Internal Revenue Bulletin 2008-45 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 200
8-45
November 10, 200
8
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
SPECIAL ANNOUNCEMENT
Announcement 2008–106, page 1137.
The announcement for the 2009 IRS Individual e-file Partnership
Program solicits applications from potential partners for par-
ticipation in the program. The partnership opportunities are a
result of RRA 98 which authorized the IRS Commissioner to pro-
mote the benefits of and encourage the use of e-file products
and services through partnerships with various entities that of-
fer low-cost tax preparation and electronic filing of individual
income tax returns for qualified taxpayers. Those applicants
that are accepted into the program will have a link(s) and offer
description(s) for their products and services posted toIRS.gov
(Partners Page).
INCOME TAX
Rev. Rul. 2008–50, page 1098.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for November 2008.
REG–142339–05, page 1116.
Proposed regulations under section 45D of the Code relate
to how an entity serving certain targeted populations under
section 45D(e)(2) can meet the requirements to be a qualified
active low-income community business. A public hearing is
scheduled for January 22, 2009.
REG–107318–08, page 1131.
Proposed regulations provide that the notice required under
section 411(a)(11) of the Code to be provided to a participant
of his or her right, if any, to defer receipt of an immediately
distributable benefit must also describe the consequences of
failing to defer receipt of the distribution. The regulations also
provide that the applicable election period for waiving the qual-
ified joint and survivor annuity form of benefit under section
417 is the 180-day period ending on the annuity starting date,
and that a notice required to be provided under section 402(f),
411(a)(11), or 417 may be provided to a participant as much
as 180 days before the annuity starting date (or, for a notice
under section 402(f), the distribution date). A public hearing is
scheduled for February 20, 2009.
Rev. Proc. 2008–66, page 1107.
Cost-of-living adjustments for 2009.This procedure sets
forth the cost-of-living adjustments to certain items for 2009
as required under various provisions of the Code and Service
guidance.
EMPLOYEE PLANS
REG–107318–08, page 1131.
Proposed regulations provide that the notice required under
section 411(a)(11) of the Code to be provided to a participant
of his or her right, if any, to defer receipt of an immediately
distributable benefit must also describe the consequences of
failing to defer receipt of the distribution. The regulations also
provide that the applicable election period for waiving the qual-
ified joint and survivor annuity form of benefit under section
417 is the 180-day period ending on the annuity starting date,
and that a notice required to be provided under section 402(f),
411(a)(11), or 417 may be provided to a participant as much
as 180 days before the annuity starting date (or, for a notice
under section 402(f), the distribution date). A public hearing is
scheduled for February 20, 2009.
(Continued on the next page)
Finding Lists begin on page ii.

Notice 2008–102, page 1106.
2009 cost-of-living adjustments; retirement plans, etc.
This notice sets forth certain cost-of-living adjustments effec-
tive January 1, 2009, applicable to the dollar limits on bene-
fits and contributions under qualified retirement plans. Other
limitations applicable to deferred compensation plans are also
affected by these adjustments. This notice also contains cost-
of-living adjustments for several pension-related amounts in re-
stating the data in News Release IR–2008–118 issued October
16, 2008.
EXEMPT ORGANIZATIONS
Announcement 2008–104, page 1136.
A list is provided of organizations now classified as private foun-
dations.
ESTATE TAX
Rev. Proc. 2008–66, page 1107.
Cost-of-living adjustments for 2009.This procedure sets
forth the cost-of-living adjustments to certain items for 2009
as required under various provisions of the Code and Service
guidance.
GIFT TAX
Rev. Proc. 2008–66, page 1107.
Cost-of-living adjustments for 2009.This procedure sets
forth the cost-of-living adjustments to certain items for 2009
as required under various provisions of the Code and Service
guidance.
EXCISE TAX
Rev. Proc. 2008–66, page 1107.
Cost-of-living adjustments for 2009.This procedure sets
forth the cost-of-living adjustments to certain items for 2009
as required under various provisions of the Code and Service
guidance.
ADMINISTRATIVE
T.D. 9425, page 1100.
REG–160868–04, page 1115.
Temporary and proposed regulations under section 6707A
of the Code provide guidance for taxpayers against whom a
penalty is assessed and who may request rescission of the
penalty from the Commissioner if the violation is with respect
to a reportable transaction other than a listed transaction.
Notice 2005–11 superseded.
REG–128841–07, page 1124.
Proposed regulations under section 147 of the Code provide
discreet new rules under the public approval requirement for
tax-exempt bonds and also update certain provisions in existing
regulations relating to the public approval requirement. A public
hearing is scheduled for January 26, 2009.
Rev. Proc. 2008–66, page 1107.
Cost-of-living adjustments for 2009.This procedure sets
forth the cost-of-living adjustments to certain items for 2009
as required under various provisions of the Code and Service
guidance.
November 10, 20082008–45 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top quality service by helping them
understand an
d meet their tax responsibilities and by applying
the tax law with
integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2008–45 I.R.B.November 10, 2008

November 10, 20082008–45 I.R.B.
Place missing child here.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 1.—Ta
xImposed
The Service pr
ovides inflation adjustments to the
tax rate table
s for individuals, trusts, and estates for
taxable years
beginning in 2009. In addition, the
amounts of cer
tain reductions allowed against the
unearned inc
ome of minor children in computing
the “kiddie t
ax” are adjusted. Also adjusted are the
amounts used
to determine whether a parent may
elect to repo
rt the “kiddie tax” on the parent’s return.
See Rev. Proc
. 2008-66, page 1107.
Section 23.—Adoption
Expenses
The Service provides inflation adjustments to the
adoption credit allowed for the adoption of a child for
taxable years beginning in 2009. The Service also
provides inflation adjustments to the value used in
calculating the modified adjusted gross income lim-
itations used to determine the amount of adoption
credit that is allowed in taxable years beginning in
2009. See Rev. Proc. 2008-66, page 1107.
Section 24.—Child Tax
Credit
The Service provides inflation adjustments for the
value used in determining the amount of the credit
that may be refundable for taxable years beginning in
2009. See Rev. Proc. 2008-66, page 1107.
Section 25A.—Hope and
Lifetime Learning Credits
For taxable years beginning in 2009, the Ser-
vice provides inflation adjustments for the amount
of qualified tuition and related expenses that are
taken into account in determining the amount of the
Hope Scholarship Credit, and for the amount of a
taxpayer’s modified adjusted gross income that is
taken into account in determining the reduction in
the amount of the Hope Scholarship and Lifetime
Learning Credits otherwise available. See Rev. Proc.
2008-66, page 1107.
Section 32.—Earned
Income
The Service provides inflation adjustments to the
limitations on the earned income credit for taxable
years beginning in 2009. See Rev. Proc. 2008-66,
page 1107.
Section 42.—L
ow-Income
Housing Credi
t
The adjusted a
pplicable federal short-term, mid-
term, and long
-term rates are set forth for the month
of November 20
08. See Rev. Rul. 2008-50, page
1098.
The Service provides inflation adjustments to the
amounts used to calculate the State housing credit
ceiling used in determining the low-income housing
credit for calendar year 2009. See Rev. Proc. 2008-
66, page 1107.
Section 45A.—Indian
Employment Credit
As a result of cost-of-living adjustments, the limi-
tation on wages under section 45A regarding individ-
uals eligible for the Indian employment credit, which
was $40,000 for tax years beginning in 2008, is in-
creased by $45,000 for tax years beginning in 2009.
See Notice 2008-102, page 1106.
Section 59.—Other
Definitions and Special
Rules
The Service provides an inflation adjustment to the
exemption amount used in computing the alternative
minimum tax for a minor child subject to the “kiddie
tax” for taxable years beginning in 2009. See Rev.
Proc. 2008-66, page 1107.
Section 62.—Adjusted
Gross Income Defined
The Service provides inflation adjustments to the
amounts an eligible employer may pay in calendar
year 2009 to certain welders and heavy equipment
mechanics for rig-related expenses that are deemed
substantiated under an accountable plan if paid in ac-
cordance with Rev. Proc. 2002–41, 2002–1 C.B.
1098. See Rev. Proc. 2008-66, page 1107.
Section 63.—Taxable
Income Defined
The Service provides inflation adjustments to the
standard deduction amounts (including the limitation
in the case of certain dependents, and the additional
standard deduction for the aged or blind) for taxable
years beginning in 2009. See Rev. Proc. 2008-66,
page 1107.
Section 68.—O
verall
Limitation on
Itemized
Deductions
The Service pr
ovides inflation adjustments to the
overall limit
ation on itemized deductions for taxable
years beginn
ing in 2009. See Rev. Proc. 2008-66,
page 1107.
Section 132.—Certain
Fringe Benefits
The Service provides inflation adjustments to the
limitations on the exclusion of income for a qualified
transportation fringe benefit for taxable years begin-
ning in 2009. See Rev. Proc. 2008-66, page 1107.
Section 135.—Income
From United States Savings
Bonds Used to Pay Higher
Education Tuition and Fees
The Service provides inflation adjustments to the
limitation on the exclusion of income from United
States savings bonds for taxpayers who pay qualified
higher education expenses for taxable years begin-
ning in 2009. See Rev. Proc. 2008-66, page 1107.
Section 137.—Adoption
Assistance Programs
The Service provides inflation adjustments to the
maximum amount that can be excluded from an em-
ployee’s gross income in connection with a qualified
adoption assistance programfor taxable years begin-
ning in 2009. The Service also provides inflation ad-
justments to the amount used to calculate the modi-
fied adjusted gross income limitations used to deter-
mine the amount that can be excluded from an em-
ployee’s gross income for taxable years beginning in
2009. See Rev. Proc. 2008-66, page 1107.
Section 146.—Volume Cap
The Service provides inflation adjustments to the
amounts used to determine the State ceiling for the
volume cap of private activity bonds for calendar year
2009. See Rev. Proc. 2008-66, page 1107.
Section 147.—Other
Requirements Applicable to
Certain Private Activity
Bonds
The Service provides an inflation adjustment to the
loan limit amount on agricultural bonds for first-time
2008–45 I.R.B.1096November 10, 2008

farmers for calendar year 2009. See Rev. Proc. 2008-
66, page 1107.
Section 148.—Arbitrage
26 CFR 1.148–5: Yield and valuation of investments.
The Service provides inflation adjustments for de-
termining in the calendar year 2009 whether a bro-
ker’s commission or similar fee with respect to the
acquisition of a guaranteed investment contract or in-
vestments purchased for a yield restricted defeasance
escrow is reasonable. The Service provides an infla-
tion adjustment to the computation credit determined
under section 1.148–3(d)(4) of the proposed Income
Tax Regulations for bond years ending in 2009. See
Rev. Proc. 2008-66, page 1107.
Section 151.—Allowance
of Deductions for Personal
Exemptions
The Service provides inflation adjustments to the
personal exemption and to the threshold amounts of
adjusted gross income above which the exemption
amount phases out for taxable years beginning in
2009. See Rev. Proc. 2008-66, page 1107.
Section 170.—Charitable,
etc.,Contributions and Gifts
The Service provides inflation adjustments to the
“insubstantial benefit” guidelines for calendar year
2009. Under the guidelines, a charitable contribu-
tion is fully deductible even though the contributor re-
ceives “insubstantial benefits” from the charity. See
Rev. Proc. 2008-66, page 1107.
Section 17
9.—Election
to Expense
Certain
Depreciable Business
Assets
The Service provides inflation adjustments to the
aggregate cost of section 179 property that a taxpayer
may elect to treat as an expense for taxable years be-
ginning in 2009. See Rev. Proc. 2008-66, page 1107.
Section 213.—Medical,
Dental, etc., Expenses
The Service provides inflation adjustments to the
limitation on the amount of eligible long-term care
premiums includible in the term “medical care” for
taxable years beginning in 2009. See Rev. Proc.
2008-66, page 1107.
Section 220.—Archer MSAs
The Service provides inflation adjustments to the
amounts used to determine whether a health plan is
a “high deductible health plan” for purposes of de-
termining whether an individual is eligible for a de-
duction for cash paid to a medical savings account
for taxable years beginning in 2009. See Rev. Proc.
2008-66, page 1107.
Section 221.—Interest on
Education Loans
The Service provides inflation adjustments to the
income limitations used to determine the allowable
deduction for interest on education loans for taxable
years beginning in 2009. See Rev. Proc. 2008-66,
page 1107.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2008. See
Rev. Rul. 2008-50, page 1098.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of November 2008. See Rev.
Rul. 2008-50, page 1098.
Section
412.—Minimum
Funding
Standards
The adju
sted applicable federal short-term, mid-
term, an
d long-term rates are set forth for the month
of Novem
ber 2008. See Rev. Rul. 2008-50, page
1098.
Section 415.—Limitations
on Benefits and
Contributions Under
Qualified Plans
Certain cost-of-living adjustments effective Jan-
uary 1, 2009, applicable to the dollar limitations on
benefits and contributions under qualified retirement
plans are set forth. Other limitations applicable to de-
ferred compensation plansare also affected by these
adjustments. See Notice 2008-102, page 1106.
Secti
on 467.—Certain
Payme
nts for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2008. See Rev. Rul. 2008-50, page
1098.
Section 468.—Special
Rules for Mining and Solid
Waste Reclam
ation and
Closing Cost
s
The adjusted
applicable federal short-term, mid-
term, and lo
ng-term rates are set forth for the month
of November
2008. See Rev. Rul. 2008-50, page
1098.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2008. See
Rev. Rul. 2008-50, page 1098.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2008. See Rev. Rul. 2008-50, page
1098.
Section 5
12.—Unrelated
Business
Taxable Income
The Servi
ce provides an inflation adjustment to the
maximum a
mount of annual dues that can be paid
to certai
n agricultural or horticultural organizations
without
any portion being treated as unrelated trade
or busin
ess income by reason of any benefits or priv-
ileges a
vailable to members for taxable years begin-
ning in 2
009. See Rev. Proc. 2008-66, page 1107.
Section 513.—Unrelated
Trade or Business
The Service provides an inflation adjustment to
the maximum cost of a “low cost article” for tax-
able years beginning in 2009. Funds raised through
a charity’s distribution of “low cost articles” will not
be treated as unrelated business income to the charity.
See Rev. Proc. 2008-66, page 1107.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2008. See
Rev. Rul. 2008-50, page 1098.
November 10, 200810972008–45 I.R.B.

Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2008. See Rev. Rul. 2008-50, page
1098.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2008. See Rev. Rul. 2008-50, page
1098.
Section 877.—
Expatriation
to Avoid Tax
The Service provides an inflation adjustment to
the amount used for calendar year 2009 to determine
whether an individual’s loss of United States citizen-
ship had the avoidance of United States tax as one of
its principal purposes. See Rev. Proc. 2008-66, page
1107.
Section 877A.—Tax
Responsibilities of
Expatriation
The Service provides an inflation adjustment to the
amount that reduces the amount that would be in-
cludible in the gross income of a covered expatriate
for taxable years beginning in 2009. See Rev. Proc.
2008-66, page 1107.
Section 911.—Citizens or
Residents of the United
States Living Abroad
The Service provides an inflation adjustment to
the amount of foreign earned income that may be ex-
cluded from gross income for taxable years beginning
in 2009. See Rev. Proc. 2008-66, page 1107.
Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for November 2008.
Rev. Rul. 2008–50
This revenue ruling provides various
prescribed rates for federal income tax
purposes for November 2008 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. How-
ever, under section 42(b)(2), the applicable
percentage for non-federally subsidized
new buildings placed in service after July
30, 2008, and before December 31, 2013,
shall not be less than 9%. Finally, Table
5 contains the federal rate for determining
the present value of an annuity, an interest
for life or for a term of years, or a remain-
der or a reversionary interest for purposes
of section 7520.
REV. RUL. 2008–50 TABLE 1
Applicable Federal Rates(AFR) for November 2008
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR1.63%1.62%1.62%1.61%
110% AFR1.79%1.78%1.78%1.77%
12
0% AFR
1.95%
1.
94%
1.
94%
1.
93%
130% AFR2.12%2.11%2.10%2.10%
M
id-term
A
FR
2
.97%
2.95%
2
.94%
2
.93%
110% AFR3.28%
3.25%
3.24%3.23%
120% AFR
3.57%3.54%3.52%3.51%
130% AFR3.88%3.84%3.82%3.81%
150% AFR
4.48%4.43%4.41%4.39%
175% AFR5.23%5.16%5.13%5.11%
Long-term
AFR4.24%4.20%4.18%4.16%
110% AFR4.67%4.62%
4.59%4.58%
120% AFR
5.10%5.04%5.01%
4.99%
130% AFR
5.53%5.46%5.42%5.40%
2008–45 I.R.B.1098November 10, 2008

REV. RUL. 2008–50 TABLE 2
Adjusted AFR for November 2008
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adj
usted
AFR
2.20%2.19%2.18%2.18%
Mid-term adjusted AFR
3.35%
3.32%3.31%3.30%
Long-term adjusted
AFR
4.94%4.88%
4.85%
4.83%
REV. RUL. 2008–50 TABLE 3
Rates Under Section 382 for November 2008
Adjusted federal long-term rate for the current month4.94%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)4.94%
REV. RUL. 2008–50 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for November 2008
Note: Under Section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, and before December 31, 2013, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.83%
Appropriate percentage for the 30% present value low-income housing credit3.36%
REV. RUL. 2008–50 TABLE 5
Rate Under Section 7520 for November 2008
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest3.6%
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2008. See Rev. Rul. 2008-50, page
1098.
Section 2032A.—Valuation
of Certain Farm, etc.,
Real Property
The Service provides an inflation adjustment to the
maximum amount by which the value of certain farm
and other qualified real property included in a dece-
dent’s gross estate may be decreased for purposes of
valuing the estate of a decedent dying in calendar year
2009. See Rev. Proc. 2008-66, page 1107.
Section 2503.—Taxable
Gifts
The Service provides an inflation adjustment to the
amount of gifts that may be made to a person in a
calendar year without including the amount in taxable
gifts for calendar year 2009. See Rev. Proc. 2008-66,
page 1107.
Section 2523.—Gift to
Spouse
The Service provides an inflation adjustment to the
amount of gifts that may be made in a calendar year
to a spouse who is not a citizen of the United States
without including the amount in taxable gifts for cal-
endar year 2009. See Rev. Proc. 2008-66, page 1107.
Section 4161.—Imposition
of Tax
The Service provides an inflation adjustment to the
amount of excise tax imposed for calendar year 2009
on the first sale by a manufacturer, producer, or im-
porter of any shaft of a type used in the manufacture
of certain arrows. See Rev. Proc. 2008-66, page
1107.
Section 4261.—Imposition
of Tax
The Service provides inflation adjustments to the
amounts of the excise taxes on passenger air trans-
portation beginning or ending in the United States and
November 10, 200810992008–45 I.R.B.

