us-irs-notices-irb-2011-43-pdf•Internal Revenue Bulletin 2011-43 (PDF rendition): IRS Notices
Internal Revenue Bulletin 2011-43 (PDF rendition): IRS Notices
us-irs-notices-irb-2011-43-pdfInternal Revenue Bulletin 2011-43 (PDF rendition): IRS NoticesGuidance
Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.
Bulletin No. 201 1-43 October 24, 2011 HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. SPECIAL ANNOUNCEMENT REG–116284–11, page 598. Proposed regulations to the user fee regulations under Part 300 of the Code would establish a new user fee for individuals to take the registered tax return preparer competency exam- ination and a new user fee for certain persons to be finger- printed in conjunction with the preparer tax identification num- ber (PTIN), acceptance agent, and authorized e-file provider programs. Notice 2011–80, page 591. This notice provides guidance to individuals who have or will obtain a preparer tax identification number (PTIN), including a provisional PTIN, or who become registered tax return prepar- ers. INCOME TAX Rev. Rul. 2011–23, page 585. Insurance companies; interest rate tables.Prevailing state assumed interest rates are provided for the determina- tion of reserves under section 807 of the Code for contracts issued in 2010 and 2011. Rev. Rul. 92–19 supplemented in part. T.D. 9547, page 580. Final regulations under section 179C of the Code provide rules for the election to deduct 50 percent of the cost of any re- finery property that meets the following requirements: (1) the property is part of a qualified refinery; (2) the original use of the property commences with the taxpayer within a specified time period; (3) the property is placed in service by a speci- fied date; (4) the property meets certain production capacity requirements; (5) the property meets all applicable environmen- tal laws; and (6) the property meets certain construction and written binding contract requirements. The election is made by entering the deduction claimed at the appropriate place on a timely filed return for the taxable year in which the property is placed in service, and attaching a report to that return. REG–116284–11, page 598. Proposed regulations to the user fee regulations under Part 300 of the Code would establish a new user fee for individuals to take the registered tax return preparer competency exam- ination and a new user fee for certain persons to be finger- printed in conjunction with the preparer tax identification num- ber (PTIN), acceptance agent, and authorized e-file provider programs. Notice 2011–80, page 591. This notice provides guidance to individuals who have or will obtain a preparer tax identification number (PTIN), including a provisional PTIN, or who become registered tax return prepar- ers. Notice 2011–83, page 593. This notice provides for the suspension of certain requirements under section 42 of the Code for certain low-income housing credit projects in order to provide emergency housing relief needed as a result of the devastation in Pennsylvania caused by either Hurricane Irene during the period of August 26, 2011, to August 30, 2011, or Tropical Storm Lee beginning on Septem- ber 3, 2011. (Continued on the next page) Finding Lists begin on page ii. EMPLOYEE PLANS Notice 2011–84, page 595. Weighted average interest rate update; corporate bond indices; 30-year Treasury securities; segment rates. This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in October 2011; the 24-month average segment rates; the funding transitional segment rates applicable for October 2011; and the minimum present value transitional rates for September 2011. ADMINISTRATIVE REG–116284–11, page 598. Proposed regulations to the user fee regulations under Part 300 of the Code would establish a new user fee for individuals to take the registered tax return preparer competency exam- ination and a new user fee for certain persons to be finger- printed in conjunction with the preparer tax identification num- ber (PTIN), acceptance agent, and authorized e-file provider programs. Notice 2011–80, page 591. This notice provides guidance to individuals who have or will obtain a preparer tax identification number (PTIN), including a provisional PTIN, or who become registered tax return prepar- ers. October 24, 20112011–43 I.R.B. The IRS Mission Provide Americ a’s taxpayers top-quality service by helping them understa nd and meet their tax responsibilities and en- force the law wi th integrity and fairness to all. Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conven- tions, legislation, court decisions, and other items of general interest. It is published weekly and may be obtained from the Superintendent of Documents on a subscription basis. Bulletin contents are compiled semiannually into Cumulative Bulletins, which are sold on a single-copy basis. It is the policy of the Service to publish in the Bulletin all sub- stantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, mod- ify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indi- cated. Procedures relating solely to matters of internal man- agement are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—19 86 Code. This part i ncludes rulings and decisions based on provisions of the Intern al Revenue Code of 1986. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Leg- islation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rul- ings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secre- tary (Enforcement). Part IV .—Items of General Interest. This par t includes notices of proposed rulemakings, disbar- ment an d suspension lists, and announcements. The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period. The c ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402. 2011–43 I.R.B.October 24, 2011 October 24, 20112011–43 I.R.B. Part I. Rulings and Decisions Under the Internal Revenue Code of 1986 Section 179.— Election to Expense Certa in Refineries 26 CFR 1.179C–1: Election to expense certain re- fineries. T.D. 9547 Election to Expense Certain Refineries AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations and removal of temporary regulations. SUMMARY: This document provides fi- nal regulations relating to the election to expense qualified refinery property under section 179C of the Internal Revenue Code (Code). These final regulations adopt the temporary regulations with certain modifi- cations to reflect changes to the law made by the Energy Improvement and Extension Act of 2008. DATES:Effective Date:These regulations are effective August 22, 2011. FOR FURTHER INFORMATION CONTACT: Philip Tiegerman (202) 622–3110 (not a toll-free number). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The col lection of information contained in the se regulations has been reviewed and ap proved by the Office of Manage- ment a nd Budget in accordance with the Pa perwork Reduction Act of 1995 (44 U. S.C. 3507(d)) under control number (154 5–2103). Responses to this collection of in formation are mandatory. An ag ency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the coll ection of information displays a valid OMB c ontrol number. Book s or records relating to a collection of in formation must be retained as long as t heir contents may become material in the administration of any internal revenue law. Generall y, tax returns and tax return information a re confidential, as required by 26 U.S.C. 61 03. Background Section 179C w as added to the Code by section 1323 (a)oftheEnergyPolicyActof 2005, Public Law 109–58 (119 Stat. 594), to encourage the construction of new re- fineries and the expansion of existing re- fineries to e nhance the nation’s refinery ca- pacity. Sec tion 179C(a) allows a taxpayer to elect to d educt as an expense 50 percent of the cost o f any qualified refinery prop- erty. The re maining 50 percent of the tax- payer’s qu alifying expenditures generally are recove red under section 168 and sec- tion 179B, if applicable. All costs properly capitaliz ed into qualified refinery property are inclu dable in the cost of the qualified refinery property. As origin ally enacted, section 179C(c)( 1)(B) required that qualified re- finery pr operty be placed in service by ataxpaye r after August 8, 2005, and before J anuary 1, 2012. Under section 179C(c) (1)(F) as originally enacted, (i) the cons truction of the property must have bee n subject to a written binding constru ction contract entered into be- fore Ja nuary 1, 2008, (ii) the property must ha ve been placed in service before Januar y 1, 2008, or (iii) in the case of self-c onstructed property, the construction of the p roperty must have begun after June 14 , 2005, and before January 1, 2008. Secti on 179C(d)(1) originally required that a qualified refinery be designed to serve the primary purpose of processing liqui d fuel from crude oil or qualified fuels (as de fined in section 45K(c)). Under sect ion 179C(e) as originally enacted, qual ifiedrefinerypropertymusthave enab led the existing qualified refinery to incr ease total volume output (determined with out regard to asphalt or lube oil) by 5 per cent or more on an average daily basis or t o process qualified fuels (as defined in s ection 45K(c)) at a rate that is equal to o r greater than 25 percent of the total thr oughput of the qualified refinery on an ave rage daily basis. Section 209 of the Energy Improve- ment and Exten sion Act of 2008 (the “2008 Act”), D ivision B, Public Law 110–343 (122 Stat. 3765), amended sec- tion 179C in s everal respects. The 2008 Act extended the placed in service date of section 179C (c)(1)(B) to January 1, 2014. In addition , the 2008 Act amended section 179C(c)(1) (F) to provide that (i) the con- struction o f the property must be subject to a written binding construction contract entered int o before January 1, 2010, (ii) the proper ty must be placed in service be- fore Janua ry 1, 2010, or (iii) in the case of self-cons tructed property, the construction of the prop erty must begin after June 14, 2005, and before January 1, 2010. Effective for property placed in ser- vice afte r October 3, 2008, the 2008 Act amend ed the definition of “qualified refinery ” under section 179C(d)(1) to in- clude a re finery that is designed to serve the prima ry purpose of processing liquid fuel dir ectly from shale or tar sands, and expande d the production capacity require- ment of s ection 179C(e)(2) to include propert y that enables the existing qualified refine ry to process shale or tar sands. On July 9 , 2008, the Treasury De- partme nt and the IRS published in the Federa lRegistertemporary regula- tions ( T.D. 9412, 2008–2 C.B. 687 [73 FR 3 9230]) and a notice of propos ed rulemaking (REG–146895–05, 2008– 2 C.B. 700 [73 FR 39270]) by cross -reference to temporary regulations. A publ ic hearing was scheduled for Novem ber 20, 2008. The public hearing was ca ncelledonNovember6,2008(73 FR 66 001) because no written comments or re quests to speak were received. The t emporary regulations and pro- pose d regulations are hereby removed and the f inal regulations adopt the rules of the t emporary and proposed regulations with certain revisions, described below, to refl ect amendments to the statute made by the 2008 Act. 2011–43 I.R.B.580October 24, 2011 Explanation of Provisions Placed in Service and Construction and Written Binding Contract Requirements Section1.179C–1T(b)(4)and §1.179C–1T(b)(7)(i)(A) of the temporary regulations required that qualified refin- ery property be placed in service by the taxpayer after August 8, 2005, and before January 1, 2012. Section 1.179C–1(b)(4) and §1.179C–1(b)(7)(i)(A) of the final regulations provide that the property must be placed in service after August 8, 2005, and before January 1, 2014. Section 1.179C–1T(b)(7)(iii) of the temporary regulations provided that the manufacture, construction, or produc- tion of self-constructed property must begin before January 1, 2008. Under §1.179C–1(b)(7)(iii) of the final regula- tions, the manufacture, construction, or production of self-constructed property must begin before January 1, 2010. Under §1.179C–1T(b)(7)(iii)(C) of the temporary regulations, a compo- nent of self-constructed property had to be acquired or self-constructed be- fore January 1, 2008, in order to qualify as qualified refinery property. Section 1.179C–1(b)(7)(iii)(C) of the final regula- tions provides that the component must be acquired or self-constructed before Jan- uary 1, 2010. Qualified Refinery Property Section 1.179C–1T(b)(2)(i) of the temporary regulations provided that a qualified refinery is any refinery located in the United States that is designed to serve the primary purpose of processing crude oil or qualified fuels. The final reg- ulations add new §1.179C–1(b)(2)(i)(A) and new §1.179C–1(b)(2)(i)(B). Section 1.179C–1(b)(2)(i)(A) of the final regula- tions provides that in the case of property placed in service after August 8, 2005, and on or before October 3, 2008, a quali- fied refinery is any refinery located in the United States that is designed to serve the primary purpose of processing liquid fuel from crude oil or qualified fuels. Section 1.179C–1(b)(2)(i)(B) of the final regula- tions provides that, in the case of property placed in service after October 3, 2008, and before January 1,2014, a qualified re- finery is any refinery located in the United States that is designed to serve the primary purpose of processing liquid fuel from crude oil, qualified fuels, or directly from shale or tar sands. Production Capacity Section 1.179C–1T(b)(5)(i) of the tem- porary regulations generally provided that refinery property is considered to be qual- ified refinery property if (A) it enables the existing qualified refinery to increase the total volume output by at least 5 percent on an average daily basis; or (B) it enables the existing qualified refinery to increase the percentage of total throughput attributable to processing qualified fuels to a rate that is at least 25 percent of the total throughput on an average daily basis. The final regu- lations, in §1.179C–1(b)(5)(i), modify this definition to provide generally that refin- ery property is considered to be qualified refinery property if (A) it enables the ex- isting qualified refinery to increase the to- tal volume output by at least 5 percent on an average daily basis; (B) in the case of property placed in service after August 8, 2005, and on or before October 3, 2008, it enables the existing qualified refinery to increase the percentage of total throughput attributable to processing qualified fuels to a rate that is at least 25 percent of the to- tal throughput on an average daily basis; or (C) in the case of property placed in ser- vice after October 3, 2008, and before Jan- uary 1, 2014, it enables the existing quali- fied refinery to increase the percentage of total throughput attributable to processing shale, tar sands, or qualified fuels to a rate that is at least 25 percent of total through- put on an average daily basis. Effective/Applicability Date This section is applicable for taxable years ending on or after August 22, 2011. For taxable years ending before August 22, 2011, taxpayers may apply the proposed regulations published on July 9, 2008, or, in the alternative, may apply these final regulations. Special Analyses It has been determined that this Trea- sury decision is not a significant regula- tory action as defined in Executive Order 12866 as supplemented by Executive Or- der 13563. The collections of information in §1.179–1(d)(2), (e)(2), and (f) are re- quired by section 179C(b), (g), and (h), re- spectively, and, therefore, are not imposed by these regulations. Accordingly, they are not subject to the Regulatory Flexibility Act. Only the collection of information in §1.179–1(d)(3), regarding the revocation of an election under section 179C(a), is im- posed by these regulations. It is hereby certified that the collection of information contained in §1.179–1(d)(3) of the reg- ulations will not have a significant eco- nomic impact on a substantial number of small entities. This certification is based upon the fact that although most of the 12 taxpayers who potentially could or would make an election under section 179C(a) will be small entities, it is expected that few, if any, of those 12 taxpayers once hav- ing made the election will choose to revoke it. Therefore, the collection of informa- tion will not affect