Internal Revenue Bulletin 2017-40 (PDF rendition): IRS Revenue Procedures

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

# INTERNAL REVENUE BULLETIN

IRS

Bulletin No. 2017-40
October 2, 2017

## 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. 2017-19, page 257.

Fringe benefits aircraft valuation formula. For purposes of
section 1.61-21(g) of the Income Tax Regulations, relating to
the rule for valuing non-commercial flights on employer-
provided aircraft, the Standard Industry Fare Level (SIFL) cents-
per-mile rates and terminal charge in effect for the second half
of 2017 are set forth.

### Notice 2017-51, page 260.

The Notice publishes Treasury's estimate of the annual aver-
age wellhead price per 1000 cubic feet for all domestic natural
gas. This estimate is the "reference price" for purposes of the
credit in § 45I. The Treasury Department estimate, for calen-
dar year 2016, is $2.43 per 1000 cubic feet, meaning the
§ 45I credit is $0.060 per 1,000 cubic feet of qualified natural
gas produced from marginal wells.

### Notice 2017-52, page 262.

This notice provides that the IRS will not assert that cash
payments an employer makes to § 170(c) organizations (in
exchange for vacation, sick, or personal leave that its employ-
ees elect to forgo) constitute gross income or wages of the
employees under certain circumstances relating to Hurricane
or Tropical Storm Irma.

## EMPLOYEE PLANS

### Notice 2017-49, page 258.

This notice provides relief in connection with certain employee
benefit plans because of damage caused by Hurricanes Harvey
and Irma. The relief provided by this notice is in addition to any
relief already provided by the IRS, EBSA, and PBGC to victims
of Hurricanes Harvey and Irma.

Finding Lists begin on page ii.

### Announcement 2017-13, page 271.

Announcement 2017-13 provides relief to victims of Hurricane
Irma, which caused damage to Florida and other areas. It
permits easier access to victims' funds held in workplace
retirement plans and in IRAs, for the period beginning Septem-
ber 4, 2017, (for Florida) and ending January 31, 2018. The
relief provided in the announcement is in addition to the relief
already provided by the IRS pursuant to News Release IR-
2017-150.

## EXCISE TAX & EXEMPT ORGANIZATIONS

Rev. Proc. 2017-53, page 263.

This revenue procedure provides guidelines that qualified tax
practitioners may use for preparing written advice on which a
private foundation (or a sponsoring organization of a donor
advised fund) ordinarily may rely in making a good faith deter-
mination that a grantee is a qualifying public charity. Rev. Proc.
92-94, 1992-2 C.B. 507, is modified and superseded.

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## The IRS Mission

Provide America's taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.

## Introduction

The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.

Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings to
taxpayers or technical advice to Service field offices, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted invasions of privacy and to comply with
statutory requirements.

Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

### Part I .- 1986 Code.

This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.

### Part II .- Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.

Part III .- Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury's Office of the Assistant Sec-
retary (Enforcement).

### Part IV .- Items of General Interest.

This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

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# Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

## Section 61 .- Gross Income Defined

26 CFR 1.61-21: Taxation of fringe benefits.

## Rev. Rul. 2017-19

For purposes of the taxation of fringe
benefits under section 61 of the Internal
Revenue Code, section 1.61-21(g) of the

Income Tax Regulations provides a rule
for valuing noncommercial flights on
employer-provided aircraft. Section 1.61-
21(g)(5) provides an aircraft valuation
formula to determine the value of such
flights. The value of a flight is determined
under the base aircraft valuation formula
(also known as the Standard Industry Fare
Level formula or SIFL) by multiplying the
SIFL cents-per-mile rates applicable for

the period during which the flight was taken
by the appropriate aircraft multiple provided
in section 1.61-21(g)(7) and then adding the
applicable terminal charge. The SIFL cents-
per-mile rates in the formula and the termi-
nal charge are calculated by the Department
of Transportation and are reviewed semi-
annually.

The following chart sets forth the ter-
minal charge and SIFL mileage rates:

Period During Which the Flight Is Taken
7/1/17 - 12/31/17

Terminal Charge
$40.63

SIFL Mileage Rates

Up to 500 miles = $.2222 per mile
501-1500 miles = $.1694 per mile
Over 1500 miles = $.1629 per mile

## DRAFTING INFORMATION

The principal author of this revenue
ruling is Kathleen Edmondson of the Of-

fice of Associate Chief Counsel (Tax Ex-
empt/Government Entities). For further
information regarding this revenue ruling,

contact Ms. Edmondson at (202) 317-
6798 (not a toll-free number).

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## Part III. Administrative, Procedural, and Miscellaneous

### Hurricane Harvey and Hurricane Irma Disaster Relief Notice 2017-49

#### I. PURPOSE

The Internal Revenue Service (IRS),
the Department of Labor's Employee
Benefits Security Administration (EBSA),
and the Pension Benefit Guaranty Corpo-
ration (PBGC) are providing relief in con-
nection with certain employee benefit
plans because of damage caused by Hur-
ricane Harvey and Hurricane Irma. The
relief provided by this notice is in addition
to any relief already provided by the IRS,
EBSA, and PBGC to victims of Hurricanes
Harvey and Irma. For additional informa-
tion relating to disaster relief, see https://
www.irs.gov/newsroom/help-for-victims-of-
hurricane-harvey and https://www.pbgc.gov/
prac/other-guidance/dr/updates.

#### II. BACKGROUND

##### A. Provisions Relating to Disaster Relief.

Under § 7508A(b) of the Internal Rev-
enue Code (Code), in the case of a pension
or other employee benefit plan, or any
sponsor, administrator, participant, bene-
ficiary, or other person with respect to
such a plan affected by a federally de-
clared disaster or a terroristic or military
action, the Secretary of the Treasury may
prescribe a period of up to 1 year that may
be disregarded in determining the date
by which any action is required or permit-
ted to be completed. No plan is to be
treated as failing to be operated in accor-
dance with its terms solely because the
plan disregards any period by reason of
this relief. Sections 518 and 4002(i) of the
Employee Retirement Income Security
Act of 1974, Pub. L. No. 93-406, 88 Stat.
829 (1974), as amended (ERISA), autho-
rize the provision of parallel relief under
Titles I and IV of ERISA.

B. Funding-related Provisions for
Single-employer Defined Benefit Plans.

Section 412(a) of the Code and section
302(a) of ERISA require that an employer

that sponsors a single-employer pension
plan satisfy the minimum funding stan-
dard for a plan year. For most single-
employer plans, the minimum funding
standard is satisfied for a plan year if the
employer contributes the minimum re-
quired contribution determined under
§ 430 of the Code and section 303 of
ERISA (or, in the case of a money pur-
chase plan, the contributions that are re-
quired under the terms of the plan) for the
plan year. Section 430(j)(1) of the Code
and section 303(j)(1) of ERISA provide
that the due date for payment of the min-
imum required contribution for a plan
year is 8-1/2 months after the close of the
plan year.

Section 430(f) of the Code provides
rules regarding a plan's maintenance of a
prefunding balance and a funding stan-
dard carryover balance, including rules
permitting the use of those balances to
offset the minimum required contribution.
Section 1.430(f)-1(f)(2) sets forth timing
rules regarding elections with respect to a
plan's prefunding balance and funding
standard carryover balance.

Section 412(c) of the Code and section
302(c) of ERISA provide for waivers of
the minimum funding requirements in the
event of temporary substantial business
hardship. In order for a plan other than a
multiemployer plan to receive such a
waiver, § 412(c)(5) of the Code and sec-
tion 302(c)(5) of ERISA provide that an
application for such a waiver must be sub-
mitted no later than the 15th day of the 3rd
month beginning after the close of the
plan year for which the waiver is sought.

Section 430(j)(3) of the Code and sec-
tion 303(j)(3) of ERISA impose a higher
rate of interest with respect to late quar-
terly installments for a plan with a funding
shortfall for the prior plan year. Section
430(j)(4) of the Code and section
303(j)(4) of ERISA increase the quarterly
installments to the amount needed to pre-
vent a liquidity shortfall (as defined in
those sections). For a plan year, the due
dates for the required installments are the
15th day of the 4th plan month, the 15th
day of the 7th plan month, the 15th day of
the 10th plan month, and the 15th day after
the end of the plan year.

Section 430(k) of the Code and section
303(k) of ERISA provide, for certain
plans with a funding target attainment per-
centage of less than 100 percent for the
plan year, that a lien arises in favor of the
plan if the required installments or any
other payment required under § 430 of the
Code and section 303 of ERISA are not
made to the plan before the due date for
the required installment or other payment
and if the aggregate unpaid balance of
required installments and other payments
exceeds $1,000,000. If this lien arises, the
plan sponsor is required to notify PBGC
within 10 days of the failure.

Section 436 of the Code and section
206(g) of ERISA impose certain benefit
restrictions that are applied based on a
plan's adjusted funding target attainment
percentage for the plan year. For this pur-
pose, § 436(h)(2) of the Code and section
206(g)(7)(B) of ERISA provide that a
plan's adjusted funding target attainment
percentage for the plan year is conclu-
sively presumed to be less than 60 percent
from the first day of the 10th month of the
plan year through the end of the plan year
if no certification of the adjusted funding
target attainment percentage for the plan
year is made before the first day of the
10th month of the plan year. Section
436(h)(3) of the Code and section
206(g)(7)(C) of ERISA require, in certain
cases in which no certification of the ad-
justed funding target attainment percent-
age for a plan year is made before the first
day of the 4th month of the plan year, that
the plan's adjusted funding target attain-
ment percentage is presumed to be equal
to 10 percentage points less than the ad-
justed funding target attainment percent-
age for the preceding plan year for a pe-
riod beginning on the first day of the 4th
month.

Section 101(j)(1) of ERISA provides
that the plan administrator of a single-
employer plan is required to provide writ-
ten notice to participants and beneficiaries
within 30 days after the date the plan has
become subject to a benefit restriction un-
der section 206(g)(1) of ERISA (under
which the payment of certain unpredict-
able contingent event benefits is re-
stricted) or section 206(g)(3) of ERISA
(under which the payment of certain ac-

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celerated benefit distributions is restricted).
Section 101(j)(2) of ERISA provides that,
for a single-employer plan under which ben-
efit accruals are restricted under section
206(g)(4) of ERISA because the plan's ad-
justed funding target attainment percentage
is less than 60 percent, the plan administra-
tor is required to provide written notice to
participants and beneficiaries within 30 days
after the earlier of the plan's valuation date
or the date the adjusted funding target at-
tainment percentage is presumed to be less
than 60 percent for the plan year pursuant to
section 206(g)(7)(B) of ERISA.