for each domestic segment of air transportation for
calendar year 2009. See Rev. Proc. 2008-66, page
1107.
Section 6033.—Returns by
Exempt Organizations
The Service provides an inflation adjustment to
the amount of dues certain exempt organizations with
nondeductible lobbying expenditures can charge and
still be excepted from reporting requirements for tax-
able years beginning in 2009. See Rev. Proc. 2008-
66, page 1107.
Section 6039F.—Notice of
Large Gifts Received From
Foreign Persons
The Service provides an inflation adjustment to the
amount of gifts received, in a taxable year from for-
eign persons, that triggers a reporting requirement for
a United States person for taxable years beginning in
2009. See Rev. Proc. 2008-66, page 1107.
Section 6323.—Validity
and Priority Against
Certain Persons
The Service provides inflation adjustments for cal-
endar year 2009 to (1) the maximum amount of a ca-
sual sale of personal property below which a federal
tax lien will not be valid against a purchaser of the
property and (2) the maximum amount of a contract
for the repair or improvement of certain residential
property at or below which a federal tax lien will not
be valid against a mechanic’s lienor. See Rev. Proc.
2008-66, page 1107.
Section 6334.—Property
Exempt From Levy
The Service provides inflation adjustments to the
value of certain property exempt from levy (fuel, pro-
visions, furniture, household personal effects, arms
for personal use, livestock, poultry, and books and
tools of a trade, business, or profession) for calendar
year 2009. See Rev. Proc. 2008-66, page 1107.
Section 6601.—Interest
on Underpayment,
Nonpayment, or Extensions
of Time for Payment, of Tax
The Service provides an inflation adjustment to
the amount used to determine the amount of interest
charged on a certain portion of the estate tax payable
in installments for the estate of a decedent dying in
calendar year 2009. See Rev. Proc. 2008-66, page
1107.
Section 6707A.—Penalty
for Failure to Include
Reportable Transaction
Information
With Return
26 CFR 301.6707A–1T: Failure to include on any re-
turn or statement any information required to be dis-
closed under section 6011 with respect to a reportable
transaction.
T.D. 9425
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 301
Section 6707A and the Failure
to Include on Any Return or
Statement any Information
Required to be Disclosed
Under Section 6011 With
Respect to a Reportable
Transaction
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Temporary regulations.
SUMMARY: This document contains
temporary regulations regarding the im-
position of penalties under section 6707A
of the Internal Revenue Code (Code) for
the failure to include on any return or
statement any information required to
be disclosed under section 6011 with re-
spect to a reportable transaction. The text
of the temporary regulations also serves
as the text of the proposed regulations
(REG–160868–04) set forth in the notice
of proposed rulemaking on this subject in
this issue of the Bulletin.
DATES:Effective Date:These regulations
are effective on September 11, 2008.
Applicability Date:For dates of appli-
cability, see §301.6707A–1T(f).
FOR FURTHER INFORMATION
CONTACT: Matthew Cooper, (202)
622–4940 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to
26 CFR part 301 under section 6707A of
the Code. Section 6707A was added to the
Code by section 811 of the American Jobs
Creation Act of 2004, Public Law 108–357
(118 Stat. 1418) (AJCA), enacted on Oc-
tober 22, 2004. Section 6707A provides
a monetary penalty for the failure to in-
clude on any return or statement any in-
formation required to be disclosed under
section 6011 with respect to a reportable
transaction. The penalty applies to returns
and statements the due date for which is af-
ter October 22, 2004, and which were not
filed before that date.
The amount of the section 6707A
penalty for failure to include information
required under section 6011 with respect
to a reportable transaction, other than a
listed transaction, is $10,000 in the case
of an individual, and $50,000 in any other
case. If the failure is with respect to a
listed transaction, the penalty is increased
to $100,000 in the case of an individual,
and $200,000 in any other case.
Section 6707A(d)(1) grants the Com-
missioner authority to rescind all or a
portion of any penalty imposed under
section 6707A if (1) the violation relates
to a reportable transaction that is not a
listed transaction and (2) rescission of the
penalty would promote compliance with
the requirements of the Code and effective
tax administration. Section 6707A(d)(2)
provides that the Commissioner’s determi-
nation whether to rescind the penalty may
not be reviewed in any judicial proceed-
ing. Rev. Proc. 2007–21, 2007–9 I.R.B.
613, provides the procedures to follow to
request rescission of all or any portion of
a penalty assessed under section 6707A
with respect to a reportable transaction
other than a listed transaction.
Section 6707A(e) requires a person
that is required to file periodic reports
under section 13 or 15(d) of the Securities
Exchange Act of 1934, or consolidated
reports with another person, to disclose
in those reports for the periods speci-
fied by the Secretary, the requirement
to pay the penalties set forth in section
6707A(e)(2) (for example, certain penal-
ties under section 6662(h) and penalties
under sections 6662A(c), 6707A(b)(2)),
or 6707A(e)). Rev. Proc. 2005–51,
2005–2 C.B. 296, which was amplified by
Rev. Proc. 2007–25, 2007–12 I.R.B. 761,
describes the reports on which the disclo-
sures must be made, the information that
must be disclosed, and the deadlines by
2008–45 I.R.B.1100November 10, 2008

which persons must make the disclosures
on the reports to avoid additional penalties
under section 6707A(e). If the person
fails to disclose the requirement to pay the
penalties, then section 6707A(e) requires
that the failure be treated as a failure to
disclose a listed transaction to which an
additional section 6707A penalty applies.
Because a penalty imposed under section
6707A(e) is treated as a penalty imposed
with respect to a listed transaction, the
penalty is not subject to rescission.
To implement the pertinent provisions
of the AJCA, the Treasury Department and
the IRS proposed amendments to the rules
relating to the disclosure of reportable
transactions by taxpayers under section
6011 (see Prop. Treas. Reg. §1.6011–4,
REG–103038–05, 2006–2 C.B. 1049) and
finalized those proposed regulations in
T.D. 9350, 2007–38 I.R.B. 607 (72 FR
43146) published on August 3, 2007.
Sections 1.6011–4(a) and (d) generally
require that a taxpayer file a disclosure
statement on Form 8886,“Reportable
Transaction Disclosure Statement”(or
successor form) for each reportable trans-
action in which the taxpayer participated.
Section 1.6011–4(e)(1) provides that a
disclosure statement for a reportable trans-
action must be attached to the taxpayer’s
tax return for each taxable year for which a
taxpayer participates in a reportable trans-
action. In addition, a disclosure statement
for a reportable transaction must be at-
tached to each amended return that reflects
a taxpayer’s participation in a reportable
transaction. The taxpayer also must send a
copy of the disclosure statement to the IRS
Office of Tax Shelter Analysis (OTSA) at
the same time that any disclosure state-
ment pertaining to a particular reportable
transaction is first filed. If a reportable
transaction results in a loss that is carried
back to a prior year, the disclosure state-
ment for the reportable transaction must
be attached to the taxpayer’s application
for tentative refund or amended tax return
for that prior year. If a taxpayer who is
a partner in a partnership, a shareholder
in an S corporation, or a beneficiary of
a trust receives a timely Schedule K–1,
“Partner’s Share of Income, Deductions,
Credits, etc.,”less than 10 calendar days
before the due date of the taxpayer’s
return (including extensions) and, based
on receipt of the timely Schedule K–1,
the taxpayer determines that the taxpayer
participated in a reportable transaction, the
disclosure statement will not be considered
late if the taxpayer discloses the reportable
transaction by filing a disclosure statement
with OTSA within 60 calendar days after
the due date of the taxpayer’s return
(including extensions).
For transactions entered into after Au-
gust 2, 2007, §1.6011–4(e)(2)(i) provides
that if a transaction becomes a listed trans-
action or a transaction of interest after the
filing of a taxpayer’s tax return (includ-
ing an amended return) reflecting the tax-
payer’s participation in the listed trans-
action or transaction of interest and be-
fore the end of the period of limitations
for assessment of tax for any taxable year
in which the taxpayer participated in the
listed transaction or transaction of interest,
then a disclosure statement must be filed
with OTSA within 90 calendar days after
the date on which the transaction became
a listed transaction or a transaction of in-
terest, regardless of whether the taxpayer
participated in the transaction in the year
the transaction became a listed transaction
or a transaction of interest.
Published guidance identifying listed
transactions or transactions of interest in-
volving estate, gift, employment, and cer-
tain excise taxes will specify the manner in
which taxpayers must disclose those trans-
actions. See §§20.6011–4; 25.6011–4;
31.6011–4; 53.6011–4; 54.6011–4; and
56.6011–4.
The Treasury Department and IRS
issued Notice 2005–11, 2005–1 C.B.
493, providing interim guidance re-
garding the imposition and rescission
of penalties under section 6707A (see
§601.601(d)(2)(ii)(b)). Specifically, the
notice stated that the IRS will impose a
penalty under section 6707A with respect
to each failure to disclose a reportable
transaction within the time and in the form
and manner provided by section 6011 and
the regulations thereunder. Accordingly,
a taxpayer would be subject to a penalty
under section 6707A for: (1) the failure to
attach an appropriate reportable transac-
tion disclosure statement to an original or
amended return; or (2) the failure to pro-
vide a copy of an appropriate disclosure
statement to OTSA, if required, within the
time and in the form and manner provided
by section 6011 and the regulations there-
under. A taxpayer that failed to attach a
reportable transaction disclosure statement
to an original or amended return and failed
to provide a copy of a required disclosure
statement to OTSA would be subject to a
single penalty under section 6707A.
Notice 2005–11 requested comments
regarding the rules and standards relating
to section 6707A, including the factors
that should be considered in exercising
the rescission authority under section
6707A(d) and how voluntary, but untimely
disclosures (for example, if a taxpayer
failed to make a required disclosure upon
filing a return, but subsequently submits
the required disclosure statement) should
be treated in applying the section 6707A
penalty. Since then, many have observed
that there is little incentive for remedial
action if a complete but delinquent disclo-
sure statement is penalized as harshly as
a complete failure to submit a disclosure
statement. The Treasury Department and
the IRS are currently considering whether
it would be appropriate to publish a rule
that would treat as timely a Form 8886
voluntarily filed prior to the date the IRS
first contacts the taxpayer concerning a
tax examination for the taxable period
in which the taxpayer participated in the
reportable transaction. Other appropriate
dates by which filings must be made to
qualify for relief would be considered as
well. Comments are specifically requested
on the necessity and appropriateness of
publishing guidance addressing this issue.
Explanation of Provisions
These temporary regulations provide
rules reflecting the AJCA enactment of
the section 6707A penalty for the failure
to include on any return or statement any
information required to be disclosed under
section 6011 with respect to a reportable
transaction.
These temporary regulations provide
that a taxpayer may incur a separate
penalty under section 6707A with respect
to each reportable transaction that the tax-
payer was required, but failed, to disclose
within the time and in the form and man-
ner required under §1.6011–4(d) and (e)
or as stated in other published guidance.
A taxpayer who is required to disclose
a reportable transaction on a Form 8886
(or successor form) filed with a return,
amended return, or application for tenta-
tive refund and who also is required to
disclose the transaction on a Form 8886
November 10, 200811012008–45 I.R.B.

(or successor form) with OTSA, is subject
to only a single section 6707A penalty for
failure to make either one or both of those
disclosures. Additionally, these temporary
regulations define “reportable transaction”
and “listed transaction” by reference to the
regulations under section 6011.
These temporary regulations restate the
existing authority of the Secretary to pre-
scribe the procedures to request rescission
of a section 6707A penalty with respect
to a nonlisted reportable transaction by
revenue procedure or other guidance pub-
lished in the Internal Revenue Bulletin.
Rev. Proc. 2007–21 describes the pro-
cedures for requesting rescission of a
penalty assessed under section 6707A,
including the deadline by which a person
must request rescission; the information
the person must provide in the rescission
request; the factors that weigh in favor
of and against granting rescission; where
the person must submit the rescission re-
quest; and the rules governing requests
for additional information from the person
requesting rescission.
These temporary regulations adopt fac-
tors mentioned in the legislative history
to section 6707A that the Commissioner
(or the Commissioner’s delegate) should
take into account during the determina-
tion whether to rescind all or a portion of
any penalty imposed under section 6707A.
See H.R. Conf. Rep. No. 755, 108
th
Cong., 2d Sess. at 599 (2004). Factors
that these regulationsidentify as weighing
in favor of rescission reflect circumstances
that suggest that sustaining assessment of
the penalty is against equity and good con-
science.
These temporary regulations generally
adopt the list of factors stated in Rev. Proc.
2007–21. One additional factor these reg-
ulations identify as weighing in favor of
granting rescission is whether the penalty
assessed is disproportionately larger than
the tax benefit received. The factors iden-
tified in these temporary regulations do
not represent an exclusive list, and no sin-
gle factor will be determinative of whether
to grant rescission in any particular case.
Rather, the Commissioner (or the Com-
missioner’s delegate) will consider and
weigh all relevant factors, regardless of
whether the factor is included in this list.
Because it is the policy of the IRS to
administer penalties in a manner that pro-
motes voluntary compliance with the tax
laws, it will weigh heavily in favor of
rescission if a taxpayer voluntarily files the
form required under section 6011: (i) prior
to the date the IRS first contacts the tax-
payer (including contacts by the IRS with
any partnership in which the taxpayer is a
partner, any S corporation in which the tax-
payer is a shareholder, or any trust in which
the taxpayer is a beneficiary) concerning a
taxexaminationforthetaxperiodinwhich
the taxpayer participated in the reportable
transaction; and (ii) other circumstances
suggest that the taxpayer did not delay fil-
ing an untimely but properly completed
Form 8886 until after the IRS had taken
steps to identify the taxpayer’s participa-
tion in the reportable transaction in ques-
tion. See IRS Policy Statement 20–1 (June
29, 2004).
The temporary regulations mirror Rev.
Proc. 2007–21 in providing that a rescis-
sion request is not the appropriate forum
to contest whether the elements necessary
to support a penalty under section 6707A
exist. That questionis for the examin-
ing agent, the IRS Appeals Division, and
the courts. A rescission determination is
based on the premise that a violation of
section 6707A exists but, nonetheless, the
penalty should be rescinded (or abated).
Accordingly, the temporary regulations
provide that the Commissioner (or the
Commissioner’s delegate) will not con-
sider whether the taxpayer in fact failed to
comply with section 6011. Furthermore,
the temporary regulations provide that the
Commissioner (or the Commissioner’s
delegate) will not take into consideration
doubt as to liability for, or collectibility
of, the penalties in determining whether to
rescind the penalty.
Additionally, these temporary regula-
tions restate the existing authority of the
Secretary to prescribe by revenue proce-
dure or other guidance published in the
Internal Revenue Bulletin the manner in
which taxpayers must disclose the require-
ment to pay certain penalties on reports
filed with the Securities and Exchange
Commission. Rev. Procs. 2005–51 and
2007–25 are the current published guid-
ance items that provide these disclosure
rules and remain effective until further
guidance is issued in the form of regu-
lations or other guidance that explicitly
supersedes these two documents.
Effect on other Documents
The temporary regulations supersede
Notice 2005–11.
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It also has been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations. The tempo-
rary regulations are necessary to promote
taxpayers’ immediate compliance with the
regulations recentlyfinalized under sec-
tion 6011 and to provide for regulatory re-
lief in appropriate circumstances, includ-
ing the additional taxpayer favorable fac-
tor of whether the penalty assessed is dis-
proportionately larger than the tax benefit
received. For applicability of the Regula-
tory Flexibility Act (5 U.S.C. chapter 6),
refer to the Special Analyses section of the
preamble to the cross-referenced notice of
proposed rulemaking published in this is-
sue of the Bulletin. Pursuant to section
7805(f) of the Code, these regulations have
been submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comment on their impact on
small business.
Drafting Information
The principal author of these regula-
tions is Matthew Cooper of the Office of
the Associate ChiefCounsel (Procedure
and Administration).
*****
Amendments to the Regulations
Accordingly, 26 CFR Part 301 is
amended as follows:
PART 301 — PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6707A–1T is added
to read as follows:
2008–45 I.R.B.1102November 10, 2008

§301.6707A–1T Failure to include on
any return or statement any information
required to be disclosed under section
6011 with respect to a reportable
transaction.
(a)In general. Any person who fails to
include on any return or statement any in-
formation required to be disclosed under
section 6011 with respect to a reportable
transaction may be subject to a monetary
penalty. The penalty for failure to include
information with respect to a reportable
transaction, other than a listed transaction,
is $10,000 in the case of a natural person,
and $50,000 in any other case. The penalty
for failure to include information with re-
spect to a listed transaction is $100,000 in
the case of a natural person, and $200,000
in any other case. The section 6707A
penalty is in addition to any other penalty
that may be imposed.
(b)Definitions—(1)Reportable trans-
action. The term “reportable transaction”
is defined in §1.6011–4(b)(1) of this chap-
ter.
(2)Listed transaction. The term “listed
transaction” is defined in section 6707A(c)
of the Code and §1.6011–4(b)(2) of this
chapter.
(c)Assessment of the penalty—(1)In
general. The Internal Revenue Service
(IRS) may assess a penalty under section
6707A with respectto each failure to dis-
close a reportable transaction within the
time and in the form and manner provided
by §1.6011–4(d) and (e) of this chapter
or pursuant to the time, form, and man-
ner stated in other published guidance.
A taxpayer who is required to disclose
a reportable transaction with a return,
amended return, or application for ten-
tative refund and who also is required
to disclose the transaction on a Form
8886,“Reportable Transaction Disclo-
sure Statement”(or successor form), filed
with the IRS Office of Tax Shelter Anal-
ysis (OTSA), is subject to only a single
section 6707A penalty for failure to make
either one or both of those disclosures. If
section 6011 and the regulations thereun-
der require a disclosure statement to be
filed at the time that a return is filed, the
disclosure statement is considered to be
timely filed if it is filed at the same time
as the return, even if the return is filed
untimely after its due date.
(2)Examples. The rules of paragraph
(c)(1) of this section are illustrated by the
following examples:
Example 1. Taxpayer T is required to attach a
Form 8886 to its return for the 2007 taxable year and
to send a copy of the Form 8886 to OTSA at the
time it files its return. Taxpayer T fails to attach the
Form 8886 to its return and fails to send a copy of
the Form 8886 to OTSA. Taxpayer T is subject to a
single penalty under section 6707A for failure to dis-
close because Taxpayer T failed to comply with the
disclosure requirements of section 6011. A penalty
under section 6707A also would apply if Taxpayer T
had failed to comply with only one of the two require-
ments.
Example 2.SameasExample 1, except that Tax-
payer T also subsequently files an amended return
for 2007 that reflects Taxpayer T’s participation in
the reportable transaction. Taxpayer T fails to attach
a Form 8886 to the amended return as required by
§1.6011–4(e)(1) of this chapter. Taxpayer T is sub-
ject to an additional penalty under section 6707A for
failing to disclose a reportable transaction.
Example 3. In November 2009, Taxpayer U par-
ticipates in a reportable transaction resulting in a loss
that is carried back to 2008. Taxpayer U fails to attach
a Form 8886 to its 2008 amended return claiming the
loss carryback. Section 1.6011–4(e)(1) of this chap-
ter requires Taxpayer U to attach a Form 8886 to its
amended return for the 2008 taxable year. Taxpayer
U is subject to a penalty under section 6707A.
Example 4. Taxpayer P participates in a non-
listed reportable transaction and is required to attach
a Form 8886 to its return for the 2008 taxable year
that is due on March 16, 2009. Taxpayer P timely
files its return but fails to attach the Form 8886 to its
return. After the due date of Taxpayer P’s return and
without an extension of time to file, Taxpayer P files
an amended return relating to the 2008 taxable year to
which Taxpayer P attaches the Form 8886. Taxpayer
P is subject to a penalty under section 6707A for fail-
ure to disclose because Taxpayer P failed to comply
with the disclosure requirements of section 6011 by
not attaching a Form 8886 to its return for the 2008
taxable year that was timely filed on or before the
due date of March 16, 2009. A penalty under section
6707A also would apply if Taxpayer P had failed to
attach a Form 8886 to its amended return. Taxpayer
P, nevertheless, may file a complete and proper Form
8886 and request in writing rescission of the penalties
assessed within 30 days after the date the IRS sends
notice and demand for payment of the penalties in ac-
cordance with Rev. Proc. 2007–21. The filing of
the untimely Form 8886 will weigh heavily in favor
of rescission provided that Taxpayer P files the Form
8886 prior to the date the IRS first contacts the tax-
payer concerning a tax examination for the 2008 tax-
able year and there are no other circumstances that
suggest that Taxpayer P delayed filing the Form 8886
until after the IRS had taken steps to identify Tax-
payer P’s participation in the reportable transaction
in question.
Example 5. Shareholder V, a shareholder in
an S Corporation, receives a timely Schedule
K–1“Partner’s Share of Income, Deductions,
Credits, etc.,”on April 10, 2009, and determines
that she is required to attach a Form 8886 to her
individual income tax return for the 2008 taxable
year. Shareholder V fails to attach the Form 8886
to her 2008 individual income tax return but files a
proper and complete Form 8886 with OTSA on June
12, 2009. Section 1.6011–4(e)(1) of this chapter
provides that if a taxpayer who is a partner in a
partnership, a shareholder in an S corporation, or
a beneficiary of a trust receives a timely Schedule
K–1 less than 10 calendar days before the due date
of the taxpayer’s return (including extensions) and,
based on receipt of the timely Schedule K–1, the
taxpayer determines that the taxpayer participated in
a reportable transaction, the disclosure statement will
not be considered late if the taxpayer discloses the
reportable transaction by filing a disclosure statement
with OTSA within 60 calendar days after the due
date of the taxpayer’s return (including extensions).
Accordingly, Shareholder V is not subject to a
penalty under section 6707A for failure to disclose.
Example 6. In July 2008, Taxpayer W participates
in Transaction Z, a transaction that is not reportable as
of April 15, 2009, the date Taxpayer W files his indi-
vidual income tax return for 2008. On July 15, 2009,
Transaction Z is identified as a transaction of inter-
est. Section 1.6011–4(e)(2)(i) of this chapter pro-
vides that if a transaction that is not otherwise a re-
portable transaction becomes a listed transaction or
a transaction of interest after the taxpayer has filed
a tax return (including an amended return) reflecting
the taxpayer’s participation in the listed transaction or
transaction of interest and before the end of the period
of limitations for assessment of tax for any taxable
year in which the taxpayer participated in the listed
transaction or transaction of interest, then a disclo-
sure statement must be filed with OTSA within 90
calendar days after the date on which the transaction
became a listed transaction or transaction of interest,
regardless of whether the taxpayer participated in the
transaction in the year the transaction became a listed
transaction or a transaction of interest. Taxpayer W
fails to file a Form 8886 with OTSA by October 13,
2009, 90 calendar days after the date that the trans-
action was identified as a transaction of interest. Ac-
cordingly, Taxpayer W is subject to a penalty under
section 6707A.
Example 7. Taxpayer X is required to attach a
Form 8886 to its return for the 2008 taxable year with
respect to participation in a listed transaction. Tax-
payer X attaches the Form 8886 to its return in a
timely manner. The Form 8886, however, does not
describe any of the potential tax benefits expected to
result from this transaction and states that informa-
tion will be provided uponrequest. Because the Form
8886 does not describe any of the potential tax bene-
fits expected to result from the transaction and merely
provides that the information will be provided upon
request, the Form 8886 filed by Taxpayer X is incom-
plete and does not satisfy the requirements set forth
in §1.6011–4(d) of this chapter. Taxpayer X is sub-
ject to a penalty under section 6707A for failure to
disclose in the appropriate manner.
(d)Rescission authority—(1)In gen-
eral.The Commissioner (or the Commis-
sioner’s delegate) may rescind the section
6707A penalty if—
(i) The violation relates to a reportable
transaction that is not a listed transaction,
and
November 10, 200811032008–45 I.R.B.