a substantial number of small entities. The information required to revoke an election under section 179C(a) consists entirely of a portion of the infor- mation required to make the election. Con- sequently, the economic burden for those taxpayers who choose to revoke the elec- tion is minimal in nature and the regula- tions do not impose any burden in addition to the burden associated with making the election. Therefore,a regulatory assess- ment is not required. It also has been deter- mined that section 553(b) of the Adminis- trative Procedure Act (5 U.S.C. chapter 6) does not apply to these regulations. Drafting Information The principal author of these regu- lations is Philip Tiegerman, Office of Associate Chief Counsel (Passthroughs and Special Industries).However, other personnel from the IRS and Treasury Department participated in their development. ***** Adoption of Amendments to the Regulations Accordingly 26, CFR parts 1 and 602 are amended as follows: PART 1—INCOME TAXES Paragraph 1. The authority for part 1 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * October 24, 20115812011–43 I.R.B. Par. 2. Section 1.179C–1 is added to read as follows: §1.179C–1 Election to expense certain refineries. (a)Scope and definitions—(1)Scope. This section provides the rules for deter- mining the deduction allowable under sec- tion 179C(a) for the cost of any qualified refinery property. The provisions of this section apply only to a taxpayer that elects to apply section 179C in the manner pre- scribed under paragraph (d) of this section. (2)Definitions. For purposes of section 179C and this section, the following defi- nitions apply: (i)Applicable environmental lawsare any applicable federal, state, or local en- vironmental laws. (ii)Qualified fuelshas the meaning set forthinsection45K(c). (iii)Costis the unadjusted depreciable basis (as defined in §1.168(b)–1(a)(3), but without regard to the reduction in basis for any portion of the basis the taxpayer prop- erly elects to treat as an expense under sec- tion 179C and this section) of the property. (iv)Throughputisavolumetricrate measuring the flow of crude oil, qualified fuels, or, in the case of property placed in service after October 3, 2008, and be- fore January 1, 2014, shale or tar sands, processed over a given period of time, typically referenced on the basis of barrels per calendar day. (v)Barrels per calendar dayis the amount of fuels that a facility can process under usual operating conditions, ex- pressed in terms of capacity during a 24-hour period and reduced to account for down time and other limitations. (vi)United Stateshas the same mean- ing as that term is defined in section 7701(a)(9). (b)Qualified refinery property—(1)In general. Qualified refinery property is any property that meets the requirements set forth in paragraphs (b)(2) through (b)(7) of this section. (2)Description of qualified refinery property—(i)In general. Property that comprises any portion of a qualified re- finery may be qualified refinery property. For purposes of section 179C and this section, a qualified refinery is any refinery located in the United States that — (A) In the case of property placed in ser- vice after August 8, 2005, and on or before October 3, 2008, is designed to serve the primary purpose of processing liquid fuel from crude oil or qualified fuels; or (B) In the case of property placed in service after October 3, 2008, and before January 1, 2014, is designed to serve the primary purpose of processing liquid fuel from crude oil, qualified fuels, or directly from shale or tar sands. (ii)Nonqualified refinery property.Re- finery property is not qualified refinery property for purposes of this paragraph (b)(2) if— (A) The primary purpose of the refinery property is for use as a topping plant, as- phalt plant, lube oil facility, crude or prod- uct terminal, or blending facility; or (B) The refinery property is built solely to comply with consent decrees or projects mandated by Federal, State, or local gov- ernments. (3)Original use—(i)In general.For purposes of the deduction allowable under section 179C(a), refinery property will meet the requirements of this paragraph (b)(3) if the original use of the property commences with the taxpayer. Except as provided in paragraph (b)(3)(ii) of this section, original use means the first use to which the property is put, whether or not that use corresponds to the use of the prop- erty by the taxpayer. Thus, if a taxpayer incurs capital expenditures to recondition or rebuild property acquired or owned by the taxpayer, only the capital expenditures incurred by the taxpayer to recondition or rebuild the property acquired or owned by the taxpayer satisfy the original use requirement. However, the cost of recon- ditioned or rebuilt property acquired by a taxpayer does not satisfy the original use requirement. Whether property is recon- ditioned or rebuilt property is a question of fact. For purposes of this paragraph (b)(3)(i), acquired or self-constructed property that contains used parts will be treated as reconditioned or rebuilt only if the cost of the used parts is more than 20 percent of the total cost of the property. (ii)Sale-leaseback. If any new por- tion of a qualified refinery is originally placed in service by a person after Au- gust 8, 2005, and is sold to a taxpayer and leased back to the person by the taxpayer within three months after the date the prop- erty was originally placed in service by the person, the taxpayer-lessor is considered the original user of the property. (4)Placed-in-service date—(i)In gen- eral. Refinery property will meet the re- quirements of this paragraph (b)(4) if the property is placed in service by the tax- payer after August 8, 2005, and before Jan- uary 1, 2014. (ii)Sale-leaseback. If a new portion of refinery property is originally placed in service by a person after August 8, 2005, and is sold to a taxpayer and leased back to the person by the taxpayer within three months after the date the property was originally placed in service by the person, the property is treated as originally placed in service by the taxpayer-lessor not earlier than the date on which the property is used by the lessee under the leaseback. (5)Production capacity—(i)In gen- eral. Refinery property is considered qualified refinery property if— (A) It enables the existing qualified re- finery to increase the total volume output, determined without regard to asphalt or lube oil, by at least 5 percent on an aver- age daily basis; (B) In the case of property placed in ser- vice after August 8, 2005, and on or be- fore October 3, 2008, it enables the exist- ingqualifiedrefinerytoincreasetheper- centage of total throughput attributable to processing qualified fuels to a rate that is at least 25 percent of total throughput on an average daily basis; or (C) In the case of property placed in ser- vice after October 3, 2008, and before Jan- uary 1, 2014, it enables the existing quali- fied refinery to increase the percentage of total throughput attributable to processing qualified fuels, shale, or tar sands to a rate that is at least 25 percent of total through- put on an average daily basis. (ii)When production capacity is tested. The production capacity requirement of this paragraph (b)(5) is determined as of the date the property is placed in service by the taxpayer. Any reasonable method may be used to determine the appropriate base- line for measuring capacity increases and to demonstrate and substantiate that the ca- pacity of the existing qualified refinery has been sufficiently increased. (iii)Multi-stage projects. In the case of multi-stage projects, a taxpayer must satisfy the reporting requirements of para- graph (f)(2) of this section, sufficient to establish that the production capacity re- 2011–43 I.R.B.582October 24, 2011 quirements of this paragraph (b)(5) will be met as a result of the taxpayer’s overall plan. (6)Applicable environmental laws—(i) In general. The environmental compli- ance requirement applies only with respect to refinery property, or any portion of re- finery property, that is placed in service after August 8, 2005. A refinery’s failure to meet applicable environmental laws with respect to a portion of the refinery that was in service prior to August 8, 2005 will not disqualify a taxpayer from making the election under section 179C(a) with respect to otherwise qualifying refinery property. (ii)Waiver under the Clean Air Act. Refinery property must comply with the Clean Air Act, notwithstanding any waiver received by the taxpayer under that Act. (7)Construction of property—(i)In general. Qualified property will meet the requirements of this paragraph (b)(7) if no written binding contract for the construc- tion of the property was in effect before June 14, 2005, and if— (A) The construction of the property is subject to a written binding contract en- tered into before January 1, 2010; (B) The property is placed in service before January 1, 2010; or (C) In the case of self-constructed prop- erty, the construction of the property began after June 14, 2005, and before January 1, 2010. (ii)Definition of binding contract—(A) In general. A contract is binding only if it is enforceable under state law against the taxpayer or a predecessor, and does not limit damages to a specified amount (for example, by use of a liquidated damages provision). For this purpose, a contractual provision that limits damages to an amount equal to at least 5 percent of the total con- tract price will not be treated as limiting damages to a specified amount. In deter- mining whether a contract limits damages, the fact that there may be little or no dam- ages because the contract price does not significantly differ from fair market value will not be taken into account. (B)Conditions. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party or the predecessor of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions, or if any term is to be determined by a standard beyond the con- trol of either party. A contract that imposes significant obligations on the taxpayer or a predecessor will be treated as binding, notwithstanding the fact that insubstantial terms remain to be negotiated by the par- ties to the contract. (C)Options.Anoptiontoeitheracquire or sell property is not a binding contract. (D)Supply agreements. A binding con- tract does not include a supply or similar agreement if the payment amount and de- sign specification of the property to be pur- chased have not been specified. (E)Components. A binding contract to acquire one or more components of a larger property will not be treated as a binding contract to acquire the larger property. If a binding contract to acquire a compo- nent does not satisfy the requirements of this paragraph (b)(7), the component is not qualified refinery property. (iii)Self-constructed property—(A)In general. Except as provided in paragraph (b)(7)(iii)(B) of this section, if a taxpayer manufactures, constructs, or produces property for use by the taxpayer in its trade or business (or for the production of income by the taxpayer), the construc- tion of property rules in this paragraph (b)(7) are treated as met for qualified refinery property if the taxpayer begins manufacturing, constructing, or produc- ing the property after June 14, 2005, and before January 1, 2010. Property that is manufactured, constructed, or produced for the taxpayer by another person under a written binding contract (as defined in paragraph (b)(7)(ii) of this section) that is entered into prior to the manufacture, construction, or production of the property for use by the taxpayer in its trade or business (or for the production of income) is considered to be manufactured, constructed, or produced by the taxpayer. (B)When construction begins.For purposes of this paragraph (b)(7)(iii), con- struction of property generally begins when physical work of a significant nature begins. Physical work does not include preliminary activities such as planning or designing, securing financing, explor- ing, or researching.The determination of when physical work of a significant nature begins depends on the facts and circum- stances. (C)Components of self-constructed property—(1)Acquired components.Ifa binding contract (as defined in paragraph (b)(7)(ii) of this section) to acquire a com- ponent of self-constructed property is in effect on or before June 14, 2005, the com- ponent does not satisfy the requirements of paragraph (b)(7)(i) of this section, and is not qualified refinery property. How- ever, if construction of the self-constructed property begins after June 14, 2005, the self-constructed property may be quali- fied refinery property if it meets all other requirements of section 179C and this section (including paragraph (b)(7)(i) of this section), even though the component is not qualified refinery property. If the construction of self-constructed property begins before June 14, 2005, neither the self-constructed property nor any com- ponent related to the self-constructed property is qualified refinery property. If the component is acquired before Jan- uary 1, 2010, but the construction of the self-constructed property begins af- ter December 31, 2009, the component may qualify as qualified refinery property even if the self-constructed property is not qualified refinery property. (2)Self-constructed components.If the manufacture, construction, or pro- duction of a component fails to meet any of the requirements of paragraph (b)(7)(iii) of this section, the component is not qualified refinery property. How- ever, if the manufacture, construction, or production of a component fails to meet any of the requirements provided in paragraph (b)(7)(iii) of this section, but the construction of the self-constructed property begins after June 14, 2005, the self constructed property may qualify as qualified refinery property if it meets all other requirements of section 179C and this section (including paragraph (b)(7)(i) of this section). If the construction of the self-constructed property begins before June 14, 2005, neither the self-constructed property nor any components related to the self-constructed property are qualified refinery property. If the component was self-constructed before January 1, 2010, but the construction of the self-constructed property begins after December 31, 2009, the component may qualify as qualified refinery property, although the self-constructed property is not qualified refinery property. (c)Computation of expense deduction for qualified refinery property. In general, October 24, 20115832011–43 I.R.B. the allowable deduction under paragraph (d) of this section for qualified refinery property is determined by multiplying by 50 percent the cost of the qualified refinery property paid or incurred by the taxpayer. (d)Election—(1)In general.Atax- payer may make an election to deduct as an expense 50 percent of the cost of any qual- ified refinery property. A taxpayer making this election takes the 50 percent deduction for the taxable year in which the qualified refinery property is placed in service. (2)Time and Manner for making elec- tion—(i)Time for making election.An election specified in this paragraph (d) generally must be made not later than the duedate(includingextensions) for filing the original Federal income tax return for the taxable year in which the qualified refinery property is placed in service by the taxpayer. (ii)Manner of making election.The taxpayer makes an election under section 179C(a) and this paragraph (d) by entering the amount of the deduction at the appro- priate place on the taxpayer’s timely filed original Federal income tax return for the taxable year in which the qualified refin- ery property is placed in service, and at- taching a report as specified in paragraph (f) of this section to the taxpayer’s timely filed original federal income tax return for the taxable year in which the qualified re- finery property is placed in service. (3)Revocation of Election—(i)In gen- eral. An election made under section 179C(a) and this paragraph (d), and any specification contained in such election, may not be revoked except with the con- sent of the Commissioner of Internal Revenue. (ii)Revocation prior to the revocation deadline. A taxpayer is deemed to have requested, and to have been granted, the consent of the Commissioner to revoke an election