Under PBGC's premium regulations,
contribution receipts for a plan year (as
described in section 303(g)(4) of ERISA)
are included in the market value of assets
as of the valuation date to the extent re-
ceived by the plan by the date the pre-
mium is filed. See 29 CFR section
4006.4(c). In addition, reporting require-
ments under Title IV of ERISA arise from
certain late contributions. See 29 CFR
sections 4043.25 and 4043.81.

##### C. Funding-related Provisions for Multiemployer Defined Benefit Plans.

Section 432(b)(3)(A) of the Code and
section 305(b)(3)(A) of ERISA provide
special rules for certain multiemployer de-
fined benefit plans. For a plan that is sub-
ject to those requirements, the plan actu-
ary must make certain certifications each
year regarding the plan's funded status.
The deadline for these certifications for a
plan year is the 90th day of the plan year.
Under § 432(b)(3)(D) of the Code and
section 305(b)(3)(D) of ERISA, in certain
circumstances, the plan sponsor is re-
quired to provide notice regarding the
plan's funded status to participants and
beneficiaries, the bargaining parties,
PBGC, the Secretary of Labor, and, if
applicable, the Secretary of the Treasury.
Section 432(c)(1) of the Code and section
305(c)(1) of ERISA require, for the first
plan year that a multiemployer plan is in
endangered status, that the plan sponsor
adopt a funding improvement plan no
later than 240 days following the required

date for the actuarial certification of en-
dangered status. Section 432(e)(1) of the
Code and section 305(e)(1) of ERISA re-
quire, for the first plan year that a mul-
tiemployer plan is in critical status, that
the plan sponsor adopt a rehabilitation
plan no later than 240 days following the
required date for the actuarial certification
of critical status.

## III. RELIEF

### A. Definition of Affected Plan and Initial Relief Date.

Pursuant to § 7508A(b) of the Code,
the relief set forth in this section III ap-
plies to an Affected Plan. A plan is an
Affected Plan if any of the following were
located in the Affected Area1: the principal
place of business of the employer that main-
tains the plan (in the case of a plan covering
employees of one employer, determined
disregarding the rules of § 414(b) and (c) of
the Code); the principal place of business of
employers that employ more than 50 per-
cent of the active participants covered by the
plan (in the case of a plan covering employ-
ees of more than one employer, determined
disregarding the rules of § 414(b) and (c));
the relevant office of the plan or the plan
administrator; the relevant office of the pri-
mary record keeper serving the plan; or the
office of the enrolled actuary or other advi-
sor that previously had been retained by the
plan or the employer to make funding de-
terminations or certifications for which the
due date falls between the date specified by
the Federal Emergency Management
Agency (FEMA) as the beginning of the
incident period (for example, August 23,
2017, for Texas counties affected by Hurri-
cane Harvey and September 4, 2017, for
Florida counties affected by Hurricane
Irma) and January 31, 2018. For purposes of
the preceding sentence, the term "office"
means the worksite of the relevant individ-
uals and the location of any records neces-
sary to determine the plan's funding require-
ments for the relevant period. In addition,
for purposes of this notice, the date specified
by FEMA as the beginning of the incident

period with respect to a plan is referred to as
the Initial Relief Date for the plan.

### B. Relief for Single-employer Defined Benefit Plans.

For any single-employer plan (other
than a CSEC plan as defined in § 414(y))
that is an Affected Plan, if the date de-
scribed in § 430(j)(1) or 430(j)(3) of the
Code and section 303(j)(1) or 303(j)(3) of
ERISA for making a contribution for a
plan year falls within the period beginning
on the Initial Relief Date and ending on
January 31, 2018, then the date for mak-
ing such a contribution is postponed to
January 31, 2018.2 If the date specified in
§ 1.430(f)-1(f)(2) for making an election
relating to such a plan's prefunding bal-
ance or funding standard carryover bal-
ance falls within the period beginning on
the Initial Relief Date and ending on Jan-
uary 31, 2018, then the date by which that
election must be made is postponed to
January 31, 2018. If the date described in
§ 436(h)(2) or 436(h)(3) of the Code and
section 206(g)(7)(B) or 206(g)(7)(C) of
ERISA for certification of the adjusted
funded target attainment percentage falls
within the period beginning on the Initial
Relief Date and ending on January 31,
2018, then the date by which that certifi-
cation must be made is postponed to Jan-
uary 31, 2018.

For any CSEC plan that is an Affected
Plan, if the date described in § 433(c)(9) or
§ 433(f) of the Code and section 306(c)(9)
or section 306(f) of ERISA for making a
contribution for a plan year falls within the
period beginning on the Initial Relief Date
and ending on January 31, 2018, then the
date for making such a contribution is post-
poned to January 31, 2018. For any such
plan that is an Affected Plan, if the date
described in § 433(j)(4) of the Code and
section 306(j)(4) of ERISA by which the
plan actuary must make the required certi-
fication falls within the period beginning on
the Initial Relief Date and ending on Janu-
ary 31, 2018, then the date by which that
certification must be made is postponed to
January 31, 2018. If the deadline described

1The Affected Area is defined as any of the Texas counties identified for individual assistance by FEMA because of Hurricane Harvey, any of the Florida counties identified for individual
assistance by FEMA because of Hurricane Irma, and any other areas identified for individual assistance by FEMA because of Hurricane Harvey or Hurricane Irma (or Tropical Storm Harvey
or Tropical Storm Irma). The areas identified for individual assistance by FEMA can be found on FEMA's website at https://www.fema.gov/disasters.

2This extension also applies to contributions that are due during this period to plans described in section 104 of the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780
(2006).

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in § 433(j)(3) of the Code and section
306(j)(3) of ERISA by which a plan sponsor
of such an Affected Plan that is in funding
restoration status must adopt a funding res-
toration plan falls within the period begin-
ning on the Initial Relief Date and ending on
January 31, 2018, then that deadline is post-
poned to January 31, 2018.

With respect to any single-employer
plan that is an Affected Plan, if the dead-
line for furnishing a notice required under
section 101(j)(1) or (2) of ERISA falls
within the period beginning on the Initial
Relief Date and ending on January 31,
2018, then the date by which that notice
must be furnished is postponed to January
31, 2018.

The relief set forth in this section III.B
applies under Title IV of ERISA for pur-
poses of determining the timeliness of a
contribution and whether that contribution
is included in market value of assets. For
example, for any plan for which this no-
tice extends a due date described in
§ 430(j)(1) of the Code and section
303(j)(1) of ERISA, contribution receipts
are taken into account in determining the
variable rate premium if made on or be-
fore the date the plan's premium is filed.

### C. Relief for Multiemployer Defined Benefit Plans.

For any multiemployer plan that is
an Affected Plan, if the date described in
§ 432(b)(3)(A) of the Code and section
305(b)(3)(A) of ERISA by which the plan
actuary must make any certification re-
quired under § 432(b)(3)(A) falls within
the period beginning on the Initial Relief
Date and ending on January 31, 2018, then the
date by which that certification must be made
is postponed to January 31, 2018. If the dead-
line described in § 432(c)(1) or 432(e)(1) of
the Code and section 305(c)(1) or 305(e)(1) of
ERISA by which a plan sponsor of such
an Affected Plan that is in endangered or
critical status must adopt or update a fund-
ing improvement plan or a rehabilitation
plan falls within the period beginning on
the Initial Relief Date and ending on Jan-
uary 31, 2018, then that deadline is post-
poned to January 31, 2018. If, however,
the date by which a certification of such
an Affected Plan's status is postponed in
accordance with this section III.C, then
the date described in § 432(c)(1) or
432(e)(1) of the Code and section 305(c)

or 305(e) of ERISA by which the plan
sponsor of such an Affected Plan that is in
critical or endangered status must adopt a
funding improvement plan or a rehabilita-
tion plan nonetheless continues to be de-
termined based on the original deadline
for the certification of the plan's status.

### D. Relief Related to Funding Waivers.

With respect to a plan that is an Af-
fected Plan, if the date described in
§ 412(c)(5) of the Code and section
302(c)(5) of ERISA for applying for a
waiver for an Affected Plan falls within
the period beginning on the Initial Relief
Date and ending on January 31, 2018,
then that deadline is postponed to January
31, 2018.

## DRAFTING INFORMATION

The principal author of this notice is
Tom Morgan of the Office of the Associ-
ate Chief Counsel (Tax Exempt and Gov-
ernment Entities). However, other person-
nel from the IRS participated in the
development of this guidance. For further
information regarding this notice, contact
Mr. Morgan at 202-317-6700 (not a toll-
free call). For further information regard-
ing the relief in this notice relating to Title
IV of ERISA, contact Amy Viener at
(202) 326 4000 extension 3919 (not a
toll-free number).

## Reference Price for Section 45I Credit for Production of Natural Gas from Marginal Wells During Taxable Years Beginning in Calendar Year 2016 Notice 2017-51

SECTION 1. PURPOSE

This notice provides the applicable ref-
erence price for qualified natural gas pro-
duction from qualified marginal wells dur-
ing taxable years beginning in calendar year
2016 for the purpose of determining the
marginal well production credit (MWC) un-
der § 45I of the Internal Revenue Code. The
applicable reference price for taxable years
beginning in calendar year 2016 is $2.38 per
1,000 cubic feet (mcf).

This notice also provides the credit
amount used for the purpose of determin-
ing the MWC for taxable years beginning
in calendar year 2016. The credit amount
is determined using the 2016 inflation ad-
justment factor of 1.2332 and the applica-
ble reference price of $2.38 per mcf. The
credit amount for taxable years beginning
in calendar year 2016 is $0.14 per mcf.

## SECTION 2. BACKGROUND

Section 45I(a), as it relates to qualified
natural gas production, provides that, for
purposes of § 38, the MWC for any tax-
able year is an amount equal to the prod-
uct of (1) the credit amount and (2) the
qualified natural gas production that is
attributable to the taxpayer.

Section 45I(c)(1) provides that "quali-
fied natural gas production" means do-
mestic natural gas produced from a qual-
ified marginal well. Section 45I(c)(3)(A)
provides that a qualified marginal well is a
domestic well (i) the production from
which during the taxable year is treated as
marginal production under § 613A(c)(6),
or (ii) which during the taxable year (I)
has average production of not more than
25 barrel-of-oil equivalents per day, and
(II) produces water at a rate of not less
than 95 percent of total well effluent.

Section 613A(c)(6)(D) and (E) provide
that "marginal production" means domes-
tic natural gas produced during any tax-
able year from a property that is a stripper
well property for the calendar year in
which the taxable year begins. A "stripper
well property" is, with respect to any cal-
endar year, any property producing not
more than 15 barrel equivalents per day,
determined by dividing the average daily
production of domestic crude oil and do-
mestic natural gas from producing wells
on the property for such calendar year by
the number of such wells on the property.