(ii) Rescinding the penalty would pro-
mote compliance with the requirements of
the Code and effective tax administration.
(2)Requesting rescission. The Secre-
tary may prescribe the procedures for a
taxpayer to request rescission of a section
6707A penalty with respect to a reportable
transaction other than a listed transaction
by publishing a revenue procedure or other
guidance in the Internal Revenue Bulletin.
(3)Factors that weigh in favor of grant-
ing rescission.In determining whether
rescission would promote compliance with
the requirements of the Code and effective
tax administration, the Commissioner (or
the Commissioner’s delegate) will take
into account the following list of factors
that weigh in favor of granting rescission.
This is not an exclusive list and no single
factor will be determinative of whether
to grant rescission in any particular case.
Rather, the Commissioner (or the Com-
missioner’s delegate) will consider and
weigh all relevant factors, regardless of
whether the factor is included in this list.
(i) The taxpayer, upon becoming aware
that it failed to disclose a reportable trans-
action properly, filed a complete and
proper, albeit untimely, Form 8886 (or
successor form). This factor will weigh
heavily in favor of rescission provided
that—
(A) the taxpayer files the Form 8886
prior to the date the IRS first contacts the
taxpayer (including contacts by the IRS
with any partnership in which the taxpayer
is a partner, any S corporation in which the
taxpayer is a shareholder, or any trust in
which the taxpayer is a beneficiary) con-
cerning a tax examination for the tax pe-
riod in which the taxpayer participated in
the reportable transaction; and
(B) other circumstances suggest that the
taxpayer did not delay filing an untimely
but properly completed Form 8886 until
after the IRS had taken steps to identify the
taxpayer’s participation in the reportable
transaction in question.
(ii) The failure to disclose properly was
due to an unintentional mistake of fact that
existed despite the taxpayer’s reasonable
attempts to ascertain the correct facts with
respect to the transaction.
(iii) The taxpayer has an established
historyofproperlydisclosingotherre-
portable transactions and complying with
other tax laws.
(iv) The taxpayer demonstrates that
the failure to include on any return or
statement any information required to be
disclosedundersection6011arosefrom
events beyond the taxpayer’s control.
(v) The taxpayer cooperates with the
IRS by providing timely information
with respect to the transaction at issue
that the Commissioner (or the Commis-
sioner’s delegate) may request in con-
sideration of the rescission request. In
considering whether a taxpayer cooper-
ates with the IRS, the Commissioner (or
the Commissioner’s delegate) will take
into account whether the taxpayer meets
the deadlines described in Rev. Proc.
2007–21 (or successor document) (see
§601.601(d)(2)(ii)(b) of this chapter) for
complying with requests for additional
information.
(vi) Assessment of the penalty weighs
against equity andgood conscience, in-
cluding whether the penalty is dispro-
portionate to the tax benefit received and
whether the taxpayer demonstrates that
there was reasonable cause for, and the
taxpayer acted in good faith with respect
to, the failure to timely file or to include
on any return any information required to
be disclosed under section 6011. An im-
portant factor in determining reasonable
cause and good faith is the extent of the
taxpayer’s efforts to ensure that persons
who prepared the taxpayer’s return were
informed of the taxpayer’s participation in
the reportable transactions. The presence
of reasonable cause, however, will not
necessarily be determinative of whether to
grant rescission.
(4)Absence of favorable factors weighs
against rescission. The absence of facts
establishing the factors described in para-
graph (d)(3) of this section weighs against
granting rescission. The absence of any
one of these factors, however, will not
necessarily be determinative of whether to
grant rescission.
(5)Factors not considered. In deter-
mining whether to grant rescission, the
Commissioner (or the Commissioner’s
delegate) will not consider doubt as to lia-
bility for, or collectibility of, the penalties.
(e)Reports to the Securities and Ex-
change Commission (SEC)—(1)In gen-
eral. Under section 6707A(e), a taxpayer
who is required to file periodic reports un-
der section 13 or 15(d) of the Securities
Exchange Act of 1934 (or is required to file
consolidated reports with another person)
must disclose in periodic reports filed with
the SEC the requirement to pay each of the
following penalties:
(i) The penalty imposed by section
6707A(a) in the amount of $200,000 for
failure to disclose a listed transaction.
(ii) The accuracy-related penalty
imposed by section 6662A(a) at the
30-percent rate determined under section
6662A(c) for a reportable transaction un-
derstatement with respect to which the
relevant facts affecting the tax treatment
of the reportable transaction were not
adequately disclosed in accordance with
regulations prescribed under section 6011.
(iii) The accuracy-related penalty im-
posed by section 6662(a) at the 40-percent
rate determined under section 6662(h) for
a gross valuation misstatement, if the tax-
payer (but for the exclusionary rule of sec-
tion 6662A(e)(2)(C)(ii)) would have been
subject to the accuracy-related penalty un-
der section 6662A(a) at the 30-percent rate
determined under section 6662A(c).
(iv) The penalty described in paragraph
(e)(3) of this section for failure to disclose
in periodic reports filed with the SEC the
requirement to pay any of the penalties de-
scribed in paragraphs (e)(1)(i) through (iii)
or (e)(3) of this section.
(2)Manner and content of disclosure.
The Secretary may prescribe the manner in
which disclosure of the requirement to pay
the penalties identified in paragraph (e)(1)
of this section must be made on reports
filed with the SEC, including identifica-
tion of the specific SEC form and section
thereof in which the taxpayer must make
the disclosure as well as specification of
the timing and contents of the disclosure,
by publishing a revenue procedure or other
guidance in the Internal Revenue Bulletin.
(3)Penalty for failure to disclose in SEC
filings. Any taxpayer who is required to
file periodic reports under section 13 or
15(d)oftheSecurities Exchange Act of
1934 (or is required to file consolidated
reports with another person) may be sub-
ject to a penalty in the amount of $200,000
for each failure to disclose the requirement
to pay a penalty identified in paragraphs
(e)(1)(i) through (e)(1)(iii) of this section
in the manner specified by revenue proce-
dure or other guidance published in the In-
ternal Revenue Bulletin. The taxpayer also
may be subject to an additional penalty in
the amount of $200,000 for each failure to
2008–45 I.R.B.1104November 10, 2008

disclose a penalty arising under this sec-
tion in the manner specified by revenue
procedure or other guidance published in
the Internal Revenue Bulletin. The penalty
provided by this paragraph is not subject to
rescission as described in paragraph (d) of
this section.
(f)Effective/applicability date—(1)
The rules of this section apply to disclosure
statements that are due after September
11, 2008.
(2) The applicability of this section ex-
pires on or before September 9, 2011.
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
Approved September 5, 2008.
Eric Solomon,
Assistant Secretary of
theTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on September
10, 2008, 8:45 a.m., and published in the issue of the Federal
Register for September 11, 2008, 73 F.R. 52784)
Section 7430.—Awarding
of Costs and Certain Fees
The Service provides an inflation adjustment to
the hourly limit on attorney fees incurred in calen-
dar year 2009 that may be awarded in a judgement or
settlement of an administrative or judicial proceeding
concerning the determination, collection, or refund of
tax, interest, or penalty. See Rev. Proc. 2008-66,
page 1107.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2008. See Rev. Rul. 2008-50, page
1098.
Section 7702B.—Treatment
of Qualified Long-Term
Care Insurance
The Service provides an inflation adjustment to the
stated dollar amount for calendar year 2009 of theper
diemlimitation regarding periodic payments received
under a qualified long-term care insurance contract
or periodic payments received under a life insurance
contract that are treated aspaid by reason of the death
of a chronically ill individual. See Rev. Proc. 2008-
66, page 1107.
Section 7872
.—Treatment
of Loans Wit
hBelow-Market
Interest Ra
tes
The adjuste
d applicable federal short-term, mid-
term, and lo
ng-term rates are set forth for the month
of November
2008. See Rev. Rul. 2008-50, page
1098.
November 10, 200811052008–45 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
2009 Limitations Adjusted As
Provided in Section 415(d),
etc.
1
Notice 2008–102
Section 415 of the Internal Revenue
Code (the Code) provides for dollar lim-
itations on benefits and contributions un-
der qualified retirement plans. Section 415
also requires that the Commissioner annu-
ally adjust these limits for cost-of-living
increases. Other limitations applicable to
deferred compensation plans are also af-
fected by these adjustments. Many of the
limitations will change for 2009 because
the increase in the cost-of-living index met
the statutory thresholds that trigger their
adjustment. However, for others, the lim-
itation will remain unchanged. For exam-
ple, the limitation under § 402(g)(1) on the
exclusion for elective deferrals described
in § 402(g)(3) is increased from $15,500
to $16,500. This limitation affects elec-
tive deferrals to § 401(k) plans and to the
Federal Government’s Thrift Savings Plan,
among other plans.
Cost-of-Living limits for 2009
Effective January 1, 2009, the limita-
tion on the annual benefit under a defined
benefit plan under § 415(b)(1)(A) is in-
creased from $185,000 to $195,000. For
participants who separated from service
before January 1, 2009, the limitation for
defined benefit plans under § 415(b)(1)(B)
is computed by multiplying the partic-
ipant’s compensation limitation, as ad-
justed through 2008, by 1.0530.
The limitation for defined contribution
plans under § 415(c)(1)(A) is increased
from $46,000 to $49,000.
The Code provides that various other
dollar amounts are to be adjusted at the
same time and in the same manner as the
dollar limitation of § 415(b)(1)(A). These
dollar amounts and the adjusted amounts
are as follows:
The limitation under § 402(g)(1) on
the exclusion for elective deferrals de-
scribed in § 402(g)(3) is increased from
$15,500 to $16,500.
The annual compensation limit un-
der §§ 401(a)(17), 404(l), 408(k)(3)(C),
and 408(k)(6)(D)(ii) is increased from
$230,000 to $245,000.
The dollar limitation under
§ 416(i)(1)(A)(i) concerning the defi-
nition of key employee in a top-heavy
plan is increased from $150,000 to
$160,000.
The dollar amount under
§ 409(o)(1)(C)(ii) for determining the
maximum account balance in an em-
ployee stock ownership plan subject to
a 5-year distribution period is increased
from $935,000 to $985,000, while the
dollar amount used to determine the
lengthening of the 5-year distribution
period is increased from $185,000 to
$195,000.
The limitation used in the definition
of highly compensated employee un-
der § 414(q)(1)(B) is increased from
$105,000 to $110,000.
The dollar limitation under
§ 414(v)(2)(B)(i) for catch-up con-
tributions to an applicable employer
plan other than a plan described in
§ 401(k)(11) or 408(p) for individu-
als aged 50 or over is increased from
$5,000 to $5,500. The dollar limitation
under § 414(v)(2)(B)(ii) for catch-up
contributions to an applicable employer
plan described in § 401(k)(11) or 408(p)
for individuals aged 50 or over remains
unchanged at $2,500.
The annual compensation limitation
under § 401(a)(17) for eligible partic-
ipants in certain governmental plans
that, under the plan as in effect on July
1, 1993, allowed cost-of-living adjust-
ments to the compensation limitation
under the plan under § 401(a)(17) to be
taken into account, is increased from
$345,000 to $360,000.
The compensation amount under
§ 408(k)(2)(C) regarding simplified
employee pensions (SEPs) is increased
from $500 to $550.
The limitation under § 408(p)(2)(E)
regarding SIMPLE retirement accounts
is increased from $10,500 to $11,500.
The limitation on deferrals under
§ 457(e)(15) concerning deferred com-
pensation plans of state and local gov-
ernments and tax-exempt organizations
is increased from $15,500 to $16,500.
The compensation amounts under
§ 1.61–21(f)(5)(i) of the Income Tax
Regulations concerning the definition
of “control employee” for fringe bene-
fit valuation purposes is increased from
$90,000 to $95,000. The compensation
amount under § 1.61–21(f)(5)(iii) is
increased from $185,000 to $195,000.
The limitation on wages under § 45A
regarding individuals eligible for the In-
dian employment credit is $40,000 for
tax years beginning in 2008 and will
increase to $45,000 for tax years be-
ginning in 2009. The termination date
of § 45A was recently extended from
December 31, 2007, to December 31,
2009, by § 314 of Division C of the
Emergency Economic Stabilization Act
of 2008, P.L. 110–343.
The Code also provides that several
pension-related amounts are to be adjusted
using the cost-of-living adjustment under
§ 1(f)(3). These dollar amounts and the
adjustments are as follows:
The adjusted gross income limita-
tion under § 25B(b)(1)(A) for determin-
ing the retirement savings contribution
credit for taxpayers filing a joint return
is increased from $32,000 to $33,000;
the limitation under § 25B(b)(1)(B) is
increased from $34,500 to $36,000;
and the limitation under § 25B(b)(1)(C)
and (D) is increased from $53,000 to
$55,500.
The adjusted gross income limita-
tion under § 25B(b)(1)(A) for deter-
mining the retirement savings contri-
bution credit for taxpayers filing as
head of household is increased from
$24,000 to $24,750; the limitation un-
der § 25B(b)(1)(B) is increased from
$25,875 to $27,000; and the limitation
under § 25B(b)(1)(C) and (D) is in-
creased from $39,750 to $41,625.
The adjusted gross income limita-
tion under § 25B(b)(1)(A) for deter-
mining the retirement savings contri-
bution credit for all other taxpayers is
increased from $16,000 to $16,500; the
limitation under § 25B(b)(1)(B) is in-
creased from $17,250 to $18,000; and
the limitation under § 25B(b)(1)(C)
1
Based on News Release IR–2008–118 dated October 16, 2008.
2008–45 I.R.B.1106November 10, 2008

and (D) is increased from $26,500 to
$27,750.
The deductible amount under
§ 219(b)(5)(A) for an individual mak-
ing qualified retirement contributions
remains unchanged at $5,000.
The applicable dollar amount under
§ 219(g)(3)(B)(i) for determining the
deductible amount of an IRA contri-
bution for taxpayers who are active
participants filing a joint return or as a
qualifying widow(er) is increased from
$85,000 to $89,000. The applicable
dollar amount under § 219(g)(3)(B)(ii)
for all other taxpayers (other than mar-
ried taxpayers filing separate returns)
is increased from $53,000 to $55,000.
The applicable dollar amount under
§ 219(g)(7)(A) for a taxpayer who is
not an active participant but whose
spouse is an active participant is in-
creased from $159,000 to $166,000.
The adjusted gross income limita-
tion under § 408A(c)(3)(C)(ii)(I) for
determining the maximum Roth IRA
contribution for taxpayers filing a joint
return or as a qualifying widow(er) is
increased from $159,000 to $166,000.
The adjusted gross income limitation
under § 408A(c)(3)(C)(ii)(II) for all
other taxpayers (other than married
taxpayers filing separate returns) is in-
creased from $101,000 to $105,000.
Administrators of defined benefit or de-
fined contribution plans that have received
favorable determination letters should not
request new determination letters solely
because of yearly amendments to adjust
maximum limitations in the plans.
Drafting Information
The principal author of this notice is
John Heil of the Employee Plans, Tax Ex-
empt and Government Entities Division.
For further information regarding the data
in this notice, please contact the Employee
Plans’ taxpayer assistance telephone ser-
vice at 1–877–829–5500 (a toll-free call)
between the hours of 8:30 a.m. and
4:30 p.m. Eastern time Monday through
Friday. For information regarding the
methodology used in arriving at the data
in this notice, please e-mail Mr. Heil at
RetirementPlanQuestions@irs.gov.
26 CFR 601.602: Tax forms and instructio
ns.
(AlsoPartI,§§1,23,24,25A,32,42,59
, 62, 63, 68, 132, 135, 137, 146, 147, 148, 151, 170, 179, 213, 220, 221, 512, 513, 877, 877A, 911, 2032A, 2503, 2523, 4161,
4261, 6033, 6039F, 6323, 6334, 6601, 74
30, 7702B; 1.148–3, 1.148–5.)
Rev. Proc. 2008–66
TABLE OF CONTENTS
SECTION 1. PURPOSE
SECTION 2. CHANGES
SECTION 3. 2009 ADJUSTED ITEMS
Code Section
.01TaxRateTables.................................................................... 1(a)–(e)
.02UnearnedIncomeofMinorChildrenTaxedasifParent’sIncome(“KiddieTax”) .......... 1(g)
.03AdoptionCredit.................................................................... 23
.04ChildTaxCredit................................................................... 24
.05HopeandLifetimeLearningCredits.................................................. 25A
.06EarnedIncomeCredit............................................................... 32
.07Low-IncomeHousingCredit ........................................................ 42(h)
.08AlternativeMinimumTaxExemptionforaChildSubjecttothe“KiddieTax”.............
59(j)
.09 Transportation Mainline Pipeline Construction Industry Optional Expense Substantiation
RulesforPaymentstoEmployeesunderAccountablePlans ................................ 62(c)
.10StandardDeduction ................................................................ 63
.11OverallLimitationonItemizedDeductions............................................ 68
.12QualifiedTransportationFringe...................................................... 132(f)
.13 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher
EducationExpenses.................................................................... 135
.14AdoptionAssistancePrograms....................................................... 137
.15PrivateActivityBondsVolumeCap..................................................
146(d)
November 10, 200811072008–45 I.R.B.

.16LoanLimitsonAgriculturalBonds................................................... 147(c)(2)
.17GeneralArbitrageRebateRules...................................................... 148(f)
.18 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or
InvestmentsPurchasedforaYieldRestrictedDefeasanceEscrow ........................... 148
.19PersonalExemption................................................................
151
.20ElectiontoExpenseCertainDepreciableAssets........................................ 179
.21EligibleLong-TermCarePremiums.................................................. 213(d)(10)
.22MedicalSavingsAccounts .......................................................... 220
.23InterestonEducationLoans......................................................... 221
.24TreatmentofDuesPaidtoAgriculturalorHorticulturalOrganizations....................
512(d)
.25 Insubstantial Benefit Limitations for Contributions Associatedwith Charitable Fund-Raising
Campaigns ........................................................................... 513(h)
.26ExpatriationtoAvoidTax........................................................... 877
.27TaxResponsibilitiesofExpatriation.................................................. 877A
.28ForeignEarnedIncomeExclusion.................................................... 911
.29 Valuation of Qualified Real Property in Decedent’s Gross Estate......................... 2032A
.30AnnualExclusionforGifts..........................................................
2503 & 2523
.31TaxonArrowShafts................................................................ 4161
.32PassengerAirTransportationExciseTax.............................................. 4261
.33ReportingExceptionforCertainExemptOrganizations with Nondeductible Lobbying
Expenditures.......................................................................... 6033(e)(3)
.34 Notice of Large Gifts Received from Foreign Persons.................................. 6039F
.35PersonsAgainstWhomaFederalTaxLienIsNotValid.................................
6323
.36PropertyExemptfromLevy......................................................... 6334
.37InterestonaCertainPortionoftheEstateTaxPayableinInstallments.................... 6601(j)
.38AttorneyFeeAwards............................................................... 7430
.39 Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under
CertainLifeInsuranceContracts ........................................................ 7702B(d)
SECTION 4. EFFECTIVE DATE
SECTION 5. DRAFTING INFORMATION
SECTION 1. PURPOSE
This revenue procedure sets forth infla-
tion adjusted items for 2009.
SECTION 2. CHANGES
.01 For taxable years beginning after
2008, the $3,000 increase to the phaseout
amounts of the earned income tax credit
for married taxpayers filing a joint return
under § 32(b)(2)(B)(iii) are adjusted for in-
flation. The adjusted amounts are included
in the amounts shown in section 3.06(1) of
this revenue procedure.
.02 Section 42(h)(3)(I) was added to
the Code by section 3001, Division C,
Title I, of the Housing and Economic Re-
covery Act of 2008, Pub. L. No. 110–289,
122 Stat. 2654 (2008), to provide for a
temporary increase in the State housing
credit ceiling under § 42(h)(3)(C)(ii)(I)
and (II) after any adjustments for inflation
under § 42(h)(3)(H). Accordingly, for cal-
endar years 2008 and 2009, the inflation
adjusted amount under § 42(h)(3)(C)(ii)(I)
is increased by $0.20, and the inflation ad-
justed amount under § 42(h)(3)(C)(ii)(II)
is increased by ten (10) percent and
rounded to the next lowest multiple of
$5,000. (See section 3.07 of this revenue
procedure.)
.03 Section 147(c)(2) was amended by
section 15341, Title XV, Subtitle C, Part
III, of the Food Conservation and Energy
Act of 2008, Pub. L. No. 110–246, 122
Stat. 1651 (2008), to provide for an in-
crease in the loan limits on agricultural
bonds for first-time farmers. For calen-
dar year 2008, the limit is $450,000. For
calendar years after 2008, the $450,000
amount will be adjusted for inflation. (See
section 3.16 of this revenue procedure.)
.04 Section 877A was added to the
Code by section 301(a) of Title III of the
Heroes Earnings Assistance and Relief
Tax Act of 2008, Pub. L. No. 110–245,
122 Stat. 1624 (2008), to provide spe-
2008–45 I.R.B.1108November 10, 2008

cial rules for the treatment of property of
certain individuals who are “covered ex-
patriates,” and who cease to be treated as
long term residents or who relinquish their
U.S. citizenship (expatriate). Pursuant
to § 877A(a)(1), covered expatriates, as
defined in § 877A(g)(1), are subject to
income tax on the net unrealized gain in
their property as if the property had been
sold for its fair market value on the day
before the expatriation date, as defined in
§ 877A(g)(3). Section 877A(a)(3) pro-
vides that the amount of gain includible
in gross income under § 877A(a)(1) is
reduced (but not below zero) by $600,000.
For taxable years beginning in a calendar
year after 2008, the $600,000 amount is
adjusted for inflation. (See sections 3.26
and 3.27 of this revenue procedure.)
.05 The passenger air transportation ex-
cise taxes imposed under § 4261(b) and
(c), as extended by § 2(b)(1) of the Federal
Aviation Administration Extension Act of
2008, Part II, Pub. L. No. 110–330,
122 Stat. 3717 (2008), apply to trans-
portation taken through March 31, 2009,
and to amounts paid on or before March
31, 2009, for transportation beginning af-
ter that date. Accordingly, the amounts in
§ 4261(b) and (c) are adjusted for inflation
for 2009 and are included in this revenue
procedure. (See section 3.32 of this rev-
enue procedure.)
.06 The dollar limit on contributions to
funeral trusts under § 685(c) was repealed
by § 9 of the Hubbard Act, Pub. L. No.
110–317, 122 Stat. 3526 (2008), for
taxable years beginning after August 29,
2008. Accordingly, the dollar limitation
under § 685(c) is no longer included in
this revenue procedure.
SECTION3.2009ADJUSTEDITEMS
.01Tax Rate Tables. For taxable years
beginning in 2009, the tax rate tables under
§1areasfollows:
TABLE 1 — Section 1(a) — Married Individuals Filing Joint Returns and Surviving Spouses.
If Taxable Income Is:The Tax Is:
Not over $16,700
10% of the taxable income
Over $16,700 but
not over $67,900
$1,670 plus 15% of
the excess over $16,700
Over $67,900 but
not over $137,050
$9,350 plus 25% of
the excess over $67,900
Over $137,050 but
not over $208,850
$26,637.50 plus 28% of
the excess over $137,050
Over $208,850 but
not over $372,950
$46,741.50 plus 33% of
the excess over $208,850
Over $372,950$100,894.50 plus 35% of
the excess over $372,950
TABLE 2 — Section 1(b) — Heads of Households.
If Taxable Income Is:The Tax Is:
Not over $11,950
10% of the taxable income
Over $11,950 but
not over $45,500
$1,195 plus 15% of
the excess over $11,950
Over $45,500 but
not over $117,450
$6,227.50 plus 25% of
the excess over $45,500
Over $117,450 but
not over $190,200
$24,215 plus 28% of
the excess over $117,450
Over $190,200 but
not over $372,950
$44,585 plus 33% of
the excess over $190,200
Over $372,950$104,892.50 plus 35% of
the excess over $372,950
November 10, 200811092008–45 I.R.B.