under section 179C(a) and this paragraph (d) if the taxpayer revokes the election before the revocation deadline. The revocation deadline is 24 months af- ter the due date (including extensions) for filing the taxpayer’s Federal income return for the taxable year for which the election applies. An election under section 179C(a) and this paragraph (d) is revoked by attaching a statement to an amended return for the taxable year for which the election applies. The statement must spec- ify the name and address of the refinery for which the election applies and the amount deducted on the taxpayer’s original Fed- eral income tax return for the taxable year for which the election applies. (iii)Revocation after the revocation deadline. An election under section 179C(a) and this paragraph (d) may not be revoked after the revocation deadline. The revocation deadline may not be extended under §301.9100–1. (iv)Revocation by cooperative tax- payer. A taxpayer that has made an elec- tion to allocate the section 179C deduc- tion to cooperative owners under section 179C(g) and paragraph (e) of this section may not revoke its election under section 179C(a). (e)Election to allocate section 179C deduction to cooperative owners—(1)In general. If a cooperative taxpayer makes an election under section 179C(g) and this paragraph (e), the cooperative taxpayer may elect to allocate all, some, or none of the deduction allowable under section 179C(a) for that taxable year to the coop- erative owner(s). This allocation is equal to the cooperative owner(s)’ ratable share of the total amount allocated, determined on the basis of each cooperative owner’s ownership interest in the cooperative tax- payer. For purposes of this section, a cooperative taxpayer is an organization to which part I of subchapter T applies, and in which another organization to which part I of subchapter T applies (cooperative owner) directly holds an ownership inter- est. No deduction shall be allowed under section 1382 for any amount allocated under this paragraph (e). (2)Time and Manner for making elec- tion—(i)Time for making election.Aco- operative taxpayer must make the election under section 179C(g) and this paragraph (e) by the due date (including extensions) for filing the cooperative taxpayer’s origi- nal Federal income tax return for the tax- able year to which thecooperative tax- payer’s election under section 179C(a) and paragraph (d) of this section applies. (ii)Manner of making election.An election under this paragraph (e) is made by attaching to the cooperative taxpayer’s timely filed Federal income tax return for the taxable year (including extensions) to which the cooperative taxpayer’s election under section 179C(a) and paragraph (d) of this section applies a statement providing the following information: (A) The name and taxpayer identifica- tion number of the cooperative taxpayer. (B) The amount of the deduction allow- able to the cooperative taxpayer for the taxable year to which the election under section 179C(a) and paragraph (d) of this section applies. (C) The name and taxpayer identifica- tion number of each cooperative owner to which the cooperative taxpayer is allocat- ing all or some of the deduction allowable. (D) The amount of the allowable deduc- tion that is allocated to each cooperative owner listed in paragraph (e)(2)(ii)(C) of this section. (3)Written notice to owners. If any por- tion of the deduction allowable under sec- tion 179C(a) is allocated to a cooperative owner, the cooperative taxpayer must no- tify the cooperative owner of the amount of the deduction allocated to the cooper- ative owner in a written notice, and on Form 1099–PATR, “Taxable Distributions Received from Cooperatives.” This notice must be provided on or before the due date (including extensions) of the cooperative taxpayer’s original federal income tax re- turn for the taxable year for which the co- operative taxpayer’s election under section 179C(a) and paragraph (d) of this section applies. (4)Irrevocable Election. A section 179C(g) election, once made, is irrevoca- ble. (f)Reporting requirement—(1)In gen- eral. A taxpayer may not claim a deduc- tion under section 179C(a) for any taxable year unless the taxpayer files a report with the Secretary containing information with respect to the operation of the taxpayer’s refineries. (2)Informationtobeincludedinthe report. The taxpayer must specify— (i) The name and address of the refin- ery; (ii) Under which production capacity requirement under section 179C(e) and paragraph (b)(5)(i)(A), (B), and (C) of this section the taxpayer’s qualified refinery qualifies; (iii) Whether the refinery is qualified re- finery property under section 179C(d) and paragraph (b)(2) of this section, sufficient to establish that the primary purpose of the refinery is to process liquid fuel from crude oil, qualified fuels, or directly from shale or tar sands. 2011–43 I.R.B.584October 24, 2011 (iv) The total cost basis of the qualified refinery property at issue for the taxpayer’s current taxable year; and (v) The depreciation treatment of the capitalized portion of thequalified refinery property. (3)Time and Manner for submitting re- port—(i)Time for submitting report.The taxpayer is required to submit the report specified in this paragraph (f) not later than the due date (including extensions) of the taxpayer’s Federal income tax return for the taxable year in which the qualified re- finery property is placed in service. (ii)Manner of submitting report.The taxpayer must attach the report specified in this paragraph (f) to the taxpayer’s timely filed original Federal income tax return for the taxable year in which the qualified re- finery property is placed in service. (g)Effective/applicability date.This section is applicable for taxable years end- ing on or after August 22, 2011. For tax- able years ending before August 22, 2011, taxpayers may apply the proposed regula- tions published on July 9, 2008, or, in the alternative, may apply these final regula- tions. §1.179C–1T [Removed] Par. 3. Section 1.179C–1T is removed. PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT Par. 4. The authority citation for part 602 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * Par. 5. In §602.101, paragraph (b) is amended by adding the following entry in numerical order to the table to read as fol- lows: §602.101 OMB control numbers. ***** (b) * * * CFR part or se ction where identified and described Current OMB Control No. ***** 1.179C–1........................................................... 1545–2103 ***** Steven T. Miller, Deputy Commissioner for Services and Enforcement. Approved August 9, 2011. Emily S. Mc Mahon, (Acting) A ssistant Secretary of the Trea sury (Tax Policy). (Filed by t he Office of the Federal Register on August 22, 2011, 8:45 a.m., and published in the issue of the Federal Register for August 23, 2011, 76 F.R. 52556) Section 807.—Rules for Certain Reserves Insurance companies; interest rate tables.Prevailing state assumed interest rates are provided for the determination of reserves under section 807 of the Code for contracts issued in 2010 and 2011. Rev. Rul. 92–19 supplemented in part. Rev. Rul . 2011–23 For purposes of § 807(d)(4) of the In- ternal Revenue Code, for taxable years be- ginning after December 31, 2009, this rul- ing supplements the schedules of prevail- ing state assumed interest rates set forth in Rev. Rul. 92–19, 1992–1 C.B. 227. This information is to be used by insurance companies in computing their reserves for (1) life insurance and supplementary total and permanent disability benefits, (2) in- dividual annuities and pure endowments, and (3) group annuities and pure endow- ments. As § 807(d)(2)(B) requires that the interest rate used to compute these reserves be the greater of (1) the applicable federal interest rate, or (2) the prevailing state as- sumed interest rate, the table of applicable federal interest rates in Rev. Rul. 92–19 is also supplemented. Following are supplements to schedules A, B, C, and D to Part III of Rev. Rul. 92–19, providing prevailing state assumed interest rates for insurance products with different features issued in 2010 and 2011, and a supplement to the table in Part IV of Rev. Rul. 92–19, providing the applica- ble federal interest rates under § 807(d) for 2010 and 2011. This ruling does not sup- plement Parts I and II of Rev. Rul. 92–19. This is the nineteenth supplement to the interest rates provided in Rev. Rul. 92–19. Earlier supplements were published in Rev. Rul. 93–58, 1993–2 C.B. 241 (inter- est rates for insurance products issued in 1992 and 1993); Rev. Rul. 94–11, 1994–1 C.B. 196 (1993 and 1994); Rev. Rul. 95–4, 1995–1 C.B. 141 (1994 and 1995); Rev. Rul. 96–2, 1996–1 C.B. 141 (1995 and 1996); Rev. Rul. 97–2, 1997–1 C.B. 134 (1996 and 1997); Rev. Rul. 98–2, 1998–1 C.B. 259 (1997 and 1998); Rev. Rul. 99–10, 1999–1 C.B. 671 (1998 and 1999); Rev. Rul. 2000–17, 2000–1 C.B. 842 (1999 and 2000); Rev. Rul. 2001–11, 2001–1 C.B. 780 (2000 and 2001); Rev. Rul. 2002–12, 2002–1 C.B. 624 (2001 and 2002); Rev. Rul. 2003–24, 2003–1 C.B. 557 (2002 and 2003); Rev. Rul. 2004–14, 2004–1 C.B. 511 (2003 and 2004); Rev. Rul. 2005–29, 2005–1 C.B. 1080 (2004 and 2005); Rev. Rul. 2006–25, 2006–1 C.B. 882 (2005 and 2006); Rev. Rul. 2007–10, 2007–1 C.B. 660 (2006 and 2007); Rev. Rul. 2008–19, 2008–1 C.B. 669 (2007 and 2008); Rev. Rul. 2009–3, 2009–5 I.R.B. 382 (2008 and 2009); and Rev. Rul. 2010–7, 2010–8 I.R.B. 417 (2009 and 2010). October 24, 20115852011–43 I.R.B. Part III. Prevailing State Assumed Interest Rates — Products Issued in Years After 1982.* Schedule A STATUTORY VALUATION INTEREST RATES BASED ON THE 1980 AMENDMENTS TO THE N AICSTANDARDVALUATIONLAW A. Life insurance valuation: G uaranteeDuration(years) Calendar Year of Issue 2 011 10 or fewer 4.50** More than 10 but not more than 204.25** More than 204.00** Source: Rates calculated from the monthly averages, ending June 30, 2010, of Moody’s Composite Yield on Seasoned Corporate Bonds. * The terms used in the schedules in this ruling and in Part IIIof Rev. Rul. 92–19 are those used in the Standard Valuation Law; the terms are defined in Rev. Rul. 92–19. ** As these rates exceed the applicable federal interest rate for 2011of 3.46 percent, the valuation interest rate to be used for this product under § 807 is the applicable rate specified in this table. 2011–43 I.R.B.586October 24, 2011 Part III, Schedule B STATUTORY VALUATION INTEREST RATES BASED ON THE 1980 AMENDMENTS TO THE N AICSTANDARDVALUATIONLAW B. Single premium immediate annuities and annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options: C alendarYearofIssueValuationInterestRate 2010 5.25* Source: Rates calculated from the monthly averages, ending June 30, 2010, of Moody’s Composite Yield on Seasoned Corporate Bonds (formerly known as Moody’s Corporate Bond Yield Average — Monthly Average Corporates). The terms used in this schedule are those used in the Standard Valuation Law as defined in Rev. Rul. 92–19. *As this prevailing state assumed interest exceeds the applicable federal interest rate for 2010 of 3.81 percent, the valuation interest rate of 5.25 percent is to be used for this product under § 807. October 24, 20115872011–43 I.R.B. Part III, Schedule C24 — 2010 STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR 2010 CALENDAR YEAR BUSINESS G OVERNEDBYTHE1980AMENDMENTS C. Valuation interest rates for other annuities and guaranteed interest contracts that are valued on an issue year basis: Valuation Interest Rate (%) For Plan Type Cash Settlement O ptions? Future Interest G uarantee? Guarantee Duration ( years)ABC YesYes 5 or fewer5.25*4.75*4.25* More than 5, but not more than 10 5.00*4.75*4.25* More than 10, but not more than 20 4.75*4.25*4.25* More than 20 4.25* 4.00*4.00* YesNo 5 or fewer5.25*4.75*4.50* More than 5, but not more than 10 5.25*4.75*4.50* More than 10, but not more than 20 5.00*4.50*4.25* More than 20 4.25* 4.00*4.00* NoYes or No 5 or fewer5.25* More than 5, but not more than 10 5.00* NOT APPLICABLE More than 10, but not more than 20 4.75* More than 20 4.25* Source: Rates calculated from the monthly averages, ending June 30, 2010, of Moody’s Composite Yield on Seasoned Corporate Bonds. *As these rates exceed the applicable federal interest rate for 2010of 3.81 percent, the valuation interest rate to be used for this product under § 807 is the applicable rate specified in the above table. 2011–43 I.R.B.588October 24, 2011 Part III, Schedule D24 — 2010 STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR 2010 CALENDAR YEAR BUSINESS G OVERNEDBYTHE1980AMENDMENTS D. Valuation interest rates for other annuities and guaranteed interest contracts that are contracts with cash settlement options and that are valued on a change in fund basis: Valuation Interest Rate For Plan Type Cash Settlement O ptions? Future Interest G uarantee? Guarantee Duration ( years)ABC YesYes 5 or fewer5.505.254.50 More than 5, but not more than 10 5.505.254.50 More than 10, but not more than 20 5.255.004.25 More than 20 4.754.75 4.00* YesNo 5 or fewer5.755.504.75 More than 5, but not more than 10 5.505.504.75 More than 10, but not more than 20 5.255.254.50 More than 20 4.754.754.25* Source: Rates calculated from the monthly averages, ending June 30, 2010, of Moody’s Composite Yield on Seasoned Corporate Bonds. *As the applicable federal interest rate for 2010 of 3.81 percent is less than the prevailing state assumed interest rate, the valuation interest rate to be used for this product under § 807 is the applicable rate specified in the above table. October 24, 20115892011–43 I.R.B. Part IV. Applicable Federal Interest Rates. TABLE OF APPLICABLE FEDERAL INTEREST RATES F ORPURPOSESOF§807 YearInterestRate 20103.81 20113.46 Sources: Rev. Rul. 2004–106, 2004–2 C.B. 893, for the 2005 rate; Rev. Rul. 2005–77, 2005–2 C.B. 1071, for the 2006 rate; Rev. Rul. 2006–61, 2006–2 C.B. 1028 for the 2007 rate; Rev. Rul. 2007–70, 2007–2 C.B. 1158 for the 2008 rate; Rev. Rul. 2008–53, 2008–49 I.R.B. 1231 for the 2009 rate; Rev. Rul. 2009–38, 2009–49 I.R.B. 736 for the 2010 rate; and Rev. Rul. 2010–29, 2010–50 I.R.B. 818 for the 2011 rate. EFFECT ON OTHER REVENUE RULINGS Rev. Rul. 92–19 is supplemented by the addition to Part III of that ruling of pre- vailing state assumed interest rates under § 807 for certain insurance products issued in 2010 and 2011 and is further supple- mented by an addition to the table in Part IV of Rev. Rul. 92–19 listing applicable federal interest rates. Parts I and II of Rev. Rul. 92–19 are not affected by this ruling. DRAFTING INFORMATION The principal author of this revenue ruling is Linda K. Boyd of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling, contact her at (202) 622–3970 (not a toll-free call). 