Internal Revenue Bulletin 2008-2 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 200
8-2
January 14, 2008
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2008–1, page 248.
Foreign currency exchange traded notes.This ruling holds
that a foreign currency exchange traded note is debt for U.S.
federal tax purposes, even when the initial investment and re-
payment are made in U.S. dollars and the investor may get
back fewer U.S. dollars than it invested. A companion publica-
tion to this ruling, Notice 2008–2, will ask for comments on
prepaid forward contracts and similar arrangements that are
not treated as debt for U.S. federal tax purposes.
Rev. Rul. 2008–2, page 247.
Low-income housing credit; satisfactory bond; “bond
factor” amounts for the period January through March
2008.This ruling provides the monthly bond factor amounts
to be used by taxpayers who dispose of qualified low-income
buildings or interests therein during the period January through
March 2008.
Rev. Rul. 2008–3, page 249.
Section 1274A — Inflation adjusted numbers for 2008.
This ruling provides the dollar amounts, increased by the 2008
inflation adjustment, for section 1274A of the Code. Rev. Rul.
2007–4 supplemented and superseded.
Notice 2008–1, page 251.
This notice provides rules under which a 2-percent shareholder-
employee in an S corporation is entitled to the deduction under
section 162(l) of the Code for accident and health insurance
premiums that are paid or reimbursed by the S corporation
and included in the 2-percent shareholder-employee’s gross in-
come.
Notice 2008–2, page 252.
This notice seeks comments on, among other things, whether
the parties to a prepaid forward contract or similar arrange-
ment (that is not otherwise indebtedness for U.S. federal tax
purposes) should be required to accrue income/expense dur-
ing the term of a contract and asks for comments on an ap-
propriate method for accruing income or expense. The notice
also asks for comments on various domestic and international
issues (including character and source) that would need to be
addressed if income/expense accruals were deemed appro-
priate. This notice is a companion publication to Rev. Rul.
2008–1, which concludes that a prepaid forward contract on
foreign currency is treated as debt for federal tax purposes.
Notice 2008–3, page 253.
On January 1, 2008, the impuesto empresarial a tasa única
(IETU), a single rate business tax adopted by Mexico, will be-
come effective. This notice provides that, pending the outcome
of a study to determine whether the IETU is a creditable income
tax, the IRS will not challenge a taxpayer’s position that the IETU
is an income tax that is eligible for a credit under Article 24(1)
of the U.S.-Mexico income tax treaty.
Notice 2008–4, page 253.
This notice provides interim guidance to the public on how to file
claims with the IRS Whistleblower Office for payment of awards
to persons who detect and report underpayments of tax.
Notice 2008–5, page 256.
This notice provides guidance under section 152(d) of the Code
for determining whether an individual is a qualifying relative
for whom the taxpayer may claim a dependency exemption
deduction under section 151(c).
(Continued on the next page)
Finding Lists begin on page ii.

EXEMPT ORGANIZATIONS
Rev. Proc. 2008–9, page 258.
Determination letters and rulings.This document sets forth
procedures for issuing determination letters and rulings on the
exempt status of organizations under sections 501 and 521 of
the Code. The procedures also apply to the revocation and
modification of determination letters or rulings, and provide
guidance on the exhaustion of administrative remedies for pur-
poses of declaratory judgment under section 7428. Rev. Proc.
2007–52 superseded.
Announcement 2008–3, page 269.
The IRS has revoked its determination that The Stevens Foun-
dation of New York, NY; American Assistance Corporation of
Plano, TX; Tri-State Community Development Resource Center,
Inc., of Camden, NJ; Cytogenetics Foundation of Omaha, NE;
Proyecto Esperanza of Los Angeles, CA; Community Fellow-
ship for Battered Women of Silicon Valley, Inc., of San Jose,
CA; Brooklyn Community Counseling Center, Inc., of Brooklyn,
NY; Peace Parents and Elders of Africa for Common Efforts
of Minneapolis, MN; The Healing Center of Children with Dis-
abilities, Inc., of Macon, GA; Mahisekar Charitable Supporting
Organization of Orland Park, IL; and Down Payment Assistance
Foundation, Inc., of Glendora, CA, qualify as organizations de-
scribed in sections 501(c)(3) and 170(c)(2) of the Code.
TAX CONVENTIONS
Notice 2008–3, page 253.
On January 1, 2008, the impuesto empresarial a tasa única
(IETU), a single rate business tax adopted by Mexico, will be-
come effective. This notice provides that, pending the outcome
of a study to determine whether the IETU is a creditable income
tax, the IRS will not challenge a taxpayer’s position that the IETU
is an income tax that is eligible for a credit under Article 24(1)
of the U.S.-Mexico income tax treaty.
ADMINISTRATIVE
Notice 2008–4, page 253.
This notice provides interim guidance to the public on how to file
claims with the IRS Whistleblower Office for payment of awards
to persons who detect and report underpayments of tax.
Announcement 2008–4, page 269.
This document contains notice of a public hearing on proposed
regulations (REG–113891–07, 2007–42 I.R.B. 821) providing
guidance regarding the use of certain funding balances main-
tained for defined benefit pension plans and regarding bene-
fit restrictions for certain underfunded defined benefit pension
plans. A public hearing is scheduled for January 28, 2008.
January 14, 20082008–2 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2008–2 I.R.B.January 14, 2008

January 14, 20082008–2 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 42.—Low-Income
Housing Credit
Low-income housing credit; satis-
factory bond; “bond factor” amounts
for the period January through March
2008.This ruling provides the monthly
bond factor amounts to be used by taxpay-
ers who dispose of qualified low-income
buildings or interests therein during the
period January through March 2008.
Rev. Rul. 2008–2
In Rev. Rul. 90–60, 1990–2 C.B.
3, the Internal Revenue Service provided
guidance to taxpayers concerning the gen-
eral methodology used by the Treasury
Department in computing the bond factor
amounts used in calculating the amount of
bond considered satisfactory by the Secre-
tary under § 42(j)(6) of the Internal Rev-
enue Code. It further announced that the
Secretary would publishintheInternal
Revenue Bulletin a table of bond factor
amounts for dispositions occurring during
each calendar month.
Rev. Proc. 99–11, 1999–1 C.B. 275,
established a collateral program as an al-
ternative to providing a surety bond for
taxpayers to avoid or defer recapture of
the low-income housing tax credits under
§ 42(j)(6). Under this program, taxpayers
may establish a Treasury Direct Account
and pledge certain United States Treasury
securities to the Internal Revenue Service
as security.
This revenue ruling provides in Table
1 the bond factor amounts for calculating
the amount of bond considered satisfactory
under § 42(j)(6) or the amount of United
States Treasury securities to pledge in a
Treasury Direct Account under Rev. Proc.
99–11 for dispositions of qualified low-in-
come buildings or interests therein during
the period January through March 2008.
Table 1
Rev. Rul. 2008–2
Monthly Bond Factor Amounts for Dispositions Expressed
As a Percentage of Total Credits
Calendar Year Building Placed in Service
or, if Section 42(f)(1) Election Was Made,
the Succeeding Calendar Year
Month of
Disposition
1994
1995
199619971998199920002001200220032004
Jan ’0816.4130.7043.23
54.19
63.81
65.4267.35
69.6372.1474.7977.33
Feb ’0816.4130.7043.23
54.19
63.81
65.27
67.1969.4671.96
74.59
77.11
Mar ’0816.4130.7043.23
54.19
63.81
65.12
67.0469.2971.7874.3976.89
Table 1 (cont’d)
Rev. Rul. 2008–2
Monthly Bond Factor Amounts for Dispositions Expressed
As a Percentage of Total Credits
Calendar Year Building Placed in Service
or, if Section 42(f)(1) Election Was Made,
the Succeeding Calendar Year
Month of
Disposition
2005
200620072008
Jan ’08
79.5681.5783.59
83.98
Feb ’0879.3181.3083.2783.98
Mar ’0879.07
81.05
82.9983.98
For a list of bond factor amounts ap-
plicable to dispositions occurring during
other calendar years, see: Rev. Rul. 98–3,
1998–1 C.B. 248; Rev. Rul. 2001–2,
2001–1 C.B. 255; Rev. Rul. 2001–53,
2001–2 C.B. 488; Rev. Rul. 2002–72,
2002–2 C.B. 759; Rev. Rul. 2003–117,
2003–2 C.B. 1051; Rev. Rul. 2004–100,
2004–2 C.B. 718; Rev. Rul. 2005–67,
2005–2 C.B. 771; Rev. Rul. 2006–51,
2006–2 C.B. 632; and Rev. Rul. 2007–62,
2007–41 I.R.B. 767.
DRAFTING INFORMATION
The principal author of this revenue
ruling is David McDonnell of the Office
of Associate Chief Counsel (Passthroughs
and Special Industries). For further in-
formation regarding this revenue ruling,
2008–2 I.R.B.247January 14, 2008

contact Mr. McDonnell at (202) 622–3040
(not a toll-free call).
Section 162.—Trade or
Business Expenses
A notice provides rules under which a 2-percent
shareholder-employee in an S corporation is entitled
to the deduction under section 162(l) of the Internal
Revenue Code for accident and health insurance pre-
miums that are paid or reimbursed by the S corpo-
ration and included in the 2-percent shareholder-em-
ployee’s gross income. SeeNotice2008-1,page251.
Section 483.—Interest on
Certain Deferred Payments
A ruling provides the dollar amounts, increased by
the 2008 inflation adjustment, for section 1274A of
the Code. See Rev. Rul. 2008-3, page 249.
Section 988.—Treatment of
Certain Foreign Currency
Transactions
26 CFR 1.988–1: Certain definitions and special
rules.
(Also § 1.988–2.)
Foreign currency exchange traded
notes.This ruling holds that a foreign
currency exchange traded note is debt for
U.S. federal tax purposes, even when the
initial investment and repayment are made
in U.S. dollars and the investor may get
back fewer U.S. dollars than it invested.
A companion publication to this ruling,
Notice 2008–2, will ask for comments
on prepaid forward contracts and similar
arrangements that are not treated as debt
for U.S. federal tax purposes.
Rev. Rul. 2008–1
ISSUE
What is the characterization for U.S.
federal tax purposes of an instrument (de-
scribed further below) that is issued and re-
deemed for U.S. dollars, but that provides
an economic return that is determined by
reference to the euro and market interest
rates in respect of the euro?
FACTS
Assume that on January 1, 2007, the
spot rate of exchange of U.S. dollars for
euros was $1 =€0.75. On January 1,
2007, Holder delivered $100 to Issuer in
exchange for the Issuer’s obligation (the
“Instrument”) to deliver to Holder, on Jan-
uary 1, 2010, the U.S. dollar equivalent
of an amount of euros (the “U.S. Dol-
lar Equivalent Amount”). The U.S. Dol-
lar Equivalent Amount is determinable on
January 1, 2010, and is the sum of the fol-
lowing amounts translated into U.S. dol-
lars at the spot rate on January 1, 2010:
(i)€75, and (ii) an amount of euros cal-
culated by reference to a compound stated
rate of return applied to€75 from January
1, 2007, until January 1, 2010. The com-
pound stated rate of return is the excess of a
rate based on euro interest rates over a rate
labeled as a “fee” for the benefit of the Is-
suer. (The U.S. Dollar Equivalent Amount
to be paid by Issuer to Holder on January 1,
2010, may also be determined by reference
to a mathematical formula that generates
the same substantive effect as the method-
ology described above.)
Holder and Issuer expect that Issuer will
pay the U.S. Dollar Equivalent Amount
on January 1, 2010. The legal remedies
provided in the Instrument are not mate-
rially different than legal remedies associ-
ated with instruments that are debt for fed-
eral tax purposes.
The U.S. dollar is the functional cur-
rency of Holder.
There is a significant possibility that the
U.S. Dollar Equivalent Amount payable
by Issuer to Holder on January 1, 2010,
may be significantly less than $100.
ANALYSIS
An instrument that requires payments
to be made in a foreign currency (that
is, nonfunctional currency) can be debt
for U.S. federal income tax purposes.
See, e.g., section 988(c)(1)(B)(i) of the
Internal Revenue Code. Thus, although
nonfunctional currency is considered to be
“property” for U.S. federal tax purposes
(see, e.g.,PhilipMorrisInc.v.Com-
missioner, 71 F.3d 1040 (2d Cir. 1995),
aff’g104 T.C. 61 (1995);National-Stan-
dard Company v. Commissioner,749
F.2d 369 (6th Cir. 1984),aff’g80 T.C.
551 (1983)), it is treated like money for
purposes of determining the amount and
timing of interest that accrues on debt.See
§1.988–2(b)(2) of the Income Tax Reg-
ulations; S. Rep. No. 313, 99
th
Cong.,
2d Sess., 1986–3 (Vol. 3) C.B. 461–463
(1986). Section 988 and regulations there-
under also provide that the acquisition of
a debt instrument or becoming the obligor
under a debt instrument is a section 988
transaction if the amount that a taxpayer
is entitled to receive or is required to pay
is determined by reference to the value
of a nonfunctional currency.See, e.g.,
section 988(c)(1); §§ 1.988–1(a)(1) (flush
language), 1.988–2(b)(2)(i)(B)(2). These
provisions indicate that a financial in-
strument all the payments of which are
determined by reference to a single cur-
rency can be debt, notwithstanding the
fact that (i) all actual payments due un-
der the instrument are made in a different
payment currency, and (ii) the amount of
the different payment currency that the
issuer pays at maturity may be less than
the amount of the different payment cur-
rency that was initially advanced. Indeed,
section 988 was adopted, in part, to negate
suggestions “that U.S. tax consequences
can be manipulated by arranging to repay
a foreign-currency denominated loan in
U.S. dollars equivalent in value at repay-
ment to the foreign currency borrowed.”
S. Rep. No. 313, 99
th
Cong., 2d Sess.,
1986–3 (Vol. 3) C.B. 451 (1986).See also
H.R. Rep. No. 426, 99
th
Cong. 1
st
Sess.
1986–3 (Vol. 2) C.B. 466 (1985) and Gen-
eral Explanation of the Tax Reform Act of
1986, 100
th
Cong., 1
st
Sess., 1087 (1987).
The Instrument, in form, resembles a
U.S. dollar denominated derivative con-
tract in which the Holder prepays its obli-
gations under the contract, and is entitled
to receive a return based exclusively on
the value of property at maturity. (SeeNo-
tice 2008–2, 2008–2 I.R.B. 252, dated Jan-
uary 14, 2008, requesting comments with
respect to these types of derivative con-
tracts.) However, the U.S. Dollar Equiv-
alent Amount that is payable at maturity
by the Issuer under the terms of the In-
strument is determined exclusively by ref-
erence to (i) the U.S. dollar value of the
euros at issuance and at maturity, and (ii)
market interest rates in respect of the euro.
At inception (on January 1, 2007), the
Holder delivers the U.S. dollar equivalent
of€75, and at maturity (on January 1,
2010) the Issuer is required to pay the U.S.
dollar equivalent of€75, plus the U.S.
dollar value at maturity of a return based
on euro interest rates. The fact that in-
tervening currency fluctuations may cause
January 14, 20082482008–2 I.R.B.