TABLE 3 — Section 1(c) — Unmarried Individuals (other than Surviving Spouses and Heads of Households).
If Taxable Income Is:The Tax Is:
Not over $8,350
10% of the taxable income
Over $8,350 but
not over $33,950
$835 plus 15% of
the excess over $8,350
Over $33,950 but
not over $82,250
$4,675 plus 25% of
the excess over $33,950
Over $82,250 but
not over $171,550
$16,750 plus 28% of
the excess over $82,250
Over $171,550 but
not over $372,950
$41,754 plus 33% of
the excess over $171,550
Over $372,950$108,216 plus 35% of
the excess over $372,950
TABLE 4 — Section 1(d) — Married Individuals Filing Separate Returns.
If Taxable Income Is:The Tax Is:
Not over $8,350
10% of the taxable income
Over $8,350 but
not over $33,950
$835 plus 15% of
the excess over $8,350
Over $33,950 but
not over $68,525
$4,675 plus 25% of
the excess over $33,950
Over $68,525 but
not over $104,425
$13,318.75 plus 28% of
the excess over $68,525
Over $104,425 but
not over $186,475
$23,370.75 plus 33% of
the excess over $104,425
Over $186,475$50,447.25 plus 35% of
the excess over $186,475
TABLE 5 — Section 1(e) — Estates and Trusts.
If Taxable Income Is:The Tax Is:
Not over $2,300
15% of the taxable income
Over $2,300 but
not over $5,350
$345 plus 25% of
the excess over $2,300
Over $5,350 but
not over $8,200
$1,107.50 plus 28% of
the excess over $5,350
Over $8,200 but
not over $11,150
$1,905.50 plus 33% of
the excess over $8,200
Over $11,150$2,879 plus 35% of
the excess over $11,150
.02Unearned Income of Minor
Children Taxed as if Parent’s Income
(the “Kiddie Tax”). For taxable years
beginning in 2009, the amount in
§ 1(g)(4)(A)(ii)(I), which is used to reduce
the net unearned income reported on the
child’s return that is subject to the “kiddie
tax,” is $950. This amount is the same
as the $950 standard deduction amount
provided in section 3.10(2) of this rev-
enue procedure. The same $950 amount
is used for purposes of § 1(g)(7) (that is,
to determine whether a parent may elect
to include a child’s gross income in the
parent’s gross income and to calculate the
2008–45 I.R.B.1110November 10, 2008

“kiddie tax”). For example, one of the re-
quirements for the parental election is that
a child’s gross income is more than the
amount referenced in § 1(g)(4)(A)(ii)(I)
but less than 10 times that amount; thus,
a child’s gross income for 2009 must be
more than $950 but less than $9,500.
.03Adoption Credit. For taxable years
beginning in 2009, under § 23(a)(3) the
credit allowed for an adoption of a child
with special needs is $12,150. For taxable
years beginning in 2009, under § 23(b)(1)
the maximum credit allowed for other
adoptions is the amount of qualified adop-
tion expenses up to $12,150. The available
adoption credit begins to phase out under
§ 23(b)(2)(A) for taxpayers with modi-
fied adjusted gross income in excess of
$182,180 and is completely phased out for
taxpayers with modified adjusted gross
income of $222,180 or more. (See section
3.14 of this revenue procedure for the ad-
justed items relating to adoption assistance
programs.)
.04Child Tax Credit. For taxable
years beginning in 2009, the value used in
§ 24(d)(1)(B)(i) to determine the amount
of credit under § 24 that may be refundable
is $12,550.
.05Hope and Lifetime Learning Cred-
its.
(1) For taxable years beginning in
2009, the Hope Scholarship Credit under
§ 25A(b)(1) is an amount equal to 100
percent of qualified tuition and related
expenses not in excess of $1,200 plus
50 percent of those expenses in excess
of $1,200, but not in excess of $2,400.
Accordingly, the maximum Hope Schol-
arship Credit allowable under § 25A(b)(1)
for taxable years beginning in 2009 is
$1,800.
(2) For taxable years beginning in 2009,
a taxpayer’s modified adjusted gross in-
come in excess of $50,000 ($100,000 for
a joint return) is used to determine the
reduction under § 25A(d)(2)(A)(ii) in the
amount of the Hope Scholarship and Life-
time Learning Credits otherwise allowable
under § 25A(a).
.06Earned Income Credit.
(1)In general. For taxable years be-
ginning in 2009, the following amounts
are used to determine the earned income
credit under § 32(b). The “earned in-
come amount” is the amount of earned
income at or above which the maximum
amount of the earned income credit is al-
lowed. The “threshold phaseout amount”
is the amount of adjusted gross income
(or, if greater, earned income) above which
the maximum amount of the credit begins
to phase out. The “completed phaseout
amount” is the amount of adjusted gross
income (or, if greater, earned income) at
or above which no credit is allowed. The
threshold phaseout amounts and the com-
pleted phaseout amounts shown in the ta-
ble below for married taxpayers filing a
joint return include the increase provided
in § 32(b)(2)(B)(iii), as adjusted for infla-
tion for taxable years beginning in 2009.
Number of Qualifying Children
ItemOneTwo or MoreNone
Earned Income Amount
$ 8,950$12,570$ 5,970
Maximum Amount of Credit
$ 3,043$ 5,028$ 457
Threshold Phaseout Amount
(Single, Surviving Spouse, or Head of
Household)
$16,420$16,420$ 7,470
Completed Phaseout Amount
(Single, Surviving Spouse, or Head of
Household)
$35,463$40,295$13,440
Threshold Phaseout Amount
(Married Filing Jointly)
$19,540$19,540$10,590
Completed Phaseout Amount
(Married Filing Jointly)
$38,583$43,415$16,560
The instructions for the Form 1040 se-
ries provide tables showing the amount of
the earned income credit for each type of
taxpayer.
(2)Excessive investment income.For
taxable years beginning in 2009, the
earned income tax credit is not allowed
under § 32(i) if the aggregate amount
of certain investment income exceeds
$3,100.
.07Low-Income Housing Credit.For
calendar year 2009, the amount used un-
der § 42(h)(3)(C)(ii) to calculate the State
housing credit ceiling for the low-income
housing credit is the greater of (1) $2.30
multiplied by the State population, or (2)
$2,665,000.
.08Alternative Minimum Tax Exemp-
tion for a Child Subject to the “Kiddie
Tax.”For taxable years beginning in 2009,
for a child to whom the § 1(g) “kiddie tax”
applies, the exemption amount under §§ 55
and 59(j) for purposes of the alternative
minimum tax under § 55 may not exceed
the sum of (1) the child’s earned income
for the taxable year, plus (2) $6,700.
.09Transportation Mainline Pipeline
Construction Industry Optional Expense
Substantiation Rules for Payments to Em-
ployees under Accountable Plans.For
calendar year 2009, an eligible employer
may pay certain welders and heavy equip-
mentmechanicsanamountofupto$16
per hour for rig-related expenses that is
deemed substantiated under an account-
able plan if paid in accordance with Rev.
Proc. 2002–41, 2002–1 C.B. 1098. If the
employer provides fuel or otherwise reim-
burses fuel expenses, up to $10 per hour
is deemed substantiated if paid under Rev.
Proc. 2002–41.
.10Standard Deduction.
November 10, 200811112008–45 I.R.B.

(1)In general. For taxable years be-
ginning in 2009, the standard deduction
amounts under § 63(c)(2) are as follows:
Filing StatusStandard Deduction
Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))
$11,400
Heads of Households (§ 1(b))
$8,350
Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(c))
$5,700
Married Individuals Filing Separate Returns (§ 1(d))
$5,700
(2)Dependent. For taxable years be-
ginning in 2009, the standard deduction
amount under § 63(c)(5) for an individual
who may be claimed as a dependent by an-
other taxpayer cannot exceed the greater of
(1) $950, or (2) the sum of $300 and the in-
dividual’s earned income.
(3)Aged or blind. For taxable years
beginning in 2009, the additional standard
deduction amount under § 63(f) for the
aged or the blind is $1,100. These amounts
are increased to $1,400 if the individual is
also unmarried and not a surviving spouse.
.11Overall Limitation on Itemized De-
ductions. For taxable years beginning in
2009, the “applicable amount” of adjusted
gross income under § 68(b), above which
the amount of otherwise allowable item-
ized deductions is reduced under § 68, is
$166,800 (or $83,400 for a separate return
filed by a married individual).
.12Qualified Transportation Fringe.
For taxable years beginning in 2009, the
monthly limitation under § 132(f)(2)(A),
regarding the aggregate fringe benefit
exclusion amount for transportation in a
commuter highway vehicle and any tran-
sit pass, is $120. The monthly limitation
under § 132(f)(2)(B), regarding the fringe
benefit exclusion amount for qualified
parking, is $230.
.13Income from United States Savings
Bonds for Taxpayers Who Pay Qualified
Higher Education Expenses. For taxable
years beginning in 2009, the exclusion un-
der § 135, regarding income from United
States savings bonds for taxpayers who
pay qualified higher education expenses,
begins to phase out for modified adjusted
gross income above $104,900 for joint
returns and $69,950 for other returns.
The exclusion is completely phased out
for modified adjusted gross income of
$134,900 or more for joint returns and
$84,950 or more for other returns.
.14Adoption Assistance Programs.For
taxable years beginning in 2009, under
§ 137(a)(2) the amount that can be ex-
cluded from an employee’s gross income
for the adoption of a child with special
needs is $12,150. For taxable years be-
ginning in 2009, under § 137(b)(1) the
maximum amount that can be excluded
from an employee’s gross income for the
amounts paid or expenses incurred by an
employer for qualified adoption expenses
furnished pursuant to an adoption assis-
tance program for other adoptions by the
employee is $12,150. The amount exclud-
able from an employee’s gross income be-
gins to phase out under § 137(b)(2)(A) for
taxpayers with modified adjusted gross in-
come in excess of $182,180 and is com-
pletely phased out for taxpayers with mod-
ified adjusted gross income of $222,180 or
more. (See section 3.03 of this revenue
procedure for the adjusted items relating to
the adoption credit.)
.15Private Activity Bonds Volume Cap.
For calendar year 2009, the amounts used
under § 146(d)(1) to calculate the State
ceiling for the volume cap for private
activity bonds is the greater of (1) $90
multiplied by the State population, or (2)
$273,270,000.
.16Loan Limits for Agricultural Bonds.
For calendar year 2009, the loan limit
amount on agricultural bonds under
§ 147(c)(2)(A) for first-time farmers is
$469,200.
.17General Arbitrage Rebate Rules.
Forbondyearsendingin2009,theamount
of the computation credit determined
under § 1.148–3(d)(4) of the proposed
Income Tax Regulations is $1,490.
.18Safe Harbor Rules for Broker
Commissions on Guaranteed Invest-
ment Contracts or Investments Purchased
for a Yield Restricted Defeasance Es-
crow. For calendar year 2009, under
§ 1.148–5(e)(2)(iii)(B)(1), a broker’s com-
mission or similar feefor the acquisition
of a guaranteed investment contract or in-
vestments purchased for a yield restricted
defeasance escrow is reasonable if (1) the
amount of the fee that the issuer treats as
a qualified administrative cost does not
exceed the lesser of (A) $35,000, and (B)
0.2 percent of the computational base (as
defined in § 1.148–5(e)(2)(iii)(B)(2)) or,
if more, $4,000; and (2) the issuer does
not treat more than $99,000 in brokers’
commissions or similar fees as qualified
administrative costs for all guaranteed
investment contracts and investments for
yield restricted defeasance escrows pur-
chased with gross proceeds of the issue.
.19Personal Exemption.
(1)Exemption amount. For taxable
years beginning in 2009, the personal ex-
emption amount under § 151(d) is $3,650.
The exemption amount for taxpayers with
adjusted gross income in excess of the
maximum phaseout amount is $2,433 for
taxable years beginning in 2009.
(2)Phaseout. For taxable years be-
ginning in 2009, the personal exemption
amount begins to phase out at, and reaches
the maximum phaseout amount after, the
following adjusted gross income amounts:
2008–45 I.R.B.1112November 10, 2008

Filing StatusAGI – Beginning
of Phaseout
AGI – Maximum
Phaseout
Married Individuals Filing Joint Returns and Surviving Spouses (§ 1(a))
$250,200$372,700
Heads of Households (§ 1(b))
$208,500$331,000
Unmarried Individuals (other than Surviving Spouses and Heads of Households) (§ 1(c))
$166,800$289,300
Married Individuals Filing Separate Returns (§ 1(d))
$125,100$186,350
.20Election to Expense Certain Depre-
ciable Assets. For taxable years beginning
in 2009, under § 179(b)(1) the aggregate
cost of any § 179 property a taxpayer may
elect to treat as an expense cannot exceed
$133,000. Under § 179(b)(2) the $133,000
limitation is reduced (but not below zero)
by the amount by which the cost of § 179
property placed in service during the 2009
taxable year exceeds $530,000.
.21Eligible Long-Term Care Premi-
ums. For taxable years beginning in 2009,
the limitations under § 213(d)(10), re-
garding eligible long-term care premiums
includible in the term “medical care,” are
as follows:
AttainedAgeBeforetheCloseoftheTaxableYearLimitationonPremiums
40 or less
$ 320
More than 40 but not more than 50
$ 600
More than 50 but not more than 60
$1,190
More than 60 but not more than 70
$3,180
More than 70
$3,980
22Medical Savings Accounts.
(1)Self-only coverage. For taxable
years beginning in 2009, the term “high
deductible health plan” as defined in
§ 220(c)(2)(A) means,for self-only cov-
erage, a health plan that has an annual
deductible that is not less than $2,000 and
not more than $3,000, and under which the
annual out-of-pocket expenses required
to be paid (other than for premiums) for
covered benefits do not exceed $4,000.
(2)Family coverage. For taxable years
beginning in 2009, the term “high de-
ductible health plan” means, for family
coverage, a health plan that has an annual
deductible that is not less than $4,000 and
not more than $6,050, and under which the
annual out-of-pocket expenses required
to be paid (other than for premiums) for
covered benefits do not exceed $7,350.
.23Interest on Education Loans.For
taxable years beginning in 2009, the
$2,500 maximum deduction for inter-
est paid on qualified education loans
under § 221 begins to phase out under
§ 221(b)(2)(B) for taxpayers with mod-
ified adjusted gross income in excess of
$60,000 ($120,000 for joint returns), and
is completely phased out for taxpayers
with modified adjusted gross income of
$75,000 or more ($150,000 or more for
joint returns).
.24Treatment of Dues Paid to Agricul-
tural or Horticultural Organizations.For
taxable years beginning in 2009, the limi-
tation under § 512(d)(1), regarding the ex-
emption of annual dues required to be paid
by a member to an agricultural or horticul-
tural organization, is $145.
.25Insubstantial Benefit Limitations
for Contributions Associated with Chari-
table Fund-Raising Campaigns.
(1)Low cost article. For taxable years
beginning in 2009, the unrelated business
income of certain exempt organizations
under § 513(h)(2) does not include a “low
cost article” of $9.50 or less.
(2)Other insubstantial benefits.For
taxable years beginning in 2009, the $5,
$25, and $50 guidelines in section 3 of
Rev. Proc. 90–12, 1990–1 C.B. 471 (as
amplified by Rev. Proc. 92–49, 1992–1
C.B. 987, and modified by Rev. Proc.
92–102, 1992–2 C.B. 579), for disregard-
ing the value of insubstantial benefits
received by a donor in return for a fully
deductible charitable contribution under
§ 170, are $9.50, $47.50, and $95, respec-
tively.
.26Expatriation to Avoid Tax.For
calendar year 2009, an individual with
“average annual net income tax” of more
than $145,000 for the five taxable years
ending before the date of the loss of United
States citizenship under § 877(a)(2)(A)
is a covered expatriate for purposes of
§ 877A(g)(1).
.27Tax Responsibilities of Expatria-
tion. For taxable years beginning in 2009,
the amount that would be includible in the
gross income of a covered expatriate by
reason of § 877A(a)(1) is reduced (but not
below zero) by $626,000.
.28Foreign Earned Income Exclusion.
For taxable years beginning in 2009, the
foreign earned income exclusion amount
under § 911(b)(2)(D)(i) is $91,400.
.29Valuation of Qualified Real Prop-
erty in Decedent’s Gross Estate.Foran
estate of a decedent dying in calendar year
2009, if the executor elects to use the spe-
cial use valuation method under § 2032A
for qualified real property, the aggregate
decrease in the value of qualified real prop-
erty resulting from electing to use § 2032A
for purposes of the estate tax cannot ex-
ceed $1,000,000.
.30Annual Exclusion for Gifts.
(1) For calendar year 2009, the first
$13,000 of gifts to any person (other than
gifts of future interests in property) are
November 10, 200811132008–45 I.R.B.

not included in the total amount of taxable
gifts under § 2503 made during that year.
(2) For calendar year 2009, the first
$133,000 of gifts to a spouse who is not
a citizen of the United States (other than
gifts of future interests in property) are
not included in the total amount of taxable
gifts under §§ 2503 and 2523(i)(2) made
during that year.
.31Tax on Arrow Shafts. For calen-
dar year 2009, the tax imposed under
§ 4161(b)(2)(A) on the first sale by the
manufacturer, producer, or importer of any
shaft of a type used inthe manufacture of
certain arrows is $0.45 per shaft.
.32Passenger Air Transportation Ex-
cise Tax. For calendar year 2009, the
tax under § 4261(b) on the amount paid
for each domestic segment of taxable air
transportation is $3.60. For calendar year
2009, the tax under § 4261(c) on any
amount paid (whether within or without
the United States) for any air transporta-
tion, if the transportation begins or ends
in the United States, generally is $16.10.
However, for a domestic segment begin-
ning or ending in Alaska or Hawaii as
described in § 4261(c)(3), the tax applies
only to departures and the rate is $8.00.
.33Reporting Exception for Certain
Exempt Organizations with Nondeductible
Lobbying Expenditures. For taxable years
beginning in 2009, the annual per per-
son, family, or entity dues limitation to
qualify for the reporting exception under
§ 6033(e)(3) (and section 5.05 of Rev.
Proc. 98–19, 1998–1 C.B. 547), regarding
certain exempt organizations with nonde-
ductible lobbying expenditures, is $101 or
less.
.34Notice of Large Gifts Received from
Foreign Persons. For taxable years begin-
ning in 2009, recipients of gifts from cer-
tain foreign persons may be required to re-
port these gifts under § 6039F if the ag-
gregate value of gifts received in a taxable
year exceeds $14,139.
.35Persons Against Whom a Federal
Tax Lien Is Not Valid. For calendar year
2009, a federal tax lien is not valid against
(1) certain purchasers under § 6323(b)(4)
who purchased personal property in a
casual sale for less than $1,380, or (2)
a mechanic’s lienor under § 6323(b)(7)
that repaired or improved certain residen-
tial property if the contract price with the
owner is not more than $6,880.
.36Property Exempt from Levy.For
calendar year 2009, the value of property
exempt from levy under § 6334(a)(2) (fuel,
provisions, furniture, and other household
personal effects, as well as arms for per-
sonal use, livestock, and poultry) cannot
exceed $8,230. The value of property ex-
empt from levy under § 6334(a)(3) (books
and tools necessary for the trade, business,
or profession of the taxpayer) cannot ex-
ceed $4,120.
.37Interest on a Certain Portion of the
Estate Tax Payable in Installments.Foran
estate of a decedent dying in calendar year
2009, the dollar amount used to determine
the “2-percent portion” (for purposes of
calculating interest under § 6601(j)) of the
estate tax extended as provided in § 6166
is $1,330,000.
.38Attorney Fee Awards. For fees
incurred in calendar year 2009, the
attorney fee award limitation under
§ 7430(c)(1)(B)(iii) is $180 per hour.
.39Periodic Payments Received un-
der Qualified Long-Term Care Insurance
Contracts or under Certain Life Insur-
ance Contracts. For calendar year 2009,
the stated dollar amount of theper diem
limitation under § 7702B(d)(4), regarding
periodic payments received under a qual-
ified long-term care insurance contract or
periodic payments received under a life
insurance contract that are treated as paid
by reason of the death of a chronically ill
individual, is $280.
SECTION 4. EFFECTIVE DATE
.01General Rule. Except as provided
in section 4.02, this revenue procedure ap-
plies to taxable years beginning in 2009.
.02Calendar Year Rule. This revenue
procedure applies to transactions or events
occurring in calendar year 2009 for pur-
poses of sections 3.07 (low-income hous-
ing credit), 3.09 (transportation mainline
pipeline construction industry optional
expense substantiation rules for payments
to employees under accountable plans),
3.15 (private activity bond volume cap),
3.16 (loan limits on agricultural bonds),
3.17 (general arbitrage rebate rules), 3.18
(safe harbor rules for broker commissions
on guaranteed investment contracts or in-
vestments purchased for a yield restricted
defeasance escrow), 3.26 (expatriation to
avoid tax), 3.29 (valuation of qualified
real property in decedent’s gross estate),
3.30 (annual exclusion for gifts), 3.31 (tax
on arrow shafts), 3.32 (passenger air trans-
portation excise tax), 3.35 (persons against
whom a federal tax lien is not valid), 3.36
(property exempt from levy), 3.37 (inter-
est on a certain portion of the estate tax
payable in installments), 3.38 (attorney
fee awards), and 3.39 (periodic payments
received under qualified long-term care
insurance contracts or under certain life
insurance contracts).
SECTION 5. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Christina M. Glendening of
the Office of Associate Chief Counsel
(Income Tax & Accounting). For further
information regarding this revenue pro-
cedure, contact Ms. Glendening at (202)
622–4920 (not a toll-free call).
2008–45 I.R.B.1114November 10, 2008