2011–43 I.R.B.590October 24, 2011 Part III. Administrative, Procedural, and Miscellaneous Guidance Regarding Obtaining and Renewing PTINs and Continuing Education Requirements for Registered Tax Return Preparers Notice 2011–80 Purpose This notice provides guidance to indi- viduals who have or will obtain a preparer tax identification number (PTIN), includ- ing a provisional PTIN, or who become registered tax return preparers. Section 1 of this notice provides guidance regarding the last date that provisional PTINs may be obtained, provides that provisional PTINs must be continually maintained, and clar- ifies that, beginning in 2012, provisional PTIN holders must complete continuing education requirements. Section 2 of this notice provides guidance regarding PTIN (including provisional PTIN) renewal, section 3 provides that certain individuals must be fingerprinted and pass a suit- ability check prior to obtaining a PTIN, and section 4 provides guidance regard- ing continuing education requirements for registered tax return preparers. Background The Treasury Department and the IRS are implementing the recommendations contained in Publication 4832,“Return Preparer Review.”As part of this imple- mentation, the Treasury Department and the IRS have published final regulations (T.D. 9527, 2011–27 I.R.B. 1 [76 FR 32286]) that include registered tax return preparers as practitioners under 31 CFR Part 10 (reprinted as Treasury Department Circular 230). In addition, the Treasury Department and the IRS published final regulations under section 6109 (T.D. 9501, 2010–46 I.R.B. 651 [75 FR 60309]) providing that after December 31, 2010, all individuals who prepare all or substantially all of a tax return or claim for refund for compen- sation must have a PTIN that was applied for and received at the time and in the manner prescribed by the IRS and must use that PTIN as their sole identifying number. The Treasury Department and the IRS also published final regulations (T.D. 9503, 2010–47 I.R.B. 706 [75 FR 60316]) requiring individuals to pay a $50 user fee to the IRS, plus any IRS-approved fee charged by the third-party vendor, to initially obtain and to annually renew a PTIN. Under the section 6109 regulations, only attorneys, certified public accoun- tants, enrolled agents, registered tax return preparers, and individuals authorized un- der § 1.6109–2(h) are eligible to receive a PTIN. In section 1 of Notice 2011–6, 2011–3 I.R.B. 315, the IRS identified two addi- tional groups of individuals who are eligi- ble under § 1.6109–2(h) to obtain a PTIN: (1) specified individuals who are super- vised by the attorney, certified public ac- countant, enrolled agent, enrolled retire- ment plan agent, or enrolled actuary who signs the tax return or claim for refund pre- pared by the individual and (2) individuals who certify they do not prepare or assist in the preparation of all or substantially all of any tax return or claim for refund cov- ered by a competency examination (Form 1040 series tax returns and accompanying schedules until further notice). Section 2 of Notice 2011–6 further provides that in- dividuals who are not attorneys, certified public accountants, or enrolled agents may obtain a provisional PTIN before the date that the registered tax return preparer com- petency examination is first offered (initial test offering date). For purposes of this notice, individu- als who obtain a provisional PTIN under the terms of section 2 of Notice 2011–6 are “provisional PTIN holders.” Individu- als who obtain a PTIN under section 1 of Notice 2011–6 are not provisional PTIN holders. Section 1: Provisional PTINs a. Deadline To Obtain a Provisional PTIN In Notice 2011–6, the IRS announced that it did not expect to offer the regis- tered tax return preparer competency ex- amination before mid–2011 and, once the examination was offered, the IRS would no longer issue provisional PTINs. The IRS currently does not expect to offer the competency examination before Fall 2011. The IRS, therefore, will continue to issue provisional PTINs until at least April 18, 2012, to allow individuals sufficient time to prepare for the competency examination and to prevent disruption of the 2012 fil- ing season. The IRS will announce the last date it will issue provisional PTINs in a news release issued at least 30 days before that date. The IRS will issue provisional PTINs until the designated date regardless of the initial test offering date. The provisions of section 2 of Notice 2011–6 will continue to apply to provi- sional PTIN holders regardless of the date the provisional PTIN is obtained. Thus, all provisional PTIN holders must comply with both section 2 of Notice 2011–6 and the applicable provisions of this notice. b. Provisional PTINs Must be Continually Maintained Individuals who obtain a provisional PTIN may retain the provisional PTIN un- til December 31, 2013. Individuals who have a provisional PTIN during this pe- riod, however, must annually renew and continually maintain the provisional PTIN to retain the ability to prepare tax returns or claims for refund for compensation un- til December 31, 2013. If an individual al- lows the provisional PTIN to expire, the in- dividual must become a registered tax re- turn preparer or other authorized individ- ual under § 1.6109–2 to be eligible to ob- tain a PTIN and to prepare all or substan- tially all of a tax return or claim for refund for compensation. See section 2 of this notice for the requirement to renew provi- sional PTINs on a calendar year basis. c. Continuing Education Requirements for Provisional PTIN Holders Section 10.6(d)(4) of Circular 230 re- quires registered tax return preparers to renew their status as a registered tax re- turn preparer as prescribed by the IRS in forms, instructions, or other appropriate guidance. As a condition of renewal, sec- tion 10.6(e) provides that registered tax return preparers must complete minimum continuing education requirements. Sec- tion 2.04 of Notice 2011–6 provides that tax return preparers who obtain a provi- sional PTIN before October 1, 2011 are not October 24, 20115912011–43 I.R.B. required to complete continuing education requirements during 2011. Individuals who obtain a provisional PTIN in accordance with Notice 2011–6 or this notice are not registered tax re- turn preparers and may not represent that they are registered tax return preparers or have passed the competency examination. Notice 2011–45, 2011–25 I.R.B. 886. Nevertheless, the IRS has decided that these individuals must satisfy the same minimum continuing education require- ments that registered tax return preparers are required to complete. Details regard- ing these requirements are more fully discussed in section 4 of this notice. Provisional PTIN holders who do not satisfy the minimum continuing education requirements will not be allowed to renew their provisional PTIN. Individuals whose provisional PTINs are not renewed will be required to pass the registered tax return preparer competency examination or oth- erwise become eligible to obtain a PTIN before preparing all or substantially all of a tax return or claim for refund for com- pensation. Section 2: PTIN Renewed Annually on a Calendar Year Basis Section 1.6109–2(e) provides that the IRS may designate an expiration date for any PTIN or other prescribed identifying number. The regulation further provides that the IRS may prescribe the time and manner for renewing a PTIN or other pre- scribed identifying number in forms, in- structions, or other appropriate guidance. The IRS has decided that all PTINs (including provisional PTINs) must be renewed on a calendar year basis using the IRS’s online PTIN application avail- able atwww.irs.govor paper application, Form W–12,IRS Paid Preparer Tax Identification Number (PTIN) Application. Individuals who hold valid PTINs must renew their PTIN and pay the required fee (currently $64.25, $50.00 IRS user fee plus $14.25 vendor fee) after October 15th and before January 1st each year. PTINs renewedduringthisperiodwillbevalid from January 1st through December 31st of the following calendar year. PTINs obtained or renewed during a calendar year will expire on December 31st of that year. Individuals obtaining a new PTIN af- ter October 15th will have the option of receiving a PTIN for the current calendar year or the following calendar year. Indi- viduals who choose to receive a PTIN for the current calendar year will be required to renew their PTIN before January 1st to prepare returns during the following cal- endar year. Individuals who choose to re- ceive a PTIN for the following calendar year may not prepare tax returns for com- pensation during the remainder of the cur- rent calendar year. Instead, the PTINs is- sued to these individuals will be valid for the following calendar year. To assist with the transition to a calendar year renewal period, the IRS has determined that PTINs is- sued after September 27, 2010 and before October 16, 2011 will expire on December 31, 2011. Section 3. Certain PTIN Holders Required to be Fingerprinted Section 6109(c) provides that “the Sec- retary is authorized to require such infor- mation as may be necessary to assign an identifying number to any person.” Section 1.6109–2(d) provides that a PTIN must be applied for and received in the time and manner as may be prescribed by the IRS in forms, instructions, or other appro- priate guidance. The IRS has previously stated that it intends to conduct a suitabil- ity check on all applicants prior to issuing a PTIN. As part of the suitability check, certain PTIN applicants will be required to be fingerprinted for purposes of perform- ing a background check. Collected finger- prints will be processed through the Fed- eral Bureau of Investigation’s (FBI) iden- tification records database. Information obtained through this process will enable the IRS to better determine if the applicant should receive a PTIN or have an exist- ing provisional PTIN revoked. The IRS is not requiring attorneys, certified public ac- countants, enrolled agents, enrolled retire- ment plan agents, and enrolled actuaries to be fingerprinted at this time. The Treasury Department and the IRS are currently establishing procedures to fa- cilitate the collection and processing of fingerprints. The IRS is working with third-party vendors to establish these pro- cedures. In addition, the Treasury Depart- ment and the IRS intend to publish regu- lations proposing to establish a user fee to be fingerprinted. It isanticipated that the third-party vendor will also charge a rea- sonable, IRS-approved fee for its finger- printing services. Additionally, under the current pro- posed regulations any participant in the PTIN, acceptance agent, or authorized e-file provider programs who resides and is employed outside of the United States will not have to be fingerprinted to par- ticipate in these programs. Such persons, however, must complywith all other ele- ments of the suitability check. In addition, the Treasury Department and the IRS continue to study what additional require- ments should apply to such persons. Any additional requirements would be set forth in future guidance. The IRS will not require individuals to be fingerprinted prior to obtaining a PTIN until at least April 18, 2012. The IRS will announce the last date that an individual may receive a PTIN (or provisional PTIN) without first being fingerprinted in a news release issued at least 30 days before that date. After this date, individuals not ex- empted from the fingerprint requirement must be fingerprinted and pass the back- ground check prior to obtaining a PTIN (provisional PTINs will no longer be avail- able after the date provided in the news re- lease). In addition, individuals who obtain a PTIN (or a provisional PTIN) prior to the date provided in the news release and who continually maintain their PTIN will not be required to be fingerprinted until De- cember 31, 2013. After December 31, 2013, these individuals must be finger- printed and pass the background check be- fore renewing their PTIN unless they were already fingerprinted or are not required to be fingerprinted. Section 4. Continuing Education Requirements for Registered Tax Return Preparers Section 10.6(d)(4) of Circular 230 re- quires registered tax return preparers to renew their status as a registered tax re- turn preparer as prescribed by the IRS in forms, instructions, or other appropriate guidance. As a condition of renewal, sec- tion 10.6(e)(3) of Circular 230 provides that registered tax return preparers must complete a minimum of fifteen hours 2011–43 I.R.B.592October 24, 2011 of continuing education credits, includ- ing two hours of ethics or professional conduct, three hours of federal tax law updates, and ten hours of federal tax law topics during each registration year. a. Continuing Education Requirements to be Completed on a Calendar Year Basis The IRS has determined that registered tax return preparers must complete their continuing education requirements on a calendar year basis. The IRS will re- quire registered tax return preparers (and provisional PTIN holders) to satisfy con- tinuing education requirements beginning in 2012. Therefore, except as set forth in section 4b of this notice, registered tax return preparers must complete continuing education requirements as prescribed in section 10.6(e)(3) of Circular 230 between January 1st and December 31st of each year beginning in 2012. b. Continuing Education Requirements Prorated for Individuals Who Initially Become a Registered Tax Return Preparer During the Registration Year Continuing education requirements for individuals who initially become a regis- tered tax return preparer after January 31st will be prorated for the initial registration year. These individuals will be required to complete one hour of continuing education credit regarding federal tax law updates or federal tax law topics for each month or portion of a month that the individual is a registered tax return preparer. In addition, these individuals will be required to com- plete two hours of ethics credits regardless of when the individual becomes a regis- tered tax return preparer. For example, an individual who initially becomes a regis- tered tax return preparer on April 20th is required to complete two hours of ethics credits plus 9 hours of credits regarding federal tax law or federal tax law updates. Except in the case of a waiver under sec- tion 10.6(i) of Circular 230, continuing ed- ucation requirements will not be prorated after the initial application year. Individ- uals who do not timely renew their PTIN before December 31st ordinarily will not qualify for a waiver and must complete all of the continuing education hours required in section10.6(e)(3) of Circular 230. Contact Information The principal author of this notice is Emily M. Lesniak of the Office of Associate Chief Counsel (Procedure and Administration).For further information regarding this notice, contact Emily M. Lesniak at (202) 622–4570 (not a toll-free call). Pennsylvania Low-Income Housing Credit Disaster Relief Notice 2011–83 The Internal Revenue Service is sus- pending certain requirements under § 42 of the Internal Revenue Code for low-income housing credit projects to provide emer- gency housing relief needed as a result of the devastation in Pennsylvania caused by either Hurricane Irene during the period of August 26, 2011 to August 30, 2011, or Tropical Storm Lee beginning on Septem- ber 3, 2011. This relief is being granted pursuant to the Service’s authority under § 42(n) and § 1.42–13(a) of the Income Tax Regulations. BACKGROUND On September 3, 2011, and September 12, 2011, the President declared major disasters for the Commonwealth of Pennsylvania. The declarations were made under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121et seq. Subsequently, the Federal Emergency Management Agency (FEMA) designated jurisdictions for Individual Assistance. The Commonwealth of Pennsylvania has requested that the Service allow owners of low-income housing credit projects to provide temporary housing in vacant units to individuals who resided in jurisdictions designated for Individual Assistance in Pennsylvania and who have been displaced because their residences were destroyed or damaged as a result of the devastation caused by Hurricane Irene or Tropical Storm Lee. Based upon this request and because of the widespread damage to housing caused by Hurricane Irene and Tropical Storm Lee, the Service has determined that the Pennsylvania Housing Finance Agency (Agency) may provide approval to project owners to provide temporary emergency housing for displaced individuals in accordance with this notice. I. SUSPENSION OF INCOME LIMITATIONS The Service has determined that it is appropriate to temporarily suspend certain income limitation requirements under § 42 for certain qualified low-income projects. The suspension will apply to low-income housing projects approved by the Agency, in which vacant units are rented to dis- placed individuals. The Agency will deter- mine the appropriate period of temporary housing for each project, not to extend be- yond October 31, 2012 (temporary hous- ing period). II.STATUSOFUNITS A. Units in the first year of the credit period A displaced individual temporarily occupying a unit during the first year of the credit period under § 42(f)(1) will be deemed a qualified low-income tenant forpurposesofdetermining the project’s qualified basis under§ 42(c)(1), and for meeting the project’s 20–50 test or 40–60 test as elected by the project owner under § 42(g)(1). After the end of the temporary housing period established by the Agency (not to extend beyond October 31, 2012), a displaced individual will no longer be deemed a qualified low-income tenant. B. Vacant units after the first year of the credit period During the temporary housing period established by the Agency, the status of a vacant unit (that is, market-rate or low-in- come for purposes of § 42 or never