us-irs-notices-irb-2014-43-pdf•Internal Revenue Bulletin 2014-43 (PDF rendition): IRS Notices
Internal Revenue Bulletin 2014-43 (PDF rendition): IRS Notices
us-irs-notices-irb-2014-43-pdfInternal Revenue Bulletin 2014-43 (PDF rendition): IRS NoticesGuidance
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# Internal Revenue bulletin <!-- PageHeader="Bulletin No. 2014-43 October 20, 2014" --> ## HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. ## INCOME TAX ### Notice 2014-60, page 741. This notice explains the circumstances under which the 4-year replacement period under section 1033(e)(2) of the Code is extended for livestock sold on account of drought. The Appen- dix to this notice contains a list of the counties that experi- enced exceptional, extreme, or severe drought during the preceding 12-month period ending August 31, 2014. Taxpay- ers may use this list to determine if an extension is available. ### T.D. 9696, page 727. Final regulations under section 162 of the Code describe the circumstances under which expenses paid or incurred for lodging when not traveling away from home (local lodging) may be deductible expenses. Final amendments to the regulations under section 262 provide that expenses for local lodging are nondeductible personal expenses unless they qualify as de- ductible expenses under section 162. ## EMPLOYEE PLANS ### Notice 2014-53, page 737. This notice provides guidance on the changes to the funding stabilization rules for single-employer pension plans under the Internal Revenue Code (Code) and the Employee Retirement Income Secu- rity Act of 1974 (ERISA) that were made by section 2003 of the Highway and Transportation Funding Act of 2014 (HATFA), Pub. L. No. 113-159, which was enacted on August 8, 2014. ### T.D. 9697, page 729. This document contains final regulations that modify the regula- tions providing requirements for limited-scope vision or dental benefits to qualify as excepted benefits and provide requirements for when an employee assistance program (EAP) qualifies as excepted benefits. Excepted benefits are not subject to the vari- ous market reforms imposed by the Affordable Care Act and do not qualify as minimum essential coverage. The final regulations apply to plan years beginning or or after January 1, 2015. ## EXCISE TAX ### T.D. 9697, page 729. This document contains final regulations that modify the regula- tions providing requirements for limited-scope vision or dental benefits to qualify as excepted benefits and provide requirements for when an employee assistance program (EAP) qualifies as excepted benefits. Excepted benefits are not subject to the vari- ous market reforms imposed by the Affordable Care Act and do not qualify as minimum essential coverage. The final regulations apply to plan years beginning or or after January 1, 2015. ## ADMINISTRATIVE ### Notice 2014-61, page 744. This notice updates the appendix to Notice 2013-1, which lists the Indian tribes who have settled tribal trust cases against the United States. Notice 2012-60 originally was published in IRB 2012-41 (October 9, 2012). Notice 2012-60 was super- ceded by Notice 2013-1 IRB 2013-3, and the appendix to Notice 2013-1 was superceded by Notice 2013-16 (IRB 2013-14), then Notice 2013-36, then Notice 2013-55, then Notice 2014-22, and then Notice 2014-38. However, two additional tribes have settled their cases against the United States since the publication of Notice 2014-38, so we are publishing an updated appendix to Notice 2013-1. This notice would supercede Notice 2014-38. Notice 2013-1 Appendix is modified and superseded. Finding Lists begin on page ii. Index for July through October begins on page iv. Department of the Treasury Internal Revenue Service <!-- PageBreak --> ## The IRS Mission Provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities and en- force the law with integrity and fairness to all. ## Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conven- tions, legislation, court decisions, and other items of general interest. It is published weekly. It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless other- wise indicated. Procedures relating solely to matters of internal management are not published; however, statements of inter- nal practices and procedures that affect the rights and duties of taxpayers are published. Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identify- ing details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: ### Part I .- 1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. ### Part II .- Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legisla- tion and Related Committee Reports. Part III .- Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rul- ings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury's Office of the Assistant Sec- retary (Enforcement). ### Part IV .- Items of General Interest. This part includes notices of proposed rulemakings, disbar- ment and suspension lists, and announcements. The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period. The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> ## Part I. Rulings and Decisions Under the Internal Revenue Code of 1986 ### Section 162 .- Deductibility of Expenses for Lodging 26 CFR 1.162-32: Deductibility of expenses for lodging when an individual is not traveling away from home (local lodging). #### T.D. 9696 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 #### Local Lodging Expenses AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. SUMMARY: This document contains fi- nal regulations relating to the deductibility of expenses for lodging when an individ- ual is not traveling away from home (local lodging). The regulations affect taxpayers who pay or incur local lodging expenses. DATES: Effective Date: These regula- tions are effective on October 1, 2014. Applicability Dates: For dates of appli- cability, see §§ 1.162-32(d) and 1.262- 1(b)(5). FOR FURTHER INFORMATION CONTACT: Peter Ford, (202) 317-7011 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background This document contains final regula- tions that amend the Income Tax Regula- tions (26 CFR part 1) under sections 162 and 262 of the Internal Revenue Code (Code) relating to the deduction of local lodging expenses. On April 25, 2012, a notice of proposed rulemaking (REG- 137589-07) was published in the Federal Register (77 FR 24657). One written comment responding to the notice of pro- posed rulemaking was received. No public hearing was requested or held. After con- sideration of the comment, the regulations are adopted as amended by this Treasury decision. ### Summary of Comment and Explanation of Provisions The provisions of the proposed regula- tions under section 162 of the Code were designated as § 1.162-31, however, after the proposed regulations were published, unrelated regulations were finalized as § 1.162-31. Accordingly, the final regula- tions in this document under section 162 are designated as § 1.162-32. Under the general rule in § 1.162-31(a) of the proposed regulations, local lodging expenses for an individual are personal, living, or family expenses that are nonde- ductible by the individual under section 262(a). Depending on the facts and cir- cumstances, however, local lodging ex- penses may be deductible under section 162 as ordinary and necessary business expenses. Section 1.162-31(b) of the pro- posed regulations provides a safe harbor, pursuant to which local lodging expenses that meet certain criteria are treated as ordinary and necessary business expenses of an individual. Local lodging expenses that meet either the facts and circum- stances test of paragraph (a) or the safe harbor requirements of paragraph (b) are deductible by an individual if incurred directly. Alternatively, if the expenses are incurred by an employer on behalf of an employee, the value of the local lodging may be excludible from the income of the employee as a working condition fringe under section 132(a) and (d). To the extent an employer reimburses an employee for local lodging expenses, the reimbursement may be excludible from the employee's gross income if the expense allowance ar- rangement satisfies the requirements of an accountable plan under section 62(c) and the applicable regulations. The expenses are also deductible by the employer as ordinary and necessary business expenses. The commenter requested that the final regulations be revised to make it clear that a taxpayer's local lodging expenses that do not satisfy the safe harbor under § 1.162-31(b) of the proposed regulations may nonetheless be deductible under § 1.162-31(a) of the proposed regulations depending on the taxpayer's facts and cir- cumstances. In response to this comment, the final regulations clarify that the exam- ples illustrate the facts and circum- stances test. Specifically, the examples illustrate situations in which certain conditions of the safe harbor are not satisfied and, therefore, the facts and circumstances test determines the appro- priate treatment. An example in the proposed regula- tions describes circumstances in which a professional sports team provides local lodging to players and coaches for a non- compensatory business purpose. The commenter suggested that the final regu- lations clarify that local lodging provided to other employees of a sports team also may be ordinary and necessary noncom- pensatory business expenses. In response to this comment, the final regulations re- vise the example to clarify that the refer- ence to players and coaches is illustrative and not exclusive. The commenter requested that the final regulations clarify the circumstances in which meal expenses paid or incurred in connection with lodging expenses are de- ductible. The final regulations do not adopt this comment, as the proposed reg- ulations did not provide rules relating to meal expenses and those issues are be- yond the scope of these regulations. ## Effective/Applicability Date These regulations apply to expenses paid or incurred on or after October 1, 2014. Taxpayers may apply these regula- tions to expenses paid or incurred in tax- able years ending before October 1, 2014, for which the period of limitation on credit or refund under section 6511 has not expired. ## Special Analyses This Treasury decision is not a signif- icant regulatory action as defined in Ex- ecutive Order 12866, as supplemented by Executive Order 13563. Therefore, a reg- ulatory assessment is not required. It also has been determined that section 553(b) of <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations and, because the regulations do not impose a collection of information on small entities, the Regulatory Flexibil- ity Act (5 U.S.C. chapter 6) does not ap- ply. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking that preceded these final regulations was submitted to the Chief Counsel for Advo- cacy of the Small Business Administra- tion for comment on its impact on small business. No comments were received. ### Drafting Information The principal author of these regula- tions is R. Matthew Kelley of the Office of Associate Chief Counsel (Income Tax and Accounting). However, other personnel from the IRS and the Treasury Depart- ment participated in their development. * * * * * ### Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1-INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.162-32 is added to read as follows: § 1.162-32 Expenses paid or incurred for lodging when not traveling away from home. (a) In general. Expenses paid or in- curred for lodging of an individual who is not traveling away from home (local lodg- ing) generally are personal, living, or fam- ily expenses that are nondeductible by the individual under section 262(a). Under certain circumstances, however, local lodging expenses may be deductible under section 162(a) as ordinary and necessary expenses paid or incurred in connection with carrying on a taxpayer's trade or business, including a trade or business as an employee. Whether local lodging ex- penses are paid or incurred in carrying on a taxpayer's trade or business is deter- mined under all the facts and circum- stances. One factor is whether the tax- payer incurs an expense because of a bona fide condition or requirement of employ- ment imposed by the taxpayer's employer. Expenses paid or incurred for local lodg- ing that is lavish or extravagant under the circumstances or that primarily provides an individual with a social or personal benefit are not incurred in carrying on a taxpayer's trade or business. (b) Safe harbor for local lodging at business meetings and conferences. An individual's local lodging expenses will be treated as ordinary and necessary busi- ness expenses if- (1) The lodging is necessary for the individual to participate fully in or be available for a bona fide business meeting, conference, training activity, or other business function; (2) The lodging is for a period that does not exceed five calendar days and does not recur more frequently than once per cal- endar quarter; (3) If the individual is an employee, the employee's employer requires the em- ployee to remain at the activity or function overnight; and (4) The lodging is not lavish or extrav- agant under the circumstances and does not provide any significant element of per- sonal pleasure, recreation, or benefit. (c) Examples. The provisions of the facts and circumstances test of paragraph (a) of this section are illustrated by the following examples. In each example the employer and the employees meet all other requirements (such as substantia- tion) for deductibility of the expense and for exclusion from income of the value of the lodging as a working condition fringe or of reimbursements under an account- able plan. Example 1. (i) Employer conducts a seven-day training session for its employees at a hotel near Employer's main office. The training is directly con- nected with Employer's trade or business. Some employees attending the training are traveling away from home and some employees are not traveling away from home. Employer requires all employees attending the training to remain at the hotel over- night for the bona fide purpose of facilitating the training. Employer pays the costs of the lodging at the hotel directly to the hotel and does not treat the value as compensation to the employees. (ii) Because the training is longer than five cal- endar days, the safe harbor in paragraph (b) of this section does not apply. However, the value of the lodging may be excluded from income if the facts and circumstances test in paragraph (a) of this sec- tion is satisfied. (iii) The training is a bona fide condition or requirement of employment and Employer has a noncompensatory business purpose for paying the lodging expenses. Employer is not paying the ex- penses primarily to provide a social or personal benefit to the employees, and the lodging Employer provides is not lavish or extravagant. If the employ- ees who are not traveling away from home had paid for their own lodging, the expenses would have been deductible by the employees under section 162(a) as ordinary and necessary business expenses. There- fore, the value of the lodging is excluded from the employees' income as a working condition fringe under section 132(a) and (d). (iv) Employer may deduct the lodging expenses, including lodging for employees who are not travel- ing away from home, as ordinary and necessary business expenses under section 162(a). Example 2. (i) The facts are the same as in Example 1, except that the employees pay the cost of their lodging at the hotel directly to the hotel, Em- ployer reimburses the employees for the cost of the lodging, and Employer does not treat the reimburse- ment as compensation to the employees. (ii) Because the training is longer than five cal- endar days, the safe harbor in paragraph (b) of this section does not apply. However, the reimbursement of the expenses for the lodging may be excluded from income if the facts and circumstances test in paragraph (a) of this section is satisfied. (iii) The training is a bona fide condition or requirement of employment and Employer is reim- bursing the lodging expenses for a noncompensatory business purpose and not primarily to provide a social or personal benefit to the employees and the lodging Employer provides is not lavish or extrava- gant. The employees incur the expenses in perform- ing services for the employer. If Employer had not reimbursed the employees who are not traveling away from home for the cost of the lodging, the expenses would have been deductible by the em- ployees under section 162(a) as ordinary and neces- sary business expenses. Therefore, the reimburse- ments to the employees are made under an accountable plan and are excluded from the employ- ees' gross income. (iv) Employer may deduct the lodging expense reimbursements, including reimbursements for em- ployees who are not traveling away from home, as ordinary and necessary business expenses under sec- tion 162(a). Example 3. (i) Employer is a professional sports team. Employer requires its employees (for example, players and coaches) to stay at a local hotel the night before a home game to conduct last minute training and ensure the physical preparedness of the players. Employer pays the lodging expenses directly to the hotel and does not treat the value as compensation to the employees. (ii) Because the overnight stays occur more than once per calendar quarter, the safe harbor in para- graph (b) of this section does not apply. However, the value of the lodging may be excluded from income if the facts and circumstances test in para- graph (a) of this section is satisfied. (iii) The overnight stays are a bona fide condition or requirement of employment and Employer has a noncompensatory business purpose for paying the <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> lodging expenses. Employer is not paying the lodg- ing expenses primarily to provide a social or per- sonal benefit to the employees and the lodging Em- ployer provides is not lavish or extravagant. If the employees had paid for their own lodging, the ex- penses would have been deductible by the employ- ees under section 162(a) as ordinary and necessary business expenses. Therefore, the value of the lodg- ing is excluded from the employees' income as a working condition fringe. (iv) Employer may deduct the expenses for lodg- ing the employees at the hotel as ordinary and nec- essary business expenses under section 162(a). Example 4. (i) Employer hires Employee, who currently resides 500 miles from Employer's busi- ness premises. Employer pays for temporary lodging for Employee near