notices and transmitting employee benefit elections and consents (REG–138362–04) 33,299 26 CFR 301.6020–1, added; substitute for return (REG–131739–03) 36,494 26 CFR 301.6320–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing upon filing of notice of federal tax lien (REG–150088–02) 43,774 26 CFR 301.6330–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing prior to levy (REG–150091–02) 43,780 Publication 1141, General Rulesand Specifications for Substi- tute Forms W-2 and W-3, revised (RP 65) 38,564; correction (Ann 78) 44,918 Regulations: 26 CFR 301.6020–1, removed; 301.6020–1T, added; substi- tute for return (TD 9215) 36,468 Stocks, statutory stock options, wages, application of FICA, FUTA, and income tax withholding, withdrawal of REG–142686–01 (Ann 55) 33,317 Substitute for return, Internal Revenue officer or employee (TD 9215) 36,468; (REG–131739–03) 36,494 Substitute Forms W-2 and W-3, general rules and specifications (RP 65) 38,564; correction (Ann 78) 44,918 Tool allowances to employees, arrangement not considered an accountable plan (RR 52) 35,423 Wages, when paid and received, application of Federal Insurance Contributions Act (FICA) to payments (REG–104143–05) 41, 708 ESTATE TAX Charitable remainder unitrusts (CRUTs): Inter vivos: For a term of years (RP 53) 34,339 For one measuring life (RP 52) 34,326 ESTATE TAX—Cont. With concurrent and consecutive interests for two measur- ing lives (RP 55) 34,367 With consecutive interests for two measuring lives (RP 54) 34,353 Testamentary: For a term of years (RP 57) 34,392 For one measuring life (RP 56) 34,383 With concurrent and consecutive interests for two measur- ing lives (RP 59) 34,412 With consecutive interests for two measuring lives (RP 58) 34,402 Collection due process hearings, clarification of the way con- ducted: Federal tax lien (REG–150088–02) 43,774 Levy (REG–150091–02) 43,780 Disaster relief: Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Generation-skipping transfer (GST) tax: Deemed allocations, election out (TD 9208) 31,157 Predeceased parent rule (TD 9214) 35,435 Proposed Regulations: 26 CFR 301.6020–1, added; substitute for return (REG–131739–03) 36,494 26 CFR 301.6320–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing upon filing of notice of federal tax lien (REG–150088–02) 43,774 26 CFR 301.6330–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing prior to levy (REG–150091–02) 43,780 Regulations: 26 CFR 26.2600–1, amended; 26.2612–1, amended; 26.2651–1, –2, –3, added; predeceased parent rule (TD 9214) 35,435 26 CFR 26.2600–1, amended; 26.2632–1, amended; 602.101, amended; election out of GST deemed allocations (TD 9208) 31,157 26 CFR 301.6020–1, removed; 301.6020–1T, added; substi- tute for return (TD 9215) 36,468 Substitute for return, Internal Revenue officer or employee (TD 9215) 36,468; (REG–131739–03) 36,494 EXCISE TAX Air transportation services subject to tax, passive losses (RR 64) 39,600 Biodiesel and aviation-grade kerosene (Notice 62) 35,443 Collection due process hearings, clarification of the way con- ducted: Federal tax lien (REG–150088–02) 43,774 October 31, 2005vii2005–44 I.R.B. EXCISE TAX—Cont. Levy (REG–150091–02) 43,780 Collector of collected excisetaxes, duties (TD 9221) 39,604 Disaster relief: Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Electronic technologies, use for providing employee benefit no- tices and transmitting employee benefit elections and consents (REG–138362–04) 33,299 Health Savings Accounts (HSAs), employer comparable contri- butions (REG–138647–04) 41,697 Insurance, qualification of arrangements as insurance, comments requested (Notice 49) 27,14 Penalties: Disclosure on reports filed with Securities and Exchange Commission(SEC)(RP51)33,296 Relief under section 6715, dyed diesel fuel (Ann 51) 32,283 Proposed Regulations: 26 CFR 54.4980F–1, amended; use