Section 45I(c)(2)(A) provides that gener-
ally only the first 1,095 barrels or barrel-of-
oil-equivalents (as defined in § 45K(d)(5))
produced during the taxable year qualify for
the MWC. This limitation is proportionately
reduced in the case of a short taxable year or
in the case of a well that is not capable of
production each day of a taxable year. See
§ 45I(c)(2)(B). The number of wells on
which a taxpayer can claim the MWC is not
limited.

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Section 45I(d)(2) provides that to claim the
credit a taxpayer must hold an operating inter-
est in the qualified marginal well producing
the natural gas to which the credit relates.
Under § 45I(d)(1) if a well is owned by more
than one owner and the natural gas production
exceeds the limitation under § 45I(c)(2), the
qualifying natural gas production attributable
to the taxpayer is determined on the basis
of the ratio the taxpayer's revenue interest in
the production bears to the aggregate of the
revenue interests of all operating interest own-
ers in the production. Finally, § 45I(d)(3) pro-
vides that the MWC is not allowable if the
taxpayer is also eligible to claim the § 45K
nonconventional sources credit for the taxable
year, unless the taxpayer elects not to claim the
credit under § 45K for the well.

For purposes of § 45I(a)(1), the credit
amount is 50 cents (adjusted for inflation)
per mcf of qualified natural gas production
(tentative credit amount). See § 45I(b)(1)(B)
and (b)(2)(B).

Section 45I(b)(2)(A) and (B) provide
that the tentative credit amount (adjusted for
inflation) is reduced (but not below zero) to
the extent that the applicable reference price
exceeds $1.67 (adjusted for inflation). More
specifically, § 45I(b)(2)(A) provides that the
tentative credit amount (adjusted for infla-
tion) is reduced by an amount that bears the
same ratio to such amount as the excess (if
any) of the applicable reference price over
$1.67 (adjusted for inflation), bears to $0.33
(adjusted for inflation). As a result, the
MWC is not available if the applicable ref-
erence price for qualified natural gas pro-
duction exceeds $2 (adjusted for inflation).

Section 45I(b)(2)(A) also provides that
the applicable reference price for a taxable
year is the reference price for the calendar year
preceding the calendar year in which the tax-
able year begins. Section 45I(b)(2)(C)(ii) pro-

vides the term "reference price" means, with
respect to any calendar year, in the case of
qualified natural gas production, the Secre-
tary's estimate of the annual average wellhead
price per mcf for all domestic natural gas.

Section 45I(b)(2)(B) provides that in the
case of any taxable year beginning in a
calendar year after 2005, each of the dollar
amounts contained in § 45I(b)(2)(A) will be
increased to an amount equal to such dollar
amount multiplied by the inflation adjust-
ment factor for such calendar year (deter-
mined under § 43(b)(3)(B) by substituting
"2004" for "1990").

## SECTION 3. INFLATION ADJUSTMENT FACTOR AND REFERENCE PRICE

.01 Inflation Adjustment. The inflation
adjustment factor under § 45I(b)(2)(B) for
calendar year 2016 is 1.2332.

.02 Reference Price. The Secretary
generally obtains data on energy prices
from the Energy Information Administra-
tion (EIA), an independent agency within
the Department of Energy. In the past, the
EIA published estimates of monthly and
annual average wellhead prices for natural
gas, but the EIA has not published those
estimates since December 2012. Conse-
quently, the Secretary's estimate of the
calendar year 2015 annual average well-
head price per mcf for all domestic natural
gas under § 45I(b)(2)(C)(ii) was calcu-
lated by applying the Producer Price Index
commodity index for "Natural Gas"
(WPU05310105)3 published by the Bureau
of Labor Statistics (BLS) as part of its Pro-
ducer Price Index program, to update to
2015 pricing the "national average wellhead
price of natural gas" published by the EIA
for 2012. For years after 2015, the Secretary
intends to calculate the reference price by

application of the Producer Price Index
commodity index for "Natural Gas from the
Wellhead" (WPU053101051) published by
the BLS to the previous year's reference
price.

The EIA's reported national average
wellhead price for 2012 was $2.66 per
mcf.4 The annual price index for natural
gas published by the BLS fell from 149.5
in 2012 to 133.5 in 2015, which implies
the ratio of 2015 to 2012 average well-
head prices was 0.89 (133.5/149.5).
Therefore, the Secretary's estimate of the
calendar year 2015 annual average well-
head price per mcf for all domestic natural
gas is $2.38 per mcf (0.89 × $2.66 per
mcf).

## SECTION 4. CALCULATION OF CREDIT AMOUNT

Under § 45I(b)(1)(B) and(2)(B), the
tentative credit amount used to calculate
the MWC for taxable years beginning in
calendar year 2016 is 62 cents per mcf
($0.50 × 1.2332 inflation adjustment fac-
tor). However, in order to determine the
credit amount for purposes of § 45I(a)(1),
the tentative credit amount must be re-
duced as provided by § 45I(b)(2)(A).

Pursuant to § 45I(b)(2)(A), the tenta-
tive credit amount for taxable years begin-
ning in calendar year 2016 is reduced (but
not below zero) by an amount (§ 45I(b)(2)
Reduction Amount) which bears the same
ratio to such amount as (i) the excess (if
any) of the applicable reference price over
$2.06 ($1.67 × 1.2332 inflation adjust-
ment factor), bears to (ii) $0.41 ($0.33 X
1.2332 inflation adjustment factor). Ac-
cordingly, the § 45I(b)(2) Reduction
Amount (as adjusted for inflation) is com-
puted as follows:

§ 451(b)(2) Red. Amount
0.62

App. Ref. Price - 2.06

0.41

Solving for the § 45I(b)(2) Reduction
Amount yields the following formula:

§ 451(b)(2) Red.Amount =
0.62 x (App. Ref. Price - 2.06)
0.41

3https://data.bls.gov/cgi-bin/srgate. BLS publishes indexes and not actual or average prices.

4https://www.eia.gov/dnav/ng/ng_pri_sum_a_epg0_fwa_dmcf_a.htm.

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Using the applicable reference price of
$2.38, the § 45I(b)(2) Reduction Amount
is $0.48. Therefore, the credit amount
used to calculate the MWC for taxable
years beginning in calendar year 2016 is
$0.14 per mcf ($0.62 - $0.48).

## SECTION 5. EFFECTIVE DATE

This notice is effective for qualified
natural gas production during taxable
years beginning in calendar year 2016.
The Internal Revenue Service (IRS) will
provide information on how to claim the
credit on IRS.gov, tax forms or instruc-
tions, or through other published guid-
ance.

## SECTION 6. ADDITIONAL CONSIDERATIONS

A taxpayer who filed a 2016 return on
or before October 2, 2017 and either did
not claim the credit or claimed the credit
in an amount that differs from the amount
determined using the applicable reference
price stated in this notice may file an
amended return using the applicable ref-
erence price stated in this notice.

Generally, a taxpayer has up to three
years from the date it filed a return, or two
years from the date the tax is paid, which-
ever is later, to file an amended return.
Taxpayers should consider consulting
with a tax advisor to determine if they
want to file an amended return. More in-
formation about filing an amended return
is available on IRS.gov.

## SECTION 7. COMMENTS

.01 The Treasury Department and the
IRS request written comments on this no-
tice, including the methodology for deter-
mining the reference price.

.02 Date for comments.

Comments in response to this notice
should be received by the IRS before No-
vember 16, 2017.

.03 Address to send comments:

Internal Revenue Service
CC:PA:LPD:PR (Notice 2017-51)
Room 5203
P.O. Box 7604

Ben Franklin Station
Washington, DC 20044

Please include "Notice 2017- 51 " on the
cover page.

.04 Submissions may be hand deliv-
ered Monday through Friday between the
hours of 8 a.m. and 4 p.m. to:

Internal Revenue Service
Courier's Desk
1111 Constitution Ave., N.W.
Washington, DC 20224
Attn: CC:PA:LPD:PR
(Notice 2017-51)

.05 Submissions may also be sent elec-
tronically to the following e-mail address:

Notice.Comments@irscounsel.treas.gov
Please include "Notice 2017-51" in the
subject line.

All comments will be available for
public inspection and copying.

## SECTION 8. DRAFTING AND CONTACT INFORMATION

The principal author of this notice is
Philip Tiegerman of the Office of Associ-
ate Chief Counsel (Passthroughs & Spe-
cial Industries). For further information
regarding this notice contact Philip
Tiegerman at (202) 317-6853 (not a toll-
free number).

Treatment of Amounts
Paid to Section 170(c)
Organizations under
Employer Leave-Based
Donation Programs to Aid
Victims of Hurricane and
Tropical Storm Irma
Notice 2017-52

This notice provides guidance on the
treatment of leave-based donation pro-
grams to aid victims of Hurricane and
Tropical Storm Irma.

## TREATMENT OF LEAVE-BASED DONATION PAYMENTS

In response to the extreme need for char-
itable relief for victims of Hurricane and

Tropical Storm Irma, employers may have
adopted or may be considering adopting
leave-based donation programs. Under
leave-based donation programs, employees
can elect to forgo vacation, sick, or personal
leave in exchange for cash payments that
the employer makes to charitable organiza-
tions described in § 170(c) of the Internal
Revenue Code (§ 170(c) organizations).
This notice provides guidance for income
and employment tax purposes on the treat-
ment of cash payments made by employers
under leave-based donation programs for
the relief of victims of Hurricane and Trop-
ical Storm Irma.

The Internal Revenue Service (the Ser-
vice) will not assert that cash payments an
employer makes to § 170(c) organizations
in exchange for vacation, sick, or personal
leave that its employees elect to forgo
constitute gross income or wages of the
employees if the payments are: (1) made
to the § 170(c) organizations for the relief
of victims of Hurricane and Tropical
Storm Irma; and (2) paid to the § 170(c)
organizations before January 1, 2019.

Similarly, the Service will not assert
that the opportunity to make such an elec-
tion results in constructive receipt of gross
income or wages for employees. Electing
employees may not claim a charitable
contribution deduction under § 170 with
respect to the value of forgone leave ex-
cluded from compensation and wages.

The Service will not assert that an em-
ployer is permitted to deduct these cash
payments exclusively under the rules of
§ 170 rather than the rules of § 162. Cash
payments to which this guidance applies
need not be included in Box 1, 3 (if ap-
plicable), or 5 of the Form W-2.

## DRAFTING INFORMATION

For further information, please con-
tact Sheldon A. Iskow of the Office of
Associate Chief Counsel (Income Tax
and Accounting) at (202) 317-4718 (not
a toll-free number).