Employer's business premises while Employee searches for a residence. (ii) Employer is paying the temporary lodging expense primarily to provide a personal benefit to Employee by providing housing while Employee searches for a residence. Employer incurs the ex- pense only as additional compensation and not for a noncompensatory business purpose. If Employee paid the temporary lodging expense, the expense would not be an ordinary and necessary employee business expense under section 162(a) because the lodging primarily provides a personal benefit to Em- ployee. Therefore, the value of the lodging is includ- ible in Employee's gross income as additional com- pensation. (iii) Employer may deduct the lodging expenses as ordinary and necessary business expenses under section 162(a) and § 1.162-25T. Example 5. (i) Employee normally travels two hours each way between her home and her office. Employee is working on a project that requires Em- ployee to work late hours. Employer provides Em- ployee with lodging at a hotel near the office. (ii) Employer is paying the temporary lodging expense primarily to provide a personal benefit to Employee by relieving her of the daily commute to her residence. Employer incurs the expense only as additional compensation and not for a noncompen- satory business purpose. If Employee paid the tem- porary lodging expense, the expense would not be an ordinary and necessary business expense under sec- tion 162(a) because the lodging primarily provides a personal benefit to Employee. Therefore, the value of the lodging is includible in Employee's gross income as additional compensation. (iii) Employer may deduct the lodging expenses as ordinary and necessary business expenses under section 162(a) and § 1.162-25T. Example 6. (i) Employer requires an employee to be "on duty" each night to respond quickly to emer- gencies that may occur outside of normal working hours. Employees who work daytime hours each serve a "duty shift" once each month in addition to their normal work schedule. Emergencies that re- quire the duty shift employee to respond occur reg- ularly. Employer has no sleeping facilities on its business premises and pays for a hotel room nearby where the duty shift employee stays until called to respond to an emergency. (ii) Because an employee's expenses for lodging while on the duty shift occur more frequently than once per calendar quarter, the safe harbor in para- graph (b) of this section does not apply. However, the value of the lodging may be excluded from income if the facts and circumstances test in para- graph (a) of this section is satisfied. (iii) The duty shift is a bona fide condition or requirement of employment and Employer has a noncompensatory business purpose for paying the lodging expenses. Employer is not providing the lodging to duty shift employees primarily to provide a social or personal benefit to the employees and the lodging Employer provides is not lavish or extrava- gant. If the employees had paid for their lodging, the expenses would have been deductible by the em- ployees under section 162(a) as ordinary and neces- sary business expenses. Therefore, the value of the lodging is excluded from the employees' income as a working condition fringe. (iv) Employer may deduct the lodging expenses as ordinary and necessary business expenses under section 162(a). (d) Effective/applicability date. This section applies to expenses paid or in- curred on or after October 1, 2014. How- ever, taxpayers may apply these regula- tions to local lodging expenses that are paid or incurred in taxable years for which the period of limitation on credit or refund under section 6511 has not expired. Par. 3. In § 1.262-1, paragraph (b)(5) is revised to read as follows: § 1.262-1 Personal, living, and family expenses. * * * * * (b) * * * (5) Expenses incurred in traveling away from home (which include transpor- tation expenses, meals, and lodging) and any other transportation expenses are not deductible unless they qualify as expenses deductible under section 162 (relating to trade or business expenses), section 170 (relating to charitable contributions), sec- tion 212 (relating to expenses for produc- tion of income), section 213 (relating to medical expenses), or section 217 (relat- ing to moving expenses), and the regula- tions under those sections. The taxpayer's costs of commuting to his place of busi- ness or employment are personal expenses and do not qualify as deductible expenses. For expenses paid or incurred before Oc- tober 1, 2014, a taxpayer's expenses for lodging when not traveling away from home (local lodging) are nondeductible personal expenses. However, taxpayers may deduct local lodging expenses that qualify under section 162 and are paid or incurred in taxable years for which the period of limitation on credit or refund under section 6511 has not expired. For expenses paid or incurred on or after Oc- tober 1, 2014, a taxpayer's local lodging expenses are personal expenses and are not deductible unless they qualify as de- ductible expenses under section 162. Ex- cept as permitted under section 162 or 212, the costs of a taxpayer's meals not incurred in traveling away from home are nondeductible personal expenses. * * * * * Heather C. Maloy Acting Deputy Commissioner for Services and Enforcement. Approved July 11, 2014. Mark J. Mazur Assistant Secretary of the Treasury (Tax Policy). (Filed by the Office of the Federal Register on September 9, 2014, 8:45 a.m., and published in the issue of the Federal Register for October 1, 2014, 79 F.R. 59112) Section 9831 .- General Exceptions T.D. 9697 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 54 DEPARTMENT OF LABOR Employee Benefits Security Administration 29 CFR Part 2590 DEPARTMENT OF HEALTH AND HUMAN SERVICES CMS-9946-F 45 CFR Part 146 Amendments to Excepted Benefits AGENCIES: Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> Centers for Medicare & Medicaid Services, Department of Health and Human Services. ACTION: Final rules. SUMMARY: This document contains fi- nal regulations that amend the regulations regarding excepted benefits under the Em- ployee Retirement Income Security Act of 1974, the Internal Revenue Code (the Code), and the Public Health Service Act. Excepted benefits are generally exempt from the health reform requirements that were added to those laws by the Health Insurance Portability and Accountability Act and the Patient Protection and Afford- able Care Act. In addition, eligibility for excepted benefits does not preclude an individual from eligibility for a pre- mium tax credit under section 36B of the Code if an individual chooses to enroll in coverage under a Qualified Health Plan through an Affordable In- surance Exchange. These regulations fi- nalize some but not all of the proposed rules with minor modifications; addi- tional guidance on limited wraparound coverage is forthcoming. DATES: Effective Date. These final reg- ulations are effective on December 1, 2014 .. Applicability Date. These final regula- tions apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015. ## FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee Benefits Security Administra- tion, Department of Labor, at (202) 693- 8335; Karen Levin, Internal Revenue Ser- vice, Department of the Treasury, at (202) 317-5500; Jacob Ackerman, Centers for Medicare & Medicaid Services, Depart- ment of Health and Human Services, at (301) 492-4179. Customer Service Information: Indi- viduals interested in obtaining information from the Department of Labor concerning employment-based health coverage laws, may call the EBSA Toll-Free Hotline at 1-866-444-EBSA (3272) or visit the Depart- ment of Labor's website (http://www.dol. gov/ebsa). In addition, information from HHS on private health insurance for con- sumers can be found on the Centers for Medicare & Medicaid Services (CMS) website (www.cms.gov/cciio) and infor- mation on health reform can be found at www.HealthCare.gov. ## SUPPLEMENTARY INFORMATION: ### I. Background The Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, 110 Stat. 1936, added title XXVII of the Public Health Service Act (PHS Act), part 7 of the Employee Retirement Income Security Act of 1974 (ERISA), and chapter 100 of the Internal Revenue Code (the Code), providing portability and nondis- crimination provisions with respect to health coverage. These provisions of the PHS Act, ERISA, and the Code were later augmented by other consumer pro- tection laws, including the Mental Health Parity Act of 1996,1 the Mental Health Parity and Addiction Equity Act of 2008,2 the Newborns' and Mothers' Health Protection Act,3 the Women's Health and Cancer Rights Act,4 the Ge- netic Information Nondiscrimination Act of 2008,5 the Children's Health In- surance Program Reauthorization Act of 2009,6 Michelle's Law,7 and the Afford- able Care Act.8 The Affordable Care Act reorganizes, amends, and adds to the provisions of part A of title XXVII of the PHS Act relating to group health plans and health insurance issuers in the group and individual mar- kets. The term "group health plan" in- cludes both insured and self-insured group health plans.9 Section 715(a)(1) of ERISA and section 9815(a)(1) of the Code, as added by the Affordable Care Act, incor- porate the provisions of part A of title XXVII of the PHS Act into ERISA and the Code to make them applicable to group health plans and health insurance issuers providing health insurance cover- age in connection with group health plans. The PHS Act sections incorporated by these references are sections 2701 through 2728. Sections 2722 and 2763 of the PHS Act, section 732 of ERISA, and section 9831 of the Code provide that the require- ments of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, respectively, generally do not apply to excepted benefits. Excepted benefits are described in section 2791 of the PHS Act, section 733 of ERISA, and section 9832 of the Code. The parallel statutory provisions estab- lish four categories of excepted benefits. The first category includes benefits that are generally not health coverage10 (such as automobile insurance, liability insur- ance, workers compensation, and acciden- tal death and dismemberment coverage). The benefits in this category are excepted in all circumstances. In contrast, the ben- efits in the second, third, and fourth cate- gories are types of health coverage but are 1Pub. L. 104-204, 110 Stat. 2944 (September 26, 1996). 2Pub. L. 110-343, 122 Stat. 3881 (October 3, 2008). 3Pub. L. 104-204, 110 Stat. 2935 (September 26, 1996). 4Pub. L. 105-277, 112 Stat. 2681-436 (October 21, 1998). 5Pub. L. 110-233, 122 Stat. 881 (May 21, 2008). 6Pub. L. 111-3, 123 Stat. 65 (February 4, 2009). 7Pub. L. 110-381, 122 Stat. 4081 (October 9, 2008). 8The Patient Protection and Affordable Care Act, Public Law 111-148, was enacted on March 23, 2010, and the Health Care and Education Reconciliation Act, Public Law 111-152, was enacted on March 30, 2010. (These statutes are collectively known as the "Affordable Care Act".) 9The term "group health plan" is used in title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, and is distinct from the term "health plan," as used in other provisions of title I of the Affordable Care Act. The term "health plan" does not include self-insured group health plans. 10See 62 FR 16894, 16903 (Apr. 8, 1997), which states that these benefits are generally not health insurance coverage. <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> excepted only if certain conditions are met. The second category of excepted ben- efits is limited excepted benefits, which may include limited-scope vision or den- tal benefits, and benefits for long-term care, nursing home care, home health care, or community-based care. Section 2791(c)(2)(C) of the PHS Act, section 733(c)(2)(C) of ERISA, and section 9832(c)(2)(C) of the Code authorize the Secretaries of Health and Human Services (HHS), Labor, and the Treasury (collec- tively, the Secretaries) to issue regulations establishing other similar limited benefits as excepted benefits. The Secretaries ex- ercised this authority previously with re- spect to certain health flexible spending arrangements (health FSAs).11 To be ex- cepted under this second category, the statute (specifically, ERISA section 732(c)(1), PHS Act section 2722(c)(1), and section 9831(c)(1) of the Code) pro- vides that limited benefits must either: (1) be provided under a separate policy, cer- tificate, or contract of insurance; or (2) otherwise not be an integral part of a group health plan, whether insured or self- insured. The third category of excepted bene- fits, referred to as “noncoordinated ex- cepted benefits," includes both coverage for only a specified disease or illness (such as cancer-only policies), and hospi- tal indemnity or other fixed indemnity in- surance. In the group market, these bene- fits are excepted only if all of the following conditions are met: (1) the ben- efits are provided under a separate policy, certificate, or contract of insurance; (2) there is no coordination between the pro- vision of such benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor; and (3) the benefits are paid with respect to any event without regard to whether benefits are provided under any group health plan maintained by the same plan sponsor. 12 The fourth category of excepted bene- fits is supplemental excepted benefits. Such benefits must be: (1) coverage sup- plemental to Medicare, coverage sup- plemental to the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) or to Tricare, or similar coverage that is sup- plemental to coverage provided under a group health plan; and (2) provided un- der a separate policy, certificate, or con- tract of insurance. 13 In 2004, the Departments of the Trea- sury, Labor, and HHS published final reg- ulations with respect to excepted benefits (the HIPAA regulations).14 (Subsequent references to the "Departments" include all three Departments, unless the headings or context indicate otherwise.) On December 24, 2013, the Depart- ments issued proposed regulations with respect to the second category of excepted benefits, limited excepted benefits (2013 proposed regulations).15 The 2013 pro- posed regulations proposed to: (1) elimi- nate the requirement that participants pay an additional premium or contribution for limited-scope vision or dental benefits to qualify as benefits that are not an integral part of the plan; (2) set forth the criteria under which employee assistance pro- grams (EAPs) constitute excepted bene- fits; and (3) allow plan sponsors in limited circumstances to offer, as excepted bene- fits, coverage that wraps around certain individual health insurance coverage. The Departments stated that, until rulemaking is finalized, through at least 2014, for pur- poses of enforcing the provisions of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, the Depart- ments will consider dental and vision ben- efits and EAP benefits meeting the condi- tions of the 2013 proposed regulations to qualify as excepted benefits. After consideration of comments on the 2013 proposed regulations, the De- partments are publishing final regulations regarding dental and vision benefits and EAP benefits. The Departments also in- tend to publish regulations that address limited wraparound coverage in the fu- ture, taking into account the extensive comments received on this issue. ### II. Overview of the Final Regulations #### A. Dental and Vision Benefits Under the HIPAA regulations, vision and dental benefits are excepted if they are limited in scope (described as benefits, substantially all of which are for treatment of the eyes or mouth, respectively) and are either: (1) provided under a separate pol- icy, certificate, or contract of insurance; or (2) are otherwise not an integral part of a group health plan. While only insured coverage may qualify under the first test, both insured and self-insured coverage may qualify under the second test. The HIPAA regulations provided that benefits are not an integral part of a plan if partic- ipants have the right to elect not to receive coverage for the benefits, and, if partici- pants elect to receive coverage for such benefits, they pay an additional premium or contribution for the coverage. By con- trast, health FSA benefits could qualify as excepted benefits without any participant contribution under the HIPAA regula- tions. 16 As stated in the preamble to the 2013 proposed regulations, following enact- ment of the Affordable Care Act, various stakeholders asked the Departments to amend the HIPAA regulations in order to remove conditions for limited-scope vi- sion and dental benefits to be treated as excepted benefits. Specifically, some em- 1126 CFR 54.9831-1(c)(3)(v); 29 CFR 2590.732(c)(3)(v); 45 CFR 146.145(b)(3)(v). 1226 CFR 54.9831-1(c)(4); 29 CFR 2590.732(c)(4); 45 CFR 146.145(b)(4). See also Q7 in FAQs about Affordable Care Act Implementation Part XI, available at http://www.dol.gov/ ebsa/faqs/faq-acall.html. 1326 CFR 54.9831-1(c)(5); 29 CFR 2590.732(c)(5); 45 CFR 146.145(b)(5). The Departments issued additional guidance regarding supplemental health insurance coverage as excepted benefits. See EBSA Field Assistance Bulletin No. 2007-04 (available at http://www.dol.gov/ebsa/pdf/fab2007-4.pdf); CMS Insurance Standards Bulletin 08-01 (available at http:// www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf); and IRS Notice 2008-23 (available at http://www.irs.gov/irb/2008-07_IRB/ar09.html). 1469 FR 78720 (Dec. 30, 2004). 1578 FR 77632. 