the amount of U.S. dollars that Holder re-
ceives at maturity (on January 1, 2010) to
be less than the amount of U.S. dollars that
the Holder paid for the Instrument (on Jan-
uary 1, 2007) does not affect the character-
ization of the Instrument as debt, which is
basedonananalysisofpaymentswithre-
spect to the euro. The Issuer’s translation
of U.S. dollars into euros (on January 1,
2007) and euros into U.S. dollars (on Jan-
uary 1, 2010) is not relevant to the Instru-
ment’s characterization.
HOLDING
For U.S. federal tax purposes, the
Instrument is euro-denominated indebted-
ness of Issuer. This result is not affected
if the Instrument is (i)privately offered,
(ii) publicly offered, or (iii) traded on an
exchange.
DRAFTING INFORMATION
The principal authors of this revenue
ruling are John W. Rogers III of the
Office of the Associate Chief Counsel
(Financial Institutions & Products) and
Margaret Harris of the Office of Associate
Chief Counsel (International). For further
information regarding this revenue ruling,
contact Mr. Rogers at (202) 622–3950 or
Ms. Harris at 202–622–3870 (not toll-free
calls).
Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
A ruling provides the dollar amounts, increased by
the 2008 inflation adjustment, for section 1274A of
the Code. See Rev. Rul. 2008-3, page 249.
Section 1274A.—Special
Rules for Certain
Transactions Where Stated
Principal Amount Does Not
Exceed $2,800,000
26 CFR 1.1274A–1: Special rules for certain trans-
actions where stated principal amount does not ex-
ceed $2,800,000.
(Also§§483,1274.)
Section 1274A — Inflation adjusted
numbers for 2008.This ruling provides
the dollar amounts, increased by the 2008
inflation adjustment, for section 1274A of
the Code. Rev. Rul. 2007–4 supple-
mented and superseded.
Rev. Rul. 2008–3
This revenue ruling provides the dollar
amounts, increased by the 2008 inflation
adjustment, for § 1274A of the Internal
Revenue Code.
BACKGROUND
In general, §§ 483 and 1274 determine
the principal amount of a debt instrument
given in consideration for the sale or ex-
change of nonpublicly traded property. In
addition, any interest on a debt instrument
subject to § 1274 is taken into account un-
der the original issue discount provisions
of the Code. Section 1274A, however,
modifies the rules under §§ 483 and 1274
for certain types of debt instruments.
In the case of a “qualified debt instru-
ment,” the discount rate used for purposes
of §§ 483 and 1274 may not exceed 9 per-
cent, compounded semiannually. Section
1274A(b) defines a qualified debt instru-
ment as any debt instrument given in con-
sideration for the sale or exchange of prop-
erty (other than new § 38 property within
the meaning of § 48(b), as in effect on the
day before the date of enactment of the
Revenue Reconciliation Act of 1990) if the
stated principal amount of the instrument
does not exceed the amount specified in
§ 1274A(b). For debt instruments arising
out of sales or exchanges before January 1,
1990, this amount is $2,800,000.
In the case of a “cash method debt in-
strument,” as defined in § 1274A(c), the
borrower and lender may elect to use the
cash receipts and disbursements method
of accounting. In particular, for any cash
method debt instrument, § 1274 does not
apply, and interest on the instrument is ac-
counted for by both the borrower and the
lender under the cash method of account-
ing. A cash method debt instrument is
a qualified debt instrument that meets the
following additional requirements: (A) In
the case of instruments arising out of sales
or exchanges before January 1, 1990, the
stated principal amount does not exceed
$2,000,000; (B) the lender does not use an
accrual method of accounting and is not a
dealer with respect tothe property sold or
exchanged; (C) § 1274 would have applied
to the debt instrument but for an election
under § 1274A(c); and (D) an election un-
der § 1274A(c) is jointly made with respect
to the debt instrument by the borrower and
lender. Section 1.1274A–1(c)(1) of the In-
come Tax Regulations provides rules con-
cerning the time for, and manner of, mak-
ing this election.
Section 1274A(d)(2) provides that, for
any debt instrument arising out of a sale
or exchange during any calendar year
after 1989, the dollar amounts stated in
§ 1274A(b) and § 1274A(c)(2)(A) are
increased by the inflation adjustment for
the calendar year. Any increase due to
the inflation adjustment is rounded to the
nearest multiple of $100 (or, if the increase
is a multiple of $50 and not of $100, the
increase is increased to the nearest mul-
tiple of $100). The inflation adjustment
for any calendar year is the percentage (if
any) by which the CPI for the preceding
calendar year exceeds the CPI for calendar
year 1988. Section 1274A(d)(2)(B) de-
fines the CPI for any calendar year as the
average of the Consumer Price Index as of
the close of the 12-month period ending
on September 30 of that calendar year.
INFLATION-ADJUSTED AMOUNTS
UNDER § 1274A
For debt instruments arising out of sales
or exchanges after December 31, 1989, the
inflation-adjusted amounts under § 1274A
areshowninTable1.
2008–2 I.R.B.249January 14, 2008

Rev. Rul. 2008–3 Table 1
Inflation-Adjusted Amounts Under § 1274A
Calendar Year
of Sale
or Exchange
1274A(b) Amount
(qualified debt
instrument)
1274A(c)(2)(A) Amount
(cash method debt
instrument)
1990
$2,933,200$2,095,100
1991
$3,079,600$2,199,700
1992
$3,234,900$2,310,600
1993
$3,332,400$2,380,300
1994
$3,433,500$2,452,500
1995
$3,523,600$2,516,900
1996
$3,622,500$2,587,500
1997
$3,723,800$2,659,900
1998
$3,823,100$2,730,800
1999
$3,885,500$2,775,400
2000
$3,960,10
0
$2,828,70
0
2001
$4,085,900$2,918,500
2002
$4,217,500$3,012,500
2003
$4,280,800$3,057,700
2004
$4,381,300$3,129,500
2005
$4,483,000$3,202,100
2006
$4,630,
300
$3,307,
400
2007
$4,800,800$3,429,100
2008
$4,913,400$3,509,600
Note: These inflation adjustments were computed using the All-Urban, Consumer Price Index, 1982–1984 base, published
by the Bureau of Labor Statistics.
EFFECT
ON OTHER DOCUMENTS
Rev. Rul. 2007–4, 2007–4 I.R.B. 351,
is supplemented and superseded.
DRAFTING INFORMATION
The au
thor of this revenue ruling is
Richa
rd C. LaFalce of the Office of the
Assoc
iate Chief Counsel (Financial Insti-
tuti
ons and Products). For further informa-
tion re
garding this revenue ruling, please
contac
t Mr. LaFalce at (202) 622–3930
(not a t
oll-free call).
Section 1372.—Tax
Treatment of S Corporations
and Th
eir Shareholders
This n
otice provides rules under which a 2-percent
share
holder-employee in an S corporation is entitled
to the d
eduction under section 162(l) of the Internal
Revenu
e Code for accident and health insurance pre-
miums t
hat are paid or reimbursed by the S corpo-
ration
and included in the 2-percent shareholder-em-
ploye
e’s gross income. See Notice 2008-1, page 251.
January 14, 20082502008–2 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Special
Rules for Health
Insura
nce Costs of 2-Percent
Shareh
older-Employees
Notice 2008–1
PURPOSE
This no
tice provides rules under which
a2-per
cent shareholder-employee in an
S corpo
ration is entitled to the deduction
under §
162(l) of the Internal Revenue
Code f
or accident and health insurance
premi
ums that are paid or reimbursed
by the
S corporation and included in the
2-per
cent shareholder-employee’s gross
inco
me.
LAW AND ANALYSIS
Section 1372(a) provides that, for pur-
poses of applying the income tax provi-
sions of the Code relating to employee
fringe benefits, an S corporation shall be
treated as a partnership, and any 2-per-
cent shareholder of the S corporation shall
be treated as a partner of such partner-
ship. For purposes of § 1372, the term
“2-percent shareholder’’ is any person who
owns (or is considered as owning within
the meaning of § 318) on any day during
the taxable year of the S corporation more
than 2 percent of the outstanding stock of
such corporation or stock possessing more
than 2 percent of the total combined vot-
ing power of all stock of such corporation.
Section 1372(b).
Accident and health insurance premi-
ums paid or furnished by an S corporation
on behalf of its 2-percent shareholders
in consideration for services rendered
are treated for income tax purposes like
partnership guaranteed payments under
§ 707(c) of the Code. Rev. Rul. 91–26,
1991–1 C.B. 184. An S corporation is
entitled to deduct the cost of such em-
ployee fringe benefits under § 162(a) if the
requirements of that section are satisfied
(taking into account the rules of § 263).
The premium payments are included in
wages for income tax withholding pur-
poses on the shareholder-employee’s Form
W–2,Wage and Tax Statement, but are not
wages subject to Social Security and Medi-
care taxes if the requirements for exclusion
under section 3121(a)(2)(B) are satisfied.
See § 312
1(a)(2)(B); Ann. 92–16, 1992–5
I.R.B. 5
3. The 2-percent shareholder is
require
d to include the amount of the ac-
cident
and health insurance premiums in
gross i
ncome under § 61(a).
Sectio
n 106 provides an exclusion
from th
e gross income of an employee
for emp
loyer-provided coverage under
an acci
dent and health plan. A 2-percent
share
holder is not an employee for pur-
poses
of §106. Treas. Reg. §1.106–1;
secti
on 1372(a). Accordingly, the premi-
ums ar
e not excludible from the 2-percent
share
holder-employee’s gross income un-
der §
106.
Secti
on 162(l)(1)(A) allows an individ-
ual w
ho is an employee within the meaning
of § 4
01(c)(1) to take a deduction in com-
puti
ng adjusted gross income for amounts
paid
during the taxable year for insurance
tha
t constitutes medical care for the tax-
pay
er, his or her spouse, and dependents.
The
deduction is not allowed to the ex-
ten
t that the amount of the deduction ex-
cee
ds the earned income (within the mean-
ing
of section 401(c)(2)) derived by the
ta
xpayer from the trade or business with
re
spect to which the plan providing the
me
dical care coverage is established. Sec-
ti
on 162(l)(2)(A). Also, the deduction is
no
t allowed for amounts during a month
i
n which the taxpayer is eligible to partic-
i
pate in any subsidized health plan main-
t
ainedbyanemployerofthetaxpayeror
o
f the spouse of the taxpayer. Section
1
62(l)(2)(B).
A
2-percent shareholder-employee in
a
n S corporation, who otherwise meets the
r
equirements of section 162(l), is eligible
for the deduction under section 162(l) if
the plan providing medical care coverage
for the 2-percent shareholder-employee is
established by the S corporation. Rev. Rul.
91–26, 1991–1 C.B. 184. A plan providing
medical care coverage for the 2-percent
shareholder-employee in an S corporation
is established by the S corporation if: (1)
the S corporation makes the premium
payments for the accident and health
insurance policy covering the 2-percent
shareholder-employee (and his or her
spouse or dependents, if applicable)
in the current taxable year; or (2) the
2-percent shareholder makes the premium
payments and furnishes proof of premium
payment
to the S corporation and then the
Scorpor
ation reimburses the 2-percent
shareho
lder-employee for the premium
paymen
ts in the current taxable year. If the
accide
nt and health insurance premiums
are not
paid or reimbursed by the
S corpo
ration and included in the 2-percent
share
holder-employee’s gross income, a
plan p
roviding medical care coverage for
the 2-
percent shareholder-employee is
not es
tablished by the S corporation and
the 2-
percent shareholder-employee in an
Scor
poration is not allowed the deduction
unde
r § 162(l).
In or
der for the 2-pecent shareholder-
empl
oyee to deduct the amount of the ac-
cide
nt and health insurance premiums, the
Scor
poration must report the accident and
heal
th insurance premiums paid or reim-
bur
sed as wages on the 2-percent share-
hol
der-employee’s Form W–2 in that same
yea
r. In addition, the shareholder must re-
por
t the premium payments or reimburse-
men
ts from the S corporation as gross in-
co
me on his or her Form 1040,U.S. Indi-
vi
dual Income Tax Return.
EX
AMPLES
Th
e following examples illustrate these
ru
les. The following examples assume
th
at each shareholder is a 2-percent share-
ho
lder-employee in an S corporation,
w
hose earned income from the S corpora-
t
ion exceeds the amount of the premiums
f
or the accident and health insurance poli-
c
ies covering the shareholder, his or her
s
pouse and dependents. None of the share-
h
olders in the following examples are
eligible to participate in any subsidized
health plan maintained by an employer
of the shareholder or the shareholder’s
spouse.
Example 1. (i) For 2008, shareholder A obtains
an accident and health insurance policy in the name
of shareholder A and makes the premium payments
on the policy. The S corporation makes no payments
or reimbursements with respect to the premiums.
(ii) A plan providing medical care for share-
holder A is not established by the S corporation and
shareholder A is not entitled to the deduction under
§162(l).
Example 2. (i) For 2008, the S corporation ob-
tains an accident and health insurance plan in the
name of the S corporation. The health plan provides
coverage for shareholder B, B’s spouse and depen-
dents. The S corporation makes all the premium pay-
ments to the insurance company. The S corpora-
tion reports the amount of the premiums as wages on
2008–2 I.R.B.251January 14, 2008