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26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability.
(Also Part 1, §§ 170, 501, 509, 4942, 4945, 1.170A-9, 1.509(a)-3, 53.4942(a)-3, 53.4945-5, 53.4945-6)

Rev. Proc. 2017-53

TABLE OF CONTENTS

SECTION 1. PURPOSE

264

SECTION 2. SCOPE

264

SECTION 3. BACKGROUND

264

.01 Purposes of equivalency determinations

264

.02 Requirements for an equivalency determination under § 53.4945-6(c)(2)

264

.03 Requirements for an equivalency determination under §§ 53.4942(a)-3(a)(6) and 53.4945-5(a)(5)

265

(1) Written advice that is current

265

(2) Qualified tax practitioners

265

(3) Qualifying public charity

265

(4) Reasonable reliance in good faith under § 1.6664-4(c)(1)

266

(5) General requirements imposed on qualified tax practitioners in preparing written advice

266

(a) In general

266

(b) Information regarding grantee

266

(c) Advice of another person.

266

(6) Facts required in written advice

266

SECTION 4. GUIDELINES FOR WRITTEN ADVICE

266

.01 In general

266

.02 Attachments in English

266

.03 Practitioner use of affidavits, and attestation

266

.04 Reliance on translations of foreign laws

267

SECTION 5. SUFFICIENT FACTS IN WRITTEN ADVICE REGARDING § 501(c)(3) STATUS

267

.01 Effect of written advice

267

.02 Governing instruments

267

.03 Charitable purposes

267

.04 Charitable distribution of assets on dissolution

267

.05 No private shareholders

267

.06 Insubstantial lobbying and no political intervention

267

.07 Affiliated organizations

267

.08 Description of activities and analysis

267

.09 Terrorist organizations and blocked persons

267

.10 Hospitals and § 501(r)

267

.11 Schools and racial discrimination

268

SECTION 6. SUFFICIENT FACTS IN WRITTEN ADVICE REGARDING QUALIFYING PUBLIC CHARITY STATUS

268

.01 Effect of written advice

268

.02 Financial and non-financial tests

268

.03 Section 170(b)(1)(A)(vi) or 509(a)(2) organizations within first five years

268

.04 Section 170(b)(1)(A)(vi) organizations after first five years

268

.05 Section 509(a)(2) organizations after first five years

268

.06 Support from governments

269

.07 Medical research organizations

269

.08 Non-functionally integrated Type III supporting organizations

269

.09 Operating and exempt operating foundations

269

SECTION 7. EXAMPLES OF CURRENT WRITTEN ADVICE FOR PUBLICLY SUPPORTED ORGANIZATIONS

269

SECTION 8. EFFECT ON OTHER DOCUMENTS

270

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# SECTION 9. EFFECTIVE DATE

270

# SECTION 10. PAPERWORK REDUCTION ACT

270

DRAFTING INFORMATION

270

## SECTION 1. PURPOSE

Private foundations may wish to treat
grants to foreign grantees as qualifying dis-
tributions that satisfy the distribution re-
quirements imposed by § 4942 of the
Internal Revenue Code (Code) and not as
expenditures requiring expenditure respon-
sibility in order to not be subject to the
excise tax on taxable expenditures imposed
by § 4945 of the Code. If a private founda-
tion makes a "good faith determination" that
a foreign grantee qualifies as a qualifying
public charity (as defined in section 3.03(3)
of this revenue procedure), the grant will
generally be a qualifying distribution that
does not require expenditure responsibility
in order to not be a taxable expenditure.

This revenue procedure modifies and su-
persedes Rev. Proc. 92-94, 1992-2 C.B.
507, which provided a simplified procedure
that private foundations could follow in
making good faith determinations (also
known as equivalency determinations).5
This revenue procedure reflects the changes
to the equivalency determination final regu-
lations published in 2015 (TD 9740; 80 FR
57709; 2015-42 IRB 573), including the
elimination of the ability of a private foun-
dation to rely on a grantee affidavit for pur-
poses of the special rule. This revenue pro-
cedure also reflects the changes to the public
support tests for § 170(b)(1)(A)(vi) and
§ 509(a)(2) organizations set forth in final
regulations published in 2011 (TD 9549; 76
FR 55746; 2011-46 IRB 718), and applies
these changes in the context of equivalency
determinations. In addition, this revenue pro-
cedure includes other updates and changes in
response to comments from the public.

## SECTION 2. SCOPE

This revenue procedure provides guide-
lines that qualified tax practitioners may use
for preparing written advice on which a do-
mestic private foundation ordinarily may
rely in making an equivalency determina-
tion that the grantee of a grant made for

§ 170(c)(2)(B) purposes (other than a grant
described in sections 507(b)(2) and 1.507-
3(c)) is a qualifying public charity. Until
further guidance is issued, sponsoring orga-
nizations of donor advised funds may also
use the guidelines in this revenue procedure
for purposes of applying the exception un-
der § 4966(c)(2)(A) of the Code to the ex-
cise tax imposed on taxable distributions
under § 4966.

## SECTION 3. BACKGROUND

### .01 Favorable treatment of grants with equivalency determinations.

A private foundation may make an
equivalency determination to demonstrate
that the following three provisions under
chapter 42 of the Code and the related
regulations apply and thereby potentially
prevent the imposition of excise taxes:

(1) Under §§ 4945(d)(5) and 53.4945-
6(c)(2), a private foundation's grant to an
organization described in § 501(c)(3) or-
dinarily need not be maintained in a sep-
arate charitable fund;

(2) Under §§ 4942(g)(1) and 53.4942(a)-
3(a), a private foundation's grant to a qual-
ifying public charity ordinarily is a qualify-
ing distribution that counts toward its
minimum charitable distribution require-
ment; and

(3) Under §§ 4945(d)(4) and 53.4945-
5(a), a private foundation's grant to a
qualifying public charity ordinarily is not
a taxable expenditure and the foundation
does not need to comply with a detailed
set of grant procedures known as “expen-
diture responsibility" to ensure that the
grant is used for charitable purposes.

As explained in sections 3.02 and 3.03 of
this revenue procedure, under §§ 53.4942(a)-
3(a)(6), 53.4945-5(a)(5), and 53.4945-6(c)(2)
(ii), a private foundation may make an equiv-
alency determination that a foreign grantee is
an organization described in § 501(c)(3) and
is a qualifying public charity even though
the grantee lacks a determination letter

from the Internal Revenue Service (IRS)
recognizing it as tax-exempt. Thus, a
grant to such an organization would not
need to be maintained in a separate fund
and would ordinarily be treated as a
qualifying distribution and not a taxable
expenditure.

More specifically, a private foundation
grantor that wishes to have a grant to a
foreign organization grantee that lacks an
IRS determination letter treated as made
to a qualifying public charity generally
must complete two steps in making an
equivalency determination in compliance
with §§ 53.4942(a)-3(a)(6), 53.4945-
5(a)(5), and 53.4945-6(c)(2)(ii). First, the
grantor (through one or more foundation
managers) must make a good faith deter-
mination and a reasonable judgment that
the grantee is a § 501(c)(3) organization
(other than by reason of § 509(a)(4)). Sec-
ond, the grantor must make a good faith
determination that the grantee is a quali-
fying public charity for purposes of
§§ 4942(g) and 4945(d)(4).

.02 Regulatory requirements for an
equivalency determination under
§ 53.4945-6(c)(2)(ii).

Section 53.4945-6(c)(2)(ii) provides
that a private foundation grantor may treat
a foreign grantee as an organization de-
scribed in § 501(c)(3) if:

(1) In the reasonable judgment of the foun-
dation manager (as defined in § 4946(b)), the
grantee is described in § 501(c)(3) (other than
an organization that tests for public safety);

(2) The grant is made for purposes
described in § 170(c)(2)(B) (charitable
purposes); and

(3) The grant is not a transfer of assets
pursuant to a liquidation, merger, redemp-
tion, recapitalization, or other adjustment,
organization, or reorganization of the foun-
dation under §§ 507(b)(2) and 1.507-3(c).

5This revenue procedure uses the term "equivalency determination" unless referring to regulatory provisions that use the term "good faith determination."

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.03 Regulatory requirements for an
equivalency determination under
§§ 53.4942(a)-3(a)(6) and
53.4945-5(a)(5).

In 2015, the Treasury Department and
the IRS finalized the regulatory require-
ments for equivalency determinations un-
der §§ 53.4942(a)-3(a)(6) and 53.4945-
5(a)(5) (TD 9740; 80 FR 57709; 2015-42
IRB 573) for purposes of determining
when a grant is a qualifying distribution
and not a taxable expenditure. The regu-
lations provide a general rule that the pri-
vate foundation grantor may treat a for-
eign grantee as a qualifying public charity
if the foundation has made a good faith
determination to that effect. The regula-
tions also include a special rule that a private
foundation's determination ordinarily will
be considered made in good faith if it is
based on written advice that is "current" and
received from a "qualified tax practitioner"
concluding that the grantee is a "qualifying
public charity," and if the foundation rea-
sonably relied in good faith on the written
advice in accordance with the requirements
of § 1.6664-4(c)(1) in making the determi-
nation. Under this special rule, the written
advice must give enough facts concerning
the foreign grantee's operations and support
to enable the IRS to determine that the
grantee would likely qualify as a qualifying
public charity as of the date of the written
advice. This special rule reflects three sig-
nificant changes from the equivalency de-
termination process provided under the prior
regulations: (1) a general broadening of the
class of qualified tax practitioners that could
prepare written advice; (2) elimination, un-
der the special rule, of reliance by a private
foundation on grantee affidavits without
current written advice received from quali-
fied tax practitioners (although such reliance
is still permissible in appropriate circum-
stances under the general rule); and (3) the
addition of a new definition of the period for
reliance on written advice received from
qualified tax practitioners for purposes of
the special rule.

The preamble to the final regulations
stated that the Treasury Department and
the IRS intended to publish an updated
revenue procedure, revised to reflect the
changes implemented in the 2015 final
regulations as well as changes to the pub-
lic support tests for § 170(b)(1)(A)(vi) and

§ 509(a)(2) organizations set forth in final
regulations published in 2011 (TD 9549;
76 FR 55746; 2011-46 IRB 718), and to
possibly provide additional guidance on
foreign schools and foreign government
support, with examples illustrating the ap-
plication of these rules on the period of
reliance on written advice.