of electronic tech- nologies for providing employee benefit notices and transmitting employee benefit elections and consents (REG–138362–04) 33,299 26 CFR 54.4980G–0 thru –5, added; employer comparable contributions to Health Savings Accounts (HSAs) under section 4980G (REG–138647–04) 41,697 26 CFR 301.6020–1, added; substitute for return (REG–131739–03) 36,494 26 CFR 301.6320–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing upon filing of notice of federal tax lien (REG–150088–02) 43,774 26 CFR 301.6330–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing prior to levy (REG–150091–02) 43,780 Regulations: 26 CFR 40.6302(c)–3, amended; 40.6302(c)–3T, removed; 49.4291–1, amended; 49.4291–1T, removed; collected ex- cise taxes, duties of collector (TD 9221) 39,604 26 CFR 301.6020–1, removed; 301.6020–1T, added; substi- tute for return (TD 9215) 36,468 Rural airport, exception to tax on the amount paid for a domestic segment of taxable transportation by air (RP 45) 30,141 Substitute for return, Internal Revenue officer or employee (TD 9215) 36,468; (REG–131739–03) 36,494 EXEMPT ORGANIZATIONS Accounting methods, change in reporting method for eligible ed- ucational institution (RP 50) 32,272 EXEMPT ORGANIZATIONS—Cont. Disaster relief: Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Federal credit unions, section 457, nonqualified deferred com- pensation plans (Notice 58) 33,295 Form 1098-C, Contributions of Motor Vehicles, Boats, and Air- planes, new 2005 form released (Ann 66) 39,613 Insurance, qualification of arrangements as insurance, comments requested (Notice 49) 27,14 Letter rulings and determination letters, areas from which Asso- ciates Chief Counsel and Division Counsel will not issue (RP 61) 37,507 List of organizations classifiedas private foundations (Ann 46) 27,63; (Ann 58) 33,319; (Ann 60) 35,455; (Ann 65) 38,587; (Ann 67) 40,678 Proposed Regulations: 26 CFR 1.501(c)(3)–1(d)(1)(iii) redesignated as 1.501(c)(3)–1(d)(1)(iv); 1.501(c)(3)–1(d)(1)(iii), –1(g), added; 53.4958–2(a)(6), added; standards for recognition of tax-exempt status if private benefit exists or if an applicable tax-exempt organization has engaged in excess benefit transaction(s) (REG–111257–05) 42,759 Revocations (Ann 54) 32,283; (Ann 75) 42,764 Tax-exempt status, standards for recognition if private benefit exists or if applicable tax-exempt organization has engaged in excess benefit transaction(s) (REG–111257–05) 42,759 GIFT TAX Charitable remainder unitrusts (CRUTs): Inter vivos: For a term of years (RP 53) 34,339 For one measuring life (RP 52) 34,326 With concurrent and consecutive interests for two measur- ing lives (RP 55) 34,367 With consecutive interests for two measuring lives (RP 54) 34,353 Collection due process hearings, clarification of the way con- ducted: Federal tax lien (REG–150088–02) 43,774 Levy (REG–150091–02) 43,780 Disaster relief: Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Proposed Regulations: 26 CFR 301.6020–1, added; substitute for return (REG–131739–03) 36,494 2005–44 I.R.B.viiiOctober 31, 2005 GIFT TAX—Cont. 26 CFR 301.6320–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing upon filing of notice of federal tax lien (REG–150088–02) 43,774 26 CFR 301.6330–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing prior to levy (REG–150091–02) 43,780 Regulations: 26 CFR 301.6020–1, removed; 301.6020–1T, added; substi- tute for return (TD 9215) 36,468 Substitute for return, Internal Revenue officer or employee (TD 9215) 36,468; (REG–131739–03) 36,494 INCOME TAX Accounting methods: Automatic consent to change to a method under which a utility may treat an up-front payment for network upgrades as not being taxable income when received (RP 35) 28,76 Changes in method of accounting, time periods for requesting consent (RP 63) 36,491 Change in reporting method for eligible educational