shareholder B’s Form W–2 for 2008 and shareholder
B reports that amount as gross income on Form 1040
for 2008.
(ii) A plan providing medical care for share-
holder B has been established by the S corporation
and shareholder B is allowed the deduction under
§ 162(l) for 2008.
Example 3. (i) For 2008, shareholder C obtains
an accident and health insurance policy in the name
of shareholder C. The S corporation makes all the
premium payments to the insurance company. The
S corporation reports the amount of the premiums as
wages on shareholder C’s Form W–2 for 2008 and
shareholder C reports that amount as gross income on
Form 1040 for 2008.
(ii) A plan providing medical care for share-
holder C has been established by the S corporation
and shareholder C is allowed the deduction under
§ 162(l) for 2008.
Example 4. (i) For 2008, shareholder D obtains
an accident and health insurance policy in the name
of shareholder D. Shareholder D makes the premium
payments to the insurance company and furnishes
proof of premium payment to the S corporation. The
S corporation then reimburses shareholder D for the
premium payments. The S corporation reports the
amount of the premium reimbursements as wages on
shareholder D’s Form W–2 for 2008 and shareholder
D reports that amount as gross income on Form 1040
for 2008.
(ii) A plan providing medical care for share-
holder D has been established by the S corporation
and shareholder D is allowed the deduction under
§ 162(l) for 2008.
AMENDED RETURNS FOR PRIOR
TAXABLE YEARS
Taxpayers who did not claim deduc-
tions for fringe benefits described in this
notice may file timely amended tax returns
to claim the deduction under § 162(l) if the
taxpayers satisfy the requirements of this
notice. The statement “Filed Pursuant to
Notice 2008–1” should be written on the
top of any amended return.
The Service does not consider pay-
ments of accident and health insurance
premiums by an S corporation on be-
half of 2-percent shareholder-employ-
ees to be distributions for purposes of
the single class of stock requirement of
§1361(b)(1)(D).
DRAFTING INFORMATION
The principal authors of this notice are
Mireille Khoury of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities) and
Charles D. Wien of the Office of Associate
Chief Counsel (Passthroughs and Special
Industries). For further information re-
garding this notice as it relates to accident
and health insurance costs of self-em-
ployed individuals generally, contact
Mireille Khoury at (202) 622–6080 (not
a toll-free call). For further information
relating to accident and health insurance
costs of 2-percent shareholder-employees
of S corporations, contact Charles D. Wien
at (202) 622–3070 (not a toll-free call).
Timing,Character,Source
and Other Issues Respecting
Prepaid Forward Contracts
and Similar Arrangements
Notice 2008–2
SECTION 1. PURPOSE
The purpose of this notice is to request
comments from the public with respect to
issues that arise in connection with certain
financial transactions frequently referred
to in the marketplace as prepaid forward
contracts (or in certain circumstances as
exchange traded notes).
SECTION 2. BACKGROUND
The Internal Revenue Service and the
Treasury Department are considering the
tax policy issues raised by certain finan-
cial transactions frequently referred to in
the marketplace as prepaid forward con-
tracts (or in certain circumstances as ex-
change traded notes).These transactions
resemble typical forward contracts (that is,
bilateral, executory contracts in which one
party agrees to purchase an asset on a fu-
ture date for a specific forward purchase
price, payable at that future time), but the
purchase price is paid in advance of fu-
ture delivery or cash settlement. Thus,
these transactions typically involve an ini-
tial payment by one party in exchange for
a promise of either (i) a future delivery of
a particular asset or group of assets (for
example, stocks or commodities), or (ii) a
future payment determined exclusively by
reference to the value of such assets.
In particular, the Internal Revenue Ser-
vice and the Treasury Department are con-
sidering whether the parties to such a trans-
action should be required to accrue in-
come/expense during the term of the trans-
action, if the transaction is not otherwise
indebtedness for U.S. federal income tax
purposes.SeeRev. Rul. 2008–1, 2008–2
I.R.B. 248, dated January 14, 2008 (hold-
ing that an instrument resembling, in form,
a prepaid forward contract is debt). The
Internal Revenue Service and the Treasury
Department are also considering a number
of other issues associated with these trans-
actions, including:
•The appropriate methodology for ac-
cruing income or expense, if that is
deemed appropriate (for example, a
mark-to-market methodology or a
method resembling the noncontingent
bond method set forth in §1.1275–4 of
the Income Tax Regulations);
•How an accrual regime might be de-
signed so that it does not inappropri-
ately or inadvertently cover routine
commercial transactions involving
property sales in the ordinary channels
of commerce;
•The appropriate character (capital vs.
ordinary, and if ordinary, whether in-
terest) of any income accruals required
under such an accrual regime, as well
as the character of amounts less than,
or in excess of, these accruals;
•Whether the tax treatment of the trans-
actions should vary depending on the
nature of the underlying asset (for ex-
ample, stocks vs. commodities);
•Whether the tax treatment of the trans-
actions should vary depending on
whether the transactions are (i) exe-
cuted on a futures exchange (and are
not otherwise subject to section 1256
of the Internal Revenue Code), or (ii)
memorialized in an instrument that is
traded on a securities exchange;
•Whether the transactions should be
treated as indebtedness pursuant to
regulations issued under section 7872;
•Whether section 1260 applies, or
should apply, to prepaid forward con-
tracts and similar transactions;
•The degree to which such transactions
(and any income accruals that may be
mandated) should be taxed under sec-
tions 871 and 881;
•How the income with respect to such
instruments should be treated for pur-
poses of section 954 (for example, as
January 14, 20082522008–2 I.R.B.

income equivalent to interest or gains
from property that does not give rise to
income);
•How investments in such contracts
should be treated under section 956;
•Whether there are other issues that
should be considered with respect
to these transactions (for example,
whether short term transactions should
be subject to the accrual regime);
•Identifying arrangements similar to
prepaid forward contracts that should
be accorded tax treatment similar to
that of prepaid forward contracts; and
•Appropriate transition rules and effec-
tive dates.
SECTION 3. REQUEST FOR
COMMENTS
The Internal Revenue Service and the
Treasury Department request public com-
ments with respect to the issues described
in Section 2 of this notice. Comments
must be submitted by May 13, 2008. All
materials submitted will be available for
public inspection and copying. Comments
may be submitted to Internal Revenue Ser-
vice, CC:PA:LPD:RU (Notice 2008–2),
Room 5203, PO Box 7604, Ben Franklin
Station, Washington, D.C. 20044. Sub-
missions may also be hand-delivered
Monday through Friday between the hours
of 8:00 a.m. and 4:00 p.m. to the Courier’s
Desk, Internal Revenue Service, 1111
Constitution Avenue, NW, Washington,
DC 20224, Attn: CC:PA:LPD:RU (Notice
2008–2), Room 5203. Submissions
may also be sent electronically via the
internet to the following email address:
Notice.Comments@irscounsel.treas.gov.
Include the notice number (Notice
2008–2) in the subject line.
DRAFTING INFORMATION
The principal author of this notice is
JohnW.RogersIIIoftheOfficeoftheAs-
sociate Chief Counsel (Financial Institu-
tions & Products). For further information
regarding this notice, contact Mr. Rogers
at (202) 622–3950 (not a toll-free call).
Creditability of Mexican Single
Rate Business Tax
Notice 2008–3
The Internal Revenue Service (IRS)
and the Treasury Department are eval-
uating theimpuesto empresarial a tasa
única(IETU), a single rate business tax
recently adopted by Mexico effective Jan-
uary 1, 2008, to determine whether it is a
creditable income tax under Article 24(1)
(Relief from Double Taxation) of the Con-
vention Between the Government of the
United States of America and the Gov-
ernment of the United Mexican States for
the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect
to Taxes on Income (the Treaty).
Article 24(1) of the Treaty generally
provides that the United States will allow
a credit for income tax paid to Mexico by
or on behalf of a U.S. resident. The taxes
in paragraphs 3 and 4 of Article 2 (Taxes
Covered by the Convention) of the Treaty
are treated as income taxes for purposes
of Article 24(1) and are therefore eligible
for a credit. In the case of Mexico, these
taxes are the income tax imposed by Mex-
ico’s Income Tax Law and any substan-
tially similar taxes imposed in addition to,
or in place of, the taxes listed in paragraph
3 of Article 2 after September 18, 1992, the
date the Treaty was signed.
The IRS and the Treasury Department
believe that the provisions, design, and
full operation of the IETU, including its
interaction with Mexico’s regular income
tax, require study to determine whether the
IETU is a creditable income tax. In view of
the responsibility of the IRS to administer
U.S. tax laws and treaties, pending the con-
clusion of this study, the IRS will not chal-
lenge a taxpayer’s position that the IETU
is an income tax that is eligible for a credit
under Article 24(1) of the Treaty. This no-
tice is effective for the IETU paid or ac-
crued on or after January 1, 2008. Any
change in the foreign tax credit treatment
of the IETU as a result of the study will be
prospective, and apply solely to the IETU
paid or accrued in taxable years beginning
after the date that further guidance is is-
sued.
DRAFTING INFORMATION
Various personnel from the IRS and the
Treasury Department participated in the
development of this notice. For further
information regarding this notice, contact
Nina E. Chowdhry of the Office of As-
sociate Chief Counsel (International) at
(202) 622–3880 (not a toll-free call).
Claims Submitted to the IRS
Whistleblower Office Under
Section 7623
Notice 2008–4
SECTION 1. PURPOSE
This notice provides guidance to the
public on how to file claims under Internal
Revenue Code section 7623 as amended
by the Tax Relief and Health Care Act of
2006, Pub. L. No. 109–432 (120 Stat.
2958) (the Act) enacted on December 20,
2006.
SECTION 2. BACKGROUND
Section 406 of the Act amended section
7623 of the Internal Revenue Code con-
cerning the payment of awards to certain
persons who detect underpayments of tax.
Prior statutory authority to pay awards at
the discretion of the Secretary was re-des-
ignated as section 7623(a), and a new sec-
tion 7623(b) was added to the Code. Addi-
tional provisions in section 406 of the Act
establish a Whistleblower Office within
the IRS and address reward program ad-
ministration issues. These provisions were
not incorporated into the Code.
The award program authorized by sec-
tion 7623(a) has been previously imple-
mented through regulations appearing at
section 301.7623–1 of the Procedure and
Administration Regulations, the substance
of which is reprinted as IRS Publication
733, with additional administrative guid-
ance appearing in the Internal Revenue
Manual. Those regulations and Internal
Revenue Manual provisions will continue
to be followed for award claims within
the scope of section 7623(a), except to the
extent Sections 3.02 and 3.03 of this no-
tice provides interim guidance regarding
2008–2 I.R.B.253January 14, 2008