previ- ously occupied) after the first year of the credit period that becomes temporarily oc- cupied by a displaced individual remains the same as the unit’s status before the displaced individual moves in. Displaced individuals temporarily occupying vacant units will not be treated as low-income tenants under § 42(i)(3)(A)(ii). However, even if it houses a displaced individual, a low-income or market rate unit that was vacant before the effective date of this no- tice will continue to be treated as a va- October 24, 20115932011–43 I.R.B. cant low-income or market rate unit. Sim- ilarly, a unit that was never previously oc- cupied before the effective date of this no- tice will continue to be treated as a unit that has never been previously occupied even if it houses a displaced individual. Thus, the fact that a vacant unit becomes occupied by a displaced individual will not affect the building’s applicable frac- tion under § 42(c)(1)(B) for purposes of determining the building’s qualified basis, nor will it affect the 20–50 test or 40–60 test of § 42(g)(1). If the income of oc- cupants in low-income units exceeds 140 percent of the applicable income limita- tion, the temporary occupancy of a unit by a displaced individualwill not cause ap- plication of the available unit rule under § 42(g)(2)(D)(ii). In addition, the project owner is not required during the temporary housingperiodtomakeattemptstorent to low-income individuals the low-income units that house displaced individuals. III. SUSPENSION OF NON-TRANSIENT REQUIREMENTS The non-transient use requirement of § 42(i)(3)(B)(i) shall not apply to any unit providing temporary housing to a displaced individualduring the temporary housing period determined by the Agency in accordance with section I of this notice. IV. OTHER REQUIREMENTS All other rules and requirements of § 42 will continue to apply during the temporary housing period established by the Agency. After the end of the temporary housing period, the appli- cable income limitations contained in § 42(g)(1), the available unit rule un- der § 42(g)(2)(D)(ii), the nontransient requirement of § 42(i)(3)(B)(i), and the requirement to make reasonable attempts to rent vacant units to low-income individ- uals shall resume. If a project owner offers to rent a unit to a displaced individual after the end of the temporary housing period, the displaced individual must be certified under the requirements of § 42(i)(3)(A)(ii) and § 1.42–5(b) and (c) to be a qualified low-income tenant. To qualify for the re- lief in this notice, the project owner must additionally meet all of the following re- quirements: (1) Major Disaster Area In the case of an individual displaced by the devastation caused by Hurricane Irene, the displaced individual must have resided in a Pennsylvania jurisdiction designated for Individual Assistance by FEMA as a result of the devastation in Pennsylvania caused by Hurricane Irene during the pe- riod of August 26, 2011, to August 30, 2011. In the case of an individual displaced by the devastation caused by Tropical Storm Lee, the displaced individual must have resided in a Pennsylvania jurisdic- tion designated for Individual Assistance by FEMA as a result of the devastation in Pennsylvania caused by Tropical Storm Lee beginning on September 3, 2011. (2) Approval of the Pennsylvania Hous- ing Finance Agency The project owner must obtain approval from the Agency for the relief described in this notice. The Agency will determine the appropriate period of temporary hous- ing for each project, not to extend beyond October 31, 2012. (3) Certificationsand Recordkeeping To comply with the requirements of § 1.42–5, project owners are required to maintain and certify certain information concerning each displaced individual tem- porarily housed in the project, specifically the following: name, address of damaged residence, social security number, and a statement signed under penalties of perjury by the displaced individual that, because of damage to the individual’s residence in a Pennsylvania jurisdiction designated for Individual Assistance by FEMA as a result of the devastation caused in Pennsylvania by Hurricane Irene during the period of August 26, 2011 to August 30, 2011, or Tropical Storm Lee beginning on Septem- ber 3, 2011, as applicable, the individual requires temporary housing. The owner must notify the Agency that vacant units are available for rent to displaced individ- uals. The owner must also certify the date the displaced individual began temporary oc- cupancy and the date the project will dis- continue providing temporary housing as established by the Agency. The certifica- tions and recordkeeping for displaced in- dividuals must be maintained as part of the annual compliance monitoring process with the Agency. (4) Rent Restrictions Rents for the low-income units that house displaced individuals must not ex- ceed the existing rent-restricted rates for the low-income units established under § 42(g)(2). (5) Protection of Existing Tenants Existing tenants in occupied low-in- come units cannot be evicted or have their tenancy terminated as a result of efforts to provide temporary housing for displaced individuals. EFFECTIVE DATES This notice is effective September 3, 2011 (the date of the President’s ma- jor disaster declaration) for devastation caused by Hurricane Irene in Pennsyl- vania during the period of August 26, 2011 to August 30, 2011. This notice is effective September 12, 2011 (the date of the President’s major disaster declaration) for devastation caused by Tropical Storm Lee in Pennsylvania beginning on September 3, 2011. PAPERWORK REDUCTION ACT The collection of information contained in this notice has been reviewed and ap- proved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545–2218. An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. The collection of information in this notice is in the section titled “OTHER REQUIREMENTS” under “(3) Certifica- tions and Recordkeeping.” This informa- tion is required to enable the Service to verify whether individuals are displaced as a result of the devastation caused in Pennsylvania by either Hurricane Irene during the period of August 26, 2011 to August 30, 2011, or Tropical Storm Lee beginning on September 3, 2011, and thus warrant temporary housing in vacant low-income housing units. The collection of information is required to obtain a benefit. The likely respondents are individuals and businesses. The estimated total annual recordkeep- ing burden is 150 hours. The estimated annual burden per recordkeeper is approximately 15 minutes. 2011–43 I.R.B.594October 24, 2011 The estimated numberof recordkeepers is 600. Books or records relating to a collection of information must be retained as long as their contents may become material to the administration of the internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. DRAFTING INFORMATION The principal author of this notice is David Selig of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Mr. Selig at (202) 622–3040 (not a toll-free call). Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates Notice 2011–84 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 as in ef- fect for plan years beginning before 2008. It also provides guidance on the cor- porate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under § 430(h)(2). In addition, this no- tice provides guidance as to the interest rate on 30-year Treasury securities un- der § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the min- imum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007. 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 and by the Pension Protection Act of 2006 (PPA), provide that the interest rates used to cal- culate current liability and to determine the required contribution under § 412(l) for plan years beginning in 2004 through 2007 must be within a permissible range based on the weighted average of the rates of interest on amounts invested conser- vatively in long term investment 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 methodology for determining the monthly composite corporate bond rate as set forth in Notice 2004–34 continues to apply in determining that rate. See Notice 2006–75, 2006–2 C.B. 366. The composite corporate bond rate for September 2011 is 4.82 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 Beginning inPermissible Range MonthYear Corporate Bond Weighted Average90%to100% October2011 5.865.285.86 YIELD CURVE AND SEGMENT RATES Generally for plan years beginning after 2007 (except for delayed effective dates for certain plans under sections 104, 105, and 106 of PPA), § 430 of the Code specifies the minimum funding require- ments that apply to single employer plans pursuant to § 412. Section 430(h)(2) spec- ifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined us- ing three 24-month average interest rates (“segment rates”), each of which applies to cash flows during specified periods. However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates. Sec- tion 430(h)(2)G) set forth a transitional rule applicable to plan years beginning in 2008 and 2009 under which the segment rates were blended with the corporate bond weighted average described above, includ- ing an election under § 430(h)(2)(G)(iv) foranemployertousethesegmentrates without the transitional rule. Notice 2007–81, 2007–2 C.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond seg- ment rates used to compute the target nor- mal cost and the funding target. Pursuant to Notice 2007–81, the monthly corporate bond yield curve derived from September 2011 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of September 2011 are, respectively, 1.98, 4.49, and 5.80. The three 24-month average cor- porate bond segment rates applicable for October 2011 are as follows: First Segment Second Segment Third Segment 2.03 5.20 6.30 October 24, 20115952011–43 I.R.B. The transitional rule of § 430(h)(2)(G) does not apply to plan years beginning af- ter December 31, 2009. Therefore, for a plan year beginning after 2009 with a look- back month to October 2011, the funding segment rates are the three 24-month aver- age corporate bond segment rates applica- ble for October 2011, listed above without blending for any transitional period. 30-YEAR TREASURY SECURITIES INTEREST RATES Section 417(e)(3)(A)(ii)(II) (prior to amendment by PPA) defines the appli- cable 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 se- curities 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 rate of interest on 30-year Treasury secu- rities as specified by the Commissioner for that month in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin. The rate of interest on 30-year Treasury securities for September 2011 is 3.18 per- cent. The Service has determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond ma- turing in August 2041. Generally for plan years beginning after 2007, § 431 specifies the mini- mum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in section 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the inter- est rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities dur- ing the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The following rates were determined for plan years beginning in the month shown below. For Plan Years Beginning inPermissible Range MonthYear 30–Year Treasury Weighted Average 90%to 105% October20114.203.784.41 MINIMUM PRESENT VALUE SEGMENT RATES Generally for plan years beginning after December 31, 2007, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average. For plan years beginning in 2008 through 2011, the ap- plicable interest rates are the monthly spot segment rates blended with the applica- ble rate under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning in 2007. Notice 2007–81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value transitional segment rates determined for September 2011, taking into account the September 2011 30-year Treasury rate of 3.18 stated above, are as follows: For Plan Years Beginning in First Segment Second Segment Third Segment 20102.463.97 4.75 20112.224.23 5.28 20121.984.49 5.80 DRAFTING INFORMATION The principal author of this notice is Tony Montanaro of the Employee Plans, Tax Exempt and Government Entities Division. Mr. Montanaro may be e-mailed atRetirementPlanQuestions@irs.gov. 2011–43 I.R.B.596October 24, 2011 Table I Monthly Yield Curve for September 2011 Derived from September 2011 Data Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield 0.5 0.61 20.55.2840.55.8660.5 6.06 80.5 6.16 1.0 0.99 21.0 5.31 41.0 5.87 61.06.0681.06.16 1.51.3521.55.3441.55.8861.56.0781.56.16 2.01.6722.0 5.36 42.05.8962.06.0782.06.16 2.5 1.96 22.5 5.39 42.5 5.89 62.5 6.07 82.5 6.16 3.02.2223.0 5.41 43.05.9063.06.0783.06.17 3.5 2.46 23.55.4443.5 5.90 63.5 6.08 83.5 6.17 4.02.6724.0 5.46 44.05.9164.06.0884.06.17 4.52.8624.55.4844.55.9264.56.0884.56.17 5.0 3.04 25.05.5045.0 5.92 65.0 6.09 85.0 6.17 5.5 3.20 25.55.5245.5 5.93 65.5 6.09 85.5 6.17 6.0 3.35 26.0 5.54 46.05.9366.0 6.09 86.06.18 6.5 3.49 26.55.5546.5 5.94 66.5 6.09 86.5 6.18 7.03.6127.0 5.57 47.05.9567.06.1087.06.18 7.53.7327.55.5947.55.9567.56.1087.56.18 8.03.8428.0 5.60 48.05.9668.06.1088.06.18 8.5 3.95 28.55.6248.5 5.96 68.5 6.10 88.5 6.18 9.0 4.05 29.0 5.63 49.0 5.97 69.0 6.11 89.0 6.18 9.54.1429.5 5.64 49.55.9769.56.1189.5 6.19 10.04.2230.0 5.6650.0 5.9870.06.11 90.06.19 10.54.3030.55.6750.55.9870.56.1190.5 6.19 11.04.3831.0 5.6851.0 5.9971.06.1291.06.19 11.54.4531.55.7051.5 5.99 71.5 6.1291.5 6.19 12.0 4.52 32.0 5.7152.0 5.9972.06.12 92.06.19 12.5 4.59 32.55.7252.5 6.00 72.5 6.1292.56.20 13.0 4.65 33.0 5.7353.0 6.0073.06.13 93.0 6.20 13.54.7133.55.7453.56.0173.56.1393.56.20 14.04.7634.0 5.7554.0 6.0174.06.1394.06.84 14.5 4.82 34.55.7654.5 6.02 74.5 6.8194.56.20 15.0 4.87 35.05.7755.0 6.02 75.0 6.1395.06.20 15.5 4.91 35.55.7855.5 6.02 75.5 6.1495.56.20 16.0 4.96 36.05.79 56.0 6.0376.06.14 96.0 6.20 16.55.0036.55.8056.56.0376.56.1496.56.21 17.0 5.04 37.0 5.8157.0 6.0377.06.1497.06.21 17.55.0837.55.8257.5 6.04 77.56.15 97.56.21 18.0 5.12 38.0 5.8358.0 6.0478.0 6.15 98.0 6.21 18.55.1638.55.8358.56.0578.56.15 98.56.21 19.0 5.19 39.0 5.84 59.0 6.05 79.0 6.15 99.0 6.21 19.55.2239.55.8559.56.0579.56.1599.56.21 20.0 5.25 40.0 5.86 60.06.0680.0 6.15 100.06.21 October 24, 20115972011–43 I.R.B. Part IV. Items o fGeneralInterest Notice of Prop osed Rulemaking an dNoticeof Public Hearin g User Fees Rela ting to the Regist ered Tax Return Pr eparer Competency Examination and Fingerprin ting Participants in the Prepar er Tax Identification Number, Ac ceptance Agent, and Autho rized E-File Provider Programs REG–1162 84–11 AGENCY: Internal Revenue Service (IRS), T reasury. ACTION: Notice of proposed rulemaking and noti ce of public hearing. SUMMARY : This document contains propos ed amendments to the user fee reg- ulatio ns. The proposed regulations would establ ish a new user fee for individuals to take the registered tax return preparer compet ency examination and a new user fee fo r certain persons to be fingerprinted in con junction with the preparer tax iden- tific ation number, acceptance agent, and autho rized e-file provider programs. The propo sed regulations also would redesig- nate §300.12, Fee for obtaining a preparer tax i dentification number, as §300.13. The prop osed regulations affect individuals who t ake the registered tax return preparer comp etency examination and applicants and certain participants in the preparer tax ide ntification number, acceptance agent, or a uthorized e-file provider programs. The charging of user fees is authorized by the Independent Offices Appropriations Ac t of 1952. This document also provides no tice of a public hearing on these pro- po sed regulations. DA TES: Written or electronic comments mu st be received by October 27, 2011. Ou tlines of topics to be discussed at the p ublic hearing scheduled for October 7, 2 011, at 10 a.m. must be received by Oc- t ober 4, 2011. ADDRESSES: Se nd submissions to: CC:PA:LPD:PR (REG–116284–11), room 5205, Interna l Revenue Service, PO Box 7604, Ben Fran klin Station, Washing- ton, DC 20044. Submissions may be hand-delive red Monday through Friday between the h oursof8a.m. and4p.m. to CC:PA:LPD :PR (REG–116284–11), Courier’s De sk, Internal Revenue Service, 11 11 Constitution Avenue, NW, Washington , DC, or sent electronically via the Fede ral eRulemaking Portal