(1) Written advice that is current. For pur-
poses of the special rule in §§ 53.4942(a)-
3(a)(6) and 53.4945-5(a)(5), written advice
is generally current if the relevant law on
which the advice is based has not changed
since the date of the written advice and the
factual information on which the advice is
based is from the grantee's current or prior
taxable year (or the current or prior annual
accounting period if the grantee does not
have a taxable year for United States federal
tax purposes). Thus, a grantor may rely on
written advice for a period of up to two
years after the advice is provided, depend-
ing on when within the grantee's taxable
year (or annual accounting period) the ad-
vice was provided, and how recent the fac-
tual information is on which the advice was
based. For example, written advice issued in
January 2017, based on information dating
from January 2017 for a grantee having a
calendar taxable year, would generally re-
main current through December 2018. Writ-
ten advice that a grantee met the public
support test under § 170(b)(1)(A)(vi) or
§ 509(a)(2) for a test period of five years is
current during the two taxable years of the
grantee immediately following the end of
the five-year test period.

(2) Qualified tax practitioner. A "qual-
ified tax practitioner" is an attorney, cer-
tified public accountant (CPA), or en-
rolled agent who is subject to the
standards of practice before the IRS set
forth in Circular 230 (31 CFR Part 10). To
practice before the IRS, Circular 230 re-
quires that an attorney or CPA be licensed
in a state, territory, or possession of the
United States (including the District of
Columbia), and that an enrolled agent
meet the eligibility requirements set forth
in section 10.4 of Circular 230. A quali-
fied tax practitioner may include an attor-
ney, CPA, or enrolled agent serving as an
employee of the grantor.

(3) Qualifying public charity. Section
501(c)(3) organizations are classified un-
der § 509(a) as either public charities or
private foundations. Public charities under

§ 509(a) include, but are not limited to,
the following types of organizations:

(a) A church or a convention or associa-
tion of churches as described in §§ 509(a)(1)
and 170(b)(1)(A)(i);

(b) A school, as described in §§ 509(a)(1)
and 170(b)(1)(A)(ii) and §1.170A-9(c)(1);

(c) A hospital or medical research orga-
nization, as described in §§ 509(a)(1) and
170(b)(1)(A)(iii) and § 1.170A-9(d)(1) or
(d)(2);

(d) A publicly supported organization de-
scribed in §§ 509(a)(1) and 170(b)(1)(A)(vi)
and § 1.170A-9(f);

(e) A publicly supported organization
described in §§ 509(a)(2) and 1.509(a)-3;
and

(f) A supporting organization described in
§§ 509(a)(3) and 1.509(a)-4, whether Type I,
Type II, functionally integrated Type III, or
non-functionally integrated Type III.

For purposes of § 4945(d)(4) (which re-
quires expenditure responsibility for grants
from private foundations to organizations
other than qualifying public charities), a
qualifying public charity is a public charity
described in § 509(a)(1), 509(a)(2), or
509(a)(3) (other than a disqualified support-
ing organization, defined below in this sec-
tion 3.03(3)), or an exempt operating foun-
dation described in § 4940(d)(2).

For purposes of § 4942(g) (which treats
distributions to qualifying public charities as
qualifying distributions), a qualifying public
charity includes a qualifying public charity
under § 4945(d)(4) and also includes a dis-
qualified supporting organization (if the
grantor is an operating foundation) and a
grantee that is an operating foundation un-
der § 4942(j)(3) (whether or not it is an
exempt operating foundation). See
§§ 4942(g)(1) and (4).

For purposes of § 4966(c)(2)(A)
(which requires expenditure responsibility
for distributions from donor advised funds
to organizations other than qualifying
public charities), a qualifying public char-
ity is a public charity described in
§ 509(a)(1), 509(a)(2), or 509(a)(3) (other than
a disqualified supporting organization, de-
fined below in this section 3.03(3)), an oper-
ating foundation under § 4942(j)(3), a private
foundation described in § 170(b)(1)(F)(ii)
that annually distributes all of its contribu-
tions, and a private foundation described in
§ 170(b)(1)(F)(iii) that maintains a com-

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mon fund and annually distributes all of
its income.

A disqualified supporting organization
includes a non-functionally integrated
Type III supporting organization under
§ 1.509(a)-4(i). A disqualified supporting
organization also includes any other sup-
porting organization if a disqualified per-
son of the private foundation directly or
indirectly controls the supporting organiza-
tion or a supported organization (or, for
grants from donor advised funds, if a donor
or donor advisor (and any related parties)
directly or indirectly controls a supported
organization). See §§ 4942(g)(4)(A) and
4966(c)(4).

(4) Reasonable reliance in good faith
under § 1.6664-4(c)(1). Under § 1.6664-
4(c)(1), all pertinent facts and circum-
stances are taken into account in deter-
mining whether a private foundation has
reasonably relied in good faith on written
advice, such as the foundation managers'
education, sophistication, and business
experience. This standard is not met if the
private foundation knows, or reasonably
should know, that a qualified tax practi-
tioner lacks knowledge of the U.S. tax law
of charities. Moreover, a private founda-
tion may not rely on written advice if it
knows, or has reason to know, that rele-
vant facts were not disclosed to the qual-
ified tax practitioner or that the written
advice is based on a representation or as-
sumption that the foundation knows, or
has reason to know, is unlikely to be true.

(5) General requirements imposed on
qualified tax practitioners in preparing
written advice.

(a) In general. Under 31 CFR 10.37(a)(2),
in preparing written advice, a qualified tax
practitioner must-

(i) Base the written advice on reason-
able factual and legal assumptions (in-
cluding assumptions as to future events);

(ii) Reasonably consider all relevant
facts and circumstances that the practitio-
ner knows or reasonably should know;

(iii) Use reasonable efforts to identify
and ascertain the relevant facts;

(iv) Not rely upon representations, state-
ments, findings, or agreements (including pro-
jections, financial forecasts, or appraisals) of
the taxpayer or any other person if reliance on
them would be unreasonable, which is the
case if the practitioner knows or reasonably
should know that one or more representations

or assumptions on which any representation is
based are incorrect, incomplete, or inconsis-
tent;

(v) Relate applicable law and authori-
ties to facts; and

(vi) Not base the advice on consider-
ation of the possibility that a return will
not be audited or that a matter will not be
raised by the IRS on audit.

(b) Information regarding grantee. Under
31 CFR 10.34(d), a qualified tax practitioner
generally, without verification, may rely in
good faith upon information furnished by the
private foundation regarding the grantee, but
may not ignore the implications of information
furnished to, or actually known by, the practi-
tioner, and must make reasonable inquiries if
the information as furnished appears to be
incorrect, inconsistent with an important fact
or another factual assumption, or incomplete.

(c) Advice of another person. Also, un-
der 31 CFR 10.37(b), a qualified tax prac-
titioner may rely on the advice of another
person (such as foreign counsel on a ques-
tion of foreign law) if the advice was
reasonable and the reliance is in good
faith considering all the facts and circum-
stances. Reliance is not reasonable when
the practitioner knows or reasonably
should know that -

(i) The opinion of the other person
should not be relied upon;

(ii) The other person is not competent
or lacks the necessary qualifications to
provide the advice; or

(iii) The other person has a conflict of
interest in violation of 31 CFR Part 10.

(6) Facts required in written advice.
The equivalency determination regula-
tions require that the written advice in-
clude enough facts concerning the foreign
grantee's operations and support to enable
the IRS to determine that the grantee
would likely qualify as a qualifying public
charity as of the date of the written advice,
and include a conclusion that the grantee
is a qualifying public charity for purposes
of the pertinent sections of the regulations.

## SECTION 4. GUIDELINES FOR WRITTEN ADVICE

.01 In general.

Written advice that meets the guide-
lines of sections 4, 5, and 6 of this revenue
procedure (preferred written advice) ordi-
narily will be considered to contain suffi-

cient facts concerning the foreign grant-
ee's operations and support to enable the
IRS to determine that the grantee would
likely qualify as a qualifying public char-
ity as of the date of the written advice.
Whether written advice that does not meet
one or more of the guidelines of sections
4, 5, or 6 of this revenue procedure con-
tains enough facts concerning the foreign
grantee's operations and support to enable
the IRS to determine that the grantee
would likely qualify as a qualifying public
charity as of the date of the written advice
depends on all the facts and circum-
stances. In all cases, the private founda-
tion still must meet the requirement to
have reasonably relied in good faith on the
written advice in accordance with the re-
quirements of § 1.6664-4(c)(1). Further-
more, in order to rely on the special rule in
§§ 53.4942(a)-3(a)(6) and 53.4945-5(a)(5),
the private foundation must retain the orig-
inal written advice (or a copy) and make it
available to the IRS upon request.

.02 Attachments in English.

For purposes of section 4.01 of this
revenue procedure, preferred written ad-
vice and any attachments are written in or
translated into English and contain the
substantive information set out in sections
5 and 6 of this revenue procedure. An
English translation that meets the require-
ments of section 7.01(2)(c) of Rev. Proc.
2017-1, 2017-1 I.R.B. 1, 24 (or the cor-
responding provision of the most recent
annual update of that revenue procedure),
is an acceptable translation for any docu-
ments that are not written in English, but
compliance with that revenue procedure is
not required.

### .03 Practitioner use of affidavits, and attestation.

Preferred written advice described in
section 4.01 of this revenue procedure sets
forth the qualified tax practitioner's own
application of the law to the facts and own
conclusion that the grantee is a qualifying
public charity. The written advice may
reference attached affidavits from the
grantee providing factual information
upon which the written advice is based.
Any attached grantee affidavit is attested
to by an officer or trustee of the grantee
with personal knowledge of the facts.

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.04 Reliance on translations of foreign
laws.

The grantor and qualified tax practitioner
may rely on translations of and public infor-
mation concerning foreign laws that meet
the requirements of section 7.01(2)(b) and
(c) of Rev. Proc. 2017-1 (or the correspond-
ing provisions of the most recent annual
update of that revenue procedure), but com-
pliance with that revenue procedure is not
required.

## SECTION 5. SUFFICIENT FACTS IN WRITTEN ADVICE REGARDING § 501(c)(3) STATUS

.01 Effect of written advice.

See section 4.01 of this revenue proce-
dure for the effect of preferred written
advice that meets the guidelines described
in this section 5.

### .02 Governing instruments.

Preferred written advice includes an
attachment with an English translation of
the grantee's articles of organization, by-
laws, or other organizing or enabling doc-
ument or documents by which the grantee
is formed and governed. Preferred written
advice identifies the country in which the
grantee was formed if not evident from
such documents.

.03 Charitable purposes.