submissions of information under section
7623(a).
New section 7623(b) requires that
awards be made for submissions meeting
certain criteria. Individuals are eligible
for section 7623(b) awards based on the
amount collected as a result of any admin-
istrative or judicialaction resulting from
the information provided. Because new
section 7623(b) includes several require-
ments that are inconsistent with existing
regulations and administrative guidance
applicable to award claims under section
7623(a), the regulations which appear
at section 301.7623–1 will not apply to
the new award program authorized by
section 7623(b). This notice provides in-
terim guidance applicable to award claims
submitted under the authority of section
7623(b). In addition, this notice seeks
public comment on the topics covered
herein.
SECTION 3. INTERIM GUIDANCE
3.01Eligibility Requirements to Submit
Claims Under Section 7623(b)
To be eligible for an award under sec-
tion 7623(b), the tax, penalties, interest,
additions to tax, and additional amounts
in dispute must exceed in the aggregate
$2,000,000 and, if the allegedly noncom-
pliant person is an individual, the individ-
ual’s gross income must exceed $200,000
for any taxable year at issue in a claim. If
the thresholds in section 7623(b) are not
met, section 7623(a) authorizes, but does
not require, the Service to pay for infor-
mation relating to violations of the inter-
nal revenue laws that result in the govern-
ment’s recovery of tax. Submissions that
do not qualify under section 7623(b) will
be processed under section 7623(a). Un-
like payments made on claims under sec-
tion 7623(b), there is no requirement that
payments made on claims under section
7623(a) be subject to the statutory award
percentages. The United States Tax Court
appeal provisions added by the Act and
codified in section 7623(b)(4) are applica-
ble exclusively to award claims under sec-
tion 7623(b). Accordingly, there is no right
to appeal to the Tax Court for claims under
section 7623(a).
3.02.Submission of Information for
Award under Sections 7623(a) or (b)
(1) Individuals submitting informa-
tion under section 7623(a) or (b) must
complete IRS Form 211,Application for
Award for Original Information, (available
onwww.irs.gov) and send the completed
Form 211 to:
Internal Revenue Service
Whistleblower Office
SE:WO
1111 Constitution Ave., NW
Washington, D.C. 20224
(2) All claims for awards must be sub-
mitted under penalty of perjury in accor-
dance with section 3.03(9) below.
Until further guidance is issued, claims
for awards may not be submitted electron-
ically or by fax.
3.03Information to be Included with IRS
Form 211
The Form 211 must be completed in its
entirety and should include the following
information:
(1) The date the claimant submits the
claim;
(2) Claimant’s name;
(3) Name of claimant’s spouse (if appli-
cable);
(4) Claimant’s contact information, in-
cluding address with zip code and tele-
phone number;
(5) Claimant’s date of birth;
(6) Claimant’s Taxpayer Identification
Number (e.g., Social Security Number or
Individual TaxpayerIdentification Num-
ber) and Taxpayer Identification Number
of claimant’s spouse, if applicable.
(7) Specific and credible information
concerning the person(s) that the claimant
believes have failed to comply with tax
laws and which will lead to the collection
of unpaid taxes. This information should
include the following:
(i) The legal name of the person(s) (e.g.,
individual or entity), and any related per-
son(s), that committed the violation of tax
laws;
(ii) The person’s aliases, if any;
(iii) The person’s address;
(iv) The person’s Taxpayer Identifica-
tion Number(s);
(v)Adescriptionoftheamount(s)and
tax year(s) of Federal tax claimed to be
owed, and facts supporting the basis for the
amount(s) claimed to be owed;
(vi) Documentation to substantiate the
claim (e.g., financial data; the location of
bank accounts, assets, books, and records;
transaction documents or analyses relevant
to the claim); and
(vii) Any and all other facts and infor-
mationpertainingtotheclaim.
If available information is not provided
by the claimant, the claimant bears the risk
that such information may not be consid-
ered by the Whistleblower Office in mak-
ing any award determination. If docu-
ments or supporting evidence are known to
the claimant but are not in his or her pos-
session or control, the claimant should de-
scribe these documents and identify their
location to the best of his or her ability.
(8) Explanation of how the informa-
tion that forms the basis of the claim came
to the attention of the claimant, includ-
ing the date(s) on which this information
was acquired, and a complete description
of the claimant’s present or former rela-
tionship (if any) to the person that is the
subject of the claim (e.g., family member,
acquaintance, client, employee, accoun-
tant, lawyer, bookkeeper, customer). If
the claimant identifies multiple person(s)
as the subject of a claim, describe his or
her relationship to each person.
(9) Information submitted under section
7623 must be accompanied by an original
signed declaration under penalty of per-
jury, as follows:
I declare, under penalty of perjury, that I
have examined this application and my
accompanying statement and support-
ing documentation and aver that such
application is true, correct and com-
plete, to the best of my knowledge.
The requirement to submit information
under penalty of perjury precludes submis-
sions by: (1) a person serving as a rep-
resentative of the claimant, or (2) an en-
tity other than a natural person. With re-
spect to claims under section 7623(b), the
requirement to submit information under
penalty of perjury precludes submissions
made anonymously or under an alias.
(10) Joint claims must be signed by
each claimant and each claimant must sign
the claim under penalty of perjury as de-
scribedin3.03(8).
January 14, 20082542008–2 I.R.B.

3.04Examples of Grounds for not
Processing Claims Under Section 7623(b)
Examples of claims that will not be pro-
cessed under section 7623(b) include:
(1) Claims submitted by an individual
who is an employee of the Department of
Treasury, or who is acting within the scope
of his/her duties as an employee of any
Federal, State, or local Government.
(2) Claims submitted by an individual
who is required by Federal law or regula-
tion to disclose the information, or by an
individual who is precluded by Federal law
or regulation from making the disclosure.
(3) Claims submitted by an individual
who obtained or was furnished the infor-
mation while acting in an official capacity
as a member of a State body or commission
having access to such materials as Federal
returns, copies or abstracts.
(4) Claims submitted by an individual
who had access to taxpayer information
arising out of a contract with the Federal
government that forms the basis of the
claim.
(5) Claims that upon initial review have
no merit or that lack sufficient specific and
credible information.
(6) Claims submitted anonymously or
under an alias.
(7) Claims filed by a person other than
a natural person (such as a corporation or
a partnership).
(8) The alleged noncompliant person is
an individual whose gross income is below
$200,000 for all taxable years at issue in a
claim.
3.05Acknowledgment of Claim by
Whistleblower Office
The Whistleblower Office will ac-
knowledge receipt of a claim in writing.
If required information has not been sub-
mitted on a Form 211, the Whistleblower
OfficemayreturnaForm211tothe
claimant for completion and submission.
Following submission of the claim, the
Whistleblower Office may, in its sole dis-
cretion, offer the opportunity to confer
with the claimant to discuss the claim to
ensure that the Service fully understands
the information submitted with the claim.
The Whistleblower Office, in its sole dis-
cretion, may ask for additional assistance
from the claimant or any legal represen-
tative of such individual. Any assistance
shall be under the direction and control
of the Whistleblower Office or the office
assigned to investigate the matter. The
submission of a claim does not create an
agency relationship between the claimant
and the Federal Government, nor does the
claimant act in any way on behalf of the
Federal Government.
3.06Confidentiality of Claimant’s Identity
The Service will protect the identity of
the claimant to the fullest extent permitted
by law. Under some circumstances, such
as when the claimant is needed as a wit-
ness in a judicial proceeding, it may not be
possible to pursue the investigation or ex-
amination without revealing the claimant’s
identity. The Service will make every ef-
fort to inform the claimant before proceed-
inginsuchacase.
3.07IRS Process for Evaluating Claim
The process for evaluating a claim is
initiated by Service consideration of the
information provided by the claimant in
light of the facts developed by the Service
in investigating the claim. This process
will also consider whether the information
submitted by the claimant resulted in ad-
ministrative action taken by the Service or
judicial action. For example, in the case
of large entities where the entities’ tax re-
turns are subject to annual examination by
the Service, an administrative action can
mean the creation of a new issue under the
Audit Plan or a change in the way infor-
mation about an issue is collected or an-
alyzed, which would not otherwise have
occurred without the information provided
by the claimant. In other cases, an ad-
ministrative action may include initiating
an examination of the person which would
not otherwise have occurred without in-
formationprovidedbytheclaimant. Al-
ternatively, a claimant’s description of in-
formation when the alleged noncompliant
person is already under investigation and
when the information results in no change
in the manner regarding how the issue is
approached or resolved would not gener-
ally be regarded as resulting in administra-
tive or judicial action and therefore would
not be eligible for an award.
3.08Duration of Process from Submitted
Claim to Award Determination.
The process, from submission of com-
plete information to the Service until the
proceeds that serve as the basis for any
award determination are collected, may
take several years. Accordingly, the Ser-
vice is unable to make any commitment to
the claimant concerning the expected du-
ration of the process.
Payment of awards will not be made
until there is a final determination of the
tax liability (including taxes, penalties,
interest, additions to tax and additional
amounts) owed to the Service and such
amounts have been collected by the Ser-
vice. Examples of when a final determina-
tion of tax liability can be made include,
but are not limited to: (1) at the adminis-
trative level, when the Service and person
that is the subject of the claimant’s al-
legations enter into a closing agreement
which conclusively waives the right to
appeal or otherwise challenge a deficiency
or additional tax liability determined by
the Service; (2) if the person that is the
subject of the claimant’s allegations pe-
titions the United States Tax Court for a
redetermination of a deficiency, when the
decision in that case becomes final within
the meaning of section 7481; and (3) after
the expiration of the statutory period for
a taxpayer to file a claim for refund and
to file a refund suit based on that claim
against the United States or, if a refund
suit is filed, when the judgment in that suit
becomes final. In a case in which litigation
is commenced, any award consideration
will be delayed until that litigation has
been concluded with finality.
3.09Percentages Applied to Awards
Under 7623(b)
The Whistleblower Office will make
the final determination whether an award
will be paid and the amount of the award
for claims which it processes. Awards will
be paid in proportion to the value of infor-
mation furnished voluntarily with respect
to proceeds collected, including penalties,
interest, additions to tax and additional
amounts. The amount of the award will
be at least 15% but no more than 30% of
the collected proceeds in cases in which
the Service determines that the informa-
tion submitted by the claimant substan-
2008–2 I.R.B.255January 14, 2008

tially contributed to the Service’s detec-
tion and recovery of tax. If the claimant
planned and initiated the actions that led to
the underpayment of tax, or to the violation
of the internal revenue laws, the Whistle-
blower Office may reduce the award. If the
claimant is convicted of criminal conduct
arising from his or her role in planning and
initiating the action, the Whistleblower Of-
fice will deny the claim.
If an action is based principally on al-
legations resulting from judicial or admin-
istrative proceedings, government reports,
hearing, audit, or investigation, or the me-
dia, an award of a lesser amount, subject to
the discretion of the Whistleblower Office,
may be provided; such an award, how-
ever, may not exceed 10% of the collected
proceeds, including penalties, interest, ad-
ditions to tax, and additional amounts re-
sulting from the action. This reduction in
award percentage doesnot apply if the Ser-
vice determines that the claimant was the
initial source of the information that re-
sulted in the judicial or administrative pro-
ceedings, government reports, hearing, au-
dit, or investigation, or the media’s report
on the allegations.
3.10Tax Treatment of Awards
All awards will be subject to current
federal tax reporting and withholding re-
quirements. Award recipients will receive
aForm1099orsuchotherformasmaybe
prescribed by law, regulation or publica-
tion.
3.11Appeal Rights
When the Whistleblower Office has
made a final determination regarding a
claim, the Whistleblower Office will send
correspondence to the claimant regard-
ing its final award determination. Final
Whistleblower Office determinations re-
garding awards under section 7623(b)
may, within 30 days of such determination,
be appealed to the United States Tax Court.
In accordance with section 7623(b)(4),
decisions under section 7623(a) may not
be appealed to the Tax Court.
3.12Claims Submitted Prior to Date of
EnactmentoftheAct
Information provided prior to Decem-
ber 20, 2006 (the date of enactment of the
Act) is covered by the law and policies
in place at the time the information was
submitted. Supplemental information pro-
vided on or after December 20, 2006, will
not be considered a new claim unless its
receipt prompts the Service to take an ad-
ministrative or judicial action that would
not otherwise have been taken on the basis
of the earlier-supplied information alone.
3.13Additional Questions
An electronic mailbox for email in-
quiries has been set up and may be ac-
cessed atWO@IRS.gov.
SECTION 4. REQUEST FOR
COMMENTS
Interested parties are invited to sub-
mit comments on or before February
13, 2008. Comments should be sub-
mitted to: Internal Revenue Service,
CC:PA:LPD:PR (Notice 2008–4), Room
5203, P.O. Box 7604, Ben Franklin Sta-
tion, Washington, D.C. 20224. Alter-
natively, comments may be hand deliv-
ered Monday through Friday between
the hours of 8:00 a.m. to 4:00 p.m.
to: CC:PA:LPD:PR (Notice 2008–4),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue,
N.W., Washington, D.C. Comments
may also be submitted electronically
via the following email address:
Notice.Comments@irscounsel.treas.gov.
Please include “Notice 2008–4” in the
subject line of any electronic submissions.
SECTION 5. EFFECTIVE DATE
This notice is effective as of January 14,
2008.
SECTION 6. DRAFTING
INFORMATION
The principal author of this notice is
Holly Styles of the Office of Associate
Chief Counsel, General Legal Services.
For further information regarding this
notice, contact Holly Styles at (202)
927–0900 (not a toll-free call).
Qualifying Relative for
Purposes of Section 152(d)(1)
Notice 2008–5
PURPOSE
This notice provides guidance under
section 152(d) of the Internal Revenue
Code for determining whether an indi-
vidual is a qualifying relative for whom
the taxpayer may claim a dependency ex-
emption deduction under section 151(c).
Section 152(d)(1)(D)provides that an in-
dividual is not a qualifying relative of the
taxpayer if the individual is a qualifying
child of any other taxpayer. This notice
clarifies that an individual is not a quali-
fying child of “any other taxpayer” if the
individual’s parent (or other person with
respect to whom the individual is defined
as a qualifying child) is not required by
section 6012 to file an income tax return
and (i) does not file an income tax return,
or (ii) files an income tax return solely to
obtain a refund of withheld income taxes.
BACKGROUND
Section 151 allows a taxpayer a deduc-
tion for each individual who is a depen-
dent (as defined in section 152) of the tax-
payer for the taxable year. Section 152(a)
provides that the term “dependent” means
a “qualifying child” (as defined in section
152(c)) or a “qualifying relative” (as de-
fined in section 152(d)). The terms “quali-
fying child” and “qualifying relative” were
added to section 152 by section 201 of the
Working Families Tax Relief Act of 2004
(WFTRA), Pub. L. No. 108–311, 118 Stat.
1169, effective for taxable years beginning
after December 31, 2004. WFTRA estab-
lished a uniform definition of a “qualify-
ing child” pursuant to section 152(c) for
determining whether a taxpayer may claim
certain child-related tax benefits, namely
head of household filing status, the earned
income credit, child tax credit, the child
and dependent care credit, and the depen-
dency exemption deduction. See §§ 2(b),
32, 24, 21, 152. WFTRA also established
the term “qualifying relative” to identify
individuals (other than a qualifying child)
for whom a dependency exemption deduc-
tion may be allowed.
January 14, 20082562008–2 I.R.B.