16Under the HIPAA regulations, benefits provided under a health FSA are only excepted for a class of participants if other group health coverage, not limited to excepted benefits, is made available for the year to the class of participants; and the arrangement is structured so that the maximum benefit payable to any participant in the class for a year does not exceed an amount specified in the regulations. <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> ployers represented that, although their vi- sion and dental benefits complied with the pre-Affordable Care Act requirements in title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code (such as the nondiscrimination and preexisting condition exclusion provisions), compli- ance with certain Affordable Care Act provisions presented additional chal- lenges. These employers argued that, where employers are providing such ben- efits on a self-insured basis and without a contribution from employees, employers should not be required to charge a nomi- nal contribution from participants simply for the benefits to qualify as excepted ben- efits. In some cases, the cost of collecting the nominal contribution would be greater than the contribution itself. Moreover, they pointed out that employers providing dental and vision benefits through a sepa- rate insurance policy are not required to charge a participant any premium or con- tribution in order for the dental or vision benefits to be considered excepted bene- fits. Similarly, consumer groups argued that, if an employer offers primary group health coverage that is treated as unafford- able under the Code, but offers limited- scope vision or dental coverage, such limited-scope vision or dental coverage should qualify as excepted benefits so as not to make such individuals ineligible to receive a premium tax credit under section 36B of the Code if they enroll in coverage under a Qualified Health Plan (QHP) through an Affordable Insurance Ex- change, or "Exchange" (also called a Health Insurance Marketplace or Market- place). In response to these concerns, and to achieve greater consistency between in- sured and self-insured coverage, the 2013 proposed regulations proposed eliminat- ing the requirement under the HIPAA reg- ulations that participants pay an additional premium or contribution for limited-scope vision or dental benefits to qualify as ben- efits that are not an integral part of a plan (and therefore to qualify as excepted ben- efits). The Departments invited comments on this approach. Many comments supported the concept of achieving greater consis- tency regarding the excepted benefits re- quirements for dental and vision benefits between insured and self-insured plans. One comment argued that the proposal undermined the inclusion of pediatric vi- sion and dental coverage as an essential health benefit. Other comments requested clarification as to whether separately- administered and stand-alone dental and vision benefits offered separate from, or without a connection to, a primary plan could qualify as excepted benefits. Consistent with the 2013 proposed reg- ulations, these final regulations eliminate the requirement under the HIPAA regula- tions that participants pay an additional premium or contribution for limited-scope vision or dental benefits to qualify as ex- cepted benefits. As explained in the pre- amble to the 2013 proposed regulations, without this change, an employer that es- tablishes or maintains a self-insured plan could be required to charge a nominal contribution from participants simply for limited-scope vision and dental benefits to qualify as excepted benefits and, in some cases, the cost of collecting the nominal contribution would be greater than the contribution itself. In addition, if an em- ployer offers primary group health cover- age that is unaffordable to individuals, but limited-scope vision or dental coverage, without this modification, accepting the vision or dental coverage could make such individuals ineligible to receive a pre- mium tax credit under section 36B of the Code if they enroll in coverage under a QHP through the Exchange. In addition, it is the Departments' view that the final regulations do not undermine the inclusion of pediatric vision or dental coverage as essential health benefits. The requirement that issuers in the small group market offer coverage of essential health benefits is not changed, and that rule does not apply to large or self-insured plans. Moreover, PHS Act section 2711 (as in- corporated into ERISA by section 715 and the Code by section 9815) allows self- insured plans to choose any definition of essential health benefits that is authorized by the Secretary of HHS for purposes of the prohibition on lifetime or annual dol- lar limits on essential health benefits.17 These final regulations clarify that limited-scope vision or dental benefits do not have to be offered in connection with a separate offer of major medical or "pri- mary" group health coverage under the plan, in order to meet the statutory crite- rion that such benefits are "otherwise not an integral part of the plan." To meet this criterion, limited-scope vision or dental benefits can be provided without connec- tion to a primary plan, or the limited- scope vision or dental benefits can be of- fered separately from the major medical or "primary" coverage under the plan (as described in these final regulations). Un- der the 2013 proposed regulations, in or- der to satisfy the statutory excepted ben- efits criterion that such benefits cannot otherwise be "an integral part of the plan," participants must be able to decline cov- erage. These final regulations provide that this criterion is satisfied if participants may decline coverage or the claims for the benefits are administered under a contract separate from claims administration for any other benefits under the plan. While coverage for long-term care benefits is not the focus of this rule, such benefits are also subject to the "not an integral part of a group health plan" stan- dard in order to be classified as excepted benefits. Accordingly, the revisions dis- cussed in this section of the preamble also apply to coverage of long-term care benefits. #### B. Employee Assistance Programs EAPs are typically programs offered by employers that can provide a wide- ranging set of benefits to address circum- stances that might otherwise adversely af- fect employees' work and health. Benefits may include referral services and short- term substance use disorder or mental health counseling, as well as financial counseling and legal services. They are typically available free of charge to em- ployees and are often provided through third-party vendors. Benefits for medical care provided through an EAP would gen- erally be considered group health plan coverage (and, therefore, minimum essen- tial coverage), which would generally be subject to the HIPAA and Affordable Care Act market reform requirements (and could make individuals receiving 17See CMS, Frequently Asked Questions on Essential Health Benefits Bulletin, Q10 (February 17, 2012) http://www.cms.gov/CCIIO/Resources/Files/Downloads/ehb-faq-508.pdf. <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> benefits under an EAP ineligible to re- ceive a premium tax credit under section 36B of the Code if they enroll in coverage under a QHP through the Exchange), un- less the EAP meets the criteria for being excepted benefits. Since enactment of the Affordable Care Act, various stakeholders have asked the Departments to treat EAPs as excepted benefits for reasons analogous to the ar- guments described above with respect to vision and dental benefits. Specifically, some employers represented that compli- ance with the prohibition on annual dollar limits could be problematic as such bene- fits are typically very limited, and that EAPs generally are intended to provide benefits in addition to those provided un- der other group health plans sponsored by employers. Moreover, consumer groups have represented that EAPs with very lim- ited benefits, which may be the only cov- erage offered to employees, could make such employees ineligible to receive a premium tax credit under section 36B of the Code if they enroll in coverage under a QHP through the Exchange. At the same time, the Departments recognize that no universal definition exists for EAPs, and are concerned that employers not act to shift primary coverage to a separate "EAP plan," exempt from the consumer protec- tion provisions of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, including the mental health par- ity provisions.18 In guidance issued on September 13, 2013, the Departments stated their intent to amend the excepted benefits regulations with respect to EAPs.19 The guidance also provided transition relief, stating, “[u]ntil rulemaking is finalized, through at least 2014, the Departments will consider an employee assistance program or EAP to constitute excepted benefits only if the employee assistance program or EAP does not provide significant benefits in the nature of medical care or treatment. For this purpose, employers may use a reason- able, good faith interpretation of whether an employee assistance program or EAP provides significant benefits in the nature of medical care or treatment." The 2013 proposed regulations set forth criteria for an EAP to qualify as excepted benefits beginning in 2015. Un- der the 2013 proposed regulations, bene- fits provided under EAPs are excepted if four criteria are met. First, the program cannot provide significant benefits in the nature of medical care. The Departments invited comments on how to define "sig- nificant." For example, the Departments requested comments as to whether a pro- gram that provides no more than 10 out- patient visits for mental health or sub- stance use disorder counseling, an annual wellness checkup, immunizations, and di- abetes counseling, with no inpatient care benefits, should be considered to provide significant benefits in the nature of medi- cal care.20 The second proposed criterion for an EAP to constitute excepted benefits under the 2013 proposed regulations is that its benefits cannot be coordinated with bene- fits under another group health plan. The Departments outlined three conditions to meet this proposed criterion: (i) partici- pants in the separate group health plan must not be required to exhaust benefits under the EAP (making the EAP a “gate- keeper") before an individual is eligible for benefits under the other group health plan; (ii) participant eligibility for benefits under the EAP must not be dependent on participation in another group health plan; and (iii) benefits under the EAP must not be financed by another group health plan. The third proposed criterion for an EAP to constitute excepted benefits under the 2013 proposed regulations is that no employee premiums or contributions be required to participate in the EAP. The fourth proposed criterion is that there is no cost sharing under the EAP. The criteria in the 2013 proposed reg- ulations were intended to ensure that em- ployers are able to continue offering EAPs as supplemental benefits to other cover- age, and to ensure that in circumstances in which an EAP with limited benefits is the only coverage, or the only affordable cov- erage provided to an employee, that the coverage does not unreasonably disqual- ify an employee from potential eligibility to receive a premium tax credit under sec- tion 36B of the Code if the employee enrolls in coverage under a QHP through the Exchange. The Departments requested comments on whether the criteria pro- posed are sufficient to prevent the poten- tial for abuse, including the evasion of compliance with the mental health parity provisions, and whether different or addi- tional standards should be included. The Departments received a number of comments relating to the treatment of EAPs as excepted benefits. While the comments generally supported treating EAPs as excepted benefits, there were many suggestions for clarifying or modi- fying the specific requirements in the 2013 proposed regulations for EAPs to constitute excepted benefits. In particular, many comments included suggestions for clarifying what is meant by significant benefits in the nature of medical care. Most of these comments raised concerns about the suggestion in the preamble to propose using numerical limits on the number of visits. Some comments requested that EAPs be allowed to provide wellness and dis- ease management programs, provided such programs do not provide significant benefits in the nature of medical care. However, treating wellness programs as excepted benefits by including them in an EAP would circumvent consumer protec- tions contained in the statutory standards 18The mental health parity provisions are included in PHS Act section 2726, ERISA section 712, and Code section 9812. See also final regulations on mental health parity, published at 78 FR 68239 (November 13, 2013). 19 See IRS Notice 2013-54 (available at http://www.irs.gov/pub/irs-drop/n-13-54.pdf) and DOL Technical Release 2013-03 (available at http://www.dol.gov/ebsa/newsroom/tr13-03.html), Q&A 9. See also CMS Insurance Standards Bulletin-Application of Affordable Care Act Provisions to Certain Healthcare Arrangements (available at http://www.cms.gov/CCIIO/Resources/ Regulations-and-Guidance/Downloads/cms-hra-notice-9-16-2013.pdf). 20Other examples of EAPs that do not provide significant benefits in the nature of medical care, discussed in IRS Notice 2004-50 Q&A-10 include (1) an EAP with benefits that consist primarily of free or low-cost confidential short-term counseling (which could address substance abuse, alcoholism, mental health or emotional disorders, financial or legal difficulties, and dependent care needs ) to identify an employee's problem that may affect job performance and, when appropriate, referrals to an outside organization, facility or program to assist the employee in resolving the problem; and (2) a wellness program that provides a wide-range of education and fitness services (also including sports and recreation activities, stress management, and health screenings) designed to improve the overall health of the employees and prevent illness, where any costs charged to the individual for participating in the services are separate from the individual's coverage under the health plan. <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> for wellness programs under section 2705(j) of the PHS Act as enacted by the Affordable Care Act. This suggestion is not adopted in these final regulations. Several comments opposed the prohi- bition in the 2013 proposed regulations on an EAP being financed by the other group health plan to qualify as excepted benefits. In particular, the comments noted that of- ten the EAP and the group health plan are financed by a single payment or otherwise combined, and the requirement would re- sult in disruptions of existing commercial arrangements. Moreover, these comments noted, the other requirements sufficiently protected against inappropriate coordina- tion of the EAP benefits with the benefits of the other group health plan. In addition, there were a number of comments con- cerning EAPs that were beyond the scope of the 2013 proposed regulations. After consideration of the comments, the Departments are finalizing the pro- posal, with one modification related to financing, described below.21 As with the 2013 proposed regulations, these final reg- ulations provide that, for an EAP to con- stitute excepted benefits, the EAP must satisfy four requirements. The first requirement of the 2013 pro- posed regulations and these final regula- tions is that the EAP does not provide significant benefits in the nature of medi- cal care. For this purpose, the amount, scope, and duration of covered services are taken into account. For example, an EAP that provides only limited, short- term outpatient counseling for substance use disorder services (without covering inpatient, residential, partial residential or intensive outpatient care) without requir- ing prior authorization or review for med- ical necessity does not provide significant benefits in the nature of medical care. At the same time, a program that provides disease management services (such as lab- oratory testing, counseling, and prescrip- tion drugs) for individuals with chronic conditions, such as diabetes, does provide significant benefits in the nature of medi- cal care. The Departments may, through guidance, provide additional clarification in the future regarding when a program provides significant benefits in the nature of medical care. The second requirement of these final regulations is that for an EAP to constitute excepted benefits, its benefits cannot be coordinated with the benefits under an- other group health plan. This requirement has two elements: (1) participants in the other group health plan must not be re- quired to use and exhaust benefits under the EAP (making the EAP a "gatekeeper") before an individual is eligible for benefits under the other group health plan; and (2) participant eligibility for benefits under the EAP must not be dependent on partic- ipation in another group health plan. In response to comments, these final regula- tions do not include the requirement set forth in the 2013 proposed regulations that EAP benefits cannot be financed by an- other group health plan in order to qualify as excepted benefits. The third requirement of the 2013 pro- posed regulations and these final regula- tions for EAPs to constitute excepted ben- efits is that no employee premiums or contributions may be required as a condi- tion of participation in the EAP. Finally, as with the 2013 proposed regulations, the final regulations provide that an EAP that constitutes excepted benefits may not im- pose any cost-sharing requirements. #### C. Applicability Date and Reliance In the preamble to the 2013 proposed regulations, the Departments stated that, until rulemaking is finalized, through at least 2014, for purposes of enforcing the provisions of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, the Departments will consider den- tal and vision benefits, and EAP benefits, meeting the conditions of the 2013 pro- posed regulations to qualify as excepted benefits and that, to the extent final regu- lations or other guidance with respect to vision or dental benefits or EAPs is more restrictive on plans and issuers than the 2013 proposed regulations, the final regu- lations or other guidance will not be ef- fective prior to January 1, 2015. These final regulations apply to group health plans and group health insurance issuers for plan years beginning on or after Jan- uary 1, 2015. They do not apply to health insurance issuers offering individual health insurance coverage. Until the appli- cability date of these final regulations, the Departments will consider dental and vi- sion benefits and EAP benefits meeting the conditions of the 2013 proposed reg- ulations or these final regulations to qual- ify as excepted benefits. ### III. Economic Impact and Paperwork Burden A. Summary - Department of Labor and Department of Health and Human Services As stated above, these final regulations eliminate the requirement under the HIPAA regulations that participants pay an additional premium or contribution for limited-scope vision or dental benefits to qualify as excepted benefits, and set forth four requirements for an EAP to constitute excepted benefits. B. Executive Order 12866 - Department of Labor and Department of Health and Human Services OMB has determined that this regula- tory action is significant within the mean- ing of section 3(f)(4) of the Executive