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking by
Cross-Refere
nce to
Temporary Re
gulations
Section 6707
AandtheFailure
to Include on
Any Return or
Statement A
ny Information
Required to
be Disclosed
Under Sect
ion 6011 With
Respect to
a Reportable
Transact
ion
REG–160868–04
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: N
otice of proposed rulemaking
by cross-
reference to temporary regula-
tions.
SUMMARY: In this issue of the Bulletin,
the IRS is issuing temporary regulations
(T.D. 9425) under section 6707A of the In-
ternal Revenue Code (Code), which pro-
vide the rules relating to the assessment
of penalties under section 6707A for the
failure to include on any return or state-
ment any information required to be dis-
closed under section 6011 with respect to
a reportable transaction. The text of those
temporary regulations also serves as the
text of these proposed regulations.
DATES: Written or electronic comments
and requests for a public hearing must be
received by December 10, 2008.
ADDRES
SES: Send submission to:
CC:PA:
LPD:PR (REG–160868–04), room
5203,
Internal Revenue Service, P.O. Box
7604,
Ben Franklin Station, Washing-
ton, D
C 20044. Submissions may be
hand d
elivered Monday through Friday
betwe
en the hours of 8 a.m. and 4 p.m.
to: C
C:PA:LPD:PR (REG–160868–04),
Cour
ier’s Desk, Internal Revenue Ser-
vice
, 1111 Constitution Avenue, NW,
Wash
ington, DC, or sent electroni-
call
y via the Federal eRulemaking Por-
tal a
thttp://www.regulations.gov(IRS
REG
–160868–04).
FOR FURTHER IN
FORMATION
CONTACT: Conc
erning the pro-
posed regulat
ions, Matthew Cooper
(202) 622–494
0; concerning submis-
sions of comme
nts and requests for a
public heari
ng, Richard Hurst (202)
622–2949 (TD
D telephone) (not toll-free
numbers) and
his e-mail address is
Richard.A.H
urst@irscounsel.treas.gov.
SUPPLEMENTA
RY INFORMATION:
Background a
nd Explanation of
Provisions
Temporary r
egulations in this issue
of the Bulle
tinamendtheProcedureand
Administra
tion Regulations (26 CFR part
301) relati
ng to section 6707A. Section
811 of the A
merican Jobs Creation Act
of 2004, Pu
blic Law 108–357 (118 Stat.
1418) adde
d section 6707A to the Code to
provide a m
onetary penalty for the failure
to include
on any return or statement any
informat
ion required to be disclosed under
section 6
011 with respect to a reportable
transact
ion. The temporary regulations
set forth
the rules relating to the assess-
ment of t
he penalty as well as the factors
that the
Commissioner (or the Commis-
sioner’
s delegate) will consider in deciding
whether
the penalty should be rescinded
based on
promoting compliance with the
Code an
d effective tax administration.
The tex
t of those temporary regulations
also se
rves as the text of these proposed
regula
tions. The preamble to the tempo-
rary re
gulations explains the amendments.
Specia
lAnalyses
It has b
een determined that this notice
of pro
posed rulemaking is not a significant
regul
atory action as defined in Executive
Order
12866. Therefore,a regulatory as-
sessm
ent is not required. It also has been
deter
mined that section 553(b) of the Ad-
minis
trative Procedure Act (5 U.S.C. chap-
ter 5
) does not apply to these regulations,
and b
ecause they do not impose a collec-
tion
of information on small entities, the
Regu
latory Flexibility Act (5 U.S.C. chap-
ter 6
) does not apply. Pursuant to section
780
5(f) of the Code, these regulations have
bee
n submitted to the Chief Counsel for
Advocacy of th
e Small Business Adminis-
tration for co
mment on its impact on small
business.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (a signed origi-
nal and eight (8) copies)orelectroniccom-
ments that are submitted timely to the IRS.
The IRS and the Treasury Department re-
quest comments on the clarity of the pro-
posed rules and how they can be made eas-
ier to understand. All comments will be
made available for public inspection and
copying. A public hearing may be sched-
uled if requested by any person who timely
submits comments. If a public hearing
is scheduled, notice of the date, time and
place for the public hearing will be pub-
lished in theFederal Register.
Drafting Information
The principal author of these regula-
tions is Matthew Cooper, Office of the As-
sociate Chief Counsel (Procedure and Ad-
ministration).
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART 301 — PROCEDURE AND
ADMINISTRATION
Par. 1. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6707A–1 is added
to read as follows:
§301.6707A–1 Failure to include on
any return or statement any information
required to be disclosed under section
6011 with respect to a reportable
transaction.
[Th
e text of proposed §301.6707A–1 is
the
same as the text of §301.6707A–1T
November 10, 200811152008–45 I.R.B.

published elsewhere in this issue of the
Bulletin].
Linda E. Stiff,
Deputy Commissioner
for Services and Enforcement.
(Filed by the Office of the Federal Register on September
10, 2008, 8:45 a.m., and published in the issue of the Federal
Register for September 11, 2008, 73 F.R. 52805)
Notice of Proposed
Rulemaking and Notice of
Public Hearing
Targeted Populations Under
Section 45D(e)(2)
REG–142339–05
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains pro-
posed regulations relating to how an entity
serving certain targeted populations under
section 45D(e)(2) can meet the require-
ments to be a qualified active low-income
community business. The regulations re-
flect changes to the law made by the Amer-
ican Jobs Creation Act of 2004. The regu-
lations will affect certain taxpayers claim-
ing the new markets tax credit. This doc-
ument also provides a notice of a public
hearing on these proposed regulations.
DATES: Written or electronic comments
must be received by December 23, 2008.
Outlines of topics to be discussed at the
public hearing scheduled for Thursday,
January 22, 2009 at 10:00 a.m. must be
received by Friday, December 26, 2008.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–142339–05), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washing-
ton, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to: CC:PA:LPD:PR (REG–142339–05),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC, or sent electroni-
cally, via the Federal eRulemaking
Portal atwww.regulations.gov(IRS –
REG–142339–05). The public hearing
will be held in the IRS Auditorium,
Internal Revenue Building, 1111
Constitution Avenue, NW, Washington,
DC.
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
Julie Hanlon-Bolton, (202) 622–3040;
concerning submission of comments,
the hearing, and/or to be placed on the
building access list to attend the hearing,
Funmi Awosika Taylor, (202) 622–7180
(not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document amends 26 CFR part 1
to provide rules relating to certain targeted
populations under section 45D(e)(2). On
May 24, 2005, the Community Develop-
ment Financial Institutions (CDFI) Fund
published an advance notice of proposed
rulemaking (ANPRM) (70 FR 29658) to
seek comments from the public with re-
spect to how targeted populations may be
treated as eligible low-income communi-
ties under section 45D(e)(2). In response
to the ANPRM, comments were received
making various suggestions relating to the
Treasury Department’s definition of the
term “targeted populations” and proposing
amendments to the requirements to be a
qualified active low-income community
business under §1.45D–1. On June 30,
2006, the IRS and Treasury Department
released Notice 2006–60, 2006–2 C.B. 82,
which announced that §1.45D–1 would
be amended to provide rules relating to
how an entity meets the requirements to
be a qualified active low-income commu-
nity business when its activities involve
certain targeted populations under section
45D(e)(2). TaxpayersmayrelyonNotice
2006–60 until final regulations are is-
sued. See §601.601(d)(2)(ii)(b). The IRS
and Treasury Department have reviewed
and considered all written and electronic
comments in the process of preparing the
proposed regulations. This preamble to
the proposed regulations describes many
of the more significant comments received
by the IRS and Treasury Department in
response to the notice.
General Overview
Section 45D(a)(1) provides a new mar-
kets tax credit on certain credit allowance
dates described in section 45D(a)(3) with
respect to a qualified equity investment in
a qualified community development entity
(CDE) described in section 45D(c).
Section 45D(b)(1) provides that an eq-
uity investment in a CDE is a “qualified
equity investment” if, among other re-
quirements: (A) the investment is acquired
by the taxpayer at its original issue (di-
rectly or through an underwriter) solely in
exchange for cash; (B) substantially all of
thecashisusedbytheCDEtomakequal-
ified low-income community investments;
and (C) the investment is designated for
purposes of section 45D by the CDE.
Under section 45D(b)(2), the maxi-
mum amount of equity investments issued
by a CDE that may be designated by the
CDE as qualified equity investments shall
not exceed the portion of the new markets
taxcreditlimitationsetforthinsection
45D(f)(1) that is allocated to the CDE by
the Secretary under section 45D(f)(2).
Section 45D(c)(1) provides that an en-
tity is a CDE if, among other requirements,
the entity is certified by the Secretary as a
CDE.
Section 45D(d)(1) provides that the
termqualified low-income community in-
vestmentmeans: (A) any capital or equity
investment in, or loan to, any qualified
active low-income community business
(as defined in section 45D(d)(2)); (B)
the purchase from another CDE of any
loan made by the entity that is a qualified
low-income community investment; (C)
financial counseling and other services
specified in regulations prescribed by the
Secretary to businesses located in, and
residents of, low-income communities;
and (D) any equity investment in, or loan
to, any CDE.
Under section 45D(d)(2), a qualified
active low-income community business is
any corporation (including a nonprofit cor-
poration) or partnership if for such year,
among other requirements, (i) at least 50
percent of the total gross income of the en-
tity is derived from the active conduct of a
qualified business within any low-income
community, (ii) a substantial portion of the
2008–45 I.R.B.1116November 10, 2008

use of the tangible property of the entity
(whether owned or leased) is within any
low-income community, and (iii) a sub-
stantial portion of the services performed
for the entity by its employees are per-
formed in any low-income community.
Under section 45D(d)(3), with certain
exceptions, a qualified business is any
trade or business. The rental to others
of real property is a qualified business
only if, among other requirements, the
real property is located in a low-income
community.
Section 221 of the American Jobs
Creation Act of 2004 (Public Law
108–357, 118 Stat. 1418) amended sec-
tion 45D(e)(2) to provide that the Sec-
retary shall prescribe regulations under
which one or more targeted populations
(within the meaning of section 103(20)
of the Riegle Community Development
and Regulatory Improvement Act of 1994
(12 U.S.C. 4702(20))) may be treated as
low-income communities. The regulations
shall include procedures for determining
which entities are qualified active low-in-
come community businesses with respect
to those populations.
The termtargeted population,asde-
finedin12U.S.C.4702(20)and12C.F.R.
1805.201, means individuals, or an iden-
tifiable group of individuals, including an
Indian tribe, who (A) are low-income per-
sons; or (B) otherwise lack adequate ac-
cess to loans or equity investments. Un-
der 12 U.S.C. 4702(17) as interpreted by
12 C.F.R 1805.104, the termlow-income
means having an income, adjusted for fam-
ily size, of not more than (A) for metropoli-
tan areas, 80 percent of the area median
family income; and (B) for non-metropoli-
tan areas, the greater of (i) 80 percent of the
area median family income; or (ii) 80 per-
cent of the statewide nonmetropolitan area
median family income.
Section 101(a) of the Gulf Oppor-
tunity Zone Act of 2005 (Public Law
109–135, 119 Stat. 2577) added new sec-
tion 1400M(1), which provides that the
Gulf Opportunity Zone (GO Zone) is that
portion of the Hurricane Katrina disaster
area determined by the President to war-
rant individual or individual and public
assistance from the Federal Government
under the Robert T. Stafford Disaster Re-
lief and Emergency Assistance Act (the
Act) by reason of Hurricane Katrina.
Section 1400M(2) provides that the
Hurricane Katrina disaster area is an area
with respect to which a major disaster
has been declared by the President before
September 14, 2005, under section 401 of
the Act by reason of Hurricane Katrina.
After determination by the President that a
disaster area warrants assistance pursuant
to the Act, the Federal Emergency Man-
agement Agency (FEMA) makes damage
assessments. The categories for damage
assessment in the wake of a hurricane are:
flooded area, saturated area, limited dam-
age, moderate damage, extensive damage,
and catastrophic damage.
Under section 1400N(m)(1), a CDE
shall be eligible for an allocation un-
der section 45D(f)(2) of the increase
in the new markets tax credit limita-
tion described in section 1400N(m)(2)
only if a significant mission of the CDE
is the recovery and redevelopment of
the GO Zone. Section 1400N(m)(2)
provides that the new markets tax credit
limitation otherwise determined under
section 45D(f)(1) shall be increased by
an amount equal to $300,000,000 for
2005 and 2006 and $400,000,000 for
2007, to be allocated among CDEs to
make qualified low-income community
investments within the GO Zone.
Notice 2006–60 provides rules relating
to how an entity meets the requirements to
be a qualified active low-income commu-
nity business when its activities involve
targeted populations. Targeted popula-
tions that will be treated as a low-income
community are defined as individuals,
or an identifiable group of individuals,
including an Indian tribe, who are low-in-
come persons or who are individuals who
otherwise lack adequate access to loans or
equity investments. The notice provides
requirements for qualified active low-in-
come community businesses that serve
low-income targeted populations and for
qualified active low-income community
businesses that serve the GO Zone Tar-
geted Population.
Summary of Comments and
Explanation of Provisions
The proposed amendments to
§1.45D–1 incorporate the guidance pro-
vided by Notice 2006–60 into the reg-
ulations. Unless otherwise stated, the
existing rules of §1.45D–1 relating to
qualified active low-income community
businesses apply to businesses serving
targeted populations. For example, the
“reasonable expectations” safe harbor of
§1.45D–1(d)(6)(i) applies to businesses
serving targeted populations. That rule
allows an entity to be treated as a qualified
active low-income community business
for the duration of the CDE’s investment
if the CDE reasonably expects, at the time
the CDE makes the investment in, or loan
to, the entity that the entity will satisfy
the requirements to be a qualified active
low-income community business through-
out the entire period of the investment
or loan. Except as discussed later in this
preamble, the rules in these proposed reg-
ulations are the same as those provided in
Notice 2006–60.
Sections 3.03 and 3.04 of Notice
2006–60 and the proposed amendments to
§1.45D–1 include a definition of Targeted
Populations, determined by the Treasury
Department, that further defines the terms
“low-income persons” and “individuals
who otherwise lack adequate access to
loans or equity investments.”
Section 3.03(1) of Notice 2006–60
states that an individual shall be consid-
ered to be low-income if the individual’s
family income, adjusted for family size,
is not more than (A) for metropolitan ar-
eas, 80 percent of the area median family
income; and (B) for non-metropolitan ar-
eas, the greater of (i) 80 percent of the
area median family income; or (ii) 80
percent of the statewide nonmetropolitan
area median family income. A commenta-
tor requested guidance on calculating the
applicable income limitation and calcu-
lating the family income. In calculating
the applicable income limitation, taxpay-
ers must rely on the annual estimates of
median family income released by the
Department of Housing and Urban De-
velopment (HUD) and may rely on those
figures until 45 days after HUD releases a
new list of income limits, or until HUD’s
effective date for the new list, whichever
is later. For example, a taxpayer hires on
January 1, 2007, a new employee who is a
member of a four person family. The most
recent HUD median family income esti-
mates were released on March 19, 2007.
In determining whether the employee is
low-income on January 1, 2008, the tax-
payer may rely on the 2007 HUD median
family income estimates for a four person
November 10, 200811172008–45 I.R.B.

family until 45 days after HUD releases a
new list of income limits, or until HUD’s
effective date for the new list, whichever
is later. The income limits are computed
and listed, according to family size, by
HUD for every Metropolitan Statistical
Area, Primary Metropolitan Statistical
Area, and nonmetropolitan county of the
United States and Puerto Rico. HUD also
releases income limits for the possessions
of Guam and the Virgin Islands.
One commentator suggested that it
would be less burdensome for a qualified
active low-income community businesses
to document that an individual is low-in-
come for purposes of section 45D(e)(2) if
individuals who live in a low-income com-
munity as defined in section 45D(e)(1),
(3), (4), or (5) were deemed to be low-in-
come for purposes of section 45D(e)(2).
However, section 45D(e)(2) directly cross
references targeted populations as defined
in 12 U.S.C. 4702(20). The termlow-in-
comeis defined in 12 U.S.C. 4702(17) to
mean having an income, adjusted for fam-
ily size, of not more than: for metropolitan
areas, 80 percent of the area median in-
come; and for nonmetropolitan areas, the
greater of 80 percent of the area median
income or 80 percent of the statewide
nonmetropolitan area median income. Ac-
cordingly, the Treasury Department is not
adopting the commentator’s suggestion.
Some commentators suggested stricter
requirements for targeted populations by
increasing the 120-percent-income restric-
tion in section 3.03(3) of Notice 2006–60
to 150 percent of municipal median in-
come and requiring that taxpayers meet all
three of the qualified active low-income
community business tests set forth in sec-
tions 3.03(2)(a) and 3.04(3)(a) instead of
one of the three. The commentators also
suggested providing stricter requirements
for the definitions of low-income persons,
low-income communities, and qualified
active low-income community businesses.
The commentators expressed concern that
Notice 2006–60 permits investments be-
yond low-income communities. Neither
Notice 2006–60 nor the proposed regula-
tions change the existing rules governing
low-income communities. Rather, they
provide guidance on how an entity serving
certain targeted populations under section
45D(e)(2) can be a qualified active low-in-
come community business. The IRS and
Treasury Department believe that Notice
2006–60 and the proposed regulations
appropriately implement Congressional
intent to expand new market tax credit in-
vestments to low-income individuals and
individuals that otherwise lack adequate
access to loans or equity investments by
treating targeted populations as a low-in-
come community. Congress enacted the
targeted populations provisions under sec-
tion 45D(e)(2) to expand new markets tax
credit investment dollars to other under-
served areas. Consequently, the proposed
regulations do not adopt the commenta-
tors’ suggestions.
Some commentators believe that the
rules in Notice 2006–60 should be broad-
ened in scope to allow entities engaged
in essential governmental functions, such
as health care services to the community,
to be deemed to be a qualified active
low-income community business serving
targeted populations. The IRS and Trea-
sury Department do not believe that it is
appropriate to provide targeted benefits
to particular industries. Accordingly, the
proposed regulations do not adopt this
comment.
Other commentators believe that a
non-profit business that is not individu-
ally owned should be able to satisfy the
ownership test if at least 25 percent of
the business’s board is comprised of indi-
viduals who are low-income or represent
a low-income targeted population. An-
other commentator suggested removing
the 120-percent-income restriction. Con-
cerning the rules for the GO Zone Targeted
Population, one commentator suggested
using parishes rather than census tracts
and suggested removing or substantially
reducing the percentage test for the gross
income requirement. The proposed reg-
ulations do not adopt these suggestions
because the IRS and Treasury Department
believe that the guidance provided in No-
tice 2006–60 generally ensures that the
businesses receiving qualified low-income
community investments serve targeted
populations for low-income and GO Zone
populations. Finally, some commenta-
tors suggested providing geographic rules
for targeted populations. Targeted pop-
ulations is not a geographic concept; it
is designed to provide a new markets
tax credit to investors of qualified active
low-income community businesses that
serve targeted populations. Therefore, this
comment was not adopted.
Section 3.03(2) of Notice 2006–60
provides qualified active low-income
community business requirements for
low-income targetedpopulations. Several
commentators suggested that businesses
that qualify and participate in other Fed-
eral programs targeted specifically to
low-income individuals and families may
use such participation as a proxy for meet-
ing the targeted populations requirements.
The IRS and Treasury Department have
not analyzed other Federal programs to
determine whether they meet the statutory
requirements under section 45D(e), and
it is not certain that programs currently
meeting the requirements would continue
to do so in the future. Moreover, the IRS
and Treasury Department do not believe it
is appropriate to exempt certain businesses
from meeting the regulatory requirements
to be a qualified active low-income com-
munity business based upon participation
in other Federal programs, including those
designed to aid low-income individuals
and families, because these Federal pro-
grams cannot be substituted for the statu-
tory requirements under section 45D(e).
Therefore, the proposed regulations do not
adopt this comment.
One commentator requested that
the gross income requirement of sec-
tion 3.03(2)(a)(i) of Notice 2006–60 be
amended to include income from the pro-
vision of services to businesses that serve
targeted populations. The comment fo-
cuses on wholesalers that sell goods to
retailers that resell to low-income persons.
The IRS and Treasury Department believe
that such a rule would cover too broad a
range of transactions and would conflict
with the goal of ensuring that qualified
low-income community investment dol-
lars go directly to businesses that serve
targeted populations. Accordingly, the
proposed regulations do not adopt this
comment.
Several commentators suggested that
additional restrictions should be added to
the employee requirement under sections
3.03(2)(a)(ii) and 3.04(3)(a)(ii) of Notice
2006–60. One commentator proposed
thattheemployeeshouldbeamemberof
a targeted group as defined by the work
opportunity tax credit under section 51.
Another commentator suggested that a
business should be able to satisfy the em-
ployee test only if the business pays a
wage that would increase the income of the
2008–45 I.R.B.1118November 10, 2008