Definition of a “qualifying child” and
“qualifying relative”
Section 152(c)(1) defines a “qualifying
child” of a taxpayer as an individual who:
(A) bears a certain relationship to the tax-
payer, (B) has the same principal place
of abode as the taxpayer for more than
one-half of the taxable year, (C) meets cer-
tain age requirements, and (D) has not pro-
videdoverone-halfofhisorherownsup-
port for the calendar year.
Section 152(d)(1) provides, in part, that
to be a “qualifying relative” of a taxpayer,
an individual must: (A) bear a certain rela-
tionship to the taxpayer, (B) have gross in-
come for the calendar year that is less than
the exemption amount (as defined in sec-
tion 151(d)), and (C) derive over one-half
of his or her support for the calendar year
from the taxpayer. In addition, section
152(d)(1)(D) requires that the individual
not be a qualifying child of the taxpayer
or of “any other taxpayer” for the taxable
year. Section 152(d)(2)(H) provides that
a qualifying relative may include an indi-
vidual who has the same principal place of
abode as the taxpayer and who is a mem-
ber of the taxpayer’s household.
Requests for guidance
Commentators haveindicated that sec-
tion 152(d)(1)(D) may lead to unintended
tax consequences that differ from the tax
consequences under prior law. For ex-
ample, commentators cite an example of
a taxpayer who supports as members of
her household two minor orphans who
are brother and sister. The commenta-
tors question whether the children are
qualifying children of “any other tax-
payer” (i.e.,one another), thus making the
taxpayer ineligible to claim dependency
exemption deductions for the children.
Commentators have requested that the
Service issue written guidance under sec-
tion 152(d)(1)(D).
Prior to amendment by WFTRA, under
sections 151 and 152 a taxpayer could
claim a dependency exemption deduction
for an unrelated child who was a member
of the taxpayer’s household for the entire
year, provided all relevant requirements
of section 151 and 152 were satisfied.
WFTRA generally permits taxpayers
to continue to apply the dependency
exemption rules of present law to claim
a dependency exemption for a qualifying
relative who does not satisfy the qualifying
child definition.SeeH.R. Conf. Rep. 696,
108
th
Cong., 2d Sess. at 56, 62, and 64
(2004). The Service, therefore, concludes
that a taxpayer otherwise eligible to claim
a dependency exemption deduction for an
unrelated child is not prohibited by section
152(d)(1)(D) from claiming the deduction
if the child’s parent (or other person with
respect to whom the child is defined as a
qualifying child) is not required by section
6012 to file an income tax return and (i)
does not file an income tax return, or (ii)
files an income tax return solely to obtain
a refund of withheld income taxes.See
Rev. Rul. 54–567, 1954–2 C.B. 108,aff’d
Rev. Rul. 65–34, 1965–1 C.B. 86.
APPLICA
TION
For purposes of section 152(d)(1)(D),
an individual is not a qualifying child of
“any other taxpayer” if the individual’s
parent (or other person with respect to
whom the individual is defined as a qual-
ifying child) is not required by section
6012 to file an income tax return and (i)
does not file an income tax return, or (ii)
files an income tax return solely to obtain
a refund of withheld income taxes.
EXAMPLES
Example 1.
Asupports as members of his household for the
taxable year an unrelated friend,B, and her 3-year-old
child,C.Bhas no gross income, is not required by
section 6012 to file an income tax return, and does not
file an income tax return forthe taxable year. Accord-
ingly, becauseBdoes not have a filing requirement
and did not file an income tax return,Cis not treated
as a qualifying child ofBor any other taxpayer, and
Amay claim bothBandCas his qualifying relatives,
provided all other requirements of sections 151 and
152 to qualify for the deduction are met.
Example 2.
Same facts as Example 1, except thatBhas earned
income of $1,500 during the taxable year 2006, had
income tax withheld from her wages, and is not re-
quired by section 6012 to file an income tax return.
With one qualifying child,Bmay claim the earned
income credit (EIC) in the amount of $519 for the
taxable year.Bfiles an income tax return solely to
obtain a refund of withheld income taxes and does
not claim the EIC. Accordingly, becauseBdoes not
have a filing requirement and filed only to obtain a
refund of withheld income taxes,Cis not a qualify-
ing child ofBor any other taxpayer, andAmay claim
bothBandCas his qualifying relatives, provided all
other requirements of sections 151 and 152 to qualify
for the deduction are met.
Example 3.
Same facts as Example 1, except thatBhas earned
income of $8,000 during the taxable year 2006, had
income tax withheld from her wages, and is not re-
quired by section 6012 to file an income tax return
for the taxable year. With one qualifying child,Bmay
claim the EIC in the amount of $2,729 for the taxable
year.Bfiles an income tax return for the taxable year
to obtain a refund of withheld income taxes, andB
claims the EIC on the return. Accordingly, becauseB
filed an income tax return to obtain the EIC, and not
solely to obtain a refund of withheld income taxes,
Cis a qualifying child of another taxpayer,B,andA
may not claimCas a qualifying relative.
EFFECTIVE DATE
This notice applies to taxable years be-
ginning after December 31, 2004.
DRAFTING INFORMATION
The principal author of this notice is
Christina Glendening of the Office of As-
sociate Chief Counsel (Income Tax & Ac-
counting). For further information regard-
ing this notice, contact Ms. Glendening at
(202) 622–4920.
2008–2 I.R.B.257January 14, 2008

26 CFR 601.201: Rulings and determination letters.
Rev. Proc. 2008–9
TABLE OF CONTENTS
SECTION 1. WHAT IS THE PURPOSE OF THIS REVENUE PROCEDURE?
.............................................. 259
.01Descriptionoftermsusedinthisrevenueprocedure.............................................................. 259
.02Updatedannually............................................................................................ 260
SECTION 2. NATURE OF CHANGES AND RELATED REVENUE PROCEDURES......................................... 260
.01Rev.Proc.2007–52issupersededandtheprocessingofapplicationsisnowcentralized.............................. 260
.02Relatedrevenueprocedures................................................................................... 260
SECTION 3. WHAT ARE THE PROCEDURES FOR REQUESTING RECOGNITION OF EXEMPT
STATUS?
............................................................................................. 260
.01Ingeneral................................................................................................... 260
.02Userfee.................................................................................................... 260
.03Form1023application....................................................................................... 260
.04Form1024application....................................................................................... 260
.05Letterapplication............................................................................................ 261
.06Form1028application....................................................................................... 261
.07Form8871noticeforpoliticalorganizations.................................................................... 261
.08Requirementsforasubstantiallycompletedapplication .......................................................... 261
.09Terroristorganizationsnoteligibletoapplyforrecognitionofexemption........................................... 261
SECTION 4. WHAT ARE THE STANDARDS FOR ISSUING A DETERMINATION LETTER OR RULING
ON EXEMPT STATUS?
................................................................................. 261
.01Exemptstatusmustbeestablishedinapplicationandsupportingdocuments ........................................ 261
.02Determinationletterorrulingbasedsolelyonadministrativerecord................................................ 262
.03Exemptstatusmayberecognizedinadvanceofactualoperations ................................................. 262
.04NoletterifexemptstatusissueinlitigationorunderconsiderationwithintheService ............................... 262
.05Incompleteapplication....................................................................................... 262
.06Evenifapplicationiscomplete,additionalinformationmayberequired............................................ 263
.07Expeditedhandling.......................................................................................... 263
SECTION 5. WHAT OFFICES ISSUE AN EXEMPT STATUS DETERMINATION LETTER OR RULING?.................... 263
.01EODeterminationsissuesadeterminationletterinmostcases .................................................... 263
.02CertainapplicationsreferredtoEOTechnical................................................................... 263
.03Technicaladvicemayberequestedincertaincases .............................................................. 263
.04Technicaladvicemustberequestedincertaincases.............................................................. 263
SECTION 6. WITHDRAWAL OF AN APPLICATION................................................................... 264
.01Applicationmaybewithdrawnpriortoissuanceofadeterminationletterorruling .................................. 264
.02§7428implicationsofwithdrawalofapplicationunder§501(c)(3)................................................ 264
SECTION 7. WHAT ARE THE PROCEDURES WHEN EXEMPT STATUS IS DENIED?..................................... 264
.01Proposedadversedeterminationletterorruling ................................................................. 264
.02AppealofaproposedadversedeterminationletterissuedbyEODeterminations .................................... 264
.03ProtestofaproposedadverserulingissuedbyEOTechnical...................................................... 264
.04Finaladversedeterminationletterorrulingwherenoappealorprotestissubmitted ................................. 264
.05HowEODeterminationshandlesanappealofaproposedadversedeterminationletter .............................. 264
.06ConsiderationbytheAppealsOffice........................................................................... 264
.07IfaprotestofaproposedadverserulingissubmittedtoEOTechnical ............................................. 265
.08Anappealorprotestmaybewithdrawn ........................................................................ 265
.09Appealorprotestandconferencerightsnotapplicableincertainsituations ......................................... 265
SECTION 8. DISCLOSURE OF APPLICATIONS AND DETERMINATION LETTERS AND RULINGS....................... 265
.01Disclosureofapplications,supportingdocuments,andfavorabledeterminationlettersorrulings...................... 265
.02Disclosureofadversedeterminationlettersorrulings............................................................ 265
January 14, 20082582008–2 I.R.B.

.03DisclosuretoStateofficialswhentheServicerefusestorecognizeexemptionunder§501(c)(3) ...................... 266
.04DisclosuretoStateofficialsofinformationabout§501(c)(3)applicants............................................ 266
SECTION 9. REVIEW OF DETERMINATION LETTERS BY EO TECHNICAL........................................... 266
.01DeterminationlettersmaybereviewedbyEOTechnicaltoassureuniformity....................................... 266
.02ProceduresforcaseswhereEOTechnicaltakesexceptiontoadeterminationletter .................................. 266
SECTION 10. DECLARATORY JUDGMENT PROVISIONS OF § 7428................................................... 266
.01Actualcontroversyinvolvingcertainissues..................................................................... 266
.02Exhaustionofadministrativeremedies......................................................................... 266
.03Notearlierthan270daysafterseekingdetermination............................................................ 266
.04Servicemusthavereasonabletimetoactonanappealorprotest .................................................. 267
.05Finaldeterminationtowhich§7428applies.................................................................... 267
SECTION 11. EFFECT OF DETERMINATIONLETTER OR RULING RECOGNIZING EXEMPTION....................... 267
.01Effectivedateofexemption................................................................................... 267
.02Relianceondeterminationletterorruling....................................................................... 267
SECTION 12. REVOCATION OR MODIFICATION OF DETERMINATION LETTER OR RULING
RECOGNIZING EXEMPTION
.......................................................................... 267
.01Revocationormodificationofadeterminationletterorrulingmayberetroactive.................................... 267
.02Appealandconferenceproceduresinthecaseofrevocationormodificationofexemptstatusletter.................... 268
SECTION 13. EFFECT ON OTHER REVENUE PROCEDURES......................................................... 268
SECTION 14. EFECTIVE DATE..................................................................................... 268
SECTION 15. PAPERWORK REDUCTION ACT....................................................................... 268
DRAFTING INFORMATION........................................................................................ 268
SECTION 1. WHAT IS THE
PURPOSE OF THIS REVENUE
PROCEDURE?
This revenue procedure sets forth proceduresfor issuing determination letters and rulings
on the exempt status of organizations under §§ 501 and 521 of the Internal Revenue Code other
than those subject to Rev. Proc. 2008–6, 2008–1 I.R.B. 192 (relating to pension, profit-shar-
ing, stock bonus, annuity, and employee stock ownership plans). Generally, the Service issues
these determination letters and rulings in response to applications for recognition of exemption
from Federal income tax. These procedures alsoapply to revocation or modification of deter-
mination letters or rulings. This revenue procedure also provides guidance on the exhaustion
of administrative remedies for purposes of declaratory judgment under § 7428 of the Code.
Description of terms used in this
revenue procedure
.01 For purposes of this revenue procedure –
(1) the term “Service” means the Internal Revenue Service.
(2) the term “application” means the appropriate form or letter that an organization must
file or submit to the Service for recognition ofexemption from Federal income tax under the
applicable section of the Internal Revenue Code.Seesection 3 for information on specific
forms.
(3) the term “EO Determinations” means the office of the Service that is primarily respon-
sible for processing initial applications for tax-exempt status. It includes the main EO Deter-
minations office located in Cincinnati, Ohio, and other field offices thatare under the direction
and control of the Manager, EO Determinations.
(4) the term “EO Technical” means the office of the Service that is primarily responsible for
issuing letter rulings to taxpayers on exempt organization matters, and for providing technical
advice or technical assistance to other officesof the Service on exempt organization matters.
The EO Technical office is located in Washington, DC.
(5) the term “Appeals Office” means any office under the direction and control of the Chief,
Appeals. The purpose of the Appeals Office is to resolve tax controversies, without litigation,
2008–2 I.R.B.259January 14, 2008