Order, and the Departments accordingly provide the following assessment of its potential benefits and costs. The Depart- ments expect the impact of these final regulations to be limited. Specifically, with respect to vision and dental benefits, the final regulations allow group health plans to offer dental and vi- sion benefits to employees without charg- ing a premium or contribution. As stated earlier in the preamble, this eliminates a difference that would otherwise exist be- tween insured and self-insured coverage. With respect to EAPs, the final regulations clarify the conditions that be must be sat- 21 In the 2013 proposed regulations, the requirements regarding EAPs were proposed in paragraph (c)(3)(vii) of 26 CFR 54.9831-1, 29 CFR 2590.732, and 45 CFR 146.145. However, HHS regulations published on October 30, 2013 and effective December 30, 2013 redesignated 45 CFR 146.145(c) as paragraph (b) (78 FR at 65092). Additionally, because these regulations are finalizing only the requirements related to dental and vision benefits and EAP benefits, these final regulations have been renumbered so that the requirements regarding EAPs are now contained in paragraph (c)(3)(vi) of 26 CFR 54.9831-1 and 29 CFR 2590.732, and in paragraph (b)(3)(vi) of 45 CFR 146.145. As stated earlier in this preamble, the Departments also intend to publish regulations that address limited wraparound coverage in the future, taking into account the extensive comments received on this issue. Those provisions are intended to be codified in paragraph (c)(3)(vii) of 26 CFR 54.9831-1 and 29 CFR 2590.732, and in paragraph (b)(3)(vii) of 45 CFR 146.145. <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> isfied for such benefits to constitute ex- cepted benefits, which are not subject to the group market requirements under the PHS Act, ERISA, and the Code. Some employers represented to the De- partments that compliance with the Af- fordable Care Act presented challenges for their limited-scope vision and dental benefits and EAPs. The clarifications pro- vided in these final regulations will benefit employees by ensuring continued access to these benefits. The Departments expect these final regulations to have some costs, but these costs will be limited because the Departments expect the primary result of the final regulations will be that employ- ers providing limited-scope dental and vi- sion and EAP benefits will continue to provide such benefits and that the number of employers who will begin providing such benefits for the first time will be small. #### C. Regulatory Flexibility Act - Department of Labor and Department of Health and Human Services The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes certain requirements with respect to Federal rules that are subject to the notice and comment requirements of section 553(b) of the Ad- ministrative Procedure Act (5 U.S.C. 551 et seq.) and that are likely to have a sig- nificant economic impact on a substantial number of small entities. Unless an agency certifies that a proposed rule is not likely to have a significant economic im- pact on a substantial number of small en- tities, section 603 of RFA requires that the agency present an initial regulatory flexi- bility analysis at the time of the publica- tion of the notice of proposed rulemaking describing the impact of the rule on small entities and seeking public comment on such impact. Small entities include small businesses, organizations and governmen- tal jurisdictions. For purposes of the RFA, the Depart- ments continue to consider a small entity to be an employee benefit plan with fewer than 100 participants. The basis for this definition is found in section 104(a)(2) of the act, which permits the Secretary of Labor to prescribe simplified annual re- ports for pension plans that cover fewer than 100 participants. Pursuant to the au- thority of section 104(a)(3), the Department of Labor has previously issued at 29 CFR 2520.104-20, 2520.104-21, 2520.104-41, 2520.104-46 and 2520.104b-10 certain simplified reporting provisions and lim- ited exemptions from reporting and dis- closure requirements for small plans, in- cluding unfunded or insured welfare plans covering fewer than 100 participants and satisfying certain other requirements. Further, while some large employers may have small plans, in general small employers maintain most small plans. Thus, the Departments believe that assess- ing the impact of these final regulations on small plans is an appropriate substitute for evaluating the effect on small entities. The definition of small entity considered ap- propriate for this purpose differs, how- ever, from a definition of small business that is based on size standards promul- gated by the Small Business Adminis- tration (13 CFR 121.201) pursuant to the Small Business Act (15 U.S.C. 631 et seq.). As noted above, the Departments ex- pect the costs imposed by these regula- tions to be limited for those employers that provide dental, vision and EAP ben- efits, and that they will not affect employ- ers who do not provide such benefits. The final regulations allow employers to de- cide based on their own costs and benefits what action to take. This is true for large and small plans alike. Accordingly, the Departments believe that these final regu- lations do not have a significant economic impact on a substantial number of small entities. Accordingly, pursuant to sec- tion 605(b) of the RFA, the Departments hereby certify that these final regula- tions will not have a significant eco- nomic impact on a substantial number of small entities. #### D. Special Analyses-Department of the Treasury For purposes of the Department of the Treasury it has been determined that these final regulations are not a significant reg- ulatory action as defined in Executive Or- der 12866, as supplemented by Executive Order 13563. Therefore, a regulatory as- sessment is not required. It has also been determined that section 553(b) of the Ad- ministrative Procedure Act (5 U.S.C. chapter 5) does not apply to these final regulations, and, because these final reg- ulations do not impose a collection of information on small entities, a Regula- tory Flexibility Analysis under the Regu- latory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, these final regula- tions have been submitted to the Small Business Administration for comment on its impact on small business. #### E. Unfunded Mandates Reform Act For purposes of the Unfunded Man- dates Reform Act of 1995 (2 U.S.C. 1501 et seq.), as well as Executive Order 12875, these final regulations do not include any Federal mandate that may result in expen- ditures by State, local, or tribal govern- ments, or the private sector, which may impose an annual burden of $100 million adjusted for inflation since 1995. #### F. Federalism- Department of Labor and Department of Health and Human Services Executive Order 13132 outlines funda- mental principles of federalism. It requires adherence to specific criteria by Federal agencies in formulating and implementing policies that have "substantial direct ef- fects" on the States, the relationship be- tween the national government and States, or on the distribution of power and re- sponsibilities among the various levels of government. Federal agencies promulgat- ing regulations that have these federalism implications must consult with State and local officials, and describe the extent of their consultation and the nature of the concerns of State and local officials in the preamble to the final regulation. In the Departments' view, the final reg- ulations, by clarifying policy regarding certain excepted benefits options that can be designed by employers to support their employees, would provide more certainty to employers and others in the regulated community as well as States and political subdivisions regarding the treatment of such arrangements under the PHS Act, ERISA and the Code. Through the regular course of outreach the Departments nor- mally engage in with officials of States (and political subdivisions), the Depart- <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> ments are aware of no special federalism implications presented by these final reg- ulations. The Departments will continue to conduct regular outreach activities with States. ### G. Congressional Review Act These final regulations are subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), and will be transmitted to the Congress and to the Comptroller General for review in accordance with such provisions. ### IV. Statutory Authority The Department of the Treasury regu- lations are adopted pursuant to the author- ity contained in sections 7805 and 9833 of the Code. The Department of Labor regulations are adopted pursuant to the authority contained in 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c; sec. 101(g), Public Law 104-191, 110 Stat. 1936; sec. 401(b), Public Law 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Public Law 110-343, 122 Stat. 3765; Public Law 110-460, 122 Stat. 5123; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9, 2012). The Department of Health and Human Services regulations are adopted pursuant to the authority contained in sections 2701 through 2763, 2791, and 2792 of the PHS Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92), as amended. * * * * * #### 29 CFR Part 2590 Continuation coverage, Disclosure, Employee benefit plans, Group health plans, Health care, Health insurance, Medical child support, Reporting and re- cordkeeping requirements. 45 CFR Part 146 Health care, Health insurance, Report- ing and recordkeeping requirements, and State regulation of health insurance. John Dalrymple Deputy Commissioner for Services and Enforcement, Internal Revenue Service. Approved September 25, 2014. Mark J. Mazur Assistant Secretary of the Treasury (Tax Policy). Signed this 25th day of September, 2014. Phyllis C. Borzi, Assistant Secretary,Employee Benefits Security Administration, Department of Labor Dated: Marilyn Tavenner, Administrator, Centers for Medicare & Medicaid Services. Dated: Sylvia Burwell, Secretary, Department of Health and Human Services. ## DEPARTMENT OF THE TREASURY ### Internal Revenue Service Accordingly, 26 CFR Part 54 is amended as follows: ## PART 54-PENSION EXCISE TAXES Paragraph 1. The authority citation for part 54 continues to read, in part, as follows: Authority: 26 U.S.C. 7805. * * * Section 54.9831-1 is also issued under 26 U.S.C. 9833; * * * Par. 2. Section 54.9831-1 is amended by revising paragraphs (c)(3)(i) and (c)(3)(ii), and adding paragraph (c)(3)(vi), to read as follows: § 54.9831-1 Special rules relating to group health plans. * * * * * (c) * * * (3) * * * (i) In general. Limited-scope dental benefits, limited-scope vision benefits, or long-term care benefits are excepted if they are provided under a separate policy, certificate, or contract of insurance, or are otherwise not an integral part of a group health plan as described in paragraph (c)(3)(ii) of this section. In addition, ben- efits provided under a health flexible spending arrangement are excepted bene- fits if they satisfy the requirements of paragraph (c)(3)(v) of this section. Fur- thermore, benefits provided under an em- ployee assistance program are excepted benefits if they satisfy the requirements of paragraph (c)(3)(vi) of this section. (ii) Not an integral part of a group health plan. For purposes of this para- graph (c)(3), benefits are not an integral part of a group health plan (whether the benefits are provided through the same plan, a separate plan, or as the only plan offered to participants) if either paragraph (c)(3)(ii)(A) or (B) are satisfied. (A) Participants may decline coverage. For example, a participant may decline coverage if the participant can opt out of the coverage upon request, whether or not there is a partic- ipant contribution required for the coverage. (B) Claims for the benefits are admin- istered under a contract separate from claims administration for any other bene- fits under the plan. * * * * * (vi) Employee assistance programs. Benefits provided under employee assis- tance programs are excepted if they sat- isfy all of the requirements of this para- graph (c)(3)(vi). (A) The program does not provide sig- nificant benefits in the nature of medical care. For this purpose, the amount, scope and duration of covered services are taken into account. (B) The benefits under the employee assistance program are not coordinated with benefits under another group health plan, as follows: (1) Participants in the other group health plan must not be required to use and exhaust benefits under the employee assistance program (making the employee assistance program a gatekeeper) before an individual is eligible for benefits under the other group health plan; and (2) Participant eligibility for benefits under the employee assistance program must not be dependent on participation in another group health plan. (C) No employee premiums or contribu- tions are required as a condition of partici- pation in the employee assistance program. (D) There is no cost sharing under the employee assistance program. * * * * * <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> ## Part III. Administrative, Procedural, and Miscellaneous Guidance on Pension Funding Stabilization under the Highway and Transportation Funding Act of 2014 (HATFA) Notice 2014-53 ### I. PURPOSE This notice provides guidance on the changes to the funding stabilization rules for single-employer pension plans under the Internal Revenue Code (Code) and the Employee Retirement Income Security Act of 1974 (ERISA)1 that were made by section 2003 of the Highway and Trans- portation Funding Act of 2014 (HATFA), Pub. L. No. 113-159, which was enacted on August 8, 2014. ## II. BACKGROUND Section 430 specifies the minimum funding requirements that generally apply to single-employer defined benefit pen- sion plans pursuant to § 412. Section 430(h)(2) specifies interest rates that are used for purposes of calculating the min- imum required contribution. The interest rates that are used for this purpose are a set of three segment rates described in § 430(h)(2)(C)(i), (ii) and (iii), or, alter- natively, a full yield curve described in § 430(h)(2)(D)(i). Section 430(h)(2)(C)(iv), which was added by the Moving Ahead for Progress in the 21st Century Act of 2012 (MAP- 21), Pub. L. No.112-141, provides that each of the three segment rates described in § 430(h)(2)(C)(i), (ii) and (iii) for a plan year is adjusted as necessary to fall within a specified range that is determined based on an average of the corresponding seg- ment rates for the 25-year period ending on September 30 of the calendar year pre- ceding the first day of that plan year. For plan years beginning in 2012, each seg- ment rate is adjusted so that it is no less than 90% and no more than 110% of the corresponding 25-year average segment rate. Under § 430(h)(2)(C)(iv)(II) as in effect prior to its modification by HATFA, this range was scheduled to gradually in- crease for later plan years, so that the segment rates for plan years beginning after 2015 would have been no less than 70% and no more than 130% of the cor- responding 25-year average segment rates. Notice 2012-61, 2012-42 I.R.B. 479, provides guidance regarding the changes to the minimum funding requirements and related rules made by MAP-21. Notice 2012-61 includes general guidance relat- ing to the application of the modified seg- ment rates (referred to in Notice 2012-61 and this notice as the MAP-21 segment rates), measurements for which the modified segment rates do not apply, transition issues, elections, reporting, and other issues. HATFA extends the period during which the narrowest range around the 25- year average segment rates applies for pur- poses of determining the segment rates that are used to apply §§ 430 and 436. Under the modifications to § 430(h)(2)(C)(iv) made by HATFA, for plan years beginning in 2012 through 2017, each segment rate is ad- justed so that it is no less than 90% and no more than 110% of the corresponding 25- year average segment rate. For later plan years, this range is scheduled to gradually increase, so that the segment rates for plan years beginning after 2020 are no less than 70% and no more than 130% of the corresponding 25-year average segment rates. The segment rates as modified by HATFA are referred to in this notice as the HATFA segment rates. Section 436 sets forth a series of limi- tations on the accrual and payment of ben- efits under an underfunded plan. These limitations are applied during a plan year based on the plan's adjusted funding tar- get attainment percentage (AFTAP). Sec- tion 2003(c) of HATFA provides that the limitation on interest rates based on the corresponding 25-year average segment rates does not apply for purposes of § 436(d)(2) (relating to limitations on ac- celerated benefit distributions for a plan sponsored by an employer in bankruptcy). Section 2003(e)(1) of HATFA provides that the modifications to § 430(h)(2)(C)(iv) apply with respect to plan years beginning after December 31, 2012. Under section 2003(e)(2) of HATFA, a plan sponsor can elect not to have the modifications to § 430 apply to any plan year beginning in 2013, either for all purposes or solely for purposes of determining the plan's AFTAP for that plan year (which is used to apply the benefit restrictions under § 436). This notice provides guidance on cer- tain issues relating to HATFA. Notice 2012-61 continues to apply except to the extent the statutory provisions have changed. ## III. ELECTION TO DEFER USE OF HATFA SEGMENT RATES UNTIL THE 2014 PLAN YEAR This section III sets forth the proce- dures for elections made pursuant to sec- tion 2003(e)(2) of HATFA that relate to a plan year beginning in 2013. A. Procedure for electing to defer use of HATFA segment rates Except as provided in section III.B of this notice (which provides for a deemed election to defer the use of the HATFA segment rates for purposes of both §§ 430 and 436 based on the filing of Form 5500 under some circumstances), a plan spon- sor elects to defer the use of the HATFA segment rates, either for all purposes or solely for purposes of § 436, until the first plan year beginning on or after January 1, 2014, by providing written notice to the enrolled actuary for the plan and to the plan administrator. The notice must specify the name of the plan, employer identification number and plan number, and whether the use of the HATFA seg- ment rates is deferred for all purposes or only for determination of the AFTAP used to apply benefit restrictions under § 436. The