athttp://w ww.regulations.gov/(IRS REG–11628 4–11). The public hearing will be hel dintheAuditoriumat the Intern al Revenue Building, 1111 Constitut ion Avenue, NW, Washington, DC. FOR FURTHE R INFORMATION CONTACT: Concerning the proposed regulati ons, Emily M. Lesniak at (202) 622–4570 ; concerning cost methodol- ogy, Eva J . Williams at (202) 435–5514; concern ing submission of comments, the publ ic hearing, and/or to be placed on the bu ilding access list to attend the publ ic hearing, Richard A. Hurst at Richard .A.Hurst@irscounsel.treas.govor (202) 6 22–7180 (not toll-free numbers). SUPPLE MENTARY INFORMATION: Backgr ound and Explanation of Provis ions In June 2009, the IRS launched a Tax Return Preparer Review with the intent to prop ose a comprehensive set of recom- menda tions that would increase taxpayer compl iance and ensure uniform and high ethic al standards of conduct for tax re- turn p reparers. In December 2009, the IRS ma de findings and recommendations based upon this review that would increase over sight of the federal tax return preparer comm unity. The findings and recom- mend ations were published in Publication 4832 ,“Return Preparer Review”(the Re- port ), which was published on January 4, 201 0. In part, the Report recommended reg istering all tax return preparers with the IRS and requiring tax return preparers who are not attorneys, certified public acc ountants, or enrolled agents to pass a competency ex amination before they are eligible to pr epare a tax return or claim for refund. Th e Treasury Department and the IRS have pu blished several documents implementing the recommendations in the Report, thre e of which are relevant to these proposed reg ulations. First, on Sep tember 30, 2010, the Trea- sury Departm ent and the IRS published fi- nal regulati ons under I.R.C. section 6109 (75 FR 60309) providing that for returns or claims fo r refund filed after Decem- ber 31, 2010 , the identifying number of a tax return preparer is the individual’s preparer ta x identification number (PTIN) or such oth er number prescribed by the IRS in form s, instructions, or other appro- priate gui dance. The section 6109 final regulatio ns require a tax return preparer who prepar es all or substantially all of a tax retur norclaimforrefundafterDe- cember 31 , 2010 to have a PTIN. These regulati ons further provide that only at- torneys, certified public accountants, en- rolled a gents, and registered tax return pre- parers a re eligible to obtain a PTIN. Sec- tion 1.6 109–2(h) of the regulations states, however , that the IRS can provide excep- tions to the §1.6109–2 regulations through forms, instructions, or other appropriate guidan ce. Second , on December 30, 2010, the Treasu ry Department and the IRS pub- lished Notice 2011–6, 2011–3 I.R.B. 315, that, i n part, creates exceptions under §1.610 9–2(h), allowing two additional class es of individuals to obtain a PTIN (prov ided all tax compliance and suitabil- ity ch ecks are passed) and prepare all or subst antially all of a tax return or claim for refun d for compensation. Section 2a. of Noti ce 2011–6 permits specified individ- uals who are supervised by the attorney, cert ified public accountant, enrolled agent, enro lled retirement plan agent, or enrolled actu ary who signs the tax return or claim for refund prepared by the individual to obt ain a PTIN. These supervised individ- ual s may not sign a tax return or claim for refund. Section 2b. of Notice 2011–6 pro vides that individuals who certify that the y do not prepare or assist in the prepa- ra tion of all or substantially all of any tax re turn or claim for refund that is covered by a competency examination will be able 2011–43 I.R.B.598October 24, 2011 to obtain a PTIN. This exception recog- nizes that the initial registered tax return preparer competency examination will be limited to individual income tax returns (Form 1040 series returns and accompa- nying schedules). Third, on June 3, 2011, the Treasury Department and the IRS published final regulations amending the regulations gov- erning practice before the IRS (76 FR 32286). These regulations are found in 31 CFR part 10 and have been reprinted as Treasury Department Circular No. 230 (Circular 230). The amendments to Circular 230, in part, provide that prac- tice before the IRS includes preparing for compensation a tax return, claim for refund, or other document submitted to the IRS and include registered tax return preparers as practitioners under Circular 230. Registered tax return preparers must demonstrate the necessary qualifications andcompetencybypassingaminimum competency examination, completing an- nual continuing education requirements, and complying with any other applicable procedures relating to the application for registration and renewal of registration established and published by the IRS. Reg- istered tax return preparers may prepare and sign tax returns, claims for refund, and other documents as provided in forms, in- structions, or other appropriate guidance. Registered tax return preparers also may represent taxpayers before revenue agents, customer service representatives, or sim- ilar officers and employees of the IRS during an examination if the registered tax return preparer signed the tax return or claim for refund for the time period under examination. Registered tax return pre- pares may not represent taxpayers before appeals officers, revenue officers, Coun- sel, or similar officers or employees of the IRS or the Department of the Treasury. User Fee to Take the Registered Tax Return Preparer Competency Examination To become a registered tax return pre- parer, applicants will be required to pass a competency examination. Proposed §300.12 establishes a $27 user fee to take the registered tax return preparer compe- tency examination. This user fee must be paid each time the applicant takes the competency examination and is in addi- tion to any reasonable fee charged by the third-party vendor that is approved by the IRS. Applicants who pass the competency examination generally will not, however, be required to re-take the examination in thefutureyears. There are costs to the IRS for admin- istering the registered tax return preparer competency examination. The user fee to take the registered tax return preparer com- petency examination will recover these costs. These costs include the personnel, administrative, management, and infor- mation technology costs to the IRS for developing and reviewing the competency examination, overseeing the competency examination, validating the competency examination results, and establishing a re- view procedure for applicants who contest any portion of the competency examina- tion. The user fee also recovers the cost to conduct background checks on employees of the third-party vendor who are involved in the administration of the examination. Individuals who pay the competency examination user fee and become regis- tered tax return preparers will receive a special benefit from the IRS that is not received by the general public. Passing the competency examination enables reg- istered tax return preparers to prepare and sign Form 1040 series returns (and ac- companying schedules) for compensation. Registered tax return preparers also are able to represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the IRS during examination if the registered taxreturnpreparersignedthetaxreturnfor the period under examination. That repre- sentation does not include practice before appeals officers, revenue officers, Coun- sel, or similar officers or employees of the IRS or the Department of the Treasury. Because the competency examination ini- tially will cover only the Form 1040 se- ries returns, only attorneys, certified public accountants, enrolled agents, or registered tax return preparers will be able to sign a Form 1040 series return. While tax return preparers who are supervised will be able to prepare all or substantially all of a Form 1040 series tax return or claim for refund, they will not be able to sign the return or claim for refund and are not able to rep- resentthetaxpayersbeforetheIRS.Any individual with a PTIN, however, can pre- pare and sign a tax return or claim for re- fund that is not part of the Form 1040 se- ries. User Fee to be Fingerprinted as Part of the PTIN, Acceptance Agent, and Authorized E-File Provider Programs The IRS intends to collect fingerprints as part of the PTIN, acceptance agent, and authorized e-file provider programs to as- sist in evaluating the suitability of appli- cants and participants in these programs. Individuals who have been or are finger- printed in conjunction with their partici- pation in any one of these programs after June 8, 2009, however, will not have to be re-fingerprinted to participate in these pro- grams. Proposed §300.13 establishes a $33 user fee on individuals who will be fin- gerprinted in conjunction with their ap- plication to participate or participation in these programs. This user fee is in ad- dition to any reasonable fee charged by a third-party vendor that is approved by the IRS. The third-party vendor fee will cover the costs for obtaining the finger- prints and transmitting the fingerprints to the Federal Bureau of Investigation (FBI), where the fingerprints will be run through the FBI identification records database. The IRS fingerprinting user fee recovers the costs to the IRS to transfer the finger- prints and the results of the FBI search to the IRS; perform background checks on third-party vendor employees; modify the database used to receive, record, and store the search results; evaluate the results re- ceived from the search of the FBI database; provide internal review of circumstances when an individual is determined not to be suitable to participate in a program; and process appeals by individuals who are denied the ability to participate in a program because the individual failed this suitability check. Additionally, under the current pro- posed regulations any participant in the PTIN, acceptance agent, or authorized e-file provider programs who resides and is employed outside of the United States will not have to be fingerprinted to par- ticipate in these programs. Such persons, however, must complywith all other ele- ments of the suitability check. In addition, the Treasury Department and the IRS continue to study what additional require- ments should apply to such persons. Any October 24, 20115992011–43 I.R.B. additional requirements would be set forth in future guidance. Individuals who are fingerprinted as part of their application or participation in the PTIN, acceptance agent, or autho- rized e-file provider programs receive a special benefit that is not received by the general public. Individuals who partic- ipate in the PTIN program receive the special benefit of being able to prepare all or substantially all of a tax return or claim for refund for compensation. Indi- viduals with a PTIN can charge for their tax preparation services. The regulations under section 6109 require tax return pre- parers to have a PTIN if they prepare all or substantially all of a tax return or claim for refund for compensation. Passing a suit- ability check is a prerequisite for receiving a PTIN. For most PTIN applicants, the suitability check includes, but is not lim- ited to, fingerprinting and processing the fingerprints through the FBI identification records database. The IRS, however, does not intend to fingerprint attorneys, certi- fied public accountants, enrolled agents, enrolled retirement plan agents, and en- rolled actuaries who apply for a PTIN at this time. The Treasury Department and the IRS specifically request comments on whether these individuals should be exempt from the fingerprinting process. Participants in the acceptance agent program, which includes certifying accep- tance agents, also receive a special benefit from participation in the program. As provided in Revenue Procedure 2006–10, 2006–1 C.B. 293, acceptance agents fa- cilitate and expedite the issuance of in- dividual taxpayer identification numbers (ITINs) and employeridentification num- ber (EINs) by verifying the identity and foreign status of applicants. An individual who wants to obtain an ITIN must submit aFormW–7,“Application for IRS Individ- ual Taxpayer Identification Number,” and documentation that evidences the individ- ual’s identity and status as an alien. An EIN applicant must submit a Form SS–4, “Application for Employer Identification Number,” and any required supplementary statements. Section 301.6109–1(d)(3)(iv) provides that ITIN and EIN applicants may submit the application and accom- panying information directly to the IRS or may use an acceptance agent. When a certifying acceptance agent is used to ap- ply for an ITIN, the ITIN applicant is not required to submit documentation proving the applicant’s identity or status as an alien because the certifying acceptance agent certifies to these facts. This certification procedure is not available to EIN appli- cants. The certification is submitted to the IRS as part of the ITIN application. To become an acceptance agent, ap- plicants must pass a suitability check. As part of the suitability check, most applicants will be fingerprinted for pro- cessing through the FBI identification records database. Successful applicants receive the special benefit of being able to facilitate and expedite ITIN and EIN applications and verify the applicants’ identity and status as an alien. Certifying acceptance agents receive the additional benefit of being able to certify ITIN ap- plicants’ identity and status as an alien, which enables ITIN applicants to retain their identification and foreign status doc- umentation. Acceptance agents can charge a fee for their services. All individuals who apply to become an acceptance agent and who are required to be fingerprinted must pay the fingerprint- ing user fee. As of June 8, 2009, the IRS began storing the fingerprints of all accep- tance agent applicantselectronically. Prior to that time, the fingerprints of acceptance agent applicants generally were not stored electronically. Fingerprints that are not stored electronically deteriorate over time. The IRS, therefore, may require accep- tance agents who were fingerprinted prior to June 8, 2009, and who are currently re- quired to be fingerprinted, to be re-finger- printed and pay the associated user fee. All individuals who apply to become authorized e-file providers also must pass a suitability check. As part of the suit- ability check, most applicants will be fingerprinted for processing through the FBI identification records database. The guidelines for participation in this pro- gram are in RevenueProcedure 2007–40, 2007–1 C.B. 1488, and numerous publi- cations that are tailored to specific tax or information returns. Successful applicants receive an electronic filing identifica- tion number (EFIN). Multiple persons associated with an applicant may use the same EFIN to electronically file tax and information returns. Authorized e-file providers receive the special benefit of being able to electronically file specified tax and information returns with the IRS. Some e-file providers charge a fee for performing this service. All individuals who apply to become an authorized e-file provider and who are required to be fingerprinted must pay the fingerprinting user fee. Addition- ally, similar to the process for acceptance agents described earlier in this preamble, authorized e-file providers who were fin- gerprinted before June 8, 2009, the date the IRS began digitally storing all finger- prints, and are required to be fingerprinted, may be re-fingerprinted and required to pay the associated user fee. If the IRS has an individual’s finger- prints digitally stored due to the individ- ual’s application to participate or participa- tion in the PTIN, acceptance agent, or au- thorized e-file provider programs, the in- dividual will not have to be fingerprinted again to participate in one of the other pro- grams. The IRS did not charge a user fee for acceptance agents or authorized e-file providers to be fingerprinted previously because an unduly large part of the user fee would have been the cost of collecting a user fee. With the addition of many PTIN applicants as individuals who also must be fingerprinted (the number of per- sons being fingerprinted will increase to approximately 