on a fair and impartial basis. The Appeals Office is independent of EO Determinations and EO
Technical.
(6) the term “determination letter” means a written statement issued by EO Determinations
or an Appeals Office in response to an application for recognition of exemption from Federal
income tax under §§ 501 and 521. This includes a written statement issued by EO Determina-
tions or an Appeals Office on the basis of advice secured from EO Technical pursuant to the
procedures prescribed herein and in Rev. Proc. 2008–5, 2008–1 I.R.B. 164.
(7) the term “ruling” means a written statement issued by EO Technical in response to an
application for recognition of exemption from Federal income tax under §§ 501 and 521.
Updated annually.02 This revenue procedure is updated annually, but may be modified or amplified during
the year.
SECTION 2. NATURE OF
CHANGES AND RELATED
REVENUE PROCEDURES
Rev. Proc. 2007–52 is superseded
and the processing of applications
is now centralized
.01 This revenue procedure updates Rev. Proc. 2007–52, 2007–30 I.R.B. 222, which is
hereby superseded.
(1) The responsibility for processing app
lications is now centralized in the EO Determina-
tions office in Cincinnati, Ohio. Key dis
trict offices no longer exist.
(2) Although applications are generally processed in the Cincinnati office, some applica-
tions may be processed in other EO Determinations offices or referred to EO Technical.
Related revenue procedures.02 This revenue procedure supplements Rev. Proc. 76–34, 1976–2 C.B. 656, with respect
to the effects of § 7428 of the Code on the classification of organizations under §§ 509(a) and
4942(j)(3). Rev. Proc. 80–27, 1980–1 C.B. 677, sets forth procedures under which exemption
may be recognized on a group basis for subordinate organizations affiliated with and under the
general supervision and control of a central organization. Rev. Proc. 72–5, 1972–1 C.B. 709,
provides information for religious and apostolic organizations seeking recognition of exemp-
tion under § 501(d). General procedures for requests for a determination letter or ruling are
provided in Rev. Proc. 2008–4, 2008–1 I.R.B. 121. User fees for requests for a determination
letter or ruling are set forth in Rev. Proc. 2008–8, 2008–1 I.R.B. 233.
SECTION 3. WHAT ARE
THE PROCEDURES FOR
REQUESTING RECOGNITION
OF EXEMPT STATUS?
In general.01 An organization seeking recognition of exempt status under § 501 or § 521 is required
to submit the appropriate application. In the case of a numbered application form, the current
version of the form must be submitted. A central organization that has previously received
recognition of its own exemption can request a group exemption letter by submitting a letter
application with Form 8718,User Fee for Exempt Organization Determination Letter Request.
SeeRev. Proc. 80–27.
User fee.02 An application must be submitted with the correct user fee, as set forth in Rev. Proc.
2008–8.
Form 1023 application.03 An organization seeking recognition of exemption under § 501(c)(3) and §§ 501(e), (f),
(k), (n) or (q) must submit a completed Form 1023. In the case of an organization that provides
credit counseling services, see § 501(q) of the Code.
Form 1024 application.04 An organization seeking recognition of exemption under §§ 501(c)(2), (4), (5), (6), (7),
(8), (9), (10), (12), (13), (15), (17), (19) or (25) must submit a completed Form 1024 with
Form 8718. In the case of an organization that provides credit counseling services and seeks
recognition of exemption under section 501(c)(4), see § 501(q) of the Code.
January 14, 20082602008–2 I.R.B.

Letter application.05 An organization seeking recognition of exemption under §§ 501(c)(11), (14), (16), (18),
(21), (22), (23), (26), (27) or (28) or under § 501(d) must submit a letter application with Form
8718.
Form 1028 application.06 An organization seeking recognition of exemption under § 521 must submit a completed
Form 1028 with Form 8718.
Form 8871 notice for political
organizations
.07 A political party, a campaign committee for a candidate for federal, state or local office,
and a political action committee are all political organizations subject to tax under § 527. To be
tax-exempt, a political organization may be required to notify the Service that it is to be treated
as a § 527 organization by electronically filing Form 8871,Political Organization Notice of
Section 527 Status. For details, go to the IRS website atwww.irs.gov/polorgs.
Requirements for a substantially
completed application
.08 A substantially completed application,including a letter application, is one that:
(1) is signed by an authorized individual.
(2) includes an Employer Identification Number (EIN).
(3) includes a statement of receipts and expenditures and a balance sheet for the current
year and the three preceding years (or the years the organization was in existence, if less than
four years). If the organization has not yet commenced operations, or has not completed one
accounting period, a substantially completed application generally includes a proposed budget
for two full accounting periods and a current statement of assets and liabilities.
(4) includes a detailed narrative statement of proposed activities, including each of the
fundraising activities of a § 501(c)(3) organization, and a narrative description of anticipated
receipts and contemplated expenditures.
(5) includes a copy of the organizing or enabling document that is signed by a principal
officer or is accompanied by a written declaration signed by an authorized individual certify-
ing that the document is a complete and accuratecopy of the original or otherwise meets the
requirements of a “conformed copy” as outlined in Rev. Proc. 68–14, 1968–1 C.B. 768.
(6) if the organizing or enabling document is in the form of articles of incorporation, includes
evidence that it was filed with and approved by an appropriate state official (e.g.,stamped
“Filed” and dated by the Secretary of State). Alternatively, a copy of the articles of incor-
poration may be submitted if accompanied by awritten declaration signed by an authorized
individual that the copy is a complete and accurate copy of the original copy that was filed
with and approved by the state. If a copy is submitted, the written declaration must include the
date the articles were filed with the state.
(7) if the organization has adopted by-laws, includes a current copy. The by-laws need
not be signed if submitted as an attachment to the application for recognition of exemption.
Otherwise, the by-laws must be verifiedas current by an authorized individual.
(8) is accompanied by the correct userfee and Form 8718, when applicable.
Terrorist organizations not
eligible to apply for recognition of
exemption
.09 An organization that is identified or designated as a terrorist organization within the
meaning of § 501(p)(2) of the Code is not eligible to apply for recognition of exemption.
SECTION 4. WHAT ARE THE
STANDARDS FOR ISSUING A
DETERMINATION LETTER OR
RULING ON EXEMPT STATUS?
Exempt status must be established
in application and supporting
documents
.01 A favorable determination letter or ruling will be issued to an organization only if its
application and supporting documents establishthat it meets the particular requirements of the
section under which exemption from Federal income tax is claimed.
2008–2 I.R.B.261January 14, 2008

Determination letter or ruling
basedsolelyonadministrative
record
.02 A determination letter or ruling on exempt status is issued based solely upon the facts
and representationscontained in the administrative record.
(1) The applicant is responsible for the accuracy of any factual representations contained in
the application.
(2) Any oral representation of additional facts or modification of facts as represented or
alleged in the application must be reduced to writing over the signature of an authorized indi-
vidual.
(3) The failure to disclose a material fact or misrepresentation of a material fact on the ap-
plication may adversely affect the reliance that would otherwise be obtained through issuance
by the Service of a favorable determination letter or ruling.
Exempt status may be recognized
in advance of actual operations
.03 Exempt status may be recognized in advance of the organization’s operations if the pro-
posed activities are described in sufficient detail to permit a conclusion that the organization
will clearly meet the particular requirements for exemption pursuant to the section of the In-
ternal Revenue Code under which exemption is claimed.
(1) A mere restatement of exempt purposes or astatement that proposed activities will be
in furtherance of such purposes will not satisfy this requirement.
(2) The organization must fully describe all of the activities in which it expects to engage,
including the standards, criteria, proceduresor other means adopted or planned for carrying out
the activities, the anticipatedsources of receipts, and the natureof contemplated expenditures.
(3) Where the organization cannot demonstrate to the satisfaction of the Service that it quali-
fies for exemption pursuant to the section of theInternal Revenue Code under which exemption
is claimed, the Service will generally issue a proposed adverse determination letter or ruling.
See alsosection 7.
No letter if exempt status issue in
litigation or under consideration
within the Service
.04 A determination letter or ruling on exempt status will not ordinarily be issued if an issue
involving the organization’s exempt status under § 501 or § 521 is pending in litigation, is under
consideration within the Service, or if issuance of a determination letter or ruling is not in the
interest of sound tax administration. If the Service declines to issue a determination or ruling
to an organization seeking exempt status under§ 501(c)(3), the organization may be able to
pursue a declaratory judgment under § 7428 provided that it has exhausted its administrative
remedies.
Incomplete application.05 If an application does not contain all of the items set out in section 3.08, the Service may
return it to the applicant for completion.
(1) In lieu of returning an incomplete application, the Service may retain the application and
request additional information needed for asubstantially completed application.
(2) In the case of an application or a group exemption request under § 501(c)(3) that is
returned incomplete, the 270-day period referred to in § 7428(b)(2) will not be considered
as starting until the date a substantially completed Form 1023 or group exemption request is
refiled with or remailed to the Service. If the application or group exemption request is mailed
to the Service and a postmark is not evident, the 270-day period will start to run on the date the
Service actually receives the substantially completed Form 1023 or group exemption request.
The same rules apply for purposes of the notice requirement of § 508.
(3) Generally, the user fee will not be refunded if an incomplete application is filed.See
Rev. Proc. 2008–8, section 10.
January 14, 20082622008–2 I.R.B.

Even if application is complete,
additional information may be
required
.06 Even though an application is substantially complete, the Service may request additional
information before issuing a determination letter or ruling.
(1) If the application involves an issue where contrary authorities exist,an applicant’s failure
to disclose and distinguish contrary authorities may result in requests for additional informa-
tion, which could delay final action on the application.
(2) In the case of an application under § 501(c)(3), the period of time beginning on the date
the Service requests additional information until the date the information is submitted to the
Service will not be counted for purposes of the 270-day period referred to in § 7428(b)(2).
Expedited handling.07 Applications are normally processed in the order of receipt by the Service. However,
expedited handling of an application may be approved where a request is made in writing and
contains a compelling reason for processing the application ahead of others. Upon approval
of a request for expedited handling an application will be considered out of its normal order.
This does not mean the application will be immediately approved or denied. Circumstances
generally warranting expedited processing include:
(1) A grant to the applicant is pending and thefailure to secure the grant may have an adverse
impact on the organization’s ability to continue to operate.
(2) The purpose of the newly created organization is to provide disaster relief to victims of
emergencies such as flood and hurricane.
(3) There have been undue delays in issuing a determination letter or ruling caused by a
Service error.
SECTION 5. WHAT OFFICES
ISSUEANEXEMPTSTATUS
DETERMINATION LETTER
OR RULING?
EO Determinations issues a
determination letter in most cases
.01 Under the general procedures outlinedin Rev. Proc. 2008–4, EO Determinations is
authorized to issue determination letters on applications for exempt status under §§ 501 and
521.
Certain applications referred to
EO Technical
.02 EO Determinations will refer to EO Technical those applications that present issues
which are not specifically covered by statute or regulations, or by a ruling, opinion, or court
decision published in the Internal Revenue Bulletin. In addition, EO Determinations will refer
those applications that have been specifically reserved by revenue procedure or by other official
Service instructions for handling by EO Technical for purposes of establishing uniformity or
centralized control of designated categories of cases. EO Technical will notify the applicant
organization upon receipt of a referred application, and will consider each such application and
issue a ruling directly to the organization.
Technical advice may be requested
in certain cases
.03 If at any time during the course of consideration of an exemption application by EO
Determinations the organization believes that its case involves an issue on which there is no
published precedent, or there has been non-uniformity in the Service’s handling of similar
cases, the organization may request that EO Determinations either refer the application to EO
Technical or seek technicaladvice from EO Technical.SeeRev. Proc. 2008–5, section 4.04.
Technical advice must be
requested in certain cases
.04 If EO Determinations proposes to recognize the exemption of an organization to which
EO Technical had issued a previous contrary ruling or technical advice, EO Determinations
must seek technical advice from EO Technical before issuing a determination letter. This does
not apply where EO Technical issued an adverse ruling and the organization subsequently made
changes to its purposes, activities, or operations to remove the basis for which exempt status
was denied.
2008–2 I.R.B.263January 14, 2008