low-income individual being hired. Still
another commentator suggested that the
employee requirement be satisfied only if
each $25,000 in tax credit allocation re-
sults in at least one new job. Although the
proposed regulations do not incorporate
these suggestions at this time, the IRS and
Treasury Department request comments
regarding whether additional restrictions
should be added to the employee require-
ment.
One commentator asked that the guid-
ance provided in section 3.03(2)(b) of
Notice 2006–60 on the determination of
whether an employee is a low-income
person be amended to provide that the
determination should be made on the later
of the date the employee was hired or the
date the qualified low-income community
investment is made. The IRS and Trea-
sury Department believe that adopting this
comment would create undue complexity.
In addition, the IRS and Treasury Depart-
ment do not want to provide a rule that
may encourage employers to keep their
employees low-income to be eligible as a
qualified active low-income community
business. Therefore, the proposed regula-
tions retain the rule in Notice 2006–60 that
the determination of whether an employee
isalow-incomepersonismadeatthetime
of hire.
Sections 3.03(3)(a)(iii) and 3.04(4)
(a)(iii) of Notice 2006–60 provide that
the 120-percent-income restriction and
the 200-percent-income restriction,
respectively, do not apply to an entity
located within a population census tract
with a population of less than 2,000 if
such tract is located ina metropolitan area
and more than 75 percent of the tract is
zoned for commercial or industrial use. A
commentator suggested that to determine
whether 75 percent of a population census
tract is zoned for commercial or industrial
use, the area of the population census
tract should be used. In addition, the
tract should be considered zoned for
commercial or industrial use if commercial
or industrial use is a permissible zoning
use. The IRS and Treasury Department
agree that these suggestions will help
clarify the rule. Accordingly, the proposed
regulations adopt the commentator’s
suggestions.
Sections 3.03(3)(b), 3.04(3)(b), and
3.04(4)(b) of Notice 2006–60 provide tests
to determine whether an entity is located
in a particular census tract. One commen-
tator suggested that the percentages used
for the use of tangible property test and
services performed test be increased from
40 percent to 60 percent. The proposed
regulations do not adopt this comment
because the proposed percentages are
consistent with the qualified active low-in-
come community business requirements
under §1.45D–1(d)(4)(i).
Section 3.03(4) of Notice 2006–60 pro-
vides that the rental to others of real prop-
erty for low-income targeted populations
that otherwise satisfies the requirements to
be a qualified business will be treated as
located in a low-income community if at
least 50 percent of the entity’s total gross
income is derived from rentals to individ-
uals who are low-income persons and/or to
a qualified active low-income community
business that meets the requirements for
low-income targetedpopulations. Section
3.04(5) provides a similar rule for rental
of real property for the GO Zone Targeted
Population. One commentator suggested
that “50 percent” be lowered to “20 per-
cent” to mirror the definition of non-res-
idential real property for purposes of de-
preciation under section 168. The IRS and
Treasury Department believe that, for pur-
poses of determining whether a business
engaged in the rental of real property is
located in a low-income community, it is
more appropriate to adopt rules consistent
with the rules governing whether an en-
tity is a qualified active low-income com-
munity business for targeted populations.
Therefore, the proposed regulations do not
adopt the commentator’s suggestion.
The Treasury Department has deter-
mined that an individual is considered to
otherwise lack adequate access to loans or
equity investments only if the individual
was displaced from his or her principal
residence as a result of Hurricane Katrina
and/or the individual lost his or her prin-
cipal source of employment as a result of
Hurricane Katrina. In order to meet this
definition, the individual’s principal resi-
dence or principal source of employment,
as applicable, must have been located
in a population census tract within the
GO Zone that contains one or more areas
designated by FEMA as flooded, having
sustained extensive damage, or having
sustained catastrophic damage as a result
of Hurricane Katrina. One commentator
asked how taxpayers would know which
population census tracts have received the
relevant FEMA designations. The CDFI
Fund has made this information available
on its website atwww.cdfifund.gov.
Commentators requested that the
GO Zone Targeted Population be
expanded to all census tracts within the
GO Zone, rather than limited to only those
areas designated by FEMA as flooded,
having sustained extensive damage, or
having sustained catastrophic damage
as a result of Hurricane Katrina. The
IRS and Treasury Department believe
that for purposes of the increase in the
limitation under section 1400N(m)(2), the
new markets tax credit should only be
used in the areas that were most devastated
by Hurricane Katrina or are otherwise
qualified as low-income communities.
The IRS and Treasury Department believe
that the areas that were most devastated by
Hurricane Katrina are in greater need of
assistance, due to lack of adequate access
to loans or equity investments, than other
areas within the GO Zone.
Commentators requested that the pro-
posed regulations not limit use of the
rules governing the GO Zone Targeted
Population to investments made by CDEs
with allocations from the increase un-
der section 1400N(m)(2). The IRS and
Treasury Department do not believe that
it is appropriate to expand the ability to
use the rules governing the GO Zone
Targeted Population beyond investments
made by CDEs with GO Zone allocations,
because it would remove much needed
assistance from other low-income com-
munities within the GO Zone.
Section 1.45D–1(d)(4)(iv)(A) provides
that for purposes of §1.45D–1(d)(4)(i), an
entity will be treated as engaged in the
active conduct of a trade or business if,
at the time the CDE makes a capital or
equity investment in, or loan to, the en-
tity, the CDE reasonably expects that the
entity will generate revenues (or, in the
case of a nonprofit corporation, engage
in an activity that furthers its purpose as
a nonprofit corporation) within 3 years
after the date the investment or loan is
made. This “active conduct of a trade
or business” safe harbor applies only for
purposes of determining whether an en-
tity is engaged in the active conduct of a
trade or business and does not apply for
purposes of determining whether an entity
is otherwise a qualified active low-income
November 10, 200811192008–45 I.R.B.

community business. Further, the “active
conduct of a trade or business” safe harbor
does not conflict with the gross-income
requirement of §1.45D–1(d)(4)(i)(A) be-
cause that paragraph provides that the
entity is deemed to meet the gross-income
requirement if the entity meets the require-
ments of either §1.45D–1(d)(4)(i)(B) or
(C) if “50 percent” is applied instead of
“40 percent.” Therefore, an entity that has
no gross receipts and relies on the “ac-
tive conduct of a trade or business” safe
harbor of §1.45D–1(d)(4)(iv)(A) can meet
the requirements to be a qualified active
low-income community business by sat-
isfying either the use of tangible property
requirement of §1.45D–1(d)(4)(i)(B) or
the services performed requirement of
§1.45D–1(d)(4)(i)(C) at 50 percent in-
stead of 40 percent. Several commentators
requested that, in order to accommodate
start-up entities, the proposed regulations
provide a rule wherein a business could
qualify as a qualified active low-income
community business serving targeted pop-
ulations if the CDE reasonably expects
that the entity will generate revenues
within three years after the date the in-
vestment or loan is made. If a business
serving targeted populations chose to ap-
ply the gross income requirement rather
than the employee requirement or the
owner requirement, the commentators’
suggestion could potentially allow a busi-
ness to be a qualified active low-income
community business for three years with-
out having to meet any requirement. This
result is clearly inappropriate. Therefore,
the proposed regulations do not adopt the
commentators’ suggestion. In addition,
the proposed regulations clarify the lan-
guage in §1.45D–1(d)(4)(iv)(A) to address
any confusion as to the application of the
“active conduct of a trade or business”
safe harbor.
Several commentators submitted com-
ments that address subjects not within the
scope of these proposed regulations. For
example, comments were received ad-
dressing CDFI Fund allocation application
procedures, such as minimum submission
requirements, weighted scoring criteria,
approval procedures, “high distress” crite-
ria, underwriting criteria, and amendments
to existing allocation agreements. These
comments have been forwarded to the
CDFI Fund for consideration.
Proposed Effective/Applicability Date
The rules contained in these regulations
are proposed to apply to taxable years end-
ing on or after the date of publication of
the Treasury decision adopting these rules
as final regulation in theFederal Regis-
ter. In the meantime, taxpayers may rely
on Notice 2006–60, 2006–2 C.B. 82, for
designations made by the Secretary after
October 22, 2004.
Request for Comments
The IRS and Treasury Department in-
vite taxpayers to submit comments on is-
sues relating to how an entity meets the re-
quirements to be a qualified active low-in-
come community business when its activ-
ities involve certain targeted populations
under section 45D(e)(2). In particular, the
IRS and Treasury Department encourage
taxpayers to submit comments on the fol-
lowing issues:
1. What measure of income should
be used to determine an individual’s in-
come for purposes of the definition of low-
income persons in §1.45D–1(d)(9)(i)(A)?
For example, should the measure of in-
come for this purpose be the same as the
measure of income used by the U.S. Cen-
sus Bureau, the measure of income on the
IRS Form 1040, or the measure of income
in 24 CFR Part 5, which is used for cer-
tain HUD programs and other Federal pro-
grams? The IRS and Treasury Department
are considering using the measure of in-
come used by the U.S. Census Bureau to
ensure a consistent comparison between
the individual’s family income and the ap-
plicable area median family income.
2. Should the gross income require-
ments in §1.45D–1(d)(9)(i)(B)(1)(i)and
(ii)(C)(1)(i) be modified to include the fair
market value of goods and services pro-
vided to low-income persons at reduced
fees? For example, should a business
that provides its services to low-income
persons for half of what it charges its
other customers be able to include the fair
market value of the services provided to
low-income persons in its calculation of
gross income for purposes of the require-
ment in §1.45D–1(d)(9)(i)(B)(1)(i)?
3.Should additional restrictions
be added to the employee require-
ments in §1.45D–1(d)(9)(i)(B)(1)(ii)and
(ii)(C)(1)(ii)? For example, as one com-
mentator suggested, should a requirement
be added that the employee be a member
of a targeted group as defined by the work
opportunity tax credit? As another com-
mentator suggested, should the employee
test be satisfied only if the business pays
a wage that would increase the income of
the low-income individual being hired?
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It is hereby cer-
tified that these regulations will not have a
significant economic impact on a substan-
tial number of small entities. This certifi-
cation is based upon the fact that the regu-
lations provide a positive impact because,
consistent with legislative intent, they al-
low a tax credit to be claimed in situations
where it was previously unavailable with-
out the Secretary providing for such situa-
tions in regulations. Therefore, a Regula-
tory Flexibility Analysis under the Regula-
tory Flexibility Act (5 U.S.C. chapter 6) is
not required. Pursuant to section 7805(f)
of the Internal Revenue Code, this notice
of proposed rulemaking will be submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on their impact on small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments
(a signed original and eight (8) copies)
or electronic comments that are submit-
ted timely to the IRS. Comments are re-
quested on all aspects of the proposed reg-
ulations. In addition, the IRS and Trea-
sury Department specifically request com-
ments on the clarity of the proposed rules
and how they can be made easier to under-
stand. All comments will be available for
public inspection and copying.
A public hearing has been scheduled for
Friday, January 22, 2009 at 10 a.m. in the
IRS Auditorium, Internal Revenue Build-
ing, 1111 Constitution Avenue, NW, Wash-
ington, DC. Due to building security pro-
cedures, visitors must enter at the Consti-
tution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
2008–45 I.R.B.1120November 10, 2008

restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER IN-
FORMATION CONTACT” section of this
preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing.
Persons who wish to present oral com-
ments at the hearing must submit elec-
tronic or written comments and an out-
line of the topics to be discussed and the
time to be devoted to each topic (a signed
original and eight (8) copies) by Decem-
ber 26, 2008. A period of 10 minutes will
be allotted to each person for making com-
ments. An agenda showing the scheduling
of the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal author of these regula-
tionsisLaurenRossTaylor,formerlywith
theOfficeoftheAssociateChiefCoun-
sel (Passthroughs and Special Industries),
IRS. However, other personnel from the
IRS and Treasury Department participated
in their development.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.45D–1 also issued under
26 U.S.C. 45D(e)(2) * * *
Par. 2. Section 1.45D–1 is amended by:
1. Revising paragraph (a) to re-
vise the entry for paragraph (h) and
add new entries for (d)(9), (d)(9)(i),
(d)(9)(i)(A), (d)(9)(i)(B), (d)(9)(i)(B)(1),
(d)(9)(i)(B)(2),(d)(9)(i)(B)(3),
(d)(9)(i)(C),(d)(9)(i)(C)(1),
(d)(9)(i)(C)(2), (d)(9)(i)(D), (d)(9)(ii),
(d)(9)(ii)(A), (d)(9)(ii)(B), (d)(9)(ii)(C),
(d)(9)(ii)(C)(1),(d)(9)(ii)(C)(2),
(d)(9)(ii)(C)(2)(i),(d)(9)(ii)(C)(2)(ii),
(d)(9)(ii)(D),(d)(9)(ii)(D)(1),
(d)(9)(ii)(D)(2), (d)(9)(ii)(E), and (h)(3).
2. Revising paragraph (d)(4)(i).
3. Adding the language “See paragraph
(d)(9) of this section for rules relating to
targeted populations.” to the end of para-
graph (d)(4)(i)(A).
4. Adding the language “See paragraph
(d)(9) of this section for rules relating to
targeted populations.” to the end of para-
graph (d)(4)(i)(B)(1).
5. Adding the language “See paragraph
(d)(9) of this section for rules relating to
targeted populations.” to the end of para-
graph (d)(4)(i)(C).
6. Adding a new sentence at the end of
paragraph (d)(4)(iv)(A).
7. Adding new paragraph (d)(9).
8. Revising the heading for paragraph
(h) and adding new paragraph (h)(3).
The additions and revisions read as fol-
lows:
§1.45D–1 New markets tax credit.
(a) * * *
(d) * * *
(9) Targeted populations.
(i) Low-income persons.
(A) Definition.
(B) Qualified active low-income com-
munity business requirements for low-in-
come targeted populations.
(1) In general.
(2) Employee.
(3)Owner.
(C) 120-percent-income restriction.
(1) In general.
(2) Population census tract location.
(D) Rental of real property for low-in-
come targeted populations.
(ii) Individuals who otherwise lack ad-
equate access to loans or equity invest-
ments.
(A) In general.
(B) GO Zone Targeted Population.
(C) Qualified active low-income com-
munity business requirements for the
GO Zone Targeted Population.
(1) In general.
(2) Location.
(i) In general.
(ii) Determination.
(D) 200-percent-income restriction.
(1) In general.
(2) Population census tract location.
(E) Rental of real property for the
GO Zone Targeted Population.
*****
(h) Effective/applicability dates.
(3) Targeted populations.
*****
(d) * * *
(4) * * *
(i)In general.Thetermqualified active
low-income community businessmeans,
with respect to any taxable year, a corpo-
ration (including a nonprofit corporation)
or a partnership engaged in the active con-
duct of a qualified business (as defined
in paragraph (d)(5) of this section), if the
requirements of (d)(4)(i)(A), (B), (C), (D),
and (E) of this section are met (or in the
case of an entity serving targeted popu-
lations, if the requirements of paragraphs
(d)(4)(i)(D), (E), and (d)(9)(i) or (ii) of this
section are met). Solely for purposes of
this section, a nonprofit corporation will
be deemed to be engaged in the active con-
duct of a trade or business if it is engaged
in an activity that furthers its purpose as a
nonprofit corporation.
*****
(iv)Active conduct of a trade or busi-
ness—(A)***Thisparagraph(d)(4)(iv)
applies only for purposes of determining
whether an entity is engaged in the active
conduct of a trade or business and does not
apply for purposes of determining whether
the gross-income requirement under para-
graph (d)(4)(i)(A), (d)(9)(i)(B)(1)(i), or
(d)(9)(ii)(C)(1)(i) of this section is satis-
fied.
*****
(9)Targeted populations. As deter-
mined by the Treasury Department, for
purposes of section 45D(e)(2), targeted
populations that will be treated as a low-in-
come community are individuals, or an
identifiable group of individuals, includ-
ing an Indian tribe, who are low-income
persons as defined in paragraph (d)(9)(i)
of this section or who are individuals who
otherwise lack adequate access to loans or
equity investments as defined in paragraph
(d)(9)(ii) of this section.
(i)Low-income persons—(A)Defini-
tion. For purposes of section 45D(e)(2),
an individual shall be considered to be
low-income if the individual’s family in-
come, adjusted for family size, is not more
than—
November 10, 200811212008–45 I.R.B.

(1) For metropolitan areas, 80 percent
of the area median family income; and
(2) For non-metropolitan areas, the
greater of 80 percent of the area me-
dian family income, or 80 percent of the
statewide non-metropolitan area median
family income.
(B)Qualified active low-income com-
munity business requirements for low-in-
come targeted populations—(1)In gen-
eral. An entity will not be treated as a qual-
ified active low-income community busi-
ness for low-income targeted populations
unless—
(i) At least 50 percent of the entity’s to-
tal gross income for any taxable year is
derived from sales, rentals, services, or
other transactions with individuals who are
low-income persons for purposes of sec-
tion 45D(e)(2) and this paragraph (d)(9),
(ii) At least 40 percent of the entity’s
employees are individuals who are low-
income persons for purposes of section
45D(e)(2) and this paragraph (d)(9), or
(iii) At least 50 percent of the entity is
owned by individuals who are low-income
persons for purposes of section 45D(e)(2)
and this paragraph (d)(9).
(2)Employee. The determination of
whether an employee is a low-income per-
son must be made at the time the employee
is hired. If the employee is a low-income
person at the time of hire, that employee is
considered a low-income person for pur-
poses of section 45D(e)(2) and this para-
graph (d)(9) throughout the time of em-
ployment, without regard to any increase
in the employee’s income after the time of
hire.
(3)Owner. The determination of
whether an owner is a low-income person
must be made at the time the qualified
low-income community investment is
made. If an owner is a low-income person
at the time the qualified low-income com-
munity investment is made, that owner
is considered a low-income person for
purposes of section 45D(e)(2) and this
paragraph (d)(9) throughout the time the
ownership interest is held by that owner.
(C)120-percent-income restric-
tion—(1)In general—(i)Innocasewill
an entity be treated as a qualified active
low-income community business under
paragraph (d)(9)(i) of this section if the
entity is located in a population census
tract for which the median family income
exceeds 120 percent of—
(A) In the case of a tract not located
within a metropolitan area, the statewide
median family income, or
(B) In the case of a tract located within a
metropolitan area, the greater of statewide
median family income or metropolitan
area median family income (120-per-
cent-income restriction).
(ii) The 120-percent-income restriction
shall not apply to an entity located within
a population census tract with a population
of less than 2,000 if such tract is not located
in a metropolitan area.
(iii) The 120-percent-income restric-
tion shall not apply to an entity located
within a population census tract with a
population of less than 2,000 if such tract
is located in a metropolitan area and more
than 75 percent of the tract is zoned for
commercial or industrial use. For this
purpose, the 75 percent calculation should
be made using the area of the popula-
tion census tract. For purposes of this
paragraph (d)(9)(i)(C)(1)(iii), property for
which commercial or industrial use is a
permissible zoning use will be treated as
zoned for commercial or industrial use.
(2)Population census tract loca-
tion—(i) For purposes of the 120-per-
cent-income restriction, an entity will be
considered to be located in a population
census tract for which the median fam-
ily income exceeds 120 percent of the
applicable median family income under
paragraph (d)(9)(i)(C)(1)(i)(A)or(B)of
this section (non-qualifying population
census tract) if—
(A) At least 50 percent of the total gross
income of the entity is derived from the
active conduct of a qualified business (as
defined in paragraph (d)(5) of this section)
within one or more non-qualifying popu-
lation census tracts (non-qualifying gross
income amount);
(
B) At least 40 percent of the use of the
tangible property of the entity (whether
owned or leased) is within one or more
non-qualifying population census tracts
(non-qualifying tangible property usage);
and
(C) At least 40 percent of the services
performed for the entity by its employees
are performed in one or more non-qualify-
ing population census tracts (non-qualify-
ing services performance).
(ii) The entity is considered to have the
non-qualifying gross income amount if the
entity has non-qualifying tangible property
usage or non-qualifying services perfor-
mance of at least 50 percent instead of 40
percent.
(iii) If the entity has no employees, the
entity is considered to have the non-qual-
ifying gross income amount as well as
non-qualifying services performance if at
least 85 percent of the use of the tangible
property of the entity (whether owned or
leased) is within one or more non-qualify-
ing population census tracts.
(D)Rental of real property for low-in-
come targeted populations. The rental to
others of real property for low-income tar-
geted populations that otherwise satisfies
the requirements to be a qualified business
under paragraph (d)(5) of this section will
be treated as located in a low-income com-
munity for purposes of paragraph (d)(5)(ii)
of this section if at least 50 percent of
the entity’s total gross income is derived
from rentals to individuals who are low-
income persons for purposes of section
45D(e)(2) and this paragraph (d)(9) and/or
to a qualified active low-income commu-
nity business that meets the requirements
for low-income targeted populations un-
der paragraphs (d)(9)(i)(B)(1)(i)or(ii)and
(d)(9)(i)(B)(2)ofthissection.
(ii)Individuals who otherwise lack
adequate access to loans or equity in-
vestments—(A)In general. Paragraph
(d)(9)(ii) of this section may be applied
only with regard to qualified low-income
community investments made under the
increase in the new markets tax credit lim-
itation pursuant to section 1400N(m)(2).
Therefore, only CDEs with a significant
mission of recovery and redevelopment of
the Gulf Opportunity Zone (GO Zone) that
receive an allocation from the increase
described in section 1400N(m)(2) may
make qualified low-income community
investments from that allocation pursuant
to the rules in paragraph (d)(9)(ii) of this
section.
(B)GO Zone Targeted Population.As
determined by the Treasury Department,
for purposes of targeted populations under
section 45D(e)(2), an individual is con-
sidered to otherwise lack adequate access
to loans or equity investments only if the
individual was displaced from his or her
principal residence as a result of Hurri-
cane Katrina and/or the individual lost his
or her principal source of employment as
a result of Hurricane Katrina (GO Zone
Targeted Population). In order to meet this
2008–45 I.R.B.1122November 10, 2008