460,000), the cost of col- lecting the user fee has decreased relative to the costs associatedwith fingerprinting. Because the cost of collecting a user fee is no longer an unduly large part of the user fee, the IRS has determined that a user fee is now appropriate and will charge a user fee to recover the cost of fingerprinting the applicants and certainparticipants in the PTIN, acceptance agent, and authorized e-file provider programs. The proposed regulations also would redesignate §300.12, Fee for obtaining a preparer tax identification number, as §300.13. Authority The charging of user fees is authorized by the Independent Offices Appropriations Act (IOAA) of 1952, which is codified at 31 U.S.C. 9701. The IOAA authorizes agencies to prescribe regulations that es- tablish charges for services provided by the agency. The charges must be fair and must be based on the costs to the government, the value of the service to the recipient, 2011–43 I.R.B.600October 24, 2011 the public policy or interest served, and other relevant facts. The IOAA provides that regulations implementing user fees are subject to policies prescribed by the Pres- ident; these policies are currently set forth in the Office of Management and Bud- get Circular A–25, 58 FR 38142 (July 15, 1993) (the OMB Circular). The OMB Circular encourages user fees for government-provided services that confer benefits on identifiable re- cipients over and above those benefits received by the general public. Under the OMB Circular, an agency that seeks to impose a user fee for government-pro- vided services must calculate the full cost of providing those services. In general, a user fee should be set at an amount that allows the agency to recover the full cost of providing the special service, unless the Office of Management and Budget grants an exception. Pursuant to the guidelines in the OMB Circular, the IRS has calculated its cost of providing services for the registered tax re- turn preparer competency examination and for fingerprinting applicants and certain participants in the PTIN, acceptance agent, and authorized e-fileprovider programs. The government will charge the full cost of administering theseservices and will im- plement the proposed user fees under the authority of the IOAA and the OMB Cir- cular. Proposed Effective/Applicability Date The Administrative Procedure Act pro- vides that substantive rules generally will not be effective until thirty days after the final regulations are published in theFed- eral Register(5 U.S.C. 553(d)). Final regulations may be effective prior to thirty days after publication if the publishing agency finds that there is good cause for an earlier effective date. This regulation is part of the IRS’s con- tinued effort to implement the recommen- dations in the “Return Preparer Review.” The recently published amendments to Circular 230 established registered tax return preparers as practitioners under Circular 230 and required that individu- als must pass a competency examination, among other requirements, to become a registered tax return preparer. Before the competency examination can be offered, the competency examination user fee must be in place. As part of the recent amend- ments to the section 6109 regulations, the IRS established a requirement to pass a suitability check prior to obtaining a PTIN. To fully implement the suitability check, the regulations establishing a user fee to be fingerprinted must be finalized so the IRS can begin fingerprinting required applicants. Further, the competency ex- amination and the fingerprinting user fees must be finalized significantly before the 2012 filing season to enable the IRS to have these aspects of the new regulatory program in place for the 2012 filing sea- son. Thus, the Treasury Department and the IRS find that there is good cause for these regulations to be effective upon the pub- lication of a Treasury decision adopting these rules as final regulations in theFed- eral Register. Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Execu- tive Order 13563. It has been determined that an ini- tial regulatory flexibility analysis under 5 U.S.C. 603 is required for this final rule. The analysis is set forth under the heading, “Initial Regulatory Flexibility Analysis.” Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Adminis- tration for comment on its impact on small business. INITIAL REGULATORY FLEXIBILITY ANALYSIS When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (5 U.S.C. chapter 6) (RFA) requires the agency “to prepare and make available for public comment an initial regulatory flex- ibility analysis” that will “describe the im- pact of the proposed rule on small enti- ties.” See 5 U.S.C. 603(a). Section 605 of the RFA provides an exception to this re- quirement if the agency certifies that the proposed rulemaking will not have a sig- nificant economic impact on a substantial number of small entities. A small entity is defined as a small business, small non- profit organization, or small governmental jurisdiction. See 5 U.S.C. 601(3) through (6). The IRS and the Treasury Department conclude that the proposed rule, if promul- gated, will have a significant economic im- pact on a substantial number of small enti- ties. As a result, an initial regulatory flex- ibility analysis is required. Description of the reasons why action by the agency is being considered Based upon the finding in the Report, the IRS and the Treasury Department are implementing regulatory changes that in- crease the oversight of the tax return pre- parer industry. These regulatory changes include requiring persons who prepare all or substantially all of a tax return or claim for refund for compensation to obtain a PTIN and creating a new category of Cir- cular 230 practitioner called registered tax return preparers. Individuals who wish to become a registered tax return preparer must pass a competency examination. In- dividuals who pass the competency exam- ination and become a registered tax re- turn preparer will receive a special bene- fit that the general public does not receive because a registered tax return preparer is allowedtoprepareandsignForm1040se- ries returns (and accompanying schedules) for compensation. Under the new PTIN and Circular 230 guidance (including No- tice 2011–6), only attorneys, certified pub- lic accountants, enrolled agents, or regis- tered tax return preparers can prepare and sign all or substantially all of a Form 1040 series return for compensation. There are costs to the IRS associated with overseeing the registered tax return preparer compe- tency examination and providing the spe- cial benefits associated with being a regis- tered tax return preparer. These proposed regulations implement a user fee for taking the registered tax return preparer compe- tency examination to recover these costs. PTIN holders, acceptance agents, and e-file providers also receive a special ben- efit from participation in the PTIN, accep- tance agent, and authorized e-file provider programs. PTIN holders receive the spe- cial benefit of being able to prepare all or substantially all of a tax return or claim for refund for compensation. Acceptance agents receive the special benefit of be- ing able to facilitate and expedite ITIN and EIN applications by validating the appli- cant’s identity and status as a foreign per- October 24, 20116012011–43 I.R.B. son. Certifying acceptance agents also re- ceive the special benefit of being able to certify an ITIN applicant’s identity and sta- tus as an alien. Authorized e-file providers receive the benefit of being able to elec- tronically file tax and information returns with the IRS. As a prerequisite for partic- ipation in these programs, applicants and certain participants must pass a suitabil- ity check. As part of the suitability check, most applicants will be fingerprinted for processing through the FBI identification record database. There are costs to the IRS to administer and review the process- ing of applicant’s and certain participant’s fingerprints as part of the suitability check. These proposed regulations implement a user fee for certain individuals to be fin- gerprinted as part of the PTIN, acceptance agent, or authorized e-file provider pro- grams to recover these costs. A succinct statement of the objectives of, and legal basis for, the proposed rule Regarding the registered tax return preparer program, the objective of the proposed regulations is to recover the costs to the government associated with the registered tax return preparer compe- tency examination. This user fee will be in addition to any reasonable fee charged by the third-party vendor that is approved by the IRS for administering the com- petency examination. The costs to the government include the personnel, admin- istrative, management, and information technology costs to develop and review the competency examination, oversee the competency examination, validate the competency examination results, and establish review procedures for persons who contest the competency examination. All individuals who are not attorneys, certified public accountants, or enrolled agents and want to prepare and sign Form 1040 series tax returns (and accompa- nying schedules) for compensation will be required to become a registered tax return preparer and pass the competency examination. Individuals who pass the competency examination and become a registered tax return preparer will receive the special benefit of being able to pre- pareandsignForm1040seriesreturnsfor compensation. Registered tax return pre- parers also will receive the benefit of being able to represent taxpayers before revenue agents, customer service representatives, or similar officers and employees of the IRS during examination if the registered taxreturnpreparersignedthetaxreturn for the period under examination. These regulations recover the costs to the gov- ernment that are associated with providing this special benefit. Regarding the fingerprinting user fee to participate in the PTIN, acceptance agent, or authorized e-file provider programs, the purpose of the user fee is to recover the costs to the government for providing the special benefits associated with these programs. This user fee will be in addition to any user fee charged by the third-party vendor, which will be approved by the IRS, and covers the costs for obtaining the fingerprints and transmitting the finger- prints to the FBI. The fingerprinting user feerecoversthecoststotheIRStotrans- fer the fingerprints and the results of the FBI database search to the IRS; perform background checks on third-party vendor employees; modify the database used to receive, record, and store the search re- sults; evaluate the results received from the search of the FBI database; provide internal review of circumstances where an individual is found not suitable to par- ticipate in the respective program; and process appeals by individuals who are denied the ability to participate in their re- spective program because the individuals failed the suitability check. Individuals who participate in the PTIN program re- ceive the special benefit of being able to prepare all or substantially all of a tax return or claim for refund for compensa- tion. Individuals who participate in the acceptance agent program receive the spe- cial benefit of being able to facilitate and expedite the issuance of ITINs and EINs by verifying the applicant’s identity and status as an alien; certifying acceptance agents receive the additional benefit of being able to certify an ITIN applicant’s identity and status as an alien. Persons who participate in the authorized e-file provider program receive the special ben- efit of being able to electronically file tax and information returns. The legal basis for establishing a user fee is contained in section 9701 of title 31. A description of and, where feasible, an estimate of the number of small entities to which the proposed rule will apply The proposed regulations affect all in- dividuals who want to become registered tax return preparers under the new over- sight rules in Circular 230. Only indi- viduals, not businesses, can practice be- fore the IRS or become a registered tax return preparer. Thus, the economic im- pact of these regulations on any small en- tity generally will be a result of applicants owning a small business or a small en- tity employing applicants. The NAICS code that relates to taxpreparation services (NAICS code 541213) is the appropriate code for the registered tax return preparer program. Entities identified as tax prepa- ration services are considered small un- der the Small Business Administration size standards (13 CFR 121.201) if their annual revenue is less than $7 million. The IRS estimates that approximately 350,000 in- dividuals will become registered tax return preparers. The IRS estimates that approx- imately 70 to 80 percent of the individuals who apply to become registered tax return preparers are operating as or employed by small entities. The proposed regulations affect certain individuals who have or want to obtain a PTIN. Only individuals, not businesses, can obtain a PTIN. Thus, the economic im- pact of these regulations on any small en- tity generally will be a result of an indi- vidual tax return preparer who is required to obtain a PTIN owning a small business or a small business otherwise employing an individual tax return preparer who is required to apply for or renew a PTIN to prepare all or substantially all of a tax re- turn or claim for refund. The appropri- ate NAICS codes for applicants or partici- pants in the PTIN program who will have to be fingerprinted relates to tax prepara- tion services (NAICS code 541213). The IRS estimates that approximately 450,000 individuals who receive a PTIN will be re- quired to pay the fingerprinting user fee. Entities identified as tax preparation ser- vices and offices of lawyers are considered small under the Small Business Adminis- tration size standards if their annual rev- enue is less than $7 million. The IRS es- timates that approximately 70 to 80 per- cent of the individuals required to be fin- 2011–43 I.R.B.602October 24, 2011 gerprinted are operating as or employed by small entities. The proposed regulations also affect in- dividuals who are or want to become an ac- ceptance agent. Only an individual can be- come an acceptance agent; thus, the regu- lations will economically impact any small entity that is owned by or employs an ac- ceptance agent. The NAICS code that re- lates to tax preparation services (NAICS code 541213) is the appropriate code for the acceptance agent program. Entities identified as tax preparation services are considered small under the Small Business Administration size standards if their an- nual revenue is less than $7 million. The IRS estimates that 3,500 individuals who are not required to obtain a PTIN will be fingerprinted as part of the acceptance agent program. The IRS estimates that 80 to 90 percent of acceptance agents are op- erating as or employed by small entities. Finally, the proposed regulations will affect any person that is an authorized e-file provider or applies to become an authorized e-file provider. Small busi- nesses can be authorized e-file providers. The NAICS code that relates to autho- rized e-file providersisdataprocessing, hosting, and related services (NAICS code 518210). Entities identified as data pro- cessing, hosting, and related services are considered small under the Small Business Administration size standards if their an- nual revenue is less than $25 million. The IRS projects that 6,500 persons who are not required to obtain a PTIN will be fin- gerprinted as part of the authorized e-file provider program. The IRS estimates that 99 percent of authorized e-file providers are operating as small businesses. A description of the projected reporting, recordkeeping, and other compliance requirements of the proposed rule, including an estimate of the classes of small entities that will be subject to the requirement and the type of professional skills necessary for preparation of the report or record No reporting or recordkeeping require- ments are projected to be associated with this proposed regulation. An identification, to the extent practicable, of all relevant Federal rules which may duplicate, overlap, or conflict with the proposed rule The IRS is