institu- tion (RP 50) 32,272 Credit card cash advance fees (RP 47) 32,269 Uniform capitalization of costs, environmental remediation (RR 42) 28,67 Air transportation services subject to tax, passive losses (RR 64) 39,600 Amended returns, qualified, John Doe summons (TD 9186); cor- rection (Ann 53) 31,258;correction(Ann61)36,495 Arbitrage rebate payments: Address change (Notice 52) 28,75 Late payment (RP 40) 28,83 ATM surcharge, treatment of cardholder surcharge fees by credit card issuers (RR 47) 32,261 Charitable contributions, allocation and apportionment of deduc- tions (TD 9211) 33,287 Charitable remainder unitrusts (CRUTs): Inter vivos: For a term of years (RP 53) 34,339 For one measuring life (RP 52) 34,326 With concurrent and consecutive interests for two measur- ing lives (RP 55) 34,367 With consecutive interests for two measuring lives (RP 54) 34,353 Testamentary: For a term of years (RP 57) 34,392 For one measuring life (RP 56) 34,383 With concurrent and consecutive interests for two measur- ing lives (RP 59) 34,412 With consecutive interests for two measuring lives (RP 58) 34,402 Collection due process hearings, clarification of the way con- ducted: Federal tax lien (REG–150088–02) 43,774 INCOME TAX—Cont. Levy (REG–150091–02) 43,780 Compensation for labor or personal services, basis for determin- ing source (TD 9212) 35,429 Corporations: Corporate formations, capital contributions (Notice 70) 41, 694 Corporate reorganizations, corporate acquisitions, spin-offs (RR 65) 41,684 Corporate reorganizations, guidance on the measurement of continuity of interest (TD 9225) 42,716 Definition and tax treatment ofa stapled foreign corporation (TD 9216) 36,461 Determining a U.S. shareholder’s pro rata share of subpart F income (TD 9222) 40,614 Dividends received deduction (DRD), foreign tax credit, for- eign currency, and alternative minimum tax (Notice 64) 36, 471 Effect of certain exchanges on gain recognition agreements (Notice 74) 42,726 Exclusions from gross income of foreign corporations (TD 9218) 37,503 Special rule regarding certain section 951 pro rata share allo- cations (REG–129782–05) 40,675 Cost sharing arrangement, methods to determine taxable income in connection with (REG–144615–02) 40,625 Credits: Enhanced oil recovery credit, 2005 inflation adjustment (No- tice 56) 32,266 Health coverage tax credit (HCTC), miscellaneous issues (Notice 50) 27,14 Increasing research activities (TD 9205); correction (Ann 63) 36,496 Low-income housing credit: Carryovers to qualified states, 2005 National Pool (RP 36) 28,78 Safe harbor for extending low-income housing commit- ments (RP 37) 28,79 Satisfactory bond, “bond factor” amounts for the period: January through September 2005 (RR 44) 29,87 January through December 2005 (RR 67) 43,771 Suspension of certain requirements under section 42 due to Hurricane Katrina (Notice 69) 40,622 Deficiency procedures, use of mathematical or clerical error as- sessments (RR 51) 31,163 Dependent care assistance, reporting requirements (Notice 61) 39,607 Depreciable business property, election to expense (TD 9209) 31, 153 Disaster relief: For tax-exempt bond issuers affected by Hurricane Katrina (Ann 69) 40,681 Grants, treatment with respect to gross income (RR 46) 30, 120 Leave-based donation programs,Hurricane Katrina (Notice 68) 40,622 October 31, 2005ix2005–44 I.R.B. INCOME TAX—Cont. Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 Rules relating to temporary operation of ships in domestic trade as a result of Hurricane Katrina (Notice 65) 39,607 Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Disciplinary actions involving attorneys, CPAs, enrolled agents, and enrolled actuaries (Ann 48) 29,111; (Ann 76) 42,765 Dual consolidated loss (REG–102144–04); correction (Ann 56) 33,318 E-file provider responsibilities (RP 60) 35,449 Employer-provided vehicles, cents-per-mile valuation rule, reg- ulations sections 1.61–21(d) and (e) (RP 48) 32,271 Estimated income tax payments by individuals (TD 9224) 41, 688 Forms: W-4, specifications for filing electronically (RP 42) 30,128 1096, 1098, 1099, 5498, W-2G, and 1042-S, substitute form specifications (RP 69) 44,864 1098, 1099, 5498 and W-2G, requirements for filing electron- ically or magnetically (revised 8-2005) (RP 49) 31,165 1098-C, Contributions of Motor Vehicles, Boats, and Air- planes, new 2005 form released (Ann 66) 39,613 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, specifications for filing electronically or magnetically (RP 41) 29,90 Information reporting, returns by donees relating to qualified in- tellectual property contributions (TD 9206); correction (Ann 49) 29,119 Insurance companies: Differential earnings rate, mutual insurance companies (RR 58) 36,465 Net investment income included by foreign insurance com- pany on U.S. income tax return, guidance regarding com- putation of amount (RP 64) 36,492 Stock held by foreign insurance companies (TD 9226) 43,772 Tax on insurance companies other than life insurance compa- nies (RR 40) 27,4 Insurance, qualification of arrangements as insurance, comments requested (Notice 49) 27,14 Interest: Foreign bank interest expense allocation to effectively con- nected income (Notice 53) 32,263 Investment: Federal short-term, mid-term, and long-term rates for: July 2005 (RR 38) 27,6 August 2005 (RR 54) 33,289 September 2005 (RR 57) 36,466 October 2005 (RR 66) 41,686 Rates: Farm real property, special use value (RR 41) 28,69;cor- rection (Ann 50) 30,152 Underpayments and overpayments, quarter beginning: October 1, 2005 (RR 62) 38,557 INCOME TAX—Cont. Taxpayer remedies when the Service fails to suspend interest as required by section 6404(g) (RP 38) 28,81 Inventory: LIFO, price indexes used by department stores for: May 2005 (RR 45) 30,123 June 2005 (RR 56) 35,427 July 2005 (RR 63) 39,603 August 2005 (RR 69) 44,852 LIFO recapture by corporationsholding LIFO inventory indi- rectly (TD 9210) 33,290; correction (Ann 64) 37,537 Joint return elections, section 6020 documents and waivers (RR 59) 37,505 Judicial remedy for third personasserting wrongful levy (RR 49) 30,125 Letter rulings and determination letters: Areas from which AssociatesChief Counsel and Division Counsel will not issue (RP 61) 37,507 Issued by Associates Chief Counsel and Division Counsel, no-rule areas (RP 68) 41,694 Levied property, return in certain cases (TD 9213) 35,440 Marginal production rates, 2005 (Notice 55) 32,265 New York Liberty Zone, election out of section 1400L(c), 5-year property (RP 43) 29,107 Nonqualified deferred compensation plans, application of sec- tion 409A (REG–158080–04) 43,786 Obsoleting Rev. Proc. 64-54 and subsequent rulings (RR 43) 29, 88 Optional standard mileage rates, effective September 1, 2005 (Ann 71) 41,714 Partnerships: Assumption of partner liabilities (TD 9207); correction (Ann 52) 31,257 Installment obligations, treatment of property sold (TD 9193); correction (Ann 62) 36,495 Requirement to pay withholding tax on effectively connected U.S. trade or business income allocable to foreign partners (REG–108524–00); correction (Ann 68) 39,613; hearing date change (Ann 74) 42,764 Penalties, disclosure on reports filed with Securities and Ex- change Commission (SEC) (RP 51) 33,296 Per diem allowances, 2005-2006 (RP 67) 42,729 Private foundations, organizations now classified as (Ann 46) 27, 63; (Ann 58) 33,319; (Ann 60) 35,455; (Ann 65) 38,587; (Ann 67) 40,678 Procedures for claiming section 482 setoffs (RP 46) 30,142 Proposed Regulations: 26 CFR 1.162(k)–1, added; 1.404(k)–2, –3, added; dividends paid deduction for stock held in employee stock ownership plan (ESOP) (REG–133578–05) 39,610 26 CFR 1.263A–1, –2, amended; guidance regarding the sim- plified service