Preferred written advice identifies the
tax-exempt purpose or purposes under
§ 501(c)(3) for which the grantee is orga-
nized. Tax-exempt purposes include char-
itable, religious, educational, literary, or
scientific purposes, or purposes to foster
national or international amateur sports
competition or to prevent cruelty to chil-
dren or animals, and are referred to col-
lectively in this revenue procedure as
"charitable purposes." Preferred written
advice also confirms that the grantee is not
expressly permitted to engage in activities
for non-charitable purposes, other than as
an insubstantial part of its activities.

### .04 Charitable distribution of assets on dissolution.

Preferred written advice confirms that
if the grantee terminates, liquidates, or
dissolves, then under the governing instru-

ment or applicable law, all of the grantee's
assets will be distributed to another not-
for-profit charitable organization for char-
itable purposes or to a governmental en-
tity for a public purpose. An English
translation of applicable statutory law is
attached to preferred written advice.

.05 No private shareholders.

Preferred written advice confirms that
the grantee has no shareholders or mem-
bers who have an ownership interest in the
income or assets of the grantee. It also
confirms that the grantee does not distrib-
ute any of the grantee's income or assets
to a non-charitable organization or indi-
vidual, or apply any of the grantee's in-
come or assets for the benefit of a non-
charitable organization or individual (and
that the grantee's governing instruments
do not expressly permit such activities),
except pursuant to the conduct of the
grantee's charitable activities, or as pay-
ment of reasonable compensation for ser-
vices rendered or payment of the fair mar-
ket value of property that the grantee has
purchased.

### .06 Insubstantial lobbying and no political intervention.

Preferred written advice confirms that
the grantee does not attempt to influence
legislation (except as an insubstantial part of
its activities) and does not directly or indi-
rectly participate or intervene in any politi-
cal campaign on behalf of, or in opposition
to, any candidate for public office. Preferred
written advice also confirms that the grant-
ee's governing instruments do not expressly
permit such activities.

### .07 Affiliated organizations.

Preferred written advice discusses any
organizations that control the grantee or
are operated in connection with the
grantee.

### .08 Description of activities and analysis.

Preferred written advice or an attached
affidavit describes the past, current, and
anticipated (over the term of the grant)
activities of the grantee, including details
such as the manner of carrying out the
activities, sources of receipts, and types of

expenditures, sufficient to enable the IRS
to determine that the grantee would likely
qualify as a qualifying public charity as of
the date of the written advice. Specific
schedules in Forms 990 or 1023 may be
used to provide relevant information for
particular types of organizations. If the
grantee previously provided an affidavit,
the prior affidavit may be attached and
supplemented with a new affidavit that
describes any changes in facts or affirms
that the facts have not materially changed.
Preferred written advice applies the appli-
cable federal tax law and other relevant
law to the facts in discussing whether the
grantee is operated exclusively for chari-
table purposes. The grantee would not be
considered operated exclusively for char-
itable purposes if, for example, it operated
substantially for commercial purposes or
for the benefit of private interests, or if it
engaged in terrorist activities or support
for terrorist organizations.

#### .09 Terrorist organizations and blocked persons.

An organization ineligible to apply for
recognition of exemption pursuant to
§ 501(p) (relating to an organization des-
ignated or individually identified as a
terrorist organization) cannot qualify for
an equivalency determination. Preferred
written advice includes verification that
the grantee has not been designated or
individually identified as a terrorist orga-
nization by the United States Government
as described in § 501(p)(2). In addition,
while not a requirement for preferred writ-
ten advice, the private foundation should
also confirm that the organization or its
controlling officers, directors, or trustees
are not foreign persons whose property
and interests in property are blocked pur-
suant to an Executive Order or regulations
administered by the Office of Foreign As-
sets Control.

.10 Hospitals and § 501(r).

A grantee that operates a hospital facility is
not required to comply with § 501(r) with
respect to the facility unless the facility is re-
quired by one of the 50 States of the United
States (or the District of Columbia) to be li-
censed, registered, or similarly recognized as a
hospital. See § 1.501(r)-1(b)(17). If the
grantee operates a hospital facility in a foreign

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jurisdiction, the written advice does not need
to address § 501(r).

##### .11 Schools and racial discrimination.

Private schools operating in the United
States have long been required to comply
with Rev. Proc. 75-50, 1975-2 C.B. 587,
which sets forth guidelines and recordkeep-
ing requirements for determining whether
private schools recognized as exempt under
§ 501(c)(3) or applying for recognition have
racially nondiscriminatory policies regard-
ing students. The IRS published the guide-
lines in consequence of extensive litigation
in federal courts in the 1970s arising from
widespread racial discrimination in private
schools in the United States.

Foreign schools also have long been re-
quired to comply with Rev. Proc. 75-50 for
purposes of the Code. However, foreign ju-
risdictions may not have the same history of
racial discrimination as the United States.
Furthermore, compliance with all the provi-
sions of Rev. Proc. 75-50 is sometimes im-
practicable in foreign jurisdictions. Never-
theless, racial nondiscrimination remains an
important principle in determining whether
an organization should be recognized as de-
scribed in § 501(c)(3). Therefore, for pur-
poses of equivalency determinations regard-
ing foreign school grantees, preferred
written advice or an attached affidavit per-
taining to a grantee described in § 170(b)
(1)(A)(ii) as a school is considered sufficient
regarding the issue of racial discrimination
regarding students if: (1) the written advice
or attached affidavit states that the grantee
has adopted a policy in its governing instru-
ment, or in a resolution of its governing
body, that the grantee does not discriminate
against applicants and students on the basis
of race, color, or national or ethnic origin, as
required by section 4.01 of Rev. Proc.
75-50 (or any successor revenue proce-
dure); and (2) the written advice or attached
affidavit provides evidence that the grantee
actually operates in a racially nondiscrimi-
natory manner as to students. Evidence of
racial nondiscrimination regarding students
can be shown by compliance with Rev. Proc.
75-50 (or any successor revenue procedure).
Compliance with that revenue procedure with
respect to a foreign school grantee is not re-
quired, however, in order to provide evidence
that the grantee actually operates in a racially
nondiscriminatory manner as to students.

## SECTION 6. SUFFICIENT FACTS IN WRITTEN ADVICE REGARDING QUALIFYING PUBLIC CHARITY STATUS

.01 Effect of written advice.

See section 4.01 of the revenue proce-
dure for the effect of preferred written
advice that meets the guidelines described
in this section 6.

### .02 Financial and non-financial tests

The status of some qualifying public
charities does not depend on a financial
test (for example, schools and hospitals).
Preferred written advice on whether a
grantee is such a qualifying public charity
includes the application of the relevant
federal tax law to the particular facts and
circumstances.

The status of some qualifying public
charities may depend in whole or in part on
a financial test. Preferred written advice re-
garding a grantee whose status as a qualify-
ing public charity depends in whole or in
part on a financial test includes an attached
financial schedule with enough information
to demonstrate that the grantee satisfies the
applicable financial test or tests, in addition
to showing that the grantee meets any other
requirements. Financial data from the grant-
ee's most recently completed taxable year is
used in the preferred written advice if avail-
able.

An attached schedule or list need not
be filled out completely if the information
provided is sufficient to establish the
grantee's tax classification. For example,
a § 509(a)(2) organization need not in-
clude a list of persons providing more
than one percent of income from a related
activity if the organization passes the one-
third support test because the organization
receives sufficient donations from govern-
ments or other permitted sources regard-
less of whether any other income counts
as public support.

.03 Section 170(b)(1)(A)(vi) or 509(a)(2)
organizations within first five years.

A grantee in existence less than five years
is treated as described in § 170(b)(1)(A)(vi) or
509(a)(2) if the preferred written advice in-
cludes a determination that, as of the time of
the determination, the grantee can reason-
ably be expected to meet the applicable

test for § 170(b)(1)(A)(vi) or 509(a)(2)
status applied to the grantee's first five
years in existence, considering the factors
set forth in § 1.170A-9(f)(3) and (f)(4)(v)
or § 1.509(a)-3(d).

.04 Section 170(b)(1)(A)(vi)
organizations after first five years.

For a grantee described in § 170(b)
(1)(A)(vi) and in existence for more than five
years, preferred written advice includes as an
attachment the support schedule provided on
Form 990, Return of Organization Exempt
From Income Tax, or a similar schedule of
information, for the applicable period, plus, if
necessary, a schedule of donations from do-
nors providing more than two percent of total
support over the applicable period. A foreign
grantee's public support includes, among other
things, all contributions and grants from a do-
mestic or foreign charitable organization de-
scribed in § 170(b)(1)(A)(vi).

.05 Section 509(a)(2) organizations after
first five years.

For a grantee described in § 509(a)(2)
and in existence for more than five years,
preferred written advice includes the fol-
lowing attachments if necessary to estab-
lish the grantee's tax classification:

(1) The support schedule provided on
Form 990, Return of Organization Exempt
From Income Tax, for the applicable pe-
riod, or a similar schedule of information;

(2) A schedule of all amounts received
from disqualified persons (other than from
§ 509(a)(1) organizations), whose support
must be excluded. Disqualified persons
are substantial contributors and founda-
tion managers and certain persons related
to them as described in § 4946(a). Sub-
stantial contributors are defined in
§ 507(d)(2) generally as persons that have
contributed the greater of $5,000 or two
percent of the total contributions the
grantee has ever received;

(3) A schedule of gross receipts from
admissions, sales of merchandise, perfor-
mance of services, or furnishing of facil-
ities, in any activity that is not an unre-
lated business, received from persons (or
bureaus or agencies of governmental
units) in any taxable year if receipts from
any such person exceed the greater of
$5,000 or one percent of the grantee's
total support; and

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(4) A schedule of all donors whose
support is included as public support
solely because they are § 509(a)(1) orga-
nizations (including organizations treated
as § 509(a)(1) organizations for these pur-
poses under § 53.4945-5(a)(4) or (5)).

A foreign grantee's public support in-
cludes, among other things, all contributions
and grants (as described in § 1.509(a)-3(f)
and (g)) from a domestic or foreign charita-
ble organization described in § 509(a)(1).

.06 Support from governments.

For purposes of making equivalency
determinations only, a foreign grantee's
public support includes, among other
things, all contributions and grants as de-
scribed in § 1.509(a)-3(f) and (g) (and for
purposes of § 170(b)(1)(A)(vi), all support
described in § 1.170A-9(f)(8)) from a do-
mestic governmental unit (or agency or
instrumentality), from a foreign govern-
ment (or agency or instrumentality), or
from an international organization desig-
nated as such by Executive Order under
22 U.S.C. 288. See § 53.4945-5(a)(4).

.07 Medical research organizations.