election described in this section III.A is irrevocable, and must be made no 1Under section 101 of Reorganization Plan No. 4 of 1978 (43 FR 47713) and section 3002(c) of ERISA, the Secretary of the Treasury has interpretive jurisdiction over the subject matter addressed in this notice for purposes of ERISA, as well as the Code. Thus, the provisions of this notice pertaining to §§ 430 and 436 of the Code also apply for purposes of sections 303 and 206(g) of ERISA. <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> later than the later of: (1) the deadline for filing the Form 5500, Form 5500-SF or Form 5500-EZ (including extensions) for the plan year beginning in 2013; or (2) December 31, 2014. B. Deemed election to defer use of the HATFA segment rates for purposes of both §§ 430 and 436 through filing of Form 5500, Form 5500-SF or Form 5500-EZ With respect to a plan year beginning in 2013, if, on or before December 31, 2014, the Form 5500, Form 5500-SF or Form 5500-EZ is filed and the Schedule SB reflects the MAP-21 segment rates, then an election to defer use of the HATFA segment rates for purposes of both §§ 430 and 436 until the first plan year beginning on or after January 1, 2014 is deemed made. If an election is deemed made pursuant to this section III.B, the election is permitted to be revoked by filing, no later than December 31, 2014, an amended Form 5500, Form 5500-SF, or Form 5500-EZ2 for the plan year, with a revised Schedule SB that reflects the use of the HATFA segment rates. Alterna- tively, the deemed election is permitted to be revoked by either providing written notice of the revocation (which includes the name of the plan, employer identifica- tion number and plan number) to the en- rolled actuary for the plan and to the plan administrator or by making the election described in section III.A of this notice to defer the use of HATFA segment rates only for purposes of § 436, but only if (1) a copy of the notice of the revocation or of the election is e-mailed to the Pension Benefit Guaranty Corporation (PBGC) at revoke.deemed.HATFA.election@pbgc.gov on or before December 31, 2014 (includ- ing in the subject line of the e-mail the plan sponsor's employer identification number, the plan number, and the name of the plan), and (2) at the time of the revo- cation of the deemed election, the plan sponsor is not a debtor in a case under title 11, United States Code, or similar federal or state law. If the plan sponsor revokes the deemed election using this alternative method, then an amended Form 5500, Form 5500-SF, or Form 5500-EZ for the plan year must be filed no later than the date on which Form 5500, Form 5500-SF or Form 5500-EZ is timely filed for the following plan year, and the revised Schedule SB must reflect the use of the HATFA segment rates. If the plan sponsor revokes the deemed election, the plan sponsor can also elect to defer use of the HATFA segment rates only for purposes of § 436 under the rules of section III.A of this notice. An election that is deemed made pursuant to this sec- tion III.B is irrevocable if it is not revoked in the time and manner set forth in this section III.B. ## IV. SECTION 430 ELECTIONS AND REDESIGNATIONS AVAILABLE FOR THE 2013 PLAN YEAR This section IV sets forth rules regard- ing elections and designations relating to the minimum funding requirements appli- cable to the plan for the plan year begin- ning in 2013. Any action otherwise per- mitted in this section IV is not permitted to the extent it (1) would result in the imposition of benefit restrictions under § 436 for the plan year beginning in 2013 or 2014 that would otherwise not be im- posed, or (2) would result in an unpaid minimum required contribution for any plan year beginning before 2014. The pro- cedural and timing rules governing the acts permitted under this section IV are in section IV.E of this notice. A. Reversal of an election to reduce funding balances A plan sponsor is permitted to elect to reverse all or part of any election under § 1.430(f)-1(e) to reduce the plan's fund- ing standard carryover balance or pre- funding balance as of the first day of a plan year beginning in 2013 if (i) the HATFA segment rates apply for purposes of determining the minimum required contribution for that plan year, and (ii) the reduction election was made on or before September 30, 2014. It is expected that the regulations under § 430(f) will be revised to permit this exception to the general rule that any election to reduce the plan's funding standard carryover balance or prefunding balance is irrevocable. Under § 1.436-1(a)(5), there may have been deemed elections to reduce the fund- ing standard carryover balance or pre- funding balance to avoid or remove ben- efit restrictions under § 436 for the plan year beginning in 2013. If the HATFA segment rates are applied retroactively for purposes of § 436 for a plan year begin- ning in 2013, the election to reverse a reduction under this section IV.A also ap- plies to such a deemed election that was made in conjunction with a certification of the plan's AFTAP for the plan year. How- ever, any reduction election that was made to avoid or remove benefit restrictions un- der § 436 during the period before the date of the original AFTAP certification for the 2013 plan year cannot be reversed even if the HATFA segment rates apply retroac- tively for purposes of § 436 for the plan year. This is because the AFTAP based on the HATFA segment rates will not apply to that portion of the plan year and there- fore the reversal of any reduction election that was made to avoid or remove benefit restrictions under § 436 during that period would result in the imposition of new re- strictions. B. Late elections to add excess contri- butions for the 2013 plan year to the pre- funding balance If the HATFA segment rates apply for purposes of determining the minimum re- quired contribution for a plan year begin- ning in 2013, the plan sponsor is permitted to make (or increase) the election under § 1.430(f)-1(b)(1)(ii) to add excess con- tributions for that plan year to the plan's prefunding balance as of the first day of the following plan year. It is expected that the regulations under § 430(f) will be re- vised to permit this extension of time to make this election. C. Redesignation of a section 436 con- tribution If the HATFA segment rates are ap- plied retroactively for purposes of § 436 for a plan year beginning in 2013, any section 436 contribution within the mean- ing of § 1.436-1(j)(7) that was made in connection with the certified AFTAP for 2Schedule SB is not required to be filed for plans for which Form 5500-EZ is filed and certain plans for which Form 5500-SF is filed. For these plans, the Schedule SB must be completed (including being signed by the enrolled actuary) and delivered to the plan administrator, who must retain it. With respect to these plans, references in section III.B of this notice to the filing of an amended Form 5500, Form 5500-SF, or Form 5500-EZ with a revised Schedule SB are applied by substituting the completion and delivery of the revised Schedule SB for the filing of the amended form. <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> that plan year is applied toward the min- imum required contribution for that plan year to the extent the contribution is no longer required to avoid or remove the benefit restriction. However, no change is permitted with respect to section 436 con- tributions that were made in connection with a presumed AFTAP before the AFTAP was certified for the plan year. ### D. Redesignation of a contribution originally designated for 2013 Despite the general position of the IRS that a contribution designated for a partic- ular plan year cannot be redesignated to apply for another plan year after the Schedule SB is filed, the plan sponsor may choose to redesignate all or a portion of a contribution that was originally desig- nated as applying to the plan year begin- ning in 2013 to apply to a plan year that begins in 2014. This rule applies only to contributions made after the end of the 2013 plan year and on or before Septem- ber 30, 2014 and applies only if the orig- inal designation is on a Schedule SB for the 2013 plan year that is filed on or before December 31, 2014.3 ### E. Procedural and timing rules Any reversal of an election, election made after the generally applicable dead- line, or redesignation of contributions un- der this section IV is made by the plan sponsor by providing written notification to the plan's enrolled actuary and plan administrator, and must be made no later than the last day of the plan year begin- ning in 2014. The written notification must specify the name of the plan, the employer identification number and plan number, and must set forth the relevant details, including the specific dollar amount involved. A conditional or formula-based election does not satisfy this requirement. ## V. REPORTING REQUIREMENTS IF THE HATFA SEGMENT RATES APPLY TO THE 2013 PLAN YEAR With respect to the plan year beginning in 2013, if the plan uses the segment rates and the plan sponsor has not elected to defer the use of the HATFA segment rates in accordance with section III.A or III.B of this notice, then the Schedule SB for that plan year must reflect the use of the HATFA segment rates. ## VI. APPLICATION OF § 436 AND RELATED RULES FOR A PLAN YEAR BEGINNING AFTER DECEMBER 31, 2012 AND BEFORE OCTOBER 1, 2014 This notice provides special rules relat- ing to the application of the benefit restric- tions under § 436 and related rules for a plan year beginning after December 31, 2012 and before October 1, 2014 for a plan for which the modifications made by HATFA to § 430(h)(2)(C)(iv) are applied for purposes of determining the plan's AFTAP for the plan year. A plan year to which this section VI applies is referred to in this section VI as an applicable plan year. A. Presumptions apply based on prior year AFTAP The benefit restrictions under § 436 for an applicable plan year are applied based on the presumed AFTAP before the date, if any, that the AFTAP is certified for that applicable plan year. Thus, the application of the HATFA segment rates does not affect the application of the presumption rules under § 436(h) for the first plan year for which those rates apply to the plan for purposes of § 436 (but affects the appli- cation of those presumption rules for the subsequent plan year). B. Rules if first certification uses HATFA segment rates If the first AFTAP certification for an applicable plan year (which may be a range certification pursuant to § 1.436- 1(h)(4)(ii)) is made using the HATFA segment rates, the benefit restrictions un- der § 436 apply based on that AFTAP in accordance with the rules of §§ 1.436- 1(g) and (h). C. Rules if first certification uses MAP-21 segment rates If, on or before September 30, 2014, the AFTAP for an applicable plan year is certified using the MAP-21 segment rates, the AFTAP for that applicable plan year must be determined using the HATFA segment rates. If the change in the AFTAP using the HATFA segment rates rather than the MAP-21 segment rates results in a material change to the AFTAP, then the AFTAP must be recertified. In such a case, the plan sponsor can choose to apply any resulting change in the application of the benefit restrictions under § 436 either (i) prospectively, as described in section VI.D of this notice or (ii) retroactively to the date that the AFTAP was originally certified, as described in section VI.E of this notice. If the HATFA segment rates are applied to determine the certified AFTAP for the plan year beginning in 2013, then the option to apply any change in the application of § 436 as a result of recertification of the AFTAP using the HATFA segment rates prospectively is not available for the plan year beginning in 2014. For the first plan year for which the HATFA segment rates apply for pur- poses of § 436, if the AFTAP using the HATFA segment rates is certified before the end of the plan year, then in the ab- sence of an affirmative election to apply the changes retroactively as described in section VI.E of this notice, the plan spon- sor will be treated as having elected to apply any changes prospectively as de- scribed in section VI.D of this notice. All plan operations and elections must be con- sistent with this choice of whether to ap- ply the AFTAP using the HATFA seg- ment rates retroactively or prospectively, and any plan operations that were incon- sistent with this choice must be corrected as described in section VI.G of this notice. If any AFTAP certification for an ap- plicable plan year using the MAP-21 seg- ment rates is made after September 30, 2014, then the rules regarding a change in the AFTAP set forth in § 1.436- 1(h)(4)(iii) and (iv) apply with respect to the determination of the AFTAP for that plan year that must be made using the HATFA segment rates. D. Prospective application of change in benefit restrictions reflecting HATFA seg- ment rates If the AFTAP is certified for an appli- cable plan year using the MAP-21 seg- ment rates, then any subsequent change to that certification (including a certification based on the HATFA segment rates) is subject to the rules regarding a change in 3With respect to a plan for which the Schedule SB need not be filed, as described in footnote 2 of this notice, the reference to filing of the Schedule SB is replaced by the completion and delivery of the Schedule SB. <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> the AFTAP set forth in § 1.436- 1(h)(4)(iii) and (iv). Section 1.436-1(h)(4)(iii) sets forth rules relating to changes in certified AFTAPs and provides a special rule that deems a change in the AFTAP attributable to certain events as "immaterial," even if the change would otherwise be a material change. The effect of having an event for which the change in AFTAP is deemed immaterial is that a plan administrator can reflect the event on a prospective basis beginning with the date of the event, pro- vided that the AFTAP is recertified as soon as practicable thereafter. It is ex- pected that § 1.436-1(h)(4)(iii)(C) will be amended to provide that additional events can be added to the list of deemed imma- terial events in guidance of general appli- cability. If (1) on or before September 30, 2014, the AFTAP is certified for an applicable plan year using the MAP-21 segment rates, (2) a certification for that applicable year is subsequently made using the HATFA segment rates, and (3) the plan sponsor does not choose to apply any change in those restrictions retroactively as described in section VI.E of this notice; then the change in AFTAP attributable to the use of the HATFA segment rates for an applicable plan year under this section VI.D is treated as a deemed immaterial change. The date of the event is October 1, 2014 (or the date of the revised AFTAP certification, if earlier). Accordingly, if the plan sponsor chooses to apply any changes in the § 436 restrictions prospec- tively for an applicable plan year as de- scribed in this section VI.D, any change in benefit restrictions resulting from the up- dated AFTAP determination using the HATFA segment rates must be effective as of the earlier of (1) October 1, 2014, or (2) the date the AFTAP for the applicable plan year is recertified using the HATFA segment rates. The requirement that the AFTAP be recertified to reflect the HATFA segment rates as soon as practicable after the event giving rise to the deemed immaterial change will not be satisfied if the recerti- fication occurs later than December 31, 2014. E. Retroactive application of change in benefit restrictions reflecting HATFA seg- ment rates If (1) on or before September 30, 2014, the AFTAP is certified for an applicable plan year using the MAP-21 segment rates, (2) a certification for that applicable plan year is subsequently made using the HATFA segment rates, and (3) the plan sponsor elects to apply the AFTAP deter- mined using the HATFA segment rates retroactively as described in this section VI.E; then the operations of the plan must be conformed to that updated AFTAP for the period beginning when the AFTAP for the plan year was originally certified. In addition, if the HATFA segment rates ap- ply for purposes of determining the AFTAP for the plan year beginning in 2013, then operations of the plan during the plan year beginning in 2014 must be conformed to apply the rules of § 1.436- 1(g) and (h) using the redetermined 2013 AFTAP as the AFTAP for the preceding plan year, during the period beginning on the first day of the plan year beginning in 2014 and ending when the AFTAP for that plan year was originally certified. F. Reversal of an election to reduce funding balances and redesignation of section 436 contributions for the 2014 plan year Sections IV.A and IV.C of this notice permit the reversal of an election to re- duce a funding balance and the redesigna- tion of a section 436 contribution for an applicable plan year beginning in 2013. Under this section VI.F, a reversal of an election made on or before October 1, 2014 to reduce a funding balance or a redesignation of a section 436 contribu- tion made on or before October 1, 2014 is permitted for the plan year beginning in 2014. Any reversal of an election or redesig- nation of a section 436 contribution under this section VI.F is not permitted to the extent it would result in the imposition of benefit restrictions under § 436 for the plan year beginning in 2014 that would otherwise not be imposed. Accordingly, if the plan year beginning in 2014 is the first applicable plan year, any reduction elec- tion that was made to avoid or remove benefit restrictions under § 436 during the period before the date of the original AFTAP certification for that plan year cannot be reversed. This is because the AFTAP based on the HATFA segment rates will not apply to that portion of the plan year and therefore the reversal of any reduction election that was made to avoid or remove benefit restrictions under § 436 during that period would result in the im- position of new restrictions. Similarly, if the plan year beginning in 2014 is the first applicable plan year, no change is permit- ted with respect to section 436 contribu- tions that were made in connection with a presumed AFTAP before the AFTAP was certified for the plan year. G. Corrections Once a plan's AFTAP for an applica- ble plan year has been certified using the HATFA segment rates, the plan adminis- trator must take any corrective actions necessary to conform plan operations to this certified AFTAP, if applying this cer- tified AFTAP would have changed