SECTION 6. WITHDRAWAL
OF AN APPLICATION
Application may be withdrawn
prior to issuance of a
determination letter or ruling
.01Anapplicationmaybewithdrawnuponthewritten request of an authorized individual
atanytimepriortotheissuanceofadetermination letter or ruling. Therefore, an application
may not be withdrawn after the issuance of a proposed adverse determination letter or ruling.
(1) When an application is withdrawn, the Service will retain the application and all sup-
porting documents. The Service may consider the information submitted in connection with
the withdrawn request in a subsequent examination of the organization.
(2) Generally, the user fee will not be refunded if an application is withdrawn.SeeRev.
Proc. 2008–8, section 10.
§ 7428 implications of withdrawal
of application under § 501(c)(3)
.02 The Service will not consider the withdrawal of an application under § 501(c)(3) as
either a failure to make a determination withinthe meaning of § 7428(a)(2) or as an exhaustion
of administrative remedies within the meaning of § 7428(b)(2).
SECTION 7. WHAT ARE
THE PROCEDURES WHEN
EXEMPT STATUS IS DENIED?
Proposed adverse determination
letter or ruling
.01 If EO Determinations or EO Technical re
aches the conclusion that the organization does
not satisfy the requirements for exempt s
tatus pursuant to the section of the Internal Revenue
Code under which exemption is claimed, th
e Service will generally issue a proposed adverse
determination letter or ruling, which w
ill:
(1) Include a detailed discussion of the Service’s rationale for the denial of tax-exempt sta-
tus.
(2) Advise the organization of its opportunity to appeal or protest the decision and request
a conference.
Appeal of a proposed adverse
determination letter issued by
EO Determinations
.02 A proposed adverse determination letterissued by EO Determinations will advise the
organization of its opportunity to appeal the determination by requesting Appeals Office con-
sideration. To do this, the organization must submit a statement of the facts, law and arguments
in support of its position within 30 days from the date of the adverse determination letter. The
organization must also state whether it wishes an Appeals Office conference. Any determina-
tion letter issued on the basis of technical advice from EO Technical may not be appealed to
the Appeals Office on issues that were the subject of the technical advice.
Protest of a proposed adverse
ruling issued by EO Technical
.03 A proposed adverse ruling issued by EO Technical will advise the organization of its
opportunity to file a protest statement within 30 days and to request a conference. If a con-
ference is requested, the conference procedures outlined in Rev. Proc. 2008–4, section 12, are
applicable.
Final adverse determination letter
or ruling where no appeal or
protest is submitted
.04 If an organization does not submit a timely appeal of a proposed adverse determination
letter issued by EO Determinations, or a timely protest of a proposed adverse ruling issued by
EO Technical, a final adverse determination letter or ruling will be issued to the organization.
The final adverse letter or ruling will provideinformation about the filing of tax returns and
the disclosure of the proposed and final adverse letters or rulings.
How EO Determinations handles
an appeal of a proposed adverse
determination letter
.05 If an organization submits an appeal of the proposed adverse determination letter, EO
Determinations will first review the appeal, and if it determines that the organization qualifies
for tax-exempt status issue a favorable exempt status determination letter. If EO Determina-
tions maintains its adverse position after reviewing the appeal, it will forward the appeal and
the exemption application case file to the Appeals Office.
Consideration by the Appeals
Office
.06 The Appeals Office will consider the organization’s appeal. If the Appeals Office agrees
with the proposed adverse determination, it will either issue a final adverse determination or,
if a conference was requested, contact the organization to schedule aconference. At the end
January 14, 20082642008–2 I.R.B.

of the conference process, which may involve the submission of additional information, the
Appeals Office will either issue a final adversedetermination letter or a favorable determina-
tion letter. If the Appeals Office believes that an exemption or private foundation status issue is
not covered by published precedent or that thereis non-uniformity, the Appeals Office must re-
quest technical advice from EO Technical in accordance with Rev. Proc. 2008–5, section 4.04.
If a protest of a proposed adverse
ruling is submitted to EO
Technical
.07 If an organization submits a protest of a proposed adverse exempt status ruling, EO
Technical will review the protest statement.If the protest convinces EO Technical that the
organization qualifies for tax-exempt status, afavorable ruling will be issued. If EO Technical
maintains its adverse position after reviewing the protest, it will either issue a final adverse
ruling or, if a conference was requested, contact the organization to schedule a conference. At
the end of the conference process, which may involve the submission of additional information,
EO Technical will either issue a final adverse ruling or a favorable exempt status ruling.
An appeal or protest may be
withdrawn
.08 An organization may withdraw its appealor protest before the Service issues a final
adverse determination letter or ruling. Upon receipt of the withdrawal request, the Service will
complete the processing of the case in the same manner as if no appeal or protest was received.
Appeal or protest and conference
rights not applicable in certain
situations
.09 The opportunity to appeal or protest a proposed adverse determination letter or ruling
and the conference rights described above are not applicable to matters where delay would be
prejudicial to the interests of the Service (such as in cases involving fraud, jeopardy, the immi-
nence of the expiration of the statute of limitations, or where immediate action is necessary to
protect the interestsof the Government).
SECTION 8. DISCLOSURE
OF APPLICATIONS AND
DETERMINATION LETTERS
AND RULINGS
Sections 6104 and 6110 of the Code provide rules for the disclosure of applications, includ-
ing supporting documents, and determination letters and rulings.
Disclosure of applications,
supporting documents, and
favorable determination letters or
rulings
.01 The applications, any supporting documents, and the favorable determination letter or
ruling issued are available for public inspection under § 6104(a)(1) of the Code. However,
there are certain limited disclosure exceptions for a trade secret, patent, process, style of work,
or apparatus if the Service determines that the disclosure of the information would adversely
affect the organization.
(1) The Service is required to make the applications, supporting documents, and favorable
determination letters or rulings available upon request. The public can request this information
by submitting Form 4506–A,Request for Public Inspection or Copy of Exempt or Political
Organization IRS Form.
(2) The exempt organization is required to make its exemption application, supporting doc-
uments, and determination letter or ruling available for public inspection without charge. For
more information about the exempt organization’s disclosure obligations,seePublication 557,
Tax-Exempt Status for Your Organization.
Disclosure of adverse
determination letters or rulings
.02 The Service is required to make adverse determination letters and rulings available for
public inspection under § 6110 of the Code. Uponissuance of the final adverse determination
letter or ruling to an organization, both the proposed adverse determination letter or ruling and
the final adverse determination letter or ruling will be released under § 6110.
(1) These documents are made available to the public after the deletion of names, addresses,
and any other information that might identify the taxpayer.See§ 6110(c) for other specific
disclosure exemptions.
(2) The final adverse determination letter or ruling will enclose Notice 437,Notice of Inten-
tion to Disclose, and redacted copies of the final and proposed adverse determination letters
or rulings. Notice 437 provides instructions ifthe organization disagrees with the deletions
proposed by the Service.
2008–2 I.R.B.265January 14, 2008

Disclosure to State officials when
the Service refuses to recognize
exemption under § 501(c)(3)
.03 The Service may notify the appropriate State officials of a refusal to recognize an or-
ganization as tax-exempt under § 501(c)(3).See§ 6104(c) of the Code. The notice to the State
officials may include a copy of a proposed or final adverse determination letter or ruling the
Service issued to the organization. In addition, upon request by the appropriate State official,
the Service may make available for inspection and copying the exemption application and other
information relating to the Service’s determination on exempt status.
Disclosure to State officials of
information about § 501(c)(3)
applicants
.04 The Service may disclose to State officialsthe name, address, and identification number
of any organization that has applied for recognition of exemption under § 501(c)(3).
SECTION 9. REVIEW OF
DETERMINATION LETTERS
BY EO TECHNICAL
Determination letters may be
reviewed by EO Technical to
assure uniformity
.01 Determination letters issued by EO Determinations may be reviewed by EO Technical,
ortheOfficeoftheAssociateChiefCounsel(Passthroughs and Special Industries) (for cases
under § 521), to assure uniform application of the statutes or regulations, or rulings, court
opinions, or decisions published in the Internal Revenue Bulletin.
Procedures for cases where EO
Technical takes exception to a
determination letter
.02 If EO Technical takes exception to a determination letter issued by EO Determinations,
the manager of EO Determinations will be advised. If EO Determinations notifies the organ-
ization of the exception taken, and the organization disagrees with the exception, the file will
be returned to EO Technical. The referral to EOTechnical will be treated as a request for tech-
nical advice and the procedures in Rev. Proc. 2008–5 will be followed.
SECTION 10. DECLARATORY
JUDGMENT PROVISIONS OF
§7428
Actual controversy involving
certain issues
.01 Generally, a declaratory judgmen
t proceeding under § 7428 of the Code can be filed in
the United States Tax Court, the Unite
d States Court of Federal Claims, or the district court of
the United States for the District of C
olumbia with respect to an actual controversy involving
a determination by the Service or a fa
ilure of the Service to make a determination with respect
to the initial or continuing qualifi
cation or classification of an organization under § 501(c)(3)
(charitable, educational, etc.); §
170(c)(2) (deductibility of contributions); § 509(a) (private
foundation status); or § 4942(j)(3
) (operating foundation status).
Exhaustion of administrative
remedies
.02 Before filing a declaratory judgment action, an organization must exhaust its adminis-
trative remedies by taking, in a timely manner,all reasonable steps to secure a determination
from the Service. These include:
(1) the filing of a substantially completed application Form 1023 or group exemption re-
quest under § 501(c)(3) pursuant to section 3.08 of this Revenue Procedure or the request for
a determination of foundation status pursuant to Rev. Proc. 76–34;
(2) in appropriate cases, requesting relief pursuant to § 301.9100–1 of the Procedure and
Administration Regulations regarding the extension of time for making an election or applica-
tion for relief from tax (seeRev. Proc. 92–85, 1992–2 C.B. 490);
(3) the timely submission of all additional information requested by the Service to perfect
an exemption application or request for determination of private foundation status; and
(4) exhaustion of all administrative appeals available within the Service pursuant to section
7.
Not earlier than 270 days after
seeking determination
.03 An organization will in no event be deemed to have exhausted its administrative reme-
dies prior to the earlier of:
(1) the completion of the steps in section 10.02, and the sending by the Service by certified
or registered mail of a final determination letter or ruling; or
January 14, 20082662008–2 I.R.B.

(2) the expiration of the 270-day period described in § 7428(b)(2) in a case where the Service
has not issued a final determination letter or ruling and the organization has taken, in a timely
manner, all reasonable steps to secure a determination letter or ruling.
Service must have reasonable time
toactonanappealorprotest
.04 The steps described in section 10.02 willnot be considered completed until the Service
has had a reasonable time to act upon an appeal or protest as the case may be.
Final determination to which
§7428applies
.05 A final determination to which § 7428 of theCode applies is a determination letter or
ruling, sent by certified or registered mail, which holds that the organization is not described in
§ 501(c)(3) or § 170(c)(2), is a public charity described in a part of § 509 or § 170(b)(1)(A) other
than the part under which the organization requested classification, is not a private foundation
as defined in § 4942(j)(3), or is a private foundation and not a public charity described in a part
of § 509 or § 170(b)(1)(A).
SECTION 11. EFFECT OF
DETERMINATION LETTER
OR RULING RECOGNIZING
EXEMPTION
Effectivedateofexemption.01 A determination letter or ruling recognizing exemption is usually effective as of the date
of formation of an organization if its purposesand activities prior to the date of the determi-
nation letter or ruling were consistent with the requirements for exemption. However, special
rules under § 508(a) of the Code may apply to an organization applying for exemption under
§ 501(c)(3), and special rules under § 505(c) may apply to an organization applying for ex-
emption under §§ 501(c)(9), (17), or (20).
(1) If the Service requires the organization to alter its activities or make substantive amend-
ments to its enabling instrument, the exemption will be effective as of the date specified in a
determination letter or ruling.
(2) If the Service requires the organization to make a nonsubstantive amendment, exemp-
tion will ordinarily be recognized as of the date of formation. Examples of nonsubstantive
amendments include correction of a clerical error in the enabling instrument or the addition of
a dissolution clause where the activities of the organization prior to the determination letter or
ruling are consistent with the requirements for exemption.
Reliance on determination letter
or ruling
.02 A determination letter or ruling recognizing exemption may not be relied upon if there
is a material change, inconsistent with exemption, in the character, the purpose, or the method
of operation of the organization. Also, a determination letter or ruling may not be relied upon
if it was based on any inaccurate material factual representations.Seesection 12.01.
SECTION 12. REVOCATION
OR MODIFICATION OF
DETERMINATION LETTER
OR RULING RECOGNIZING
EXEMPTION
A determination letter or ruling recognizing exemption may be revoked or modified by (1)
a notice to the taxpayer to whom the determination letter or ruling was issued, (2) enactment of
legislation or ratification of a tax treaty, (3) a decision of the United States Supreme Court, (4)
the issuance of temporary or final regulations, or (5) the issuance of a revenue ruling, revenue
procedure, or other statement published in the Internal Revenue Bulletin.
Revocation or modification of a
determination letter or ruling may
be retroactive
.01 The revocation or modification of a determination letter or ruling recognizing exemption
may be retroactive if the organizationomittedormisstatedamaterialfact,operatedinamanner
materially different from that originally represented, or, in the case of organizations to which
§ 503 of the Code applies, engaged in a prohibited transaction with the purpose of diverting
corpus or income of the organization from its exempt purpose and such transaction involved a
substantial part of the corpus or income of suchorganization. In certain cases an organization
may seek relief from retroactive revocation or modification of a determination letter or ruling
under § 7805(b). Requests for § 7805(b) relief are subject to the procedures set forth in Rev.
Proc. 2008–5.
(1) Where there is a material change, inconsistent with exemption, in the character, the pur-
pose, or the method of operation of an organization, revocation or modification will ordinarily
take effect as of the date of such material change.
2008–2 I.R.B.267January 14, 2008