definition, the individual’s principal resi-
dence or principal source of employment,
as applicable, must have been located
in a population census tract within the
GO Zone that contains one or more areas
designated by the Federal Emergency
Management Agency (FEMA) as flooded,
having sustained extensive damage, or
having sustained catastrophic damage as a
result of Hurricane Katrina.
(C)Qualified active low-income com-
munity business requirements for the
GO Zone Targeted Population—(1)In
general. An entity will not be treated as
a qualified active low-income community
business for the GO Zone Targeted
Population unless—
(i) At least 50 percent of the entity’s to-
tal gross income for any taxable year is
derived from sales, rentals, services, or
other transactions with the GO Zone Tar-
geted Population, low-income persons as
defined in paragraph (d)(9)(i) of this sec-
tion, or some combination thereof;
(ii) At least 40 percent of the entity’s
employees consist of the GO Zone Tar-
geted Population, low-income persons as
defined in paragraph (d)(9)(i) of this sec-
tion, or some combination thereof; or
(iii) At least 50 percent of the entity
is owned by the GO Zone Targeted Pop-
ulation, low-income persons as defined in
paragraph (d)(9)(i) of this section, or some
combination thereof.
(2)Location—(i)In general.Inor-
der to be a qualified active low-income
community business under paragraph
(d)(9)(ii)(C) of this section, the entity
must be located in a population census
tract within the GO Zone that contains
one or more areas designated by FEMA
as flooded, having sustained extensive
damage, or having sustained catastrophic
damage as a result of Hurricane Katrina
(qualifying population census tract).
(ii)Determination—(A) For purposes
of the preceding paragraph, an entity will
be considered to be located in a qualifying
population census tract if—
(I) At least 50 percent of the total gross
income of the entity is derived from the
active conduct of a qualified business (as
defined in paragraph (d)(5) of this section)
within one or more qualifying population
census tracts (gross income requirement);
(II) At least 40 percent of the use of
the tangible property of the entity (whether
owned or leased) is within one or more
qualifying population census tracts (use of
tangible property requirement); and
(III) At least 40 percent of the services
performed for the entity by its employ-
ees are performed in oneormorequalify-
ing population census tracts (services per-
formed requirement).
(B) The entity is deemed to satisfy the
gross income requirement if the entity sat-
isfies the use of tangible property require-
ment or the services performed require-
ment on the basis of at least 50 percent in-
stead of 40 percent.
(C) If the entity has no employees, the
entity is deemed to satisfy the services per-
formed requirement as well as the gross
income requirement if at least 85 percent
of the use of the tangible property of the
entity (whether owned or leased) is within
one or more qualifying population census
tracts.
(D)200-percent-income restric-
tion—(1)In general—(i) In no case will
an entity be treated as a qualified active
low-income community business under
paragraph(d)(9)(ii)ofthissectionifthe
entity is located in a population census
tract for which the median family income
exceeds 200 percent of—
(A) In the case of a tract not located
within a metropolitan area, the statewide
median family income, or
(B) In the case of a tract located within a
metropolitan area, the greater of statewide
median family income or metropolitan
area median family income (200-per-
cent-income restriction).
(ii) The 200-percent-income restriction
shall not apply to an entity located within
a population census tract with a population
of less than 2,000 if such tract is not located
in a metropolitan area.
(iii) The 200-percent-income restric-
tion shall not apply to an entity located
within a population census tract with a
population of less than 2,000 if such tract
is located in a metropolitan area and more
than 75 percent of the tract is zoned for
commercial or industrial use. For this
purpose, the 75 percent calculation should
be made using the area of the population
census tract. For purposes of this para-
graph (d)(9)(ii)(D)(1)(iii), property for
which commercial or industrial use is a
permissible zoning use will be treated as
zoned for commercial or industrial use.
(2)Population census tract loca-
tion—(i) For purposes of the 200-per-
cent-income restriction, an entity will be
considered to be located in a population
census tract for which the median fam-
ily income exceeds 200 percent of the
applicable median family income under
paragraph (d)(9)(ii)(D)(1)(i)(A)or(B)of
this section (non-qualifying population
census tract) if—
(A) At least 50 percent of the total gross
income of the entity is derived from the
active conduct of a qualified business (as
defined in paragraph (d)(5) of this section)
within one or more non-qualifying popu-
lation census tracts (non-qualifying gross
income amount);
(B) At least 40 percent of the use of the
tangible property of the entity (whether
owned or leased) is within one or more
non-qualifying population census tracts
(non-qualifying tangible property usage);
and
(C) At least 40 percent of the services
performed for the entity by its employees
are performed in one or more non-qualify-
ing population census tracts (non-qualify-
ing services performance).
(ii) The entity is considered to have the
non-qualifying gross income amount if the
entity has non-qualifying tangible property
usage or non-qualifying services perfor-
mance of at least 50 percent instead of 40
percent.
(iii) If the entity has no employees, the
entity is considered to have the non-qual-
ifying gross income amount as well as
non-qualifying services performance if at
least 85 percent of the use of the tangible
property of the entity (whether owned or
leased) is within one or more non-qualify-
ing population census tracts.
(E)Rental of real property for the
GO Zone Targeted Population.The
rental to others of real property for
the GO Zone Targeted Population that
otherwise satisfies the requirements to
be a qualified business under paragraph
(d)(5) of this section will be treated as
located in a low-income community for
purposes of paragraph (d)(5)(ii) of this
section if at least 50 percent of the entity’s
total gross income is derived from rentals
to the GO Zone Targeted Population,
low-income persons as defined in
paragraph (d)(9)(i) of this section and/or to
a qualified active low-income community
business that meets the requirements for
the GO Zone Targeted Population under
November 10, 200811232008–45 I.R.B.

paragraphs (d)(9)(ii)(C)(1)(i) or (ii) of this
section.
*****
(h) Effective/applicability dates * * *
*****
(3)Targeted populations.Therulesin
paragraph (d)(9) of this section apply to
taxable years ending on or after the date of
publication of the Treasury decision adopt-
ing these rules as final regulation in the
Federal Register.
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on September
23, 2008, 8:45 a.m., and published in the issue of the Federal
Register for September 24, 2008, 73 F.R. 54990)
Notice of Proposed
Rulemaking and Notice of
Public Hearing
Public Approval Guidance for
Tax-Exempt Bonds
REG–128841–07
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of Proposed Rulemaking
and Notice of Public Hearing.
SUMMARY: This document contains pro-
posed regulations on the public approval
requirements under section 147(f) of the
Internal Revenue Code (Code) applica-
ble to tax-exempt private activity bonds
issued by State and local governments.
The proposed regulations affect State and
local governmental issuers of tax-exempt
private activity bonds. This document
also provides notice of a public hearing on
these proposed regulations.
DATES: Written or electronic comments
must be received by December 8, 2008.
Outlines of topic to be discussed at the
public hearing scheduled for January 26,
2009, at 10 a.m., must be received by De-
cember 29, 2008.
ADDRESSES: Send submissions to
CC:PA:LPD:PR(REG–128841–07),
room 5203, Internal Revenue Service,
PO Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may
be hand-delivered Monday through Friday
betweenthehoursof8a.m. and4p.m.
to CC:PA:LPD:PR (REG–128841–07),
Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW,
Washington, DC, or sent electronically,
viatheFederaleRulemaking
Portal atwww.regulations.gov(IRS
REG–128841–07). The public hearing
will be held in the Auditorium, beginning
at 10 a.m., at the Internal Revenue
Building, 1111 Constitution Avenue, NW,
Washington, DC.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed reg-
ulations, David White, (202) 622–3980;
concerning submissions of comments and
the hearing, contact Funmi Taylor at (202)
622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in the proposed regulations has been sub-
mitted to the Office of Management and
Budget in accordance with the Paper-
work Reduction Act of 1995 (44 U.S.C.
3507(d)). Comments on the collection
of information should be sent to theOf-
fice of Management and Budget, Attn:
Desk Officer for the Department of the
Treasury, Office of Information and Reg-
ulatory Affairs, Washington, DC 20503,
with copies to theInternal Revenue Ser-
vice, Attn: IRS Reports Clearance Officer,
SE:W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collection of
information should be received by Novem-
ber 10, 2008. Comments are specifically
requested concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the IRS, in-
cluding whether the information will have
practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information;
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collection of information may be
minimized, including through the appli-
cation of automated collection techniques
or other forms of information technology;
and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of services to provide informa-
tion.
The collection of information in this
proposed regulation is in §1.147(f)–1(b).
This information is required to meet the
public approval requirement under section
147(f). The likely respondents are issuers
of qualified private activity bonds.
Estimated total annual reporting bur-
den: 2600 hours.
Estimated average annual burden per
respondent: 1.3 hours.
Estimated number of respondents:
2,000.
Estimated frequency of responses: Not
applicable (this is a third party disclosure
requirement).
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 Of-
fice of Management and Budget.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Background
This document contains proposed
amendments to the Income Tax Reg-
ulations (26 CFR part 1) to add new
§1.147(f)–1 (the “Proposed Regulations”)
relating to the public approval requirement
for tax-exempt private activity bonds un-
der section 147(f) of the Internal Revenue
Code.
Explanation of Provisions
I.Introduction
In general, interest on State and local
bonds is excludable from gross income un-
der section 103 of the Internal Revenue
Code of 1986 (the “Code”). Interest on
a private activity bond is excludable from
gross income under section 103 only if the
bond meets the requirements for a “quali-
fied bond” under section 141(e) and other
applicable requirements under section 103.
Section 141(e) requires that a bond meet
2008–45 I.R.B.1124November 10, 2008

the public approval requirement of section
147(f), among other requirements, to be a
qualified bond.
II.Statutory predecessor and existing
regulations
The predecessor to section 147(f) was
section 103(k) of the Internal Revenue
Code of 1954 (“1954 Code”), which was
addedbytheTaxEquityandFiscalRe-
sponsibility Act of 1982, Public L. No.
97–248, 96 Stat. 324 (1982). Section
103(k) of the 1954 Code imposed a public
approval requirement on industrial devel-
opment bonds. Temporary Income Tax
Regulations §5f.103–2 were published un-
der section 103(k) of the 1954 Code in the
Federal Registeron May 11, 1983 (T.D.
7892, 1983–1 C.B. 30 [48 FR 21115]) (the
“Existing Regulations”).
In the Tax Reform Act of 1986, Pub-
lic Law No. 99–514 (the “1986 Act”),
Congress reorganized the tax-exempt bond
provisions and largely carried forward the
provisions of section 103(k) of the 1954
Code into new section 147(f) of the Code.
In new section 147(f), Congress also ex-
panded this public approval requirement to
apply to all types of tax-exempt private ac-
tivity bonds under section 141. The leg-
islative history to the 1986 Act provides
that “[t]he conferees intend that, to the ex-
tent not amended, all principles of present
law continue to apply under the reorga-
nized provisions.” 2 H.R. Conf. Rep. No.
841, 99
th
Cong., 2d Sess. II–686 (1986),
1986–3 C.B. (Vol. 4) at 686.
III.Proposed regulations
A.In general
In general, the Proposed Regulations
provide updating, clarifying, and sim-
plifying guidance ondiscrete aspects of
the public approval requirement under
section 147(f) (the “public approval re-
quirement”). The Proposed Regulations
provide guidance that focuses generally on
the scope, content, process, and timing for
reasonable public notices, public hearings,
and public approvals of tax-exempt pri-
vate activity bonds under section 147(f).
The Proposed Regulations provide
some special rules to address certain
changes to thepublic approval require-
mentmade by the 1986 Act that expanded
the application of this requirement to
include all types of tax-exempt private
activity bonds. The Proposed Regulations
also provide guidance to simplify compli-
ance and reduce administrative burdens
on State and local governments associated
with thepublic approval requirement,in-
cluding guidance to recognize advances in
technology and electronic communication.
The Proposed Regulations also ensure
that the affected public will receive rea-
sonable public notice and an opportunity
for a public hearing and that appropriate
governmental units will approve a bond
issue following public notice and a public
hearing.
The Proposed Regulations generally do
not update the portions of the Existing
Regulations relating to the applicable gov-
ernmental units that are required to provide
public approvals for a bond issue and the
applicable elected representatives of those
governmental units. One special rule in the
Proposed Regulations provides that only
the governmental unit by or on behalf of
which bonds are issued is required for cer-
tain types of financings and that no sepa-
rate public approval is required by a host
governmental unit with respect to the loca-
tion, if any, of financed facilities due to the
absence of financed facilities (for example,
qualified student loan bonds under section
144(b) or qualified 501(c)(3) bonds under
section 145 for working capital expendi-
tures) or the widespread or unknown loca-
tions of the financed facilities (for exam-
ple, mortgage revenue bonds). The Trea-
sury Department and the IRS solicit public
comment on whether or in what respects
those portions of the Existing Regulations
should be updated or modified further.
The Proposed Regulations provide that
the Existing Regulations continue to apply
for purposes of section 147(f) to the extent
that the Existing Regulations are not in-
consistent with the final version of the Pro-
posed Regulations, the 1986 Act, or subse-
quent law.
B.Content of public approval in general
The Proposed Regulations provide up-
dated guidance on the content of informa-
tion required to be included in a reasonable
public notice and public approval. The
Proposed Regulations continue and mod-
ify in limited respects the existing gen-
eral standard from the Existing Regula-
tions. Under the Proposed Regulations, re-
quired information for this purpose gener-
ally includes the information described in
this preamble.
The Existing Regulations require a
functional description of the type and use
of the facility to be financed with the bond
issue. In response to public comment,
the Proposed Regulations streamline this
requirement to allow a general reference
to the type of exempt facility bond being
issued or, for other types of private activity
bonds, a reference to the type of qualified
bond and a general description of the type
and use of the facility to be financed. (for
example, an exempt facility bond for an
airport under section 142(a)(1), or a quali-
fied 501(c)(3) bond to finance a hospital).
The Existing Regulations also require
the maximum stated principal amount of
bonds expected to be issued for the facil-
ity. The Proposed Regulations continue
this requirement.
The Existing Regulations require the
name of the expected initial legal owner,
operator, or manager of the facility. The
Proposed Regulations modify this require-
ment. Under the Proposed Regulations,
the name provided may be either the name
of the legal owner or principal user (as
defined under section 144(a)) or, alter-
natively, the name of the true beneficial
party of interest (for example, the name of
a 501(c)(3) organization, which is the sole
member of a limited liability company
owner).
The Existing Regulations require a gen-
eral description of the prospective loca-
tion of the facility by street address, or,
if none, by a general description that is
reasonably designed to inform the public
about the location of the project. The Ex-
isting Regulations assume that bond issues
finance a single capital project. The Pro-
posed Regulations provide that, for a facil-
ity that involves multiple capital projects
on the same site, or adjacent or reasonably
proximate sites used for similar purposes, a
consolidated description of the geographic
boundaries of all such capital projects may
be a sufficient description of the location.
The Proposed Regulations also modify
and expand the existing definition of a “fa-
cility” to include within the scope of that
defined term the principle that a facility
may include multiple capital projects.
November 10, 200811252008–45 I.R.B.

C.Special rules for mortgage revenue
bonds, qualified student loan bonds, and
certain qualified 501(c)(3) bonds
The 1986 Act extended thepublic ap-
proval requirementbeyond traditional
facility-focused industrial development
bonds under the 1954 Code to include
qualified mortgage bonds and qualified
veterans mortgage bonds under section
143(a) and 143(b) of the Code (together,
“mortgage revenue bonds”), qualified stu-
dent loan bonds under section 144(b) of
the Code, and qualified 501(c)(3) bonds
under section 145 of the Code. The expan-
sion of thepublic approval requirement
to these types of bonds raises questions
about the scope of information appro-
priately needed for public approvals for
these types of bonds. Section 147(f) and
congressional intent generally suggest that
thepublic approval requirementmust be
met before the issuance of the bonds. For
these types of bonds, however, certain
information generally required for public
approvals about specific borrowers or spe-
cific projects may be unknown before the
issuance of the bonds or may be inappro-
priate for portfolio loan financings.
The Treasury Department and IRS re-
alize there may have been uncertainty on
how to apply certain aspects of the public
approval requirement to mortgage rev-
enue bonds, qualified student loan bonds,
and qualified 501(c)(3) pooled financing
bonds under section 145 after the 1986
Act in light of special characteristics of
these financings (for example, the absence
of financed facilities for qualified student
loan bonds or the widespread or unknown
locations of the facilities to be financed
for mortgage revenue bonds or certain
501(c)(3) pooled bonds). Therefore, is-
suers of these types of bonds that made a
good faith effort to comply with section
147(f) and section 5f.103–2(f)(2) of the
Existing Regulations, taking into account
Congressional intent and the special char-
acteristics of these types of financings,
will not be subject to audit by the IRS
merely because the issuer did not include
all of the information required to be in-
cluded in the public notice and public
approval for industrial development bonds
under section 5f.103–2(f)(2) of the Exist-
ing Regulations.
The Proposed Regulations provide
special rules that allow less specific infor-
mation for public approvals of mortgage
revenue bonds, qualified student loan
bonds, and qualified 501(c)(3) bonds that
finance loans described in the special
rule for pooled financings under section
147(b)(4).
For mortgage revenue bonds, the Pro-
posed Regulations generally require that
reasonable public notice and public ap-
proval state the maximum stated principal
amount of the bonds that will be issued
to finance mortgage loans under section
143 and a general description of the geo-
graphic jurisdiction in which residences fi-
nanced with proceeds of the mortgage rev-
enue bonds will be located (for example,
residences located throughout a state for an
issuer with a statewide jurisdiction). No
information is required on specific names
of mortgage loan borrowers or specific lo-
cations of individual residences to be fi-
nanced.
For qualified student loan bonds, the
Proposed Regulations generally require
that reasonable public notice and pub-
lic approval state the maximum stated
principal amount of the bonds that will
be issued to finance student loans and a
general description of the type of student
loan program that the loans will be made
under (for example, a Federally-guar-
anteed student loan program under the
Higher Education Act of 1965 or a state
supplemental student loan program). Rec-
ognizing that these bonds do not finance
facilities, the Proposed Regulations do
not require names of specific student loan
borrowers or locations of facilities.
For qualified 501(c)(3) bonds that fi-
nance loans described in the special provi-
sion for pooled loan financings under sec-
tion 147(b)(4), the Proposed Regulations
provide for a two-stage public approval
process. First, within the time specified
in the Proposed Regulations for public ap-
proval generally, public approval must be
obtained based on the stated maximum
principal amount of bonds to be issued to
finance such loans and a general descrip-
tion of the types of facility or facilities
to be financed with the loans (for exam-
ple, loans for hospital facilities). No state-
ment need be made about the location of
the facility or the initial user of the facil-
ity if that information is not known at that
time. Second, before a loan is originated
and potentially after the issue date of the
issue, a supplemental public approval for
that loan must be obtained based on spe-
cific information about the borrower and
the particular facility to be financed with
the loan, including the location of the fa-
cility. In applying the supplemental public
approval requirement to specific loans, the
public approval requirement applies gen-
erally as if the bonds that financed the
specific loans were reissued for purposes
of section 147(b). This requirement is
similar to the remedial action requirement
in §1.141–12(e)(2) and (f), which treats
bonds as reissued for purposes of section
147 when complying with certain remedial
action rules. The Treasury Department and
the IRS solicit comments on whether a rule
similar to the special two-stage public ap-
proval requirement for qualified 501(c)(3)
bonds in pooled bond issues should apply
to other types of pooled bond issues.
D.Insubstantial and substantial
deviations in public approval information
The Proposed Regulations provide gen-
erally that a substantial deviation between
informationrequiredtobeconveyedina
reasonable public notice and public ap-
proval and actual information causes the
issue to fail to meet thepublic approval
requirement. Whether a deviation is sub-
stantial is generally based on all the facts
and circumstances.
The Proposed Regulations continue and
clarify a rule from the Existing Regula-
tions that provides that insubstantial devia-
tions in public approval information do not
invalidate a public approval. Public com-
mentators have indicated that questions of-
ten arise about what changes are substan-
tial.
The Proposed Regulations provide two
objective safe harbors under which certain
changes will not be considered substan-
tial deviations. The Proposed Regulations
provide that each of the following is an in-
substantial deviation: (1) a difference in
the amount of proceeds used for a facility
when the amount used for the facility dif-
fers from the amount the public approval
stated would be used for the facility by an
amount that is not more than five percent
(5%) of net proceeds of the issue; and (2)
a change in initial owner or principal user
of a project when the new owner or prin-
cipal user is a related party (as defined in
§1.150–1) to the initial owner or principal
2008–45 I.R.B.1126November 10, 2008