the application of the § 436 restrictions for the period (1) beginning with the date of the immaterial event described in section VI.D of this notice (if the AFTAP certifi- cation applying the HATFA segment rates applies prospectively under section VI.D) or (2) beginning with the date the AFTAP for the year was first certified, as applica- ble (if the AFTAP certification applying the HATFA segment rates applies retro- actively under section VI.E). If the plan year beginning in 2013 is an applicable plan year, the period for potential correc- tion also includes the period during the 2014 plan year before the AFTAP for that plan year beginning in 2014 was origi- nally certified. If the corrective actions described in this section VI.G are taken to reflect the application of the new certified AFTAP, then the plan's operations are treated as having been consistent with the provisions of the plan document relative to the re- quirements of § 436. For this purpose, the provisions of the Employee Plans Com- pliance Resolution System (EPCRS), as set forth in Rev. Proc. 2013-12, 2013-4 I.R.B. 313, apply, except that a plan is eligible for self-correction under sections 7, 8, and 9 of Rev. Proc. 2013-12 without regard to the requirements of sections 4.03 (requiring a favorable IRS determination letter) and 4.04 (requiring certain estab- lished practices and procedures) of that revenue procedure. Consistent with § 1.436-1(a)(4)(iii), if unpredictable contingent event benefits due to an event occurring during a plan <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> year beginning in 2013 or 2014 are not permitted to be paid because of restric- tions under § 436(b), but are later permit- ted to be paid as a result of a new certifi- cation of the AFTAP for the plan year reflecting the HATFA segment rates, then those unpredictable contingent event ben- efits must become payable, retroactive to the period those benefits would have been payable under the terms of the plan (other than plan terms implementing the require- ments of § 436(b)). Consistent with § 1.436-1(a)(4)(iv), if a plan amendment with an effective date during a plan year beginning in 2013 or 2014 does not take effect because of the limitations of § 436(c), but is later permit- ted to take effect as a result of a new certification of the AFTAP for the plan year reflecting the HATFA segment rates, then the plan amendment must automati- cally take effect as of the first day of that plan year (or, if later, the original effective date of the amendment). For any prohibited payment that was not permitted to be paid during a plan year beginning in 2013 or 2014 because of the restrictions under § 436(d), but is permit- ted to be paid as a result of a new certifi- cation of the AFTAP reflecting the HATFA segment rates, the plan has taken adequate corrective action if it makes the prohibited payment available to partici- pants or beneficiaries who would have been eligible for the prohibited payment (includ- ing a prohibited payment that is available on a restricted basis under § 436(d)(3)) on or after the dates described in the first para- graph of this section VI.G. For any accruals that were not permit- ted to accrue during a plan year beginning in 2013 or 2014 because of restrictions under § 436(e), but are permitted to accrue as a result of a new certification of the AFTAP reflecting the HATFA segment rates, the plan has taken adequate correc- tive action if it restores benefits that ac- crue during the period that begins on the date described in the first paragraph of this section VI.G. In the case of a participant or benefi- ciary who, as a result of any of the changes described in this section VI.G is entitled to increased benefits, to benefits payable at a special early retirement date, or to benefits payable in a different form of payment (and who elects such different form of payment, with spousal consent, if applicable), the required correction is to provide the benefit payments in the in- creased amount or other form of payment commencing with a new prospective an- nuity starting date. However, if payments have already commenced, the correction is to provide the participant with (1) future benefit payments that are paid in the same manner and amount as if the participant had begun receiving the corrected pay- ment at his or her original annuity starting date, and (2) a make-up for past under- payments. The make-up for past under- payments is equal to the aggregate differ- ence between the past payments actually received and the amounts that would have been received had the benefit commenced in the correct form of payment at the participant's original annuity starting date, plus interest to the date of the correction (in accordance with EPCRS), and may be paid as either (i) a single-sum payment, or (ii) an actuarially equivalent increase in the amount of future benefit payments. ## VII. PAPERWORK REDUCTION ACT The collections of information con- tained in this notice have been reviewed and approved by the Office of Manage- ment and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507) under control number 1545-2095. An agency may not conduct or spon- sor, and a person is not required to re- spond to, a collection of information un- less the collection of information displays a valid OMB control number. The collections of information in this notice are in sections III, IV, and VI of this notice. The collections of information are required to implement the application of the funding relief under section 2003 of HATFA. The collections of information are mandatory for those plan sponsors making various elections when applying the amendments made by HATFA to a plan and any plan sponsor of a plan for which the 2014 AFTAP was certified us- ing MAP-21 segment rates. For the collections in section III of this notice (relating to the election and possi- ble amendment of Schedule SB for the 2013 plan year), the estimated total num- ber of respondents is 39,600 plans. The estimated annual burden per respondent varies from 15 minutes to 1 hour and 45 minutes, depending on individual circum- stances, with an estimated average of 23 minutes. The estimated total annual re- porting and/or recordkeeping burden is 15,200 hours. For the collections in sections IV and VI of this notice (relating to elections re- garding the application of benefit restric- tions under § 436), the estimated total number of respondents is 37,000 plans. The estimated annual burden per respon- dent varies from 15 minutes to 45 min- utes, depending on individual circum- stances, with an estimated average of 37 minutes. The estimated total annual re- porting and/or recordkeeping burden is 22,800 hours. Estimates of the annualized cost to re- spondents are not relevant, because each collection of information in this notice is a one-time collection. Books or records relating to a collec- tion of information must be retained as long as their contents may become mate- rial in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by § 6103. ## VIII. DRAFTING INFORMATION The principal authors of this notice are Tonya B. Manning and Carolyn E. Zim- merman of the Employee Plans, Tax Ex- empt and Government Entities Division. For further information regarding this no- tice, please contact the Employee Plans taxpayer assistance answering service at 1-877-829-5500 (a toll free number) or e-mail Ms. Manning or Ms. Zimmerman at RetirementPlanQuestions@irs.gov. ## Extension of Replacement Period for Livestock Sold on Account of Drought ### Notice 2014-60 SECTION 1. PURPOSE This notice provides guidance regard- ing an extension of the replacement period under § 1033(e) of the Internal Revenue Code for livestock sold on account of drought in specified counties. <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> # SECTION 2. BACKGROUND .01 Nonrecognition of Gain on Invol- untary Conversion of Livestock. Section 1033(a) generally provides for nonrecog- nition of gain when property is involun- tarily converted and replaced with prop- erty that is similar or related in service or use. Section 1033(e)(1) provides that a sale or exchange of livestock (other than poultry) held by a taxpayer for draft, breeding, or dairy purposes in excess of the number that would be sold following the taxpayer's usual business practices is treated as an involuntary conversion if the livestock is sold or exchanged solely on account of drought, flood, or other weather-related conditions. .02 Replacement Period. Section 1033(a)(2)(A) generally provides that gain from an involuntary conversion is recognized only to the extent the amount realized on the conversion exceeds the cost of replacement property purchased during the replacement period. If a sale or exchange of livestock is treated as an in- voluntary conversion under § 1033(e)(1) and is solely on account of drought, flood, or other weather-related conditions that result in the area being designated as eli- gible for assistance by the federal govern- ment, § 1033(e)(2)(A) provides that the replacement period ends four years after the close of the first taxable year in which any part of the gain from the conversion is realized. Section 1033(e)(2)(B) provides that the Secretary may extend this replace- ment period on a regional basis for such additional time as the Secretary deter- mines appropriate if the weather-related conditions that resulted in the area being designated as eligible for assistance by the federal government continue for more than three years. Section 1033(e)(2) is ef- fective for any taxable year with respect to which the due date (without regard to ex- tensions) for a taxpayer's return is after December 31, 2002. SECTION 3. EXTENSION OF REPLACEMENT PERIOD UNDER § 1033(e)(2)(B) Notice 2006-82, 2006-2 C.B. 529, provides for extensions of the replacement period under § 1033(e)(2)(B). If a sale or exchange of livestock is treated as an in- voluntary conversion on account of drought and the taxpayer's replacement period is determined under § 1033(e)(2)(A), the replacement period will be extended under § 1033(e)(2)(B) and Notice 2006-82 until the end of the taxpayer's first taxable year ending after the first drought-free year for the applicable region. For this purpose, the first drought-free year for the applicable region is the first 12-month pe- riod that (1) ends August 31; (2) ends in or after the last year of the taxpayer's 4-year replacement period determined under § 1033(e)(2)(A); and (3) does not include any weekly period for which excep- tional, extreme, or severe drought is re- ported for any location in the applicable region. The applicable region is the county that experienced the drought conditions on account of which the live- stock was sold or exchanged and all counties that are contiguous to that county. A taxpayer may determine whether ex- ceptional, extreme, or severe drought is reported for any location in the applicable region by reference to U.S. Drought Mon- itor maps that are produced on a weekly basis by the National Drought Mitigation Center. U.S. Drought Monitor maps are archived at http://droughtmonitor.unl.edu/ mapsanddata/maparchive.aspx. In addition, Notice 2006-82 provides that the Internal Revenue Service will publish in September of each year a list of counties, districts, cities, boroughs, census areas or parishes (hereinafter "counties") for which exceptional, extreme, or severe drought was reported during the preceding 12 months. Taxpayers may use this list instead of U.S. Drought Monitor maps to determine whether exceptional, ex- treme, or severe drought has been re- ported for any location in the applicable region. The Appendix to this notice contains the list of counties for which exceptional, extreme, or severe drought was reported during the 12-month period ending Au- gust 31, 2014. Under Notice 2006-82, the 12-month period ending on August 31, 2014, is not a drought-free year for an applicable region that includes any county on this list. Accordingly, for a taxpayer who qualified for a 4-year replacement period for livestock sold or exchanged on account of drought and whose replace- ment period is scheduled to expire at the end of 2014 (or, in the case of a fiscal year taxpayer, at the end of the taxable year that includes August 31, 2014), the re- placement period will be extended under § 1033(e)(2) and Notice 2006-82 if the applicable region includes any county on this list. This extension will continue until the end of the taxpayer's first taxable year ending after a drought-free year for the applicable region. # SECTION 4. DRAFTING INFORMATION The principal author of this notice is Andrew Braden of the Office of Associate Chief Counsel (Income Tax & Account- ing). For further information regarding this notice contact Mr. Braden on (202) 317-4725 (not a toll-free number). # APPENDIX Alabama County of Henry. Alaska Boroughs of Denali, Fairbanks North Star. Census Areas of Southeast Fair- banks, Yukon-Koyukuk. Arizona Counties of Apache, Cochise, Co- conino, Gila, Graham, Greenlee, La Paz, Maricopa, Mohave, Navajo, Pima, Pinal, Santa Cruz, Yavapai, Yuma. Arkansas Counties of Arkansas, Ashley, Brad- ley, Calhoun, Chicot, Clark, Cleveland, Columbia, Dallas, Desha, Drew, Grant, Hempstead, Howard, Jefferson, Lafayette, Lee, Lincoln, Little River, Lonoke, Miller, Monroe, Nevada, Ouachita, Phil- lips, Prairie, Pulaski, Sevier, Union. California Counties of Alameda, Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Kern, Kings, Lake, Lassen, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Orange, Placer, Plumas, Riverside, Sacra- mento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuol- umne, Ventura, Yolo, Yuba. <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> Colorado Counties of Alamosa, Arapahoe, Archuleta, Baca, Bent, Chaffee, Chey- enne, Conejos, Costilla, Crowley, Custer, Dolores, Douglas, Eagle, Elbert, El Paso, Fremont, Garfield, Gunnison, Hinsdale, Huerfano, Jackson, Jefferson, Kiowa, Kit Carson, La Plata, Las Animas, Lincoln, Logan, Mesa, Mineral, Moffat, Montezuma, Montrose, Otero, Ouray, Park, Phillips, Prowers, Pueblo, Rio Blanco, Rio Grande, Routt, Saguache, San Juan, San Miguel, Sedgwick, Teller, Weld, Yuma. Florida County of Jackson. Georgia Counties of Atkinson, Baker, Berrien, Brooks, Calhoun, Clay, Clinch, Coffee, Colquitt, Cook, Decatur, Dougherty, Early, Echols, Grady, Irwin, Lanier, Lowndes, Miller, Mitchell, Randolph, Seminole, Thomas, Tift, Ware. Hawaii Counties of Hawaii, Kalawao, Maui. Idaho Counties of Ada, Adams, Bannock, Bingham, Blaine, Boise, Bonneville, Butte, Camas, Canyon, Caribou, Cassia, Clark, Custer, Elmore, Franklin, Fremont, Gem, Gooding, Idaho, Jefferson, Jerome, Lemhi, Lincoln, Madison, Minidoka, Oneida, Owyhee, Payette, Power, Twin Falls, Valley, Washington. Illinois Counties of Adams, Bureau, Carroll, Champaign, Christian, De Witt, Douglas, Fulton, Hancock, Henderson, Henry, Knox, Lee, Logan, McDonough, McLean, Macon, Marshall, Mason, Menard, Mer- cer, Moultrie, Ogle, Peoria, Piatt, Putnam, Rock Island, Sangamon, Shelby, Stark, Tazewell, Warren, Whiteside, Woodford. Iowa Counties of Adair, Adams, Appanoose, Audubon, Benton, Boone, Buena Vista, Calhoun, Carroll, Cass, Cedar, Clarke, Clinton, Crawford, Dallas, Davis, Des Moines, Greene, Guthrie, Hamilton, Har- din, Harrison, Henry, Humboldt, Ida, Iowa, Jackson, Jasper, Jefferson, Johnson, Jones, Keokuk, Lee, Linn, Louisa, Lucas, Madison, Mahaska, Marion, Marshall, Mills, Monroe, Montgomery, Muscatine, Pocahontas, Polk, Pottawattamie, Pow- eshiek, Sac, Scott, Shelby, Story, Tama, Union, Van Buren, Wapello, Warren, Washington, Webster, Wright. Kansas Counties of Allen, Anderson, Barber, Barton, Bourbon, Butler, Chase, Chautau- qua, Cherokee, Cheyenne, Clark, Clay, Cloud, Coffey, Comanche, Cowley, Crawford, Decatur, Dickinson, Edwards, Elk, Ellis, Ellsworth, Finney, Ford, Frank- lin, Geary, Gove, Graham, Grant, Gray, Greeley, Greenwood, Hamilton, Harper, Harvey, Haskell, Hodgeman, Jewell, Kearny, Kingman, Kiowa, Labette, Lane, Lincoln, Logan, Lyon, McPherson, Mar- ion, Marshall, Meade, Mitchell, Mont- gomery, Morris, Morton, Neosho, Ness, Norton, Osage, Osborne, Ottawa, Pawnee, Phillips, Pratt, Rawlins, Reno, Republic, Rice, Rooks, Rush, Russell, Saline, Scott, Sedgwick, Seward, Sheridan, Sherman, Smith, Stafford, Stanton, Stevens, Sum- ner, Thomas, Trego, Wabaunsee, Wallace, Washington, Wichita, Wilson, Woodson. Louisiana Parishes of Acadia, Allen, Ascension, Assumption, Avoyelles, Beauregard, Bi- enville, Bossier, Caddo, Calcasieu, Caldwell, Cameron, Claiborne, De Soto, East Carroll, East Feliciana, Evangeline, Franklin, Grant, Iberia, Iberville, Jackson, Jefferson Davis, Lafayette, La Salle, Lin- coln, Madison, Morehouse, Natchitoches, Ouachita, Pointe Coupee, Rapides, Red River, Richland, Sabine, Saint Landry, Saint Martin, Saint Mary, Tensas, Union, Vermilion, Vernon, Webster, West Car- roll, West Feliciana, Winn. Minnesota Counties of Anoka, Benton, Brown, Chippewa, Chisago, Cottonwood, Dakota, Goodhue, Hennepin, Houston, Isanti, Jackson, Kanabec, Kandiyohi, Lyon, McLeod, Martin, Meeker, Mille Lacs, Murray, Nobles, Olmsted, Pope, Ramsey, Redwood, Renville, Sherburne, Stearns, Swift, Wabasha, Washington, Watonwan, Winona, Wright. Mississippi Counties of Attala, Bolivar, Calhoun, Carroll, Choctaw, Coahoma, Grenada, Hinds, Holmes, Humphreys, Issaquena, Leake, Leflore, Madison, Montgomery, Neshoba, Oktibbeha, Panola, Quitman, Rankin, Scott, Sharkey, Sunflower, Talla- hatchie, Tunica, Warren, Washington, Webster, Winston, Yalobusha, Yazoo. Missouri Counties of Adair, Andrew, Barton, Buchanan, Caldwell, Carroll, Chariton, Clark, Clay, Clinton, Daviess, DeKalb, Gentry, Grundy, Harrison, Jasper, Knox, Lewis, Linn, Livingston, Macon, Marion, Mercer, Monroe, Newton, Nodaway, Put- nam, Randolph, Ray, Saline, Schuyler, Scotland, Shelby, Sullivan, Worth. Montana Counties of Beaverhead, Big Horn, Broadwater, Carbon, Gallatin, Granite, Jefferson, Madison, Missoula, Powell, Ravalli, Silver Bow. Nebraska Counties of Antelope, Arthur, Banner, Blaine, Boone, Box Butte, Boyd, Brown, Buffalo, Butler, Cass, Cedar, Chase, Cherry, Cheyenne, Cuming, Custer, Da- kota, Dawes, Dawson, Deuel, Dixon, Dodge, Douglas, Dundy, Franklin, Fron- tier, Furnas, Gage, Garden, Garfield, Gos- per, Grant, Greeley, Hall, Harlan, Hayes, Hitchcock, Holt, Hooker, Howard, Jeffer- son, Kearney, Keith, Keya Paha, Kimball, Knox, Lancaster, Lincoln, Logan, Loup, McPherson, Madison, Merrick, Morrill, Nance, Perkins, Phelps, Pierce, Platte, Red Willow, Rock, Sarpy, Saunders, Scotts Bluff, Seward, Sheridan, Sherman, Sioux, Stanton, Thayer, Thomas, Thurston, Valley, Washington, Wayne, Webster, Wheeler. Nevada