not aware of any federal rules that duplicate, overlap, or conflict with the proposed rule. A description of any significant alternatives to the proposed rule, which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities TheIOAAauthorizesthechargingof user fees for agency services, subject to policies designated by the President. The OMB Circular implements presidential policies regarding user fees and encour- ages user fees when a government agency provides a special benefit to a member of the public. As Congress has not appro- priated funds to the registered tax return preparer, PTIN, acceptance agent, or au- thorized e-file provider programs, there are no viable alternatives to the imposition of user fees. While the IRS previously did not charge a user fee to recover its costs in conjunc- tion with the fingerprinting of applicants to the acceptance agent and authorized e-file programs, the number of applicants in these programs was small enough that the cost of collecting a user fee to finger- print applicants in these programs would represent an unduly large portion of the user fee. The addition of the PTIN appli- cants as a group of individuals who also are required to be fingerprinted increased the number of persons required to be fingerprinted to approximately 460,000. Because the population of individuals to be fingerprinted substantially increased, the cost of collecting a user fee for finger- printing acceptance agents and authorized e-file providers is no longer an unduly large portion of the user fee. Comments and Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed origi- nal and eight (8) copies) or electronic com- ments that are submitted timely to the IRS. The IRS and the Treasury Department re- quest comments on the clarity of the pro- posed regulations and how they can be made easier to understand. All comments will be available for public inspection and copying. A public hearing has been scheduled for October 7, 2011 beginning at 10:00 am in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue, NW, Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. All visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediateentrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the “FOR FURTHER INFORMATION CONTACT”section of this preamble. The rules of 26 CFR 601.601(a)(3) ap- ply to the hearing. Persons who wish to present oral comments at the hearing must submit written or electronic comments and an outline of the topics to be discussed and the time to be devoted to each topic by October 4, 2011. A period of 10 minutes will be allocated to each person for mak- ing comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receivingoutlines has passed. Copies of the agenda will be available free of charge at the hearing. Drafting Information The principal author of these regula- tions is Emily M. Lesniak, Office of the Associate Chief Counsel (Procedure and Administration). ***** Proposed Amendments to the Regulations Accordingly, 26 CFR Part 300 is pro- posed to be amended as follows: Part 300 — USER FEES Paragraph 1. The authority citation for part 300 continues to read in part as fol- lows: Authority: 31 U.S.C. 9701. Par. 2. Section 300.0 is amended by: 1. Redesignating paragraph (b)(12) as paragraph (b)(13). October 24, 20116032011–43 I.R.B. 2. Adding new paragraph (b)(12). 3. Adding paragraph (b)(14). The additions and revisions read as fol- lows: §300.0 User fees; in general. ***** (b) * * * (12) Taking the registered tax return preparer examination. *** (14) Fingerprinting to apply for, or par- ticipate, in the preparer tax identification number, authorized e-file provider, or ac- ceptance agent programs. §300.12[Redesignated as §300.13] Par. 3. Redesignate §300.12 as §300.13. Par. 4. Adding new §300.12 to read as follows: §300.12 Registered tax return preparer competency examination fee. (a)Applicability. This section applies to the competency examination to become a registered tax return preparer pursuant to 31 CFR 10.4(c). (b)Fee. The fee for taking the regis- tered tax return preparer competency ex- amination is $27, which is the government cost for overseeing the examination and does not include any fees charged by the administrator of the examination. (c)Person liable for the fee. The person liable for the competency examination fee is the applicant taking the examination. (d)Effective/applicability date.This section is applicable on the date the final regulations are published in theFederal Register. Par. 5. Section 300.14 is added to read as follows: §300.14 Fingerprinting fee to participate in the preparer tax identification number, acceptance agent, or authorized e-file provider programs. (a)Applicability. This section ap- plies to applicants and participants in the preparer tax identification number, acceptance agent, and authorized e-file provider programs who are required to be fingerprinted as prescribed by forms, in- structions, or other appropriate guidance. This section does not apply, however, to individuals who reside and are employed outside of the United States. (b)Fee. The fee to be fingerprinted is $33, which is the cost to the government for processing the fingerprints and does not include any fees charged by the vendor. (c)Personliableforthefee. The person liable for the fingerprinting fee is the per- son being fingerprinted. (d)Effective/applicability date.This section is applicable on the date the final regulations are published in theFederal Register. Steven T. Miller, Deputy Commissioner for Services and Enforcement. (Filed by the Office of the Federal Register on September 21, 2011, 11:15 a.m., and published in the issue of the Federal Register for September 26, 2011, 76 F.R. 59329) 2011–43 I.R.B.604October 24, 2011 Definition of Terms Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the ef- fect: Amplifieddescribes a situation where no change is being made in a prior pub- lished position, but the prior position is be- ingextendedtoapplytoavariationofthe fact situation set forth therein. Thus, if an earlier ruling held that a principle ap- plied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare withmodi- fied,below). Clarifiedis used in those instances where the language in a prior ruling is be- ing made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed. Distinguisheddescribes a situation where a ruling mentions a previously pub- lished ruling and points out an essential difference between them. Modifiedis used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare withamplifiedandclarified, above). Obsoleteddescribes a previously pub- lished ruling that is not considered deter- minative with respect to future transac- tions. This term is most commonly used in a ruling that lists previously published rul- ings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted. Revokeddescribes situations where the position in the previously published ruling is not correct and the correct position is beingstatedinanewruling. Supersededdescribes a situation where the new ruling does nothing more than re- state the substance and situation of a previ- ously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same po- sition published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single rul- ing a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new rul- ing does more than restate the substance of a prior ruling, a combination of terms is used. For example,modifiedandsu- persededdescribes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously pub- lished ruling is first modified and then, as modified, is superseded. Supplementedis used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original rul- ing has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the ad- ditions, and supersedes all prior rulings in the series. Suspendedis used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study. Abbreviations The fol lowing abbreviations in current use and for merly used will appear in material publis hedintheBulletin. A—Individual. Acq.—A cquiescence. B—Individual. BE—Beneficiary. BK—Bank . B.T.A.—Board of Tax Appeals. C—Individual. C.B.—Cu mulative Bulletin. CFR—Code of Federal Regulations. CI—City. COOP—Coo perative. Ct.D.—Court Decision. CY—County. D—Decede nt. DC—Dummy Corporation. DE—Donee. Del. Order —Delegation Order. DISC—Domestic International Sales Corporation. DR—Donor. E—Estate. EE—Employee. E.O.—Executive Order. ER—Emp loyer. ERISA—Employee Retirement Income Security Act. EX—Executor. F—Fiduc iary. FC—Foreign Country. FICA—Federal Insurance Contributions Act. FISC—Fo reign International Sales Company. FPH—Foreign Personal Holding Company. F.R.—Federal Register. FUTA—Fed eral Unemployment Tax Act. FX—Foreign corporation. G.C.M.—Chief Counsel’s Memorandum. GE—Grante e. GP—General Partner. GR—Grantor. IC—Insura nce Company. I.R.B.—Internal Revenue Bulletin. LE—Lessee. LP—Limited Partner. LR—Lessor. M—Minor. Nonacq.—No nacquiescence. O—Organization. P—Parent Corporation. PHC—Persona l Holding Company. PO—Possession of the U.S. PR—Partner. PRS—Pa rtnership. PTE—Prohibited Transaction Exemption. Pub. L.—Public Law. REIT—Re al Estate Investment Trust. Rev. Proc.—Revenue Procedure. Rev. Rul.—Revenue Ruling. S—Subsi diary. S.P.R.—Statement of Procedural Rules. Stat.—Statutes at Large. T—Target Corporation. T.C.—Tax Court. T.D.—Treasury Decision. TFE—Trans feree. TFR—Transferor. T.I.R.—Technical Information Release. TP—Taxpay er. TR—Trust. TT—Trustee. U.S.C.—Uni ted States Code. X—Corporation. Y—Corporation. Z—Corporat ion. October 24, 2011i2011–43 I.R.B. Numerical Finding List 1 Bulletins 2011–27 through 2011–43 Announcements: 2011-37, 2011-27 I.R.B.37 2011-38, 2011-28 I.R.B.45 2011-39, 2011-28 I.R.B.46 2011-40, 2011-29 I.R.B.56 2011-41, 2011-28 I.R.B.47 2011-42, 2011-32 I.R.B.138 2011-43, 2011-35 I.R.B.198 2011-44, 2011-33 I.R.B.164 2011-45, 2011-34 I.R.B.178 2011-46, 2011-34 I.R.B.178 2011-47, 2011-34 I.R.B.178 2011-48, 2011-36 I.R.B.227 2011-49, 2011-36 I.R.B.228 2011-50, 2011-38 I.R.B.409 2011-51, 2011-38 I.R.B.409 2011-52, 2011-38 I.R.B.409 2011-53, 2011-38 I.R.B.409 2011-54, 2011-38 I.R.B.409 2011-55, 2011-38 I.R.B.409 2011-56, 2011-38 I.R.B.409 2011-57, 2011-38 I.R.B.409 2011-58, 2011-38 I.R.B.410 2011-59, 2011-37 I.R.B.335 2011-61, 2011-39 I.R.B.453 2011-62, 2011-40 I.R.B.483 2011-63, 2011-41 I.R.B.503 2011-64, 2011-41 I.R.B.503 Notices: 2011-47, 2011-27 I.R.B.34 2011-50, 2011-27 I.R.B.35 2011-51, 2011-27 I.R.B.36 2011-52, 2011-30 I.R.B.60 2011-53, 2011-32 I.R.B.124 2011-54, 2011-29 I.R.B.53 2011-55, 2011-29 I.R.B.53 2011-56, 2011-29 I.R.B.54 2011-57, 2011-31 I.R.B.84 2011-58, 2011-31 I.R.B.85 2011-59, 2011-31 I.R.B.86 2011-60, 2011-31 I.R.B.90 2011-61, 2011-31 I.R.B.91 2011-62, 2011-32 I.R.B.126 2011-63, 2011-34 I.R.B.172 2011-64, 2011-37 I.R.B.231 2011-65, 2011-34 I.R.B.173 2011-66, 2011-35 I.R.B.184 2011-67, 2011-34 I.R.B.174 2011-68, 2011-36 I.R.B.205 2011-69, 2011-39 I.R.B.445 2011-70, 2011-32 I.R.B.135 Notices— Continued: 2011-71, 2011-37 I.R.B.233 2011-72, 2011-38 I.R.B.407 2011-73, 2011-40 I.R.B.474 2011-74, 2011-41 I.R.B.496 2011-75, 2011-40 I.R.B.475 2011-76, 2011-40 I.R.B.479 2011-78, 2011-41 I.R.B.497 2011-79, 2011-41 I.R.B.498 2011-80, 2011-43 I.R.B.591 2011-81, 2011-42 I.R.B.513 2011-82, 2011-42 I.R.B.516 2011-83, 2011-43 I.R.B.593 2011-84, 2011-43 I.R.B.595 Proposed Regulations: REG-128224-06, 2011-42 I.R.B.533 REG-137128-08, 2011-28 I.R.B.43 REG-112805-10, 2011-40 I.R.B.482 REG-120391-10, 2011-39 I.R.B.451 REG-125592-10, 2011-32 I.R.B.137 REG-131491-10, 2011-36 I.R.B.208 REG-140038-10, 2011-42 I.R.B.537 REG-109006-11, 2011-37 I.R.B.334 REG-101352-11, 2011-30 I.R.B.75 REG-111283-11, 2011-42 I.R.B.573 REG-116284-11, 2011-43 I.R.B.598 REG-118809-11, 2011-33 I.R.B.162 REG-122813-11, 2011-35 I.R.B.197 REG-126519-11, 2011-39 I.R.B.452 Revenue Procedures: 2011-38, 2011-30 I.R.B.66 2011-39, 2011-30 I.R.B.68 2011-40, 2011-37 I.R.B.235 2011-41, 2011-35 I.R.B.188 2011-42, 2011-37 I.R.B.318 2011-43, 2011-37 I.R.B.326 2011-44, 2011-39 I.R.B.446 2011-45, 2011-39 I.R.B.449 2011-46, 2011-42 I.R.B.518 2011-47, 2011-42 I.R.B.520 2011-48, 2011-42 I.R.B.527 Revenue Rulings: 2011-14, 2011-27 I.R.B.31 2011-15, 2011-30 I.R.B.57 2011-16, 2011-32 I.R.B.93 2011-17, 2011-33 I.R.B.160 2011-18, 2011-39 I.R.B.428 2011-19, 2011-36 I.R.B.199 2011-20, 2011-36 I.R.B.202 2011-21, 2011-40 I.R.B.458 2011-22, 2011-41 I.R.B.489 2011-23, 2011-43 I.R.B.585 2011-24, 2011-41 I.R.B.485 Treasury Decisions: 9527, 2011-27 I.R.B.1 9528, 2011-28 I.R.B.38 9529, 2011-30 I.R.B.57 9530, 2011-31 I.R.B.77 9531, 2011-31 I.R.B.79 9532, 2011-32 I.R.B.95 9533, 2011-33 I.R.B.139 9534, 2011-33 I.R.B.144 9535, 2011-39 I.R.B.415 9536, 2011-39 I.R.B.426 9537, 2011-35 I.R.B.181 9538, 2011-37 I.R.B.229 9539, 2011-35 I.R.B.179 9540, 2011-38 I.R.B.341 9541, 2011-39 I.R.B.438 9542, 2011-39 I.R.B.411 9543, 2011-40 I.R.B.470 9544, 2011-40 I.R.B.458 9545, 2011-41 I.R.B.490 9546, 2011-42 I.R.B.505 9547, 2011-43 I.R.B.580 1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin 2011–26, dated June 27, 2011. 2011–43 I.R.B.iiOctober 24, 2011 Finding List of Current Actions on Previously Published Items 1 Bulletins 2011–27 through 2011–43 Announcements: 2007-47 Updated and superseded by Ann. 2011-59, 2011-37 I.R.B.335 Notices: 2006-101 Amplified and superseded by Notice 2011-64, 2011-37 I.R.B.231 2007-93 Obsoleted by T.D. 9545, 2011-41 I.R.B.490 2010-23 Modified and supplemented by Notice 2011-54, 2011-29 I.R.B.53 2010-81 Amended and supplemented by Notice 2011-63, 2011-34 I.R.B.172 2010-88 Modified by Ann. 2011-40, 2011-29 I.R.B.56 Proposed Regulations: REG-118761-09 Hearing scheduled by Ann. 2011-38, 2011-28 I.R.B.45 REG-151687-10 Hearing scheduled by Ann. 2011-48, 2011-36 I.R.B.227 Revenue Procedures: 72-36 Amplified and modified by Rev. Proc. 2011-42, 2011-37 I.R.B.318 2004-29 Amplified and modified by Rev. Proc. 2011-42, 2011-37 I.R.B.318 2006-56 Modified and amplified by Rev. Proc. 2011-46, 2011-42 I.R.B.518 2007-35 Amplified and modified by Rev. Proc. 2011-42, 2011-37 I.R.B.318 2008-24 Modified and superseded by Rev. Proc. 2011-38, 2011-30 I.R.B.66 2008-32 Superseded by Rev. Proc. 2011-39, 2011-30 I.R.B.68 Revenue Procedures— Continued: 2010-39 Amplified, modified, and superseded by Rev. Proc. 2011-47, 2011-42 I.R.B.520 2011-4 Modified by Rev. Proc. 2011-44, 2011-39 I.R.B.446 2011-14 Modified by Rev. Proc. 2011-43, 2011-37 I.R.B.326 2011-35 Amplified and modified by Rev. Proc. 2011-42, 2011-37 I.R.B.318 Revenue Rulings: 58-225 Obsoleted by Rev. Rul. 2011-15, 2011-30 I.R.B.57 92-19 Supplemented in part by Rev. Rul. 2011-23, 2011-43 I.R.B.585 Treasury Decisions: 9527 Corrected by Ann. 2011-49, 2011-36 I.R.B.228 1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–1 through 2011–26 is in Internal Revenue Bulletin 2011–26, dated June 27, 2011. October 24, 2011iii2011–43 I.R.B. 2011–43 I.R.B.October 24, 2011 October 24, 20112011–43 I.R.B. INTERNAL REVENUE BULLETIN The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin- tendent of Documents when their subscriptions must be renewed. CUMULATIVE BULLETINS The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are sold on a single copy basis andare notincluded as part of the subscription to the Internal Revenue Bulletin. Subscribers to the weekly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the Superintendent of Documents. ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNET You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Select Businesses. Under Businesses Topics, select More Topics. Then select Internal Revenue Bulletins. INTERNAL REVENUE BULLETINS ON CD-ROM Internal Revenue Bulletins are available annually as part ofPublication 1796 (Tax Products CD-ROM). The CD-ROM can be purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders) or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January. HOW TO ORDER Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance, detach entire page, and mail to the Superintendent of Documents, P.O. Box 979050, St. Louis, MO 63197–9000. Please allow two to six weeks, plus mailing time, for delivery. WE WELCOME COMMENTS ABOUT THE INTERNAL REVENUE BULLETIN If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov) or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Internal Revenue Service W ashington,DC20224 Official Business Penalty for Private Use, $300
Continue your research in ChatGPT or Claude
Connect Omnilex to search the legal corpus from your AI assistant.