For a grantee that is a medical research
organization described in § 170(b)(1)(A)(iii)
that has been in existence beyond its organi-
zational period, preferred written advice in-
cludes as an attachment a schedule showing
that the grantee devotes more than half its
assets, or spends at least 3.5 percent of the
fair market value of its endowment, directly
in conducting medical research (or an expla-
nation as provided in § 1.170A-9(d)(2)(A) if
the organization fails both tests). Either test
can be met based on a computation period
consisting of the immediately preceding tax-
able year or the immediately preceding four
taxable years. See § 1.170A-9(d)(2)(ix) for a
medical research organization operating dur-
ing its organizational period (in no event in
excess of three years following organization).

### .08 Non-functionally integrated Type III supporting organizations.

For a grantee described in § 509(a)(3)
that is a non-functionally integrated Type
III supporting organization and has ex-
isted for more than one year, preferred
written advice includes as an attachment
the financial schedules and explanations for
non-functionally integrated Type III sup-

porting organizations as provided on Form
990, Return of Organization Exempt From
Income Tax, or a similar schedule of infor-
mation, for the applicable period, showing
that the grantee met its distribution require-
ments. Under § 1.509(a)-4(i)(5)(ii)(D),
such an organization has no distributable
amount for its first taxable year.

### .09 Operating and exempt operating foundations.

For a grantee that is an operating foun-
dation under § 4942(j)(3) or exempt operat-
ing foundation under § 4940(d)(2) and has
existed for more than one year, preferred
written advice includes as an attachment the
private operating foundation schedule pro-
vided on Form 990-PF, Return of Private
Foundation or Section 4947(a)(1) Trust
Treated as Private Foundation, or a similar
schedule of information, for the applicable
period. See § 53.4942(b)-3(b) for an oper-
ating foundation in its first taxable year.

## SECTION 7. EXAMPLES OF CURRENT WRITTEN ADVICE FOR PUBLICLY SUPPORTED ORGANIZATIONS

The following examples illustrate cur-
rent written advice with regard to the re-
liance period for public support under
§§ 170(b)(1)(A)(vi) or 509(a)(2). In each
example, a private foundation grantor is
making a determination whether a foreign
organization grantee having a calendar
taxable year is a § 170(b)(1)(A)(vi) orga-
nization; the determination is based on
written advice that meets the definition of
preferred written advice in section 4.01 of
this revenue procedure; the relevant law
does not change; the grantor has no infor-
mation indicating that the written advice
should not be relied upon; and the grant-
or's reliance on the written advice is oth-
erwise reasonable under the standards of
§ 1.6664-4(c)(1).

Example 1. P, a grantor, intends to make
grants in 2017 and 2018 to Q, a foreign
charity organized in January 2017. P obtains
written advice from a qualified tax practitioner
in January 2017, based on an affidavit and the
collection of information from Q, that Q can
reasonably be expected to qualify under
§ 170(b)(1)(A)(vi) during Q's first five taxable
years. P may use the written advice to make
good faith determinations in 2017 and in 2018
that Q is described in § 170(b)(1)(A)(vi).

Example 2. Same facts as in the prior
example except that P intends to make grants
to Q in 2019 and 2020. P may no longer use
the written advice from 2017 to make a good
faith determination that would ordinarily be
considered a good faith determination. P ob-
tains written advice from a qualified tax prac-
titioner in May 2019, based on an affidavit
from Q that updates the prior affidavit with
changes in Q's operations and support
through May 2019, that Q can reasonably be
expected to qualify under § 170(b)(1)(A)(vi)
during its first five taxable years. P may use
the written advice to make good faith deter-
minations in 2019 and in 2020 that Q is
described in § 170(b)(1)(A)(vi).

Example 3. Same facts as in the prior
example except that P intends to make grants
to Q in 2021 (the last year in Q's first five
taxable years) and 2022. P obtains written
advice from a qualified tax practitioner in
June 2021, based on an affidavit from Q that
updates the prior affidavit with changes in
Q's operations and support through June
2021, that Q can reasonably be expected to
qualify under § 170(b)(1)(A)(vi) during its
first five taxable years. P may use the written
advice to make good faith determinations in
2021 and in 2022 that Q is described in
§ 170(b)(1)(A)(vi).

Example 4. Same facts as in the prior
example except that P intends to make an-
other grant to Q in 2023. P obtains written
advice from a qualified tax practitioner in
April 2023, based on an affidavit from Q
providing information from 2022 and prior
years regarding Q's operations and support,
that Q failed the support tests (both the 33 1/3
percent support test and the facts and circum-
stances test) for the periods 2017-2021 and
2018-2022. Under these circumstances, P
may not use the written advice to make a
good faith determination in 2023 that Q is
described in § 170(b)(1)(A)(vi) in 2023.

Example 5. R, a grantor, intends to make
a grant to S, a foreign charity, for the first
time in 2017, S's 6th year of operation. R
obtains written advice from a qualified tax
practitioner in March 2017, based on an af-
fidavit from S providing information from
2017 and prior years regarding S's operations
and support, that S failed the support tests for
the period 2012-2016. Under these circum-
stances, R may not use the written advice to
make a good faith determination in 2017 that
Q is described in § 170(b)(1)(A)(vi) in 2017.

Example 6. T, a grantor, intends to make
a grant in 2017 to U, a foreign charity oper-
ating since 1990. T obtains written advice
from a qualified tax practitioner in February
2017, based on an affidavit from U providing
information from 2017 and prior years re-
garding U's operations and support, that U
met a support test for the period 2011-2015
but not for 2012-2016. U's support for the
period 2011-2015 establishes that U is "pub-
licly supported" under § 170(b)(1)(A)(vi) for

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the year 2015, and thus is treated (for pur-
poses of the good faith determination regu-
lations) as publicly supported for 2016 and
2017 as well. T may use the written advice to
make a good faith determination in 2017 that
U is described in § 170(b)(1)(A)(vi).

# SECTION 8. EFFECT ON OTHER DOCUMENTS

This revenue procedure modifies and
supersedes Rev. Proc. 92-94.

# SECTION 9. EFFECTIVE DATE

This revenue procedure is effective
September 14, 2017.

# SECTION 10. PAPERWORK REDUCTION ACT

The collection of information in this
revenue procedure is the affidavit of fac-
tual information. This collection of infor-
mation is reflected in the collection of
information for Form 990-PF, Return of
Private Foundation or Section 4947(a)(1)
Trust Treated as Private Foundation, that
has been reviewed and approved by the

Office of Management and Budget in ac-
cordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507(d)), under
control number 1545-0052. An agency
may not conduct or sponsor, and a person
is not required to respond to, a collection

of information unless it displays a valid
control number assigned by the Office of
Management and Budget. Books or re-
cords relating to a collection of informa-
tion must be retained as long as their
contents might become material in the ad-
ministration of any internal revenue law.

# DRAFTING INFORMATION

The principal author of this revenue
procedure is Ward L. Thomas of the Of-
fice of Associate Chief Counsel (Tax-
Exempt and Government Entities). For
further information regarding this revenue
procedure, contact Mr. Thomas at (202)
317-6173 (not a toll-free number).

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# Part IV. Items of General Interest

## Relief for Victims of Hurricane Irma

### Announcement 2017-13

#### Purpose

This announcement provides relief to
taxpayers who have been adversely af-
fected by Hurricane Irma and who have
retirement assets in qualified employer
plans that they would like to use to alle-
viate hardships caused by Hurricane Irma.
In addition, this announcement provides
relief from certain verification procedures
that may be required under retirement
plans with respect to loans and hardship
distributions. The relief provided under
this announcement is in addition to the
relief already provided by the Service pur-
suant to News Releases VI-2017-01 and
IR-2017-150 under § 7508A of the Inter-
nal Revenue Code ("Code") for victims of
Hurricane Irma, and to any future news
releases providing relief related to Hurri-
cane Irma. These news releases can be
found on https://www.irs.gov/newsroom/
tax-relief-in-disaster-situations. (For a lis-
ting of employee benefit-related acts and
deadlines that, under the News Releases,
were postponed until January 31, 2018, in
response to Hurricane Irma, see the regu-
lations under § 7508A and Section 8 of
Rev. Proc. 2007-56, 2007-2 C.B. 388.)

#### Background

The laws relating to qualified employer
plans impose various limitations on the per-
missibility of loans and distributions from
those plans. For example, § 401(k)(2)(B)(i)
of the Code provides that in the case of a
§ 401(k) plan that is part of a profit-sharing
or stock bonus plan, elective deferrals may
be distributed only in certain situations, one
of which is on account of hardship. Section
403(b)(11) provides similar rules with re-
spect to elective deferrals under a § 403(b)
plan. Section 457(d)(1)(A) provides that a
plan described in § 457(b) may not permit
distributions before the occurrence of cer-
tain enumerated events, one being when the
participant is faced with an unforeseeable
emergency. Certain other types of plans or
accounts are not permitted to make in-service
distributions (distributions to a participant who

is still an employee) even if there is a hardship.
For example, in-service hardship distributions
are generally not permitted from pension plans
or from accounts holding qualified nonelective
contributions ("QNECs") described in
§ 401(m)(4)(C) or qualified matching contri-
butions ("QMACs") described in § 401(k)(3)
(D)(ii)(I). However, Rev. Rul. 2004-12,
2004-2 C.B. 478, holds that if amounts attrib-
utable to rollover contributions are separately
accounted for within a plan, those amounts
may be distributed at any time, pursuant to the
employee's request. Section 72(p) imposes
certain requirements relating to plan loans.
Unless those requirements are satisfied, a loan
is treated as a distribution under the plan.

In order to make a loan or distribution
(including a hardship distribution), a plan
must contain language authorizing the
loan or distribution. Also, except to the
extent a distribution consists of already-
taxed amounts, the distribution will be
includible in gross income and generally
subject to the 10-percent additional tax
under § 72(t). Similar rules relating to
income inclusion and taxation apply to a
distribution from an IRA.

Plan provisions and regulations under
certain Code sections establish verifica-
tion procedures that a plan must follow
before loans or distributions can be made
from the plan. For example, the regula-
tions under § 401(k) set forth certain cri-
teria an employee must meet in order to
receive a hardship distribution. A plan
may contain procedures designed to con-
firm that the criteria have been satisfied.