Carson City. Counties of Churchill, Clark, Douglas, Elko, Esmeralda, Eureka, Humboldt, Lander, Lincoln, Lyon, Min- eral, Nye, Pershing, Storey, Washoe, White Pine. New Mexico Counties of Bernalillo, Catron, Chaves, Cibola, Colfax, Curry, DeBaca, Dona Ana, Eddy, Grant, Guadalupe, Harding, Hidalgo, Lea, Lincoln, Los Alamos, Luna, Mckinley, Mora, Otero, Quay, Rio Ar- riba, Roosevelt, Sandoval, San Juan, San Miguel, Santa Fe, Sierra, Socorro, Taos, Torrance, Union, Valencia. North Dakota Counties of Barnes, Foster, Griggs, Kid- der, LaMoure, Logan, Stutsman, Wells. Oklahoma Counties of Alfalfa, Atoka, Beaver, Beckham, Blaine, Bryan, Caddo, Cana- dian, Carter, Choctaw, Cimarron, Cleve- land, Comanche, Cotton, Craig, Creek, Custer, Delaware, Dewey, Ellis, Garfield, Garvin, Grady, Grant, Greer, Harmon, Harper, Hughes, Jackson, Jefferson, John- ston, Kay, Kingfisher, Kiowa, Lincoln, Logan, Love, McClain, McCurtain, Major, <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> Marshall, Mayes, Murray, Noble, Nowata, Okfuskee, Oklahoma, Okmulgee, Osage, Ottawa, Pawnee, Payne, Pontotoc, Potta- watomie, Pushmataha, Roger Mills, Rog- ers, Seminole, Stephens, Texas, Tillman, Tulsa, Wagoner, Washington, Washita, Woods, Woodward. Oregon Counties of Baker, Benton, Clackamas, Clatsop, Columbia, Coos, Crook, Curry, Deschutes, Douglas, Grant, Harney, Hood River, Jackson, Jefferson, Josephine, Klamath, Lake, Lane, Lincoln, Linn, Mal- heur, Marion, Multnomah, Polk, Union, Wasco, Washington, Yamhill. South Dakota Counties of Bennett, Brown, Clark, Codington, Day, Deuel, Fall River, Grant, Hamlin, Marshall, Roberts, Shannon, Spink, Todd. Texas Counties of Anderson, Andrews, Ange- lina, Aransas, Archer, Armstrong, Atascosa, Austin, Bailey, Bandera, Bastrop, Baylor, Bee, Bell, Bexar, Blanco, Borden, Bosque, Bowie, Brazoria, Brazos, Brewster, Briscoe, Brooks, Brown, Burleson, Burnet, Caldwell, Calhoun, Callahan, Cameron, Camp, Carson, Cass, Castro, Chambers, Cherokee, Childress, Clay, Cochran, Coke, Coleman, Collin, Collingsworth, Colorado, Comal, Comanche, Concho, Cooke, Cory- ell, Cottle, Crane, Crockett, Crosby, Dallam, Dallas, Dawson, Deaf Smith, Delta, Denton, DeWitt, Dickens, Dimmit, Donley, Duval, Eastland, Ector, Edwards, Ellis, El Paso, Erath, Falls, Fannin, Fayette, Fisher, Floyd, Foard, Fort Bend, Franklin, Freestone, Frio, Gaines, Galveston, Garza, Gillespie, Glass- cock, Goliad, Gonzales, Gray, Grayson, Gregg, Grimes, Guadalupe, Hale, Hall, Hamilton, Hansford, Hardeman, Hardin, Harris, Harrison, Hartley, Haskell, Hays, Hemphill, Henderson, Hidalgo, Hill, Hock- ley, Hood, Hopkins, Houston, Howard, Hudspeth, Hunt, Hutchinson, Irion, Jack, Jackson, Jasper, Jefferson, Jim Hogg, Jim Wells, Johnson, Jones, Karnes, Kaufman, Kendall, Kenedy, Kent, Kerr, Kimble, King, Kinney, Kleberg, Knox, Lamar, Lamb, Lampasas, La Salle, Lavaca, Lee, Leon, Liberty, Limestone, Lipscomb, Live Oak, Llano, Lubbock, Lynn, McCulloch, McLen- nan, McMullen, Madison, Marion, Martin, Mason, Matagorda, Maverick, Medina, Menard, Midland, Milam, Mills, Mitchell, Montague, Montgomery, Moore, Morris, Motley, Nacogdoches, Navarro, Newton, Nolan, Nueces, Ochiltree, Oldham, Orange, Palo Pinto, Panola, Parker, Parmer, Pecos, Polk, Potter, Presidio, Rains, Randall, Rea- gan, Real, Red River, Refugio, Roberts, Robertson, Rockwall, Runnels, Rusk, Sa- bine, San Augustine, San Jacinto, San Patri- cio, San Saba, Schleicher, Scurry, Shackel- ford, Shelby, Sherman, Smith, Somervell, Starr, Stephens, Sterling, Stonewall, Sutton, Swisher, Tarrant, Taylor, Terrell, Terry, Throckmorton, Titus, Tom Green, Travis, Trinity, Tyler, Upshur, Upton, Uvalde, Val Verde, Van Zandt, Victoria, Walker, Waller, Ward, Washington, Webb, Wharton, Wheeler, Wichita, Wilbarger, Willacy, Wil- liamson, Wilson, Winkler, Wise, Wood, Yoa- kum, Young, Zapata, Zavala. Utah Counties of Beaver, Box Elder, Cache, Carbon, Daggett, Davis, Duchesne, Em- ery, Garfield, Grand, Iron, Juab, Kane, Millard, San Juan, Sanpete, Summit, Tooele, Uintah, Utah, Wasatch, Washing- ton, Wayne, Weber. Washington County of Adams, Benton, Chelan, Clark, Cowlitz, Douglas, Ferry, Franklin, Grant, Grays Harbor, Jefferson, King, Kit- sap, Kittitas, Lewis, Lincoln, Mason, Okanogan, Pacific, Pierce, Skamania, Ste- vens, Thurston, Wahkiakum, Walla Walla, Yakima. Wisconsin Counties of Adams, Buffalo, Chippewa, Clark, Columbia, Crawford, Dunn, Eau Claire, Jackson, Juneau, La Crosse, Monroe, Pepin, Pierce, Polk, Richland, Saint Croix, Sauk, Trempealeau, Vernon, Wood. Wyoming Counties of Albany, Big Horn, Camp- bell, Carbon, Converse, Fremont, Goshen, Hot Springs, Johnson, Lincoln, Natrona, Niobrara, Park, Platte, Sheridan, Sublette, Sweetwater, Uinta, Washakie, Weston. # Per Capita Payments from Proceeds of Settlements of Indian Tribal Trust Cases Notice 2014-61 BACKGROUND Notice 2013-1, 2013-3 IRB 281, pro- vides guidance on the federal tax treatment of per capita payments that members of Indian tribes receive from proceeds of cer- tain settlements of tribal trust cases be- tween the United States and those Indian tribes. Additional tribes have settled tribal trust cases against the United States since publication of Notice 2013-1. This notice provides an updated Appendix that re- flects the additional settlement agree- ments. ## EFFECT ON OTHER DOCUMENTS Notice 2013-1 Appendix is modified and superseded. ## FURTHER INFORMATION For further information regarding this notice, please contact Telly Meier at phone number (202) 317-8494 (not a toll- free number). ## Appendix Tribes That Have Entered into Set- tlement Agreements of Tribal Trust Cases 1\. Assiniboine and Sioux Tribes of the Fort Peck Reservation 2\. Bad River Band of Lake Superior Chippewa Indians 3\. Blackfeet Tribe of the Blackfeet In- dian Reservation 4\. Bois Forte Band of Chippewa 5\. Cachil Dehe Band of Wintun Indians of the Colusa Rancheria 6\. Chippewa Cree Tribe of the Rocky Boy's Reservation 7\. Coeur d'Alene Tribe 8\. Confederated Salish and Kootenai Tribes 9\. Confederated Tribes of Siletz Indi- ans 10\. Confederated Tribes of the Colville Reservation 11\. Confederated Tribes of the Goshute Reservation 12\. Crow Creek Sioux Tribe 13\. Eastern Shawnee Tribe of Okla- homa 14\. Hualapai Indian Tribe 15\. Iowa Tribe of Kansas and Nebraska 16\. Kaibab Band of Paiute Indians of Arizona 17\. Kickapoo Tribe of Kansas 18\. Lac Courte Oreilles Band of Lake Superior Chippewa Indians <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> 19. Lac du Flambeau Band of Lake 38. Salt River Pima-Maricopa Indian 57. Tlingit & Haida Tribes of Alaska Superior Chippewa Indians Community 58. Northwestern Band of Shoshone 20. Leech Lake Band of Ojibwe 39. Santee Sioux Tribe of Nebraska Indians 21. Lower Brule Sioux Tribe 40. Sault Ste. Marie Tribe 59. Hoopa Valley Tribe 22. Makah Indian Tribe of the Makah 41. Shoshone-Bannock Tribes of the 60. Ak-Chin Indian Community Reservation Fort Hall Reservation 61. Oglala Sioux Tribe 23. Mescalero Apache Tribe 42. Soboba Band of Luiseno Indians 62. Yoruk Tribe 24. Minnesota Chippewa Tribe 43. Spirit Lake Dakotah Nation 63. Cheyenne River Sioux Tribe 25. Nez Perce Tribe 44. Spokane Tribe of Indians 64. Paiute-Shoshone Indians of the 26. Nooksack Indian Tribe 45. Standing Rock Sioux Tribe Bishop Community of the Bishop Colony 27. Northern Cheyenne Tribe of Indi- 46. Stillaguamish Tribe of Indians 65. Seminole Nation of Oklahoma ans 47. Summit Lake Paiute Tribe 66. Otoe-Missouria Tribe of Oklahoma 28. Omaha Tribe of Nebraska 48. Swinomish Indian Tribal Commu- 67. Samish Indian Nation 29. Passamaquoddy Tribe of Maine nity 30. Pawnee Nation 49. Te-Moak Tribe of Western Sho- 68. Tonkawa Tribe of Indians of Okla- 31. Prairie Band of Potawatomi Nation shone Indians homa 32. Pueblo of Zia 50. Tohono O'odham Nation 69. Yakama Nation 33. Quechan Tribe of the Fort Yuma 51. Tulalip Tribes 70. Miami Tribe of Oklahoma Reservation 52. Tule River Indian Tribe 71. Shoshone Indian Tribe and the 34. Red Cliff Band of Lake Superior 53. Ute Indian Tribe of the Uintah and Northern Arapahoe Indian Tribe of the Chippewa Indians Ouray Reservation Wind River Reservation 35. Rincon Luiseño Band of Indians 54. Ute Mountain Ute Tribe 72. Pueblo of Laguna 36. Rosebud Sioux Tribe 55. Winnebago Tribe of Nebraska 73. Navajo Nation 37. Round Valley Indian Tribes 56. Qawalangin Tribe of Unalaska 74. Caddo Nation of Oklahoma <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> # Definition of Terms Revenue rulings and revenue procedures (hereinafter referred to as "rulings") that have an effect on previous rulings use the following defined terms to describe the effect: Amplified describes a situation where no change is being made in a prior pub- lished position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle ap- plied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below). Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confu- sion. It is not used where a position in a prior ruling is being changed. Distinguished describes a situation where a ruling mentions a previously pub- lished ruling and points out an essential difference between them. Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above). Obsoleted describes a previously pub- lished ruling that is not considered deter- minative with respect to future transac- tions. This term is most commonly used in a ruling that lists previously published rul- ings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted. Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a new ruling. Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a pe- riod of time in separate rulings. If the new ruling does more than restate the sub- stance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded. Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rul- ings in the series. Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study. # Abbreviations The following abbreviations in current use and formerly used will appear in ma- terial published in the Bulletin. A-Individual. Acq .- Acquiescence. B-Individual. BE-Beneficiary. F.R .- Federal Register. FUTA-Federal Unemployment Tax Act. FX-Foreign corporation. G.C.M .- Chief Counsel's Memorandum. GE-Grantee. TFE-Transferee. CFR-Code of Federal Regulations. GP-General Partner. TFR-Transferor. CI-City. GR-Grantor. T.I.R .- Technical Information Release. COOP-Cooperative. IC-Insurance Company. TP-Taxpayer. Ct.D .- Court Decision. I.R.B .- Internal Revenue Bulletin. TR-Trust. CY-County. LE-Lessee. TT-Trustee. D-Decedent. LP-Limited Partner. U.S.C .- United States Code. DC-Dummy Corporation. LR-Lessor. X-Corporation. DE-Donee. Del. Order-Delegation Order. Nonacq .- Nonacquiescence. O Organization. DR-Donor. P-Parent Corporation. PHC-Personal Holding Company. PO-Possession of the U.S. PR-Partner. PRS-Partnership. PTE-Prohibited Transaction Exemption. Pub. L .- Public Law. REIT-Real Estate Investment Trust. Rev. Proc .- Revenue Procedure. Rev. Rul .- Revenue Ruling. S Subsidiary. S.P.R .- Statement of Procedural Rules. Stat .- Statutes at Large. BK-Bank. T-Target Corporation. B.T.A .- Board of Tax Appeals. T.C .- Tax Court. C-Individual. T.D .- Treasury Decision. C.B .- Cumulative Bulletin. ERISA-Employee Retirement Income Security Act. EX-Executor. F-Fiduciary. FC-Foreign Country. FICA-Federal Insurance Contributions Act. FISC-Foreign International Sales Company. FPH-Foreign Personal Holding Company. M-Minor. Y-Corporation. Z-Corporation. DISC-Domestic International Sales Corporation. E-Estate. EE-Employee. E.O .- Executive Order. ER-Employer. <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> Numerical Finding List1 Revenue Procedures-Continued: Bulletins 2014-27 through 2014-43 2014-46, 2014-33 I.R.B. 367 2014-47, 2014-35 I.R.B. 393 Announcements: 2014-48, 2014-36 I.R.B. 527 2014-49, 2014-37 I.R.B. 535 2014-2, 2014-28 I.R.B. 120 2014-50, 2014-37 I.R.B. 540 2014-28, 2014-34 I.R.B. 391 2014-51, 2014-37 I.R.B. 543 2014-29, 2014-35 I.R.B. 452 2014-52, 2014-38 I.R.B. 560 2014-53, 2014-39 I.R.B. 573 Notices: 2014-54, 2014-41 I.R.B. 675 2014-40, 2014-27 I.R.B. 100 Revenue Rulings: 2014-41, 2014-27 I.R.B. 97 2014-42, 2014-34 I.R.B. 387 2014-14, 2014-27 I.R.B. 12 2014-43, 2014-31 I.R.B. 249 2014-19, 2014-32 I.R.B. 266 2014-44, 2014-32 I.R.B. 270 2014-20, 2014-28 I.R.B. 101 2014-45, 2014-34 I.R.B. 388 2014-21, 2014-34 I.R.B. 381 2014-46, 2014-36 I.R.B. 520 2014-22, 2014-37 I.R.B. 523 2014-47, 2014-36 I.R.B. 522 2014-23, 2014-40 I.R.B. 575 2014-48, 2014-36 I.R.B. 523 2014-24, 2014-37 I.R.B. 529 2014-49, 2014-41 I.R.B. 665 2014-25, 2014-40 I.R.B. 574 2014-50, 2014-40 I.R.B. 590 2014-26, 2014-41 I.R.B. 663 2014-51, 2014-40 I.R.B. 594 2014-52, 2014-42 I.R.B. 712 Treasury Decisions: 2014-53, 2014-43 I.R.B. 737 2014-54, 2014-41 I.R.B. 670 9664, 2014-32 I.R.B. 254 2014-55, 2014-41 I.R.B. 672 9668, 2014-27 I.R.B. 1 2014-56, 2014-41 I.R.B. 674 9669, 2014-28 I.R.B. 103 2014-57, 2014-42 I.R.B. 723 9670, 2014-29 I.R.B. 121 2014-60, 2014-43 I.R.B. 741 9671, 2014-29 I.R.B. 124 2014-61, 2014-43 I.R.B. 744 9672, 2014-30 I.R.B. 196 9673, 2014-30 I.R.B. 212 Proposed Regulations: 9674, 2014-30 I.R.B. 225 9675, 2014-31 I.R.B. 242 REG-104579-13, 2014-33 I.R.B. 370 9676, 2014-32 I.R.B. 260 REG-120756-13, 2014-31 I.R.B. 252 9677, 2014-31 I.R.B. 241 REG-105067-14, 2014-34 I.R.B. 391 9678, 2014-32 I.R.B. 262 REG-110948-14, 2014-30 I.R.B. 239 9679, 2014-32 I.R.B. 267 REG-121542-14, 2014-28 I.R.B. 119 9680, 2014-32 I.R.B. 254 REG-107012-14, 2014-33 I.R.B. 371 9681, 2014-33 I.R.B. 340 REG-123286-14, 2014-33 I.R.B. 377 9682, 2014-33 I.R.B. 342 REG-209459-78, 2014-31 I.R.B. 253 9683, 2014-33 I.R.B. 330 REG-129507-14, 2014-38 I.R.B. 561 9684, 2014-33 I.R.B. 345 REG-129786-14, 2014-38 I.R.B. 562 9685, 2014-34 I.R.B. 379 REG-105739-11, 2014-41 I.R.B. 704 9686, 2014-34 I.R.B. 382 9687, 2014-36 I.R.B. 486 Revenue Procedures: 9688, 2014-36 I.R.B. 482 9689, 2014-36 I.R.B. 456 2014-26, 2014-27 I.R.B. 26 9690, 2014-38 I.R.B. 548 2014-27, 2014-27 I.R.B. 41 9691, 2014-38 I.R.B. 547 2014-29, 2014-28 I.R.B. 105 9692, 2014-40 I.R.B. 574 2014-37, 2014-33 I.R.B. 363 9693, 2014-41 I.R.B. 596 2014-38, 2014-29 I.R.B. 132 9694, 2014-41 I.R.B. 626 2014-39, 2014-29 I.R.B. 151 9695, 2014-42 I.R.B. 707 2014-40, 2014-30 I.R.B. 229 9696, 2014-43 I.R.B. 727 2014-41, 2014-33 I.R.B. 364 9697, 2014-43 I.R.B. 729 2014-42, 2014-29 I.R.B. 193 2014-43, 2014-32 I.R.B. 273 2014-44, 2014-32 I.R.B. 274 2014-45, 2014-34 I.R.B. 388 1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2014-01 through 2014-26 is in Internal Revenue Bulletin 2014-26, dated June 30, 2014. <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> ## Finding List of Current Actions on Previously Published Items1 Bulletins 2014-27 through 2014-43 ### Announcements: 2012-11 Supplemented by Ann. 2014-2, 2014-28 I.R.B. 120 2013-11 Supplemented by Ann. 2014-2, 2014-28 I.R.B. 120 2010-41 Obsoleted by Rev. Proc. 2014-43, 2014-32 I.R.B. 273 ### Revenue Procedures: 1981-38 Superseded by Rev. Proc. 2014-42, 2014-29 I.R.B. 193 93-37 Modified and Superseded by Rev. Proc. 2014-43, 2014-32 I.R.B. 273 1981-38 Modified by Rev. Proc. 2014-42, 2014-29 I.R.B. 193 2000-12 Superseded by Rev. Proc. 2014-39, 2014-29 I.R.B. 151 2002-55 Revoked by Rev. Proc. 2014-39, 2014-29 I.R.B. 151 2003-64 Superseded by Rev. Proc. 2014-47, 2014-35 I.R.B. 393 2004-21 Superseded by Rev. Proc. 2014-47, 2014-35 I.R.B. 393 2005-77 Superseded by Rev. Proc. 2014-47, 2014-35 I.R.B. 393 2011-14 Modified by Rev. Proc. 2014-48, 2014-36 I.R.B. 527 2011-14 Modified by Rev. Proc. 2014-54, 2014-41 I.R.B. 675 2011-16 Superseded by Rev. Proc. 2014-51, 2014-37 I.R.B. 543 Revenue Procedures-Continued: 2011-16 Modified by Rev. Proc. 2014-51, 2014-51 I.R.B. 543 2012-38 Superseded by Rev. Proc. 2014-27, 2014-27 I.R.B. 26 2012-46 Superseded by Rev. Proc. 2014-26, 2014-27 I.R.B. 41 2014-4 Amplified by Rev. Proc. 2014-40, 2014-30 I.R.B. 229 2014-4 Modified by Rev. Proc. 2014-41, 2014-41 I.R.B. 675 2014-5 Amplified by Rev. Proc. 2014-40, 2014-30 I.R.B. 229 2014-8 Amplified by Rev. Proc. 2014-40, 2014-30 I.R.B. 229 2014-9 Amplified by Rev. Proc. 2014-40, 2014-30 I.R.B. 229 2014-10 Amplified by Rev. Proc. 2014-40, 2014-30 I.R.B. 229 2014-13 Modified by Rev. Proc. 2014-38, 2014-29 I.R.B. 132 2014-13 Superseded by Rev. Proc. 2014-38, 2014-29 I.R.B. 132 2014-16 Superseded by Rev. Proc. 2014-51, 2014-37 I.R.B. 543 2014-16 Modified by Rev. Proc. 2014-51, 2014-37 I.R.B. 543 2014-12 Modified by Rev. Proc. 2014-54, 2014-41 I.R.B. 675 2014-17 Modified by Rev. Proc. 2014-54, 2014-41 I.R.B. 675 ## Revenue Rulings: 2008-40 Modified by Rev. Rul. 2014-24, 2014-37 I.R.B. 529 2011-1 Modified by Rev. Rul. 2014-24, 2014-37 I.R.B. 529 2012-6 Modified by Rev. Rul. 2014-24, 2014-37 I.R.B. 529 ## Notices: 2013-1 Modified by Notice 2014-61, 2014-43 I.R.B. 744 2013-1 Superseded by Notice 2014-61, 2014-43 I.R.B. 744 2013-11 Modified by Notice 2014-48, 2014-36 I.R.B. 523 2013-23 Modified by Notice 2014-48, 2014-36 I.R.B. 523 2013-28 Modified by Notice 2014-48, 2014-36 I.R.B. 523 2013-29 Modified by Notice 2014-46, 2014-36 I.R.B. 520 2013-29 Clarified by Notice 2014-46, 2014-36 I.R.B. 520 2013-32 Modified by Notice 2014-48, 2014-36 I.R.B. 523 2013-37 Modified by Notice 2014-48, 2014-36 I.R.B. 523 2013-38 Superseded by Notice 2014-61, 2014-43 I.R.B. 744 2013-51 Obsoleted by Notice 2014-42, 2014-34 I.R.B. 387 2013-60 Modified by Notice 2014-46, 2014-36 I.R.B. 520 1A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2014-01 through 2014-26 is in Internal Revenue Bulletin 2014-26, dated June 30, 2014. <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> Notice-Continued: 2013-60 Clarified by Notice 2014-46, 2014-36 I.R.B. 520 2013-65 Superseded by Notice 2014-57, 2014-42 I.R.B. 723 2014-38 Superseded by Notice 2014-61, 2014-43 I.R.B. 744 2014-44 Supplemented by Notice 2014-45, 2014-34 I.R.B. 388 ### Treasury Decisions: 2005-47 Obsoleted by T.D. 9668 2014-27 I.R.B. 1 2010-51 Obsoleted by T.D. 9684 2014-33 I.R.B. 345 2010-71 Obsoleted by T.D. 9684 2014-33 I.R.B. 345 2011-6 Obsoleted by T.D. 9684 2014-33 I.R.B. 345 2011-9 Obsoleted by T.D. 9684 2014-33 I.R.B. 345 <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> <!