cost method and the simplified production method (REG–121584–05) 37,523 26 CFR 1.367(a)–1T, amended; 1.482–0, –1, –4, –5, –8, amended; 1.482–7 redesignated as 1.482–7A, and new 1.482–7, added; 1.861–17, amended; 1.6662–6, amended; 301.7701–1, amended; methods to determine taxable 2005–44 I.R.B.xOctober 31, 2005 INCOME TAX—Cont. income in connection with a cost sharing arrangement (REG–144615–02) 40,625 26 CFR 1.409A–1, added; application of section 409A to non- qualified deferred compensation plans (REG–158080–04) 43,786 26 CFR 1.475(a)–4; safe harborfor valuation under section 475 (REG–100420–03); correction (Ann 57) 33,318 26 CFR 1.863–3, amended; 1.863–8, –9, added; source of income from certain space and ocean activities, source of communications income (REG–106030–98) 42,739 26 CFR 1.951–1, amended; special rule regarding certain sec- tion 951 pro rata share allocations (REG–129782–05) 40, 675 26 CFR 1.1503(d)–4, –5; dual consolidated loss (REG–102144–04); correction (Ann 56) 33,318 26 CFR 1.6012–2, amended; return required by subchapter T cooperatives under section 6012 (REG–149436–04) 35, 454 26 CFR 301.6020–1, added; substitute for return (REG–131739–03) 36,494 26 CFR 301.6320–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing upon filing of notice of federal tax lien (REG–150088–02) 43,774 26 CFR 301.6330–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing prior to levy (REG–150091–02) 43,780 Publications: 1141, General Rules and Specifications for Substitute Forms W-2 and W-3, revised (RP 65) 38,564;correction(Ann78) 44,918 1187, Specifications for Filing Form 1042–S, Foreign Per- son’s U.S. Source Income Subject to Withholding, Elec- tronically or Magnetically,updates and corrections (Ann 73) 41,715 1220, Specifications for Filing Forms 1098, 1099, 5498 and W-2G Electronically or Magnetically, 2005 revision (RP 49) 31,165 1239, changes affecting tax year 2005 electronic or magnetic filing of Form 8027, Employer’s Annual Information Re- turn of Tip Income and Allocated Tips (RP 41) 29,90 1245, changes affecting the filing of Form W-4, Employee’s Withholding Allowance Certificate, electronically or mag- netically (RP 42) 30,128 Qualified green building and sustainable design projects, Brown- fields Demonstration Program (Notice 48) 27,9 Real Estate Mortgage Investment Conduit (REMIC), net operat- ing loss (NOL) (RR 68) 44,853 Reciprocal exemption agreement, Republic of Cape Verde (Ann 77) 44,855 Regulations: 26 CFR 1.179–0, –2, –4, –5, amended; 1.179–2T, –4T, –5T, –6, removed; 1.179–6T, redesignated as 1.179–6 and amended; 602.101, amended; section 179 elections (TD 9209) 31,153 INCOME TAX—Cont. 26 CFR 1.263A–1, –2, amended; 1.263A–1T, –2T, added; guidance regarding the simplified service cost method and the simplified production method (TD 9217) 37,498 26 CFR 1.269B–1, added; 1.367(b)–2, revised; 301.269B–1, added; treatment of a stapled foreign corporation (TD 9216) 36,461 26 CFR 1.368–1, amended; corporate reorganizations, guid- ance on the measurement of continuity of interest (TD 9225) 42,716 26 CFR 1.861–4, amended; 602.101, amended; source of compensation for labor or personal services (TD 9212) 35, 429 26 CFR 1.861–8, –8T, –14, –14T, amended; allocation and ap- portionment of deductions for charitable contributions (TD 9211) 33,287 26 CFR 1.864–4, revised; stock held by foreign insurance companies (TD 9226) 43,772 26 CFR 1.883–5, revised; exclusions from gross income of foreign corporations (TD 9218) 37,503 26 CFR 1.951–1, amended; guidance under section 951 for determining pro rata share (TD 9222) 40,614 26 CFR 1.1363–2, amended; 602.101, amended; LIFO recap- ture under section 1363(d) (TD 9210) 33,290; correction (Ann 64) 37,537 26 CFR 1.6015(a)–1 thru (j)–1, removed; 1.6654–2, –3, amended; 1.6654–5 redesignated as 1.6654–7; new 1.6654–5, –6, added; updating estimated