#### Relief

As described below, a qualified em-
ployer plan will not be treated as failing to
satisfy any requirement under the Code or
regulations merely because the plan
makes a loan, or a hardship distribution
for a need arising from Hurricane Irma, to
an employee or former employee whose
principal residence on September 4, 2017,
was located in one of the Florida counties
identified for individual assistance by the
Federal Emergency Management Agency
("FEMA") because of the devastation
caused by Hurricane Irma or whose place
of employment was located in one of
these counties on that applicable date or

whose lineal ascendant or descendant, de-
pendent, or spouse had a principal resi-
dence or place of employment in one of
these counties on that date. The areas
identified for individual assistance by
FEMA can be found on FEMA's website
at https://www.fema.gov/disasters. If ad-
ditional areas are identified by FEMA for
individual assistance because of damage
related to Hurricane Irma, the relief pro-
vided in this announcement will also ap-
ply, from the date specified by FEMA as
the beginning of the incident period, and
that date should be substituted for refer-
ences to September 4, 2017, in this an-
nouncement. Plan administrators may rely
upon representations from the employee
or former employee as to the need for and
amount of a hardship distribution, unless
the plan administrator has actual knowl-
edge to the contrary, and the distribution
is treated as a hardship distribution for all
purposes under the Code and regulations.

For purposes of this announcement, a
"qualified employer plan" means a plan or
contract meeting the requirements of
§ 401(a), 403(a) or 403(b), and, for pur-
poses of the hardship relief, that could, if
it contained enabling language, make
hardship distributions. For purposes of
this paragraph, a "qualified employer
plan" also means a plan described in
§ 457(b) maintained by an eligible em-
ployer described in § 457(e)(1)(A), and
any hardship arising from Hurricane Irma
is treated as an "unforeseeable emer-
gency" for purposes of distributions from
such plans. For example, a profit-sharing
or stock bonus plan that currently does not
provide for hardship or other in-service
distributions may nevertheless make hard-
ship distributions related to Hurricane
Irma pursuant to this announcement, ex-
cept from QNEC or QMAC accounts or
from earnings on elective contributions
(see below for plan amendment require-
ments). A defined benefit or money pur-
chase plan, which generally cannot make
in-service hardship distributions, may not
make hardship distributions pursuant to
this announcement, other than from a sep-
arate account, if any, within the plan con-
taining either employee contributions or
rollover amounts.

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The amount available for hardship dis-
tribution is limited to the maximum
amount that would be permitted to be
available for a hardship distribution under
the plan under the Code and regulations.
However, the relief provided by this an-
nouncement applies to any hardship of the
employee, not just the types enumerated
in the regulations, and no post-distribution
contribution restrictions are required. For
example, regulations under § 401(k) pro-
vide safe harbor hardship distribution
standards under which a hardship is
deemed to exist only for certain enumer-
ated events, and, after receipt of the hard-
ship amount, the employee is prohibited
from making contributions for at least 6
months. Plans need not follow these rules
with respect to hardship distributions for
which relief is provided under this an-
nouncement.

To make a loan or hardship distribution
pursuant to the relief provided in this an-
nouncement, a qualified employer plan
that does not provide for them must be
amended to provide for loans or hardship
distributions no later than the end of the
first plan year beginning after December
31, 2017. To qualify for the relief under
this announcement, a hardship distribu-
tion must be made on account of a hard-

ship resulting from Hurricane Irma and be
made on or after September 4, 2017, and
no later than January 31, 2018. Plan loans
made pursuant to this announcement must
satisfy the requirements of § 72(p).

In addition, a retirement plan will not
be treated as failing to follow procedural
requirements for plan loans (in the case of
retirement plans other than IRAs) or dis-
tributions (in the case of all retirement
plans, including IRAs) imposed by the
terms of the plan merely because those
requirements are disregarded for any pe-
riod beginning on or after September 4,
2017, and continuing through January 31,
2018, with respect to loans or distributions
to individuals described in the first para-
graph under "Relief", above, provided the
plan administrator (or financial institution
in the case of distributions from IRAs)
makes a good-faith diligent effort under
the circumstances to comply with those
requirements. However, as soon as prac-
ticable, the plan administrator (or financial
institution in the case of IRAs) must make
a reasonable attempt to assemble any for-
gone documentation. For example, if
spousal consent is required for a plan loan
or distribution and the plan terms require
production of a death certificate if the
employee claims his or her spouse is de-

ceased, the plan will not be disqualified
for failure to operate in accordance with
its terms if it makes a loan or distribution
to an individual described in the first para-
graph under "Relief" in the absence of a
death certificate if it is reasonable to be-
lieve, under the circumstances, that the
spouse is deceased, the loan or distribu-
tion is made no later than January 31,
2018, and the plan administrator makes
reasonable efforts to obtain the death cer-
tificate as soon as practicable. For pur-
poses of this announcement, "retirement
plan" has the same meaning as "eligible
retirement plan" under § 402(c)(8)(B).

Taxpayers are reminded that in general
the normal spousal consent rules continue
to apply, and, except to the extent the
distribution consists of already-taxed
amounts, any distribution made pursuant
to the relief provided in this announce-
ment will be includible in gross income
and generally subject to the 10-percent
additional tax under § 72(t).

The Department of Labor has advised
Treasury and the IRS that it will not treat
any person as having violated the provi-
sions of Title I of the Employee Retire-
ment Income Security Act solely because
that person complied with the provisions
of this announcement.

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# Definition of Terms

Revenue rulings and revenue procedures
(hereinafter referred to as "rulings") that
have an effect on previous rulings use the
following defined terms to describe the
effect:

Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).

Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.

Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.

Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A

and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).

Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.

Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.

Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-

stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.

Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.

Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.

# Abbreviations

The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.

A-Individual.

Acq .- Acquiescence.

B-Individual.

BE-Beneficiary.

F.R .- Federal Register.

FUTA-Federal Unemployment Tax Act.

FX-Foreign corporation.

G.C.M .- Chief Counsel's Memorandum.

GE-Grantee.

GP-General Partner.

GR-Grantor.

COOP-Cooperative.

IC-Insurance Company.

Ct.D .- Court Decision.

I.R.B .- Internal Revenue Bulletin.

CY-County.

LE-Lessee.

D-Decedent.

LP-Limited Partner.

LR-Lessor.

M-Minor.

Nonacq .- Nonacquiescence.

O Organization.

P-Parent Corporation.

PHC-Personal Holding Company.

PO-Possession of the U.S.

PR-Partner.

PRS-Partnership.

PTE-Prohibited Transaction Exemption.
Pub. L .- Public Law.

REIT-Real Estate Investment Trust.

Rev. Proc .- Revenue Procedure.

Rev. Rul .- Revenue Ruling.

S-Subsidiary.

S.P.R .- Statement of Procedural Rules.

Stat .- Statutes at Large.

T-Target Corporation.

T.C .- Tax Court.

T.D .- Treasury Decision.

TFE-Transferee.

TFR-Transferor.

T.I.R .- Technical Information Release.

TP-Taxpayer.
TR-Trust.

TT-Trustee.

U.S.C .- United States Code.

DE-Donee.

Del. Order-Delegation Order.

DISC-Domestic International Sales Corporation.
DR-Donor.

E-Estate.

EE-Employee.

E.O .- Executive Order.

ER-Employer.

ERISA-Employee Retirement Income Security Act.
EX-Executor.

F-Fiduciary.

FC-Foreign Country.

FICA-Federal Insurance Contributions Act.

FISC-Foreign International Sales Company.

FPH-Foreign Personal Holding Company.

BK-Bank.

B.T.A .- Board of Tax Appeals.

C-Individual.

C.B .- Cumulative Bulletin.

CFR-Code of Federal Regulations.

CI-City.

DC-Dummy Corporation.

X-Corporation.

Y-Corporation.

Z-Corporation.

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Numerical Finding List1

Treasury Decisions:

Bulletin 2017-27 through 2017-40

9819, 2017-29 I.R.B. 85 9820, 2017-32 I.R.B. 178

Action on Decision:

9821, 2017-32 I.R.B. 181 9822, 2017-33 I.R.B. 195

2017-5, 2017-27 I.R.B. 1

9823, 2017-33 I.R.B. 206

2017-6, 2017-33 I.R.B. 194

## Announcements:

2017-05, 2017-27 I.R.B. 5
2017-08, 2017-28 I.R.B. 9
2017-09, 2017-35 I.R.B. 219

2017-10, 2017-33 I.R.B. 210

2017-11, 2017-39 I.R.B. 255
2017-12, 2017-38 I.R.B. 238
2017-13, 2017-40 I.R.B. 271

## Notices:

2017-36, 2017-33 I.R.B. 208
2017-37, 2017-29 I.R.B. 89
2017-38, 2017-30 I.R.B. 147

2017-39, 2017-31 I.R.B. 150
2017-40, 2017-32 I.R.B. 190
2017-41, 2017-34 I.R.B. 211
2017-42, 2017-34 I.R.B. 212
2017-43, 2017-36 I.R.B. 224
2017-44, 2017-36 I.R.B. 226
2017-45, 2017-38 I.R.B. 232
2017-47, 2017-38 I.R.B. 232
2017-48, 2017-39 I.R.B. 254
2017-49, 2017-40 I.R.B. 258
2017-51, 2017-40 I.R.B. 260
2017-52, 2017-40 I.R.B. 262

## Proposed Regulations:

REG-139633-08, 2017-31 I.R.B. 175
REG-128483-15, 2017-32 I.R.B. 191
REG-136118-15, 2017-28 I.R.B. 9

## Revenue Procedures:

2017-41, 2017-29 I.R.B. 92
2017-42, 2017-29 I.R.B. 124

2017-43, 2017-31 I.R.B. 153

2017-44, 2017-35 I.R.B. 216

2017-45, 2017-35 I.R.B. 216
2017-47, 2017-38 I.R.B. 233
2017-48, 2017-36 I.R.B. 229
2017-50, 2017-37 I.R.B. 230
2017-53, 2017-40 I.R.B. 263

## Revenue Rulings:

2017-14, 2017-27 I.R.B. 2
2017-15, 2017-32 I.R.B. 176

2017-16, 2017-35 I.R.B. 215
2017-17, 2017-36 I.R.B. 222

2017-18, 2017-39 I.R.B. 239
2017-19, 2017-40 I.R.B. 257

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017-01 through 2017-26 is in Internal Revenue Bulletin
2017-26, dated June 27, 2017.

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## Finding List of Current Actions on Previously Published Items1

Bulletin 2017-27 through 2017-40

Notices:

2015-77
Amplified by
Notice 2017-40, 2017-32 I.R.B. 190

### Revenue Procedures:

2016-27
Modified by
Rev. Proc. 2017-43, 2017-31 I.R.B. 153

2016-27
Superseded by
Rev. Proc. 2017-43, 2017-31 I.R.B. 153

2016-48
Superseded by
Rev. Proc. 2017-48, 2017-36 I.R.B. 232

1A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2017-01 through 2017-26 is in Internal Revenue Bulletin
2017-26, dated June 27, 2017.

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# Internal Revenue Service Washington, DC 20224

Official Business
Penalty for Private Use, $300

# INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

# We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
(www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave.
NW, IR-6230 Washington, DC 20224.