-- PageHeader="INDEX" --> #### Internal Revenue Bulletins 2014-27 through 2014-43 The abbreviation and number in parenthesis following the index entry refer to the specific item; numbers in roman and italic type following the parentheses refer to the Internal Revenue Bulletin in which the item may be found and the page number on which it appears. Key to Abbreviations: Ann Announcement CD Court Decision DO Delegation Order EO Executive Order PL Public Law PTE Prohibited Transaction Exemption RP Revenue Procedure RR Revenue Ruling SPR Statement of Procedural Rules TC Tax Convention TD Treasury Decision TDO Treasury Department Order # ADMINISTRATIVE AJCA-Section 6707 and the Penalty for Failure to Furnish Information Regarding Reportable Transactions by Material Advisors (TD 9686) 34, 382 Adjusted Applicable Dollar Amount for Fee Imposed by §§ 4375 and 4376 (Notice 56) 41, 674 Announcement to Discontinue the Internal Revenue Bulletin Index (Ann 27) 28, 120 Annual Filing Season Program (RP 42) 29, 193 Disclosure to Census Bureau (REG-120756-13) 31, 241 Disclosure to Census Bureau (TD 9677) 31, 241 Information reporting by passport applicants (TD 9679) 32, 267 Low-Income Housing Tax Credit (RP 52) 38, 560 Per Capita Payments from Proceeds of Settlements of Indian Tribal Trust Cases (Notice 61) 43, 744 Procedures to void backup withholding (RP 43) 32, 273 Proposed Regulations: 26 CFR part 301 is amended, section 301.6103(j)(1)-1 is amended, section 301.6103(j)(1)-1T added (REG- 120756-13) 31, 241 Regulations Governing Practice Before the Internal Revenue Service (REG-138367-06) (TD 9668) 27, 1 Regulations: 31 CFR 10.1, revised; 10.3, revised; 10.22, revised; 10.31, revised; 10.35, revised; 10.36, revised; 10.37, revised; 10.52, revised; 10.81, revised; 10.82, revised; 10.91, re- vised. (TD 9668) 27, 1 26 CFR 301.6109-4, added; 1.6042-4, amended; 1.6043-4, amended; 1.6044-5, amended; 1.6045-2, amended; 1.6045-3, amended; 1.6045-4, amended; 1.6045-5, amended; 1.6049-6, amended; 1.6050A-1, amended; 1.6050E-1, amended; 1.6050N-1, amended; 1.6050P-1, amended; 1.6050S-1, amend- ed; 1.6050S-3, amended (TD 9675) 31, 242 # ADMINISTRATIVE-Cont. 26 CFR part 301 is amended, section 301.6103(j)(1)-1 is amended, section 301.6103(j)(1)-1T added (TD 9677) 31, 241 26 CFR part 301, amended; 26 CFR 301.6039E-1 added (TD 9679) 32, 267 26 CFR 301.6707-1, added; 301.6707-1T, removed; Rev. Proc. 2007-21, sections 4.04, 4.05, and 4.06 superseded; material advisor penalty for failure to furnish information regarding reportable transactions (TD 9686) 34, 382 Substantiation by Per Diem Rates (Notice 2014-57) 42, 723 Substitute Forms Preparation for Certain Information Returns (RP 27) 27, 41 Substitute Forms Preparation for Certain Information Returns (RP 44) 32, 274 Truncated Taxpayer Identification Numbers (TD 9675) 31, 242 # EMPLOYEE PLANS Additional Permitted Election Changes for Health Coverage under § 125 Cafeteria Plans (Notice 55) 41, 672 Cash balance plans and other hybrid defined benefit pension plans (TD 9693) 41, 596 Excepted benefits Group Trusts (RR 24) 37, 529 Individual Retirement Account Rollover Limitations (REG- 209459-78) 31, 253 Longevity Annuity Contracts (TD 9673) 30, 212 Proposed Regulations: 26 CFR 408, Individual Retirement Accounts (REG-209459- 78) 31, 253 Qualified Plans Rollovers (Notice 54) 41, 670 Minimum Funding Requirements (Notice 53) 43, 737 Regulations: 26 CFR 54.9815-2708, as amended (TD 9671) 29, 174 26 CFR 1.401(a)(9)-5, amended; 1.401(a)(9)-6, amended; 1.403(b)-6, amended; 1.408-8, amended; 1.408A-6, amended; 1.6047-2, added (TD 9673) 30, 212 26 CFR 1.411(a)(13)-1, amended (TD 9693); 26 CFR 1.411(b)-1, amended (TD 9693); 26 CFR 1.411(b)(5)-1, amended (TD 9693) 41, 596 26 CFR 1.162-31, added (REG-106796-12 TD 9694) 41, 626 26 CFR 301.6057-3 added, 301.6058-2 added, 301.6059-2 added (TD 9695) 42, 707 26 CFR 54.9831-1 is amended (TD 9697) 43, 729 Requirement to File Certain Employee Benefit Statements, No- tices and Reports Electronically with the Internal Revenue Service (TD 9695) 42, 707 Rules relating to 90 day waiting period limitation (TD 9671) 29, 174 The $500,000 deduction limitation for remuneration provided by certain health insurance providers (REG-106796-12) (TD 9694) 41, 626 Weighted average interest rates Segment rates for June 2014 (Notice 41) 27, 97 Segment rates for July 2014 (Notice 43) 31, 249 Segment rates for August 2014 (Notice 48) 36, 523 Segment rates for September 2014 (Notice 50) 40, 590 <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> # EMPLOYMENT TAX Extending religious and family member FICA and FUTA excep- tions to disregarded entities; regulations regarding the indoor tanning services excise tax and disregarded entities (TD 9670) 29, 121 Method of accounting for gains and losses on shares in certain money market funds; broker returns with respect to sales of shares in money market funds (REG-107012-14) 33, 371 Publications: 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c (RP29) 28, 105 4436, General Rules and Specifications for Substitute Form 941 and Schedule B (Form 941), and Schedule R (RP 26) 27, 26 Summons Interview Regulations Under Section 7602 (REG- 121542-14) (TD 9669) 28, 103 Regulations: 26 CFR 301.7602-1 is amended to add new paragraph (b)(3) pertaining to summons interviews. (TD 9669) 28, 103 26 CFR 1.1361-4, amended; 1.1361-4T, removed; 31.3121(b)(3)-1, amended; 31.3121(b)(3)-1T, removed; 31.3127-1, added; 31.3127-1T, removed; 31.3306(c)(5)-1, amended; 31.3306(c)(5)-1T, removed; 301.7701-2, amended; 301.7701-2T, removed; extending religious and family member FICA and FUTA exceptions to disregarded entities; regulations regarding the indoor tanning services excise tax and disregarded entities (TD 9670) 29, 121 26 CFR 1.446-7 added; 1.6045-1 amended; method of ac- counting for gains and losses on shares in certain money market funds; broker returns with respect to sales of shares in money market funds (REG-107012-14) 33, 371 # ESTATE TAX Section 2032A .- Valuation of Certain Farm, Etc., Real Property (RR 21) 34, 381 Summons Interview Regulations Under Section 7602 (REG- 121542-14) (TD 9669) 28, 103 Regulations: 26 CFR 301.7602-1 is amended to add new paragraph (b)(3) pertaining to summons interviews. (TD 9669) 28, 103 # EXCISE TAX Adjusted Applicable Dollar Amount for Fee Imposed by §§ 4375 and 4376 (Notice 56) 41, 674 Alternative process for religious objections to providing contracep- tive coverage under section 9815 (REG-129507-14) 38, 561 Alternative process for religious objections to providing contra- ceptive coverage under section 9815 (TD 9690) 38, 548 Branded Prescription Drug Fee (REG-123286-14) 33, 377 Branded Prescription Drug Fee (TD 9684) 33, 245 Branded Prescription Drug Fee (Notice 42) 34, 387 Definition of "eligible organization" under section 9815, regard- ing coverage of preventive services, including contraceptive coverage (REG-129786-14) 38, 562 # EXCISE TAX-Cont. Extending religious and family member FICA and FUTA excep- tions to disregarded entities; regulations regarding the indoor tanning services excise tax and disregarded entities (TD 9670) 29, 121 Section 9010 of the ACA; health insurance providers fee (Notice 47) 36, 522 Summons Interview Regulations Under Section 7602 (REG- 121542-14) (TD 9669) 28, 103 Proposed Regulations: 26 CFR 54.9815-2713A is revised; accommodations in con- nection with coverage of preventive health services under section 9815 (REG-129507-14) 38, 561 26 CFR 54.9815-2713A(a) amended; accommodations in connection with coverage of preventive health services under section 9815 (REG-129786-14) 38, 562 Regulations: 26 CFR 301.7602-1 is amended to add new paragraph (b)(3) pertaining to summons interviews. (TD 9669) 28, 103 26 CFR 1.1361-4, amended; 1.1361-4T, removed; 31.3121(b)(3)-1, amended; 31.3121(b)(3)-1T, removed; 31.3127-1, added; 31.3127-1T, removed; 31.3306(c)(5)-1, amended; 31.3306(c)(5)-1T, removed; 301.7701-2, amend- ed; 301.7701-2T, removed; extending religious and family member FICA and FUTA exceptions to disregarded entities; regulations regarding the indoor tanning services excise tax and disregarded entities (TD 9670) 29, 121 26 CFR 54.9815-2708, as amended (TD 9671) 29, 121 26 CFR 51.2(e)(3), amended; (REG-123286-14) 33, 377 26 CFR 54.9815-2713A(b), (c)(1), and (c)(2)(i) introductory text amended; 54.9815-2713A(f) and 54.9815-2713AT added; accommodations in connection with coverage of preventive health services under section 9815 (TD 9690) 38, 548 Rules relating to 90 day waiting period limitation (TD 9671) 29, 121 # EXEMPT ORGANIZATIONS Streamlined Application for Recognition of Exemption Under Section 501(c)(3) (RP 2014-40) 30, 229 Streamlined process for 501(c)(3) recognition (REG-110948- 14) 30, 225 Streamlined process for 501(c)(3) recognition (TD 9674) 30, 225 Regulations: 26 CFR 1.501(c)-1 amended 1. 501(a)-1T added; 1.501(c)(3)-1 amended, 1.501(c)(3)-1T added; and 1.508-1 amended, 1.508-1T added (REG-110948- 14)(TD 9674) 30, 225 # GIFT TAX Summons Interview Regulations Under Section 7602 (REG- 121542-14) (TD 9669) 28, 103 Regulations: 26 CFR 301.7602-1 is amended to add new paragraph (b)(3) pertaining to summons interviews (REG-121542-14) (TD 9669) 28, 103 <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> # INCOME TAX Accounting method change, retail inventory method (RP 48) 36, 132 AJCA-Section 6707 and the Penalty for Failure to Furnish Information Regarding Reportable Transactions by Material Advisors (TD 9686) 34, 382 Allocation and Apportionment of Interest Expense (TD 9676) 32, 260 Awards for Information Relating to Detecting Underpayments of Tax or Violations of the Internal Revenue Laws (TD 9687) 36, 486 Basis of indebtedness of S corporations to their shareholders (TD 9682) 33, 342 Business expenses, lodging when not traveling away from home (TD 9696) 43, 727 Credit for carbon dioxide Sequestration (Notice 40) 27, 100 Debt that is a position in personal property that is part of a straddle (TD 9691) 38, 547 Disciplinary actions involving attorneys, certified public accoun- tants, enrolled agents, and enrolled actuaries, enrolled retire- ment plan agents, and appraisers (ANN 29) 35, 452 Disclosure to Census Bureau (REG-120756-13) 31, 252 Disclosure to Census Bureau (TD 9677) 31, 241 Dispositions of property subject to depreciation under section 168 (TD 9689) 36, 456 Employer shared responsibility; look-back measurement method (Notice 49) 41, 665 FFI Agreement for Participating FFI and Reporting Model 2 FFI (RP 38) 29, 132 Foreign Earned Income Exclusion (ANN 2014-28) 34, 391 Foreign tax credit guidance under section 901 (m) (Notice 44) 32, 391 Foreign tax credit guidance under section 901 (m) (Notice 45) 34, 270 Information reporting by passport applicants (TD 9679) 32, 267 Insurance; effectively connected income (RP 53) 39, 573 Interest: Investment: Federal short-term, mid-term, and long-term rates for: July 2014 (RR 20) 28, 101 Federal short-term, mid-term, and long-term rates for: Au- gust 2014 (RR 19) 32, 266 Federal short-term, mid-term, and long-term rates for: Sep- tember 2014 (RR 22) 37, 533 Federal short-term, mid-term, and long-term rates for: Oc- tober 2014 (RR 26) 41, 663 Involuntary conversions, livestock sold on account of drought, extension of replacement period, list of affected counties (Notice 60) 43, 741 Method change procedures for dispositions of tangible deprecia- ble property (RP 2014-54) 41, 675 Money market funds and the wash sale rules (RP 45) 34, 388 Premium Tax Credit (REG-104579-13) 33, 370 Premium Tax Credit (RP 37) 33, 363 Premium Tax Credit (RP 41) 33, 364 Premium Tax Credit (TD 9683) 33, 330 <!-- PageFooter="Bulletin No. 2014-43" --> # INCOME TAX-Cont. Production Tax Credit, Investment Tax Credit, Beginning of Construction (Notice 46) 36, 520 Proposed Regulations: 26 CFR part 301 is amended, section 301.6103(j)(1)-1 is amended, section 301.6103(j)(1)-1T added (REG- 120756-13) 31, 252 26 C.F.R. 1.382-3(j)(17), modified; 1.382-3T(j)(17), added, segregation rules for public groups of shareholders (REG- 105067-14) 34, 391 Publications: 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c (RP 29) 28, 105 4436, General Rules and Specifications for Substitute Form 941 and Schedule B (Form 941), and Schedule R (RP 26) 27, 26 Qualified Intermediary (QI) Agreement (RP 39) 29, 151 Qualified residential rental projects (RP-105272-13) (RP 50) 37, 540 Regulations: 31 CFR 10.1, revised; 10.3, revised; 10.22, revised; 10.31, revised; 10.35, revised; 10.36, revised; 10.37, revised; 10.52, revised; 10.81, revised; 10.82, revised; 10.91, re- vised (TD 9668) 27, 1 26 CFR 301.7602-1 is amended to add new paragraph (b)(3) pertaining to summons interviews (REG-121542-14) (TD 9669) 28, 103 26 CFR 1.45R-0, added; 1.45R-1, added; 1.45R-2, added; 1.45R-3, added; 1.45R-4, added; 1.45R-5, added; tax credit for employee health insurance expenses of small employers (TD 9672) 30, 196 26 CFR 301.6109-4, added; 1.6042-4, amended; 1.6043-4, amended; 1.6044-5, amended; 1.6045-2, amended; 1.6045-3, amended; 1.6045-4, amended; 1.6045-5, amended; 1.6049-6, amended; 1.6050A-1, amended; 1.6050E-1, amended; 1.6050N-1, amended; 1.6050P-1, amended; 1.6050S-1, amend- ed; 1.6050S-3, amended (TD 9675) 31, 242 26 CFR 1.67-4, amended (TD 9667) 32, 254 26 CFR part 301 is amended, section 301.6103(j)(1)-1 is amended, section 301.6103(j)(1)-1T added (TD 9677) 31, 241 26 CFR 1.861-9 amended, 1.861-11 amended; (TD 9676) 32, 260 26 CFR 1.1092(b)-6, added; 1.1092(b)-6T, removed; 1.1092(b)-3T, amended; (TD 9678) 32, 262 26 CFR part 301, amended; 26 CFR 301.6039E-1 added (TD 9679) 32, 267 26 CFR 1.174-2 amended; (TD 9680) 32, 254 26 CFR 1.36B-2T, 26 CFR 1.36B-3T, 1.36B-4T, added; 26 CFR 1.36B-2, 26 CFR 1.36B-3\\, 1.36B-4, amended; 26 CFR 1.162(1)-1 and 26 CFR 1.162(1)-1T, added. (REG- 104579-13) 33, 370 26 CFR 1.195-2, added; 26 CFR 1.708-1, amended; 26 CFR 1.709-1, amended. (TD 9681) 33, 340 26 CFR 1.1366-2(a), added new paragraph (a)(2) and moved current (a)(2) through (a)(6) to (a)(3) through (a)(7), re- spectively; basis of indebtedness of S corporations to their shareholders (TD 9682) 33, 342 <!-- PageFooter="October 20, 2014" --> <!-- PageBreak --> ## INCOME TAX-Cont. 26 CFR 1.36B-2T, 26 CFR 1.36B-3T, 1.36B-4T added, 26 CFR 1.36B-2, 26 CFR 1.36B-3\\, 1.36B-4, amended, 26 CFR 1.162(1)-1 and 26 CFR 1.162(1)-1T added, (TD 9683) 33, 330 26 C.F.R. 1.382-3(j)(17), modified; 1.382-3T(j)(17), added, segregation rules for public groups of shareholders (TD 9685) 34, 379 26 CFR 301.6707-1, added; 301.6707-1T, removed; Rev. Proc. 2007-21, sections 4.04, 4.05, and 4.06 superseded; material advisor penalty for failure to furnish information regarding reportable transactions (TD 9686) 34, 382 26 CFR 301.7623-1, revised; 26 CFR 301.7623-4, added; 26 CFR 301.7623-2, added; 26 CFR 301.6103(h)(4)-1, added 26 CFR 301.7623-3, added; (TD 9687) 36, 486 26 CFR 1.471-8 amended (TD 9688) 36, 482 26 CFR 1.168(i)-8 added; 1.165-2, 1.168(i)-0, 1.168(i)-1, 1.168(i)-7, 1.263(a)-3, 1.1016-3 amended; 1.168(i)-0T, 1.168(i)-1T, 1.168(i)-8T removed; dispositions of prop- erty subject to depreciation under section 168 (TD 9689) 36, 456 26 CFR 1.1092(d)-1, amended; 1.1092(d)-1T, removed; debt that is a position in personal property that is part of a straddle (TD 9691) 38, 547 26 CFR 1.402A-1, amended; Removal of Allocation Rule for Disbursements from Designated Roth Accounts to Multi- ple Destinations (REG-105739-11) 41, 704 26 CFR 1.162-32, added; 1.262-1, amended (TD 9696) 43, 727 Regulations Governing Practice Before the Internal Revenue Service (REG-138367-06) (TD 9668) 27, 1 REIT Distressed Debt (RP 51) 37, 543 Removal of Allocation Rule for Disbursements from Designated Roth Accounts to Multiple Destinations (REG-105739-11) 41, 704 Research and experimental expenditures (TD 9680) 32, 254 Retail inventory method (TD 9688) 36, 482 Rules Regarding Inversions and Related Transactions (Note 2014-52) 42, 712 Tax Credit for Employee Health Insurance Expenses of Small Employers (TD 9672) 30, 196 Temporary relief from certain requirements of § 42 (Rev. Proc. 2014-39) (RP 49) 37, 535 Truncated Taxpayer Identification Numbers (TD 9675) 31, 242 Section 67 Limitations on Estates or Trusts; Change of Effective Date (TD 9664) 32, 254 Section 1298(f) Reporting Requirements for U.S. Persons that Hold Stock of a Passive Foreign Investment Company that is Marked to Market Under Section 475 or Another Chapter 1 Code Provision Other Than Section 1296 (Notice 51) 40, 594 Section 5000A national average premium for a bronze level of coverage (RP 46) 33, 367 Segregation rules for public groups of shareholders, (REG- 105067-14) 34, 391 Segregation rules for public groups of shareholders, (TD 9685) 34, 379 Standard Industry Fare Level (RR 2014-25) 40, 574 ## INCOME TAX-Cont. Substantiation by Per Diem Rates (Notice 2014-57) 42, 723 Substitute Forms Preparation for Certain Information Returns (RP 27) 27, 41 Substitute Forms Preparation for Certain Information Returns (RP 44) 32, 274 Summons Interview Regulations Under Section 7602 (REG- 121542-14) (TD 9669) 28, 103 Unamortized organization and syndication expenses following a partnership technical termination (TD 9681) 33, 340 Underpayment and overpayments, quarter beginning: July 1, 2014 (RR 14) 27, 12 Underpayment and overpayments, quarter beginning: October 1, 2014 (RR-129839-14) 40, 575 Unrealized gain or loss treatment upon establishment of an identified mixed straddle (TD 9678) 32, 262 Voluntary withholding(TD-9692) 40, 574 26 CFR 31.3402(p)-1, section (c) added (TD 9692) 40, 574 Withholding Foreign Partnership and Trust Agreements (RP 47) 35, 393 # SELF-EMPLOYMENT TAX Extending religious and family member FICA and FUTA excep- tions to disregarded entities; regulations regarding the indoor tanning services excise tax and disregarded entities (TD 9670) 29, 121 Regulations: 26 CFR 1.1361-4, amended; 1.1361-4T, removed; 31.3121(b)(3)-1, amended; 31.3121(b)(3)-1T, removed; 31.3127-1, added; 31.3127-1T, removed; 31.3306(c)(5)-1, amended; 31.3306(c)(5)-1T, removed; 301.7701-2, amended; 301.7701-2T, removed; extending religious and family member FICA and FUTA exceptions to disregarded entities; regulations regarding the indoor tanning services excise tax and disregarded entities (TD 9670) 29, 121 # SPECIAL ANNOUNCEMENT Annual Filing Season Program (RP 42) 29, 193 Procedures to Avoid Backup Withholding (RP 43) 32, 273 <!-- PageFooter="October 20, 2014" --> <!-- PageFooter="Bulletin No. 2014-43" --> <!-- PageBreak --> <!-- PageHeader="Internal Revenue Service Washington, DC 20224" --> Official Business Penalty for Private Use, $300 # INTERNAL REVENUE BULLETIN The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletins are available at www.irs.gov/irb/. # CUMULATIVE BULLETINS The contents of the weekly Bulletins were consolidated semiannually into permanent, indexed, Cumulative Bulletins through the 2008-2 edition. # INTERNAL REVENUE BULLETINS ON CD-ROM Internal Revenue Bulletins are available annually as part of Publication 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. # 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:P:SPA, Washington, DC 20224.
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