(2) In the case where a determination letter or ruling is issued in error or is no longer in
accord with the Service’s positionand § 7805(b) relief is granted (seesections 13 and 14 of
Rev. Proc. 2008–4), ordinarily, the revocation or modification will be effective not earlier than
the date when the Service modifies or revokesthe original determination letter or ruling.
Appeal and conference procedures
in the case of revocation or
modification of exempt status
letter
.02 In the case of a revocation or modification of a determination letter or ruling, the appeal
and conference procedures are generally the same as set out in section 7 of these procedures,
including the right of the organization to request that EO Determinations or the Appeals Office
seek technical advice from EO Technical. However, appeal and conference rights are not ap-
plicable to matters where delay would be prejudicial to the interests of the Service (such as in
cases involving fraud, jeopardy, the imminence of the expiration of the statute of limitations,
or where immediate action is necessary to protect the interests of the Government).
(1) If the case involves an exempt status issue on which EO Technical had issued a previous
contrary ruling or technical advice, EO Determinations generally must seek technical advice
from EO Technical.
(2) EO Determinations does not have to seek technical advice if the prior ruling or technical
advice has been revoked by subsequent contrary published precedent or if the proposed revo-
cation involves a subordinate unit of an organization that holds a group exemption letter issued
by EO Technical, the EO Technical ruling or technical advice was issued under the Internal
Revenue Code of 1939 or prior revenue acts, or if the ruling was issued in response to Form
4653,Notification Concerning Foundation Status.
SECTION 13. EFFECT
ON OTHER REVENUE
PROCEDURES
Rev. Proc. 2007–52 is superseded.
SECTION 14. EFECTIVE DATEThis revenue procedure is effective January 7, 2008.
SECTION 15. PAPERWORK
REDUCTION ACT
The collection of information for a letter application under section 3.05 of this revenue pro-
cedure has been reviewed and approved by the Office of Management and Budget (OMB)
in accordance with the Paperwork Reduction Act (44 U.S.C. § 3507) under control number
1545–2080. All other collections of information under this revenue procedure have been ap-
proved under separate OMB control numbers.
An agency may not conduct or sponsor, and a person is not required to respond to, a collec-
tion of information unless the collection of information displays a valid OMB control number.
The collection of this information is required if an organization wants to be recognized as
tax-exempt by the Service. We need the information to determine whether the organization
meets the legal requirements for tax-exempt status. In addition, this information will be used
to help the Service delete certain information from the text of an adverse determination letter
or ruling before it is made available for public inspection, as required by § 6110.
The time needed to complete and file a letter application will vary depending on individual
circumstances. The estimated average time is 10 hours.
Books and records relating to the collection of information must be retained as long as their
contents may become material in the administration of any internal revenue law. The rules
governing the confidentiality of letter applications are covered in § 6104.
DRAFTING INFORMATIONThe principal author of this revenue procedure is Ted Lieber of the Exempt Organizations,
Tax Exempt and Government Entities Division. For further information regarding this revenue
procedure, please contact the TE/GE Customer Service office at (877) 829–5500 (a toll-free
call).
January 14, 20082682008–2 I.R.B.

Part IV. Items o
fGeneralInterest
Deletions Fro
m Cumulative
List of Organi
zations
Contribution
stoWhich
are Deductib
le Under Section
170 of the Cod
e
Announceme
nt 2008–3
The Interna
l Revenue Service has re-
voked its de
termination that the organi-
zations lis
ted below qualify as organiza-
tions descr
ibed in sections 501(c)(3) and
170(c)(2) o
f the Internal Revenue Code of
1986.
Generally
, the Service will not disallow
deduction
s for contributions made to a
listed org
anization on or before the date
of announc
ement in the Internal Revenue
Bulletin t
hat an organization no longer
qualifie
s. However, the Service is not
preclude
d from disallowing a deduction
for any co
ntributions made after an or-
ganizati
on ceases to qualify under section
170(c)(
2) if the organization has not timely
filed a s
uit for declaratory judgment under
section
7428 and if the contributor (1) had
knowled
ge of the revocation of the ruling
or deter
mination letter, (2) was aware that
such re
vocation was imminent, or (3) was
in part
responsible for or was aware of the
activi
ties or omissions of the organization
that br
ought about this revocation.
If on th
e other hand a suit for declara-
tory ju
dgment has been timely filed, con-
tribut
ions from individuals and organiza-
tions
describedinsection170(c)(2)that
are ot
herwise allowable will continue to
be ded
uctible. Protection under section
7428(
c) would begin on January 14, 2008,
and wo
uld end on the date the court first
dete
rmines that the organization is not de-
scri
bed in section 170(c)(2) as more partic-
ular
ly set forth in section 7428(c)(1). For
indi
vidual contributors, the maximum de-
duct
ion protected is $1,000, with a hus-
ban
d and wife treated as one contributor.
Thi
s benefit is not extended to any indi-
vid
ual, in whole or in part, for the acts or
omi
ssions of the organization that were the
bas
is for revocation.
The
Stevens Foundation
New
York, NY
Ame
rican Assistance Corporation
Pla
no, TX
Tri-State Com
munity Development
Resource Cent
er, Inc.
Camden, NJ
Cytogenetics
Foundation
Omaha, NE
Proyecto Espe
ranza
Los Angeles, C
A
Community Fel
lowship for Battered
Women of Silic
on Valley, Inc.
San Jose, CA
Brooklyn Comm
unity Counseling Center,
Inc
Brooklyn, NY
Peace Parent
s and Elders of Africa for
Common Effor
ts
Minneapolis
,MN
The Healing C
enter of Children with
Disabilitie
s, Inc.
Macon, GA
Mahisekar Ch
aritable Supporting
Organizati
on
Orland Park
,IL
Down Paymen
t Assistance Foundation,
Inc.
Glendora, C
A
Benefit R
estrictions for
Underfu
nded Pension Plans;
Hearing
Announ
cement 2008–4
AGENCY
: Internal Revenue Service
(IRS),
Treasury.
ACTIO
N: Notice of public hearing on pro-
posed
rulemaking.
SUMM
ARY: This document provides
anot
ice of public hearing on proposed
rule
making (REG–113891–07, 2007–42
I.R.
B. 821) providing guidance regarding
the u
se of certain funding balances main-
tai
ned for defined benefit pension plans
and
regarding benefit restrictions for cer-
tai
n underfunded defined benefit pension
pla
ns.
DAT
ES: The public hearing is being
he
ld on Monday, January 28, 2008, at
10
:00 a.m. The IRS must receive outlines
of
the topics to be discussed at the hearing
by
January 7, 2008.
ADDRESSES: Th
e public hearing is being
held in the IRS
Auditorium, Internal Rev-
enue Service B
uilding, 1111 Constitution
Avenue, NW, Wa
shington, DC 20224.
Mail outlines
to CC:PA:LPD:PR
(REG–113891–
07), room 5203, Inter-
nal Revenue Se
rvice, POB 7604, Ben
Franklin Sta
tion, Washington, DC 20044.
Submissions
may be hand-delivered
Monday throu
gh Friday between the
hours of 8:00
a.m. and 4:00 p.m. to
CC:PA:LPD:
PR(REG–113891–07),
Couriers De
sk, Internal Revenue
Service, 11
11 Constitution Avenue, NW,
Washington
, DC, or sent electronically
viatheFed
eraleRulemaking
Portalatw
ww.regulations.gov
(IRS–REG–
113891–07).
FOR FURTHE
R INFORMATION
CONTACT: C
oncerning submissions of
comments
, the hearing and/or to be placed
on the bui
lding access list to attend the
hearing,
Kelly Banks at (202) 622–7180
(not a tol
l-free number).
SUPPLEME
NTARY INFORMATION:
The subje
ct of the public hearing
is the not
ice of proposed rulemaking
(REG–11
3891–07) that was published in
theFede
ral Registeron Friday, August
31, 2007
(72 FR 50544). The rules of 26
CFR 601.
601(a)(3) apply to the hearing.
Persons
who have submitted writ-
ten comm
ents and wish to present oral
comment
satthehearingmustsubmitan
outlin
e of the topics to be discussed and
the amo
unt of time to be devoted to each
topic b
y January 7, 2008.
Aperio
d of 10 minutes is allotted to
each pe
rson for presenting oral comments.
After t
he deadline for receiving out-
lines h
as passed, the IRS will prepare an
agend
a containing the schedule of speak-
ers. C
opies of the agenda will be made
avail
able free of charge at the hearing. Be-
cause
of access restrictions, the IRS will
not ad
mit visitors beyond the immediate
entr
ance area more than 30 minutes before
the h
earing. For information about having
your
name placed on the building access
list
to attend the hearing, see the “FOR
FURT
HER INFORMATION CONTACT”
sect
ion of this document.
2008–2 I.R.B.269January 14, 2008

LaNita Van Dyke,
Branch Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on December 18,
2007, 8:45 a.m., and published in the issue of the Federal
Register for December 19, 2007, 72 F.R. 71842)
January 14, 20082702008–2 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2008–2 I.R.B.iJanuary 14, 2008

Numerical Finding List
1
Bulletins 2008–1 through 2008–2
Announcements:
2008-1, 2008-1 I.R.B.246
2008-3, 2008-2 I.R.B.269
2008-4, 2008-2 I.R.B.269
Notices:
2008-1, 2008-2 I.R.B.251
2008-2, 2008-2 I.R.B.252
2008-3, 2008-2 I.R.B.253
2008-4, 2008-2 I.R.B.253
2008-5, 2008-2 I.R.B.256
Revenue Procedures:
2008-1, 2008-1 I.R.B.1
2008-2, 2008-1 I.R.B.90
2008-3, 2008-1 I.R.B.110
2008-4, 2008-1 I.R.B.121
2008-5, 2008-1 I.R.B.164
2008-6, 2008-1 I.R.B.192
2008-7, 2008-1 I.R.B.229
2008-8, 2008-1 I.R.B.233
2008-9, 2008-2 I.R.B.258
Revenue Rulings:
2008-1, 2008-2 I.R.B.248
2008-2, 2008-2 I.R.B.247
2008-3, 2008-2 I.R.B.249
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin
2007–52, dated December 26, 2007.
January 14, 2008ii2008–2 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2008–1 through 2008–2
Proposed Regulations:
REG-113891-07
Hearing scheduled by
Ann. 2008-4, 2008-2 I.R.B.269
Revenue Procedures:
2007-1
Superseded by
Rev. Proc. 2008-1, 2008-1 I.R.B.1
2007-2
Superseded by
Rev. Proc. 2008-2, 2008-1 I.R.B.90
2007-3
Superseded by
Rev. Proc. 2008-3, 2008-1 I.R.B.110
2007-4
Superseded by
Rev. Proc. 2008-4, 2008-1 I.R.B.121
2007-5
Superseded by
Rev. Proc. 2008-5, 2008-1 I.R.B.164
2007-6
Superseded by
Rev. Proc. 2008-6, 2008-1 I.R.B.192
2007-7
Superseded by
Rev. Proc. 2008-7, 2008-1 I.R.B.229
2007-8
Superseded by
Rev. Proc. 2008-8, 2008-1 I.R.B.233
2007-39
Superseded by
Rev. Proc. 2008-3, 2008-1 I.R.B.110
2007-52
Superseded by
Rev. Proc. 2008-9, 2008-2 I.R.B.258
Revenue Rulings:
2007-4
Supplemented and superseded by
Rev. Rul. 2008-3, 2008-2 I.R.B.249
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2007–27 through 2007–52 is in Internal Revenue Bulletin 2007–52, dated December 26,
2007.
2008–2 I.R.B.iiiJanuary 14, 2008

January 14, 20082008–2 I.R.B.

2008–2 I.R.B.January 14, 2008

January 14, 20082008–2 I.R.B.

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