income tax regu- lations under section 6654 (TD 9224) 41,688 26 CFR 1.6664–2T, amended; qualified amended returns (TD 9186); correction (Ann 53) 31,258 26 CFR 301.6020–1, removed; 301.6020–1T, added; substi- tute for return (TD 9215) 36,468 26 CFR 301.6343–3, added; return of property in certain cases (TD 9213) 35,440 Restricted property, whether transfer restrictions prevent treat- ment as substantially vested (RR 48) 32,259 Revocations, exempt organizations (Ann 54) 32,283; (Ann 75) 42,764 Safe harbor, for valuation under section 475 for marking to mar- ket (REG–100420–03); correction (Ann 57) 33,318 Source of income from certainspace and ocean activities, source of communications income (REG–106030–98) 42,739 Specifications for electronic or magnetic filing of Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, updates and corrections to Publication 1187 (Ann 73) 41,715 Standard Industry Fare Level (SIFL) formula (RR 61) 38,538 Stocks: Disallowance of deduction forreacquisition payments, divi- dends paid by corporation not maintaining employee stock ownership plan (ESOP) (REG–133578–05) 39,610 Golden parachute payments, effect of election under section 83(b) for purposes of section 280G (RR 39) 27,1 Held by foreign insurance companies (TD 9226) 43,772 Subchapter T cooperatives, return required (REG–149436–04) 35,454 October 31, 2005xi2005–44 I.R.B. INCOME TAX—Cont. Substitute for return, Internal Revenue officer or employee (TD 9215) 36,468; (REG–131739–03) 36,494 Substitute forms: W-2 and W-3, general rules and specifications (RP 65) 38, 564; correction (Ann 78) 44,918 1096, 1098, 1099, 5498, W-2G, and 1042-S, general rules and specifications (RP 69) 44,864 Tax conventions: Canadian memorandum of understanding (MOU) on MAP (Ann 47) 28,71 Reciprocal exemption agreement, Republic of Cape Verde (Ann 77) 44,855 Representations required to claim exemption from withhold- ing tax on personal services income under U.S. income tax treaties, students/teachers (RP 44) 29,110 U.S.-Mexico MAP Agreement regarding eligibility of fiscally transparent entities to benefits (Ann 72) 41,692 Third party not liable for tax, relief under sections 6325(b)(4) and 7426(a)(4) (RR 50) 30,124 Tobacco marketing quotas, tax treatment of termination pay- ments (Notice 51) 28,74; (Notice 57) 32,267 Uniform capitalization: Simplified methods, assets produced on a routine and repeti- tive basis (RR 53) 35,425 Simplified service cost and simplified production methods, assets produced on a routine and repetitive basis, guidance (TD 9217) 37,498; (REG–121584–05) 37,523 Utility companies, financing order by state agency (RP 62) 37, 507 SELF-EMPLOYMENT TAX Collection due process hearings, clarification of the way con- ducted: Federal tax lien (REG–150088–02) 43,774 Levy (REG–150091–02) 43,780 Disaster relief: Postponement of deadlines forcertain acts under section 7508A performed by IRS, Hurricane Katrina (Notice 66) 40,620 Summary and clarification of relief previously granted under sections 6081, 6161, 6656, and 7508A with respect to tax- payers affected by Hurricane Katrina (Notice 73) 42,723 Proposed Regulations: 26 CFR 301.6020–1, added; substitute for return (REG–131739–03) 36,494 26 CFR 301.6320–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing upon filing of notice of federal tax lien (REG–150088–02) 43,774 26 CFR 301.6330–1, amended; miscellaneous changes to col- lection due process procedures relating to notice and oppor- tunity for hearing prior to levy (REG–150091–02) 43,780 SELF-EMPLOYMENT TAX—Cont. Regulations: 26 CFR 301.6020–1, removed; 301.6020–1T, added; substi- tute for return (TD 9215) 36,468 Substitute for return, Internal Revenue officer or employee (TD 9215) 36,468; (REG–131739–03) 36,494 2005–44 I.R.B.xiiOctober 31, 2005 U.S. GPO: 2005—320–797/20029
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