user named in the public approval on the
issuance date.
The prohibition against substantial de-
viations has created problems when an is-
suer reasonably expected at the time the
bonds were issued to use the bonds pro-
ceeds for the facility stated in the pub-
lic approval, but later determined, as a re-
sult of unexpected events or unforeseen
changes in circumstances, that the original
planned use was no longer feasible or that
it did not need all of the proceeds for the
facility. In these circumstances, an issuer
may be unable to use the bond proceeds for
another purpose because the new use was
not covered by the information in the pub-
lic approval.
The Proposed Regulations propose a
special rule for certain cases in which there
is a substantial deviation between the in-
formationrequiredtobeprovidedinarea-
sonable public notice and public approval
and subsequent events. This rule provides
that, if certain conditions are met, an is-
suer can cure a substantial deviation in
public approval information through a sub-
sequent public approval. This remedial
action is similar to the permitted post-is-
suance public approval used for remedial
actions under §1.141–12(e)(2) and (f).
In general, the Proposed Regulations
provide that an issuer may cure a substan-
tial deviation if it satisfies several con-
ditions. First, the issuer must have ob-
tained a timely public approval for the
bond issue in accordance with thepublic
approval requirementand the issuer must
have reasonably expected on the issue date
to use the proceeds of the issue in accor-
dance with the public approval informa-
tion. Second, the issuer must encounter
unexpected events or unforeseen changes
in circumstances after the issue date as a
result of which it determines either that it
is no longer feasible or viable to use the
proceeds of some or all of the bonds in
the manner set forth in the original pub-
lic approval, or that it did not need to use
the full amount of the proceeds stated in
the public approval for the facility. Third,
the issuer must obtain a supplemental pub-
lic approval for the bonds affected by the
substantial deviation that meets thepublic
approval requirementapplied by treating
those bonds as if they were reissued for this
purpose.
E.Reasonable public notice and public
hearing
The Proposed Regulations update and
simplify the rules in the Existing Regula-
tions on reasonable public notice and pub-
lic hearings in several ways. First, in addi-
tion to the existing permitted methods for
providing reasonable public notice, which
include newspaper publication or televi-
sion or radio broadcast, the Proposed Reg-
ulations allow a governmental unit to pro-
vide reasonable public notice of a pub-
lic hearing by posting notice of the hear-
ing electronically on its website if it reg-
ularly uses that website to inform its res-
idents about events affecting the residents
(including notice of public meetings of the
governmental unit) and it offers a reason-
able alternative method for obtaining this
information for residents without access to
computers (such as phone recordings). In
addition, the Proposed Regulations define
a “writing” generally to include electronic
communication if permitted by the govern-
mental unit. Thus, the public may submit
electronic comments to the governmental
unit if permitted by the governmental unit.
The proposed regulations also reduce the
time required between the reasonable pub-
lic notice and public hearing from fourteen
days to seven business days. These revi-
sions recognize the current market envi-
ronment and the increasing importance of
electronic communication.
In addition, the Proposed Regulations
expand the types of governmental units
that may provide public notice in an alter-
native manner under a general State law on
public notice procedures for public hear-
ings to include all approving governmental
units.
Finally, the Proposed Regulations al-
low a governmental unit to cancel a public
hearing if it provides reasonable public no-
tice of the hearing and receives no requests
to participate in the hearing.
III.Proposed effective/applicability date
The proposed regulations will apply to
bonds that are sold on or after the date
of publication of final regulations in the
Federal Registerand that are subject to
section 147(f).
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Ex-
ecutive Order 12866. Therefore, a reg-
ulatory assessment is not required. It is
hereby certified that these proposed reg-
ulations will not have a significant eco-
nomic impact on a substantial number of
small entities. This certification is based
on considerations which are summarized.
In general, the proposed regulations in-
volve an existing statutory public approval
requirement for tax-exempt private activ-
ity bonds under Section 147(f) of the Inter-
nal Revenue Code, which requires reason-
able public notice, a public hearing, and
public approval of these bonds by certain
affected State or local governmental units
and which imposes certain information re-
quirements for this purpose. These pro-
posed regulations generally address mat-
ters regarding the scope, content, process,
and timing for public notices and pub-
lic hearings in connection with these pub-
lic approvals. These proposed regulations
will affect all issuers of tax-exempt pri-
vate activity bonds, including a substan-
tial number of small State or local gov-
ernmental units. These proposed regula-
tions are not expected to have a signifi-
cant economic impact on the affected enti-
ties, however, because these proposed reg-
ulations primarily are intended to stream-
line, simplify, and clarify the application of
the existing public approval requirement
in various ways, such as by allowing cer-
tain public notices on websites to reduce
costs associated with print publication of
public notices, by limiting the information
required for certain types of bond issues,
and by providing certain safe harbors and
curative ways to assist with compliance in
connection with changes in bond issues.
Therefore, a Regulatory Flexibility Anal-
ysis under the Regulatory Flexibility Act
(5 U.S.C. chapter 6) is not required. The
IRS and the Treasury Department specifi-
cally solicit comments from any party, par-
ticularly affected small entities, on the ac-
curacy of this certification. Pursuant to
section 7805(f) of the Internal Revenue
Code, this notice of proposed rulemaking
has been submitted to the Small Business
Administration for comment on its impact
on small governmental jurisdictions.
November 10, 200811272008–45 I.R.B.

Comments and Public Hearing
Before these Proposed Regulations are
adopted as final regulations, consideration
will be given to any written comments
(including a signed original and eight (8)
copies) or electronic comments that are
submitted timely to the IRS. The Treasury
Department and the IRS specifically re-
quest comments on the clarity of the pro-
posed rules and how they can be made eas-
ier to understand.
All comments will be available for pub-
lic inspection and copying.
A public hearing has been scheduled for
January 26, 2009, beginning at 10 a.m. in
the IRS Auditorium, Internal Revenue Ser-
vice Building, 1111 Constitution Avenue,
N.W., Washington, DC. Due to building
security procedures, visitors must enter at
the Constitution Avenue entrance. In addi-
tion, all visitors must present photo identi-
fication to enter the building. Because of
access restrictions, visitors will not be ad-
mitted beyond the immediate entrance area
more than 30 minutes before the hearing
starts. For information about having your
name placed on the building access list
to attend the hearing, see the FOR FUR-
THER INFORMATION CONTACT sec-
tion of this preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written or electronic comments by
December 8, 2008 and submit an outline of
thetopicstobediscussedandtheamount
of time to be devoted to each topic (a
signed original and eight (8) copies) by
December 29, 2008. A period of 10 min-
utes will be allotted to each person for
making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal authors of these reg-
ulations are Rebecca L. Harrigal and
David White, Office of Associate Chief
Counsel (Financial Institutions and
Products), IRS. However, other personnel
from the IRS and Treasury Department
participated in their development.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1 — INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.147(f)–1 is added to
read as follows:
§1.147(f)–1. Public Approval of Private
Activity Bonds.
(a)In general. Interest on a private
activity bond is excludable from gross in-
come under section 103(a) only if the bond
meets the requirements for a qualified
bond under section 141(e) and other appli-
cable requirements under section 103. In
order to be a qualified bond under section
141(e), one of the requirements that must
be met is the public approval requirement
under section 147(f). This section pro-
vides guidance on the public approval
requirement under section 147(f). In ad-
dition, to the extent not inconsistent with
this section, the Tax Reform Act of 1986
(Public Law 99–514), or subsequent law,
§5f.103–2 of this chapter continues to
apply for purposes of the public approval
requirement under section 147(f).
(b)Scope, content, process, and timing
for public approvals.
(1)In general. This paragraph (b)
provides guidance on the scope, content,
process, and timing required for public ap-
proval of an issue of private activity bonds
under section 147(f). In general, except
as otherwise provided in this section, to
meet the public approval requirement un-
der section 147(f) for an issue (as defined
in §1.150–1) of private activity bonds,
reasonable public notice (as defined in
paragraph (c)(3) of this section) must be
given in advance for a public hearing (as
defined in paragraph (c)(2) of this sec-
tion), a public hearing must be held, and
the applicable governmental units under
section 147(f)(2)(A) must provide pub-
lic approval within the time set forth in
paragraph (b)(8) of this section and in the
manner set forth in section 147(f)(2)(B).
(2)General rule on information re-
quired for a reasonable public notice and
public approval. Except as otherwise pro-
vided in this section, a facility (as defined
in paragraph (c) of this section) to be fi-
nanced with an issue is within the scope of
a public approval under section 147(f) if
the reasonable public notice of the public
hearing and the public approval include
the information set forth in paragraphs
(b)(2)(i) through (iv)of this section.
(i)The facility. The information in-
cludes a general functional description of
the type and use of the facility to be fi-
nanced with the issue. For this purpose, a
facility description generally is sufficient
if it identifies the facility by reference to
a particular category of exempt facility
bond to be issued (for example, an ex-
empt facility bond for an airport under sec-
tion 142(a)(1) or an enterprise zone facil-
ity bond under section 1394(a)), or if not
an exempt facility bond, by reference to
another general category of private activ-
ity bond, together with accompanying in-
formation on the type and use of the facil-
ity to be financed with the issue (for ex-
ample, a qualified small issue bond under
section 144(b) for a manufacturing facility,
a qualified 501(c)(3) bond under section
145 for a hospital facility and working cap-
ital expenditures, or a qualified mortgage
bond for qualified mortgage loans for sin-
gle-family housing residences under sec-
tion 143).
(ii)The maximum stated principal
amount of bonds. The information in-
cludes the maximum stated principal
amount of the issue of private activity
bonds to be issued to finance the facility.
(iii)The name of the initial owner or
principal user of the facility.Theinfor-
mation includes the name of the expected
initial owner or principal user (as defined
under section 144(a)) of the facility. The
name provided may be either the name of
the legal owner or principal user of the
facility or, alternatively, the name of the
true beneficial party of interest for such le-
gal owner or user (for example, the name
of a 501(c)(3) organization which is the
sole member of a limited liability company
owner).
(iv)The location of the facility.The
information includes a general description
of the prospective location of the facility
by street address, reference to boundary
streets or other geographic boundaries,
or other description of the specific ge-
ographic location that is reasonably de-
signed to inform readers of the location.
2008–45 I.R.B.1128November 10, 2008

For a facility involving multiple capital
projects located on the same site, or on ad-
jacent or reasonably proximate sites with
similar uses, a consolidated description
of the location of those capital projects
may provide a sufficient description of
the location of the facility. For example,
a facility for a 501(c)(3) educational en-
tity involving multiple buildings on the
entity’s main urban college campus may
describe the location of the facility by
reference to the outside street boundaries
of that campus with a reference to any
noncontiguous features of that campus.
(3)Special rule for mortgage revenue
bonds. Mortgage revenue bonds under
section 143 are treated as within the scope
of a public approval under paragraph
(b)(2) of this section if the reasonable
public notice of the public hearing and the
public approval state that the bonds are
to be issued under section 143, the maxi-
mum stated principal amount of mortgage
revenue bonds expected to be issued, and
a general description of the geographic
jurisdiction in which the residences to be
financed with the proceeds of the mortgage
revenue bonds are expected to be located,
recognizing the issuer jurisdictional lim-
itations on such financing under section
143(c)(1)(B) (for example, residences lo-
cated throughout a state for an issuer with a
statewide jurisdiction or residences within
a particular local geographic jurisdiction,
such as within a city or county, for a local
issuer). In applying paragraph (b)(2) of
this section to mortgage revenue bonds, no
information is required on specific names
of mortgage loan borrowers or specific
locations of individual residences to be
financed.
(4)Special rule for qualified student
loan bonds. Qualified student loan bonds
under section 144(b) are treated as within
the scope of a public approval under para-
graph (b)(2) of this section if the reason-
able public notice of the public hearing and
the public approval state that the bonds
will be issued under section 144(b), the
maximum stated principal amount of qual-
ified student loan bonds expected to be is-
sued for qualified student loans, and a gen-
eral description of the type of student loan
program that the loans are to be made un-
der (for example, a Federally-guaranteed
student loan program under the Higher Ed-
ucation Act of 1965 or a state supplemental
student loan program). In applying para-
graph(b)(2)ofthissectiontoqualifiedstu-
dent loan bonds, and recognizing that these
bonds do not finance facilities, no infor-
mation is required with respect to names
of specific student loan borrowers or loca-
tions of facilities.
(5)Special rule for certain qualified
501(c)(3) bonds. Qualified 501(c)(3)
bonds under section 145 to be used
to finance loans described in section
147(b)(4)(B) (without regard to any elec-
tion under section 147(b)(4)(A)) are
treated as within the scope of a public
approval under paragraph (b)(2) of this
section if both of the following require-
ments are met—
(i)Pre-issuance general public ap-
proval. Within the time period defined in
paragraph (b)(8) of this section, public ap-
proval is obtained after reasonable public
notice of a public hearing is provided and
a public hearing is held. For this purpose,
a facility is treated as described in a pub-
lic notice of a public hearing and public
approval if the notice and public approval
provide that the bonds will be qualified
501(c)(3) bonds to be used to finance
loans described in section 147(b)(4)(B),
the maximum stated principal amount of
bonds expected to be issued to finance
loans to other 501(c)(3) organizations or
governmental units as described in sec-
tion 147(b)(4)(B), a general description
of the type of facility to be financed with
such loans (for example, loans for hospital
facilities or college facilities), and a state-
ment that an additional public approval
that includes specific project information
will be obtained before any such loans are
originated; and
(ii)Post-issuance public approval for
specific loans. Before a loan described in
section 147(b)(4)(B) is originated, a sup-
plemental public approval for the bonds to
be used to finance that loan is obtained, and
that supplemental public approval meets
all the requirements of section 147(f) and
this section applied by treating the bonds
to be used to finance such loan as if they
were reissued for purpose of section 147(f)
(applied without regard to this paragraph
(b)(5)).
(6)Deviations in public approval infor-
mation.
(i)In general. Except as otherwise pro-
vided in this paragraph (b)(6), a substan-
tial deviation between the information re-
quired to be provided in a public notice
of public hearing and public approval un-
der paragraph (b)(2) of this section and ac-
tual information causes that issue to fail
to meet the public approval requirement
under section 147(f). Conversely, insub-
stantial deviations between information re-
quired to be provided in a notice of pub-
lic hearing and publicapproval and actual
information do not cause a failure to meet
section 147(f). In general, for purposes of
this paragraph (b)(6), the determination of
whether a deviation is substantial is based
on all the facts and circumstances. How-
ever, a change in the fundamental nature
or type of a project is a substantial devia-
tion.
(ii)Certain insubstantial deviations in
public approval information. For purposes
of this paragraph (b)(6), the following de-
viations are treated asinsubstantial devia-
tions:
(A)Use of proceeds. A deviation be-
tween the amount of proceeds of the is-
sue that the notice of public hearing and
public approval stated would be used for a
facility and the amount of proceeds actu-
ally used for that facility is insubstantial if
the amount of the difference does not ex-
ceed an amount equal to five percent (5%)
of the net proceeds (as defined in section
150(a)(3)) of the issue.
(B)Initial owner or principal user.
A deviation between the initial owner or
principal user of the facility named in a no-
tice of public hearing and public approval
and the actual initial owner or principal
user of the facility is treated as insubstan-
tial if such parties are related parties (as
defined in §1.150–1) on the issue date of
the issue.
(iii)Special rule to address certain
substantial deviations in public approval
information. A substantial deviation be-
tween the information required to be
conveyed in the notice of public hearing
and the public approval under paragraph
(b)(2) and the actual information does not
cause that issue to fail to meet the public
approval requirement under section 147(f)
if the following requirements are met:
(A)Original public approval and rea-
sonable expectations. The issuer obtained
a timely public approval (as set forth in
paragraph (b)(8) of this section) for the is-
sue in accordance with section 147(f) and,
on the issue date of the issue, the issuer rea-
sonably expected there would be no sub-
stantial deviations between the informa-
November 10, 200811292008–45 I.R.B.

tion required to be conveyed in the notice
of public hearing and public approval and
actual information.
(B)Unexpected events or unforeseen
changes in circumstances.Asaresultof
unexpected events or unforeseen changes
in circumstances that arise after the issue
date of the issue, the issuer determines that
it cannot use some or all of the proceeds in
the manner provided in the public approval
either because such use is no longer feasi-
ble or viable, or because the cost of the fa-
cility was less than expected so the issuer
did not need all of the proceeds specified
in the public approval for the facility.
(C)Supplemental public approval.Be-
fore using the proceeds of the bonds that
are affected by the substantial deviation
for a different use, the issuer obtains a
supplemental public approval for those
bonds, and that supplemental public ap-
proval meets all the requirements of sec-
tion 147(f) applied by treating those bonds
as if they were reissued for purposes of
section 147(f).
(7)Certain timing requirements.Ex-
cept as otherwise provided in this section,
a public approval of an issue under sec-
tion 147(f) is timely only if the issuer ob-
tains the public approval within one year
before the issue date (as defined in section
1.150–1) of the issue. For a plan of financ-
ing described in section 147(f)(2)(C), pub-
lic approval is timely for the plan of financ-
ing if the issuer obtains public approval for
the plan of financing within one year be-
foretheissuedateofthefirstissueissued
under the plan of financing and the issuer
issues all issues under the plan of financ-
ing within three years after the issue date
of such first issue.
(c)Definitions—Unless otherwise
stated, for purposes of this section, the
following definitions apply:
(1)Facility. In general, for purposes of
this section and section 5f.103–2, the term
facilitymeans one or more capital projects,
including land, buildings, equipment, and
other property to be financed with an is-
sue that is located on the same site, or ad-
jacent or proximate sites used for similar
purposes, and that is subject to the public
approval requirement under section 147(f).
For an issue of mortgage revenue bonds
under section 143 or qualified student loan
bonds under section 144(b), the termfacil-
itymeans the mortgage loans or qualified
student loans to be financed with the pro-
ceeds of the issue. For an issue of quali-
fied 501(c)(3) bonds under section 145, the
termfacilitymeans a facility, as defined in
the first sentence of this paragraph (c)(1),
and also includes working capital expen-
ditures to be financed with proceeds of the
issue.
(2)Public hearing.Thetermpublic
hearingmeans a forum providing a rea-
sonable opportunity for interested individ-
uals to express their views, both orally and
in writing, on the proposed issue of bonds
and the location and nature of the proposed
facility to be financed. In general, a gov-
ernmental unit may select its own proce-
dure for a public hearing, provided that in-
terested individuals have a reasonable op-
portunity to express their views. Thus, a
governmental unit may impose reasonable
requirementsonpersonswhowishtopar-
ticipate in the hearing, such as a require-
ment that persons desiring to speak at the
hearing make a written request to speak at
least 24 hours before the hearing or that
they limit their oral remarks to a prescribed
time. If a governmental unit provides rea-
sonable public notice for a public hearing
and receives no timely requests to partici-
pate in the hearing, then the governmental
unit may cancel the hearing and, for pur-
poses of this section, the public hearing re-
quirement will be treated as met. For pur-
poses of this public hearing requirement,
it is unnecessary, for example, to have the
applicable elected representative of the ap-
proving governmental unit present at the
hearing, to submit a report on the hearing
to that applicable elected representative, or
to meet State administrative procedural re-
quirements for public hearings. Except to
the extent in conflict with a specific re-
quirement of this paragraph (c)(2), com-
pliance with State procedural requirements
for public hearings generally satisfies the
requirements of this paragraph (c)(2). A
public hearing may beconducted by an in-
dividual appointed or employed to perform
such function by the governmental unit or
its agencies, or by the issuer. Thus, for ex-
ample, for bonds to be issued by an author-
ity that acts on behalf of a county, the hear-
ing may be conducted by the authority, the
county, or an appointee of either.
(3)Reasonable public notice. Reason-
able public notice means notice that is rea-
sonably designed to inform residents of the
affected governmental units, including res-
idents of the issuing governmental unit and
the governmental unit where a facility is
to be located, of the proposed issue. The
notice must state the time and place for
the public hearing and contain the informa-
tion required under paragraph (b) of this
section. Notice is presumed reasonable
if given no fewer than seven (7) business
days before the public hearing in one of the
ways permitted by this paragraph (c)(2).
Notice is treated as reasonably designed to
inform affected residents of an approving
governmental unit if it is given in one of
the following ways:
(i)Newspaper publication. Public no-
tice may be given by publication in one
or more newspapers of general circulation
available to the residents of the govern-
mental unit.
(ii)Radio or television broadcast. Pub-
lic notice may be given by radio or televi-
sion broadcast to the residents of the gov-
ernmental unit.
(iii)Governmental unit website post-
ing. Public notice may be given by elec-
tronic posting on the approving govern-
mental unit’s website for its residents, pro-
vided that the governmental unit regularly
uses that website to inform its residents
about events affecting the residents (in-
cluding notice of public meetings of the
governmental unit) and the governmental
unit offers a reasonable, publicly known
alternative method for obtaining this in-
formation for residents without access to
computers (such as phone recordings).
(iv)Alternative State law public notice
procedures. Public notice may be given
in a way that is permitted under a general
State law for public notices for public hear-
ings for the approving governmental unit.
(4)Writing. Unless specifically stated
otherwise in this section, if permitted by
the governmental unit, the termwritingin-
cludes electronic communication.
(5)Mortgage revenue bonds.Theterm
mortgage revenue bondsmeans qualified
mortgage bonds under section 143(a) of
the Code or qualified veterans’ mortgage
bonds under section 143(b) of the Code.
(d)Special rule on required govern-
mental unit approvals for certain types of
financings. Inapplyingsection147(f)(2)
and §5f.103–2(c) of this chapter, to mort-
gage revenue bonds under section 143, to
qualified student loan bonds under sec-
tion 144(b), and to the portion of an issue
of qualified 501(c)(3) bonds under section
145 that finance working capital expendi-
2008–45 I.R.B.1130November 10, 2008

tures, the governmental unit by or on be-
half of which those types of bonds are is-
sued is treated as the only governmental
unit required to provide a public approval
and no separate public approval is required
by a host governmental unit with respect to
the location, if any, of a financed facility.
(e)Effective/applicability date.Ex-
cept as otherwise provided in this section,
§1.147(f)–1 applies to bonds that are sold
on or after the date of publication of final
regulations in the Federal Register and
that are subject to section 147(f).
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on September
8, 2008, 8:45 a.m., and published in the issue of the Federal
Register for September 9, 2008, 73 F.R. 52220)
Notice of Proposed
Rulemaking and Notice of
Public Hearing
Notice to Participants of
Consequences of Failing to
Defer Receipt of Qualified
Retirement Plan Distributions;
Expansion of Applicable
Election Period and Period for
Notices
REG–107318–08
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of Proposed Rulemaking
and notice of public hearing.
SUMMARY: This document contains pro-
posed regulations under sections 402(f),
411(a)(11), and 417 of the Internal Rev-
enue Code (Code). The proposed regu-
lations would provide that the notice re-
quired under section 411(a)(11) to be pro-
vided to a participant of his or her right,
if any, to defer receipt of an immediately
distributable benefitmust also describe the
consequences of failing to defer receipt
of the distribution. The proposed regula-
tions would also provide that the applica-
ble election period for waiving the qual-
ified joint and survivor annuity form of
benefit under section 417 is the 180-day
period ending on the annuity starting date,
and that a notice required to be provided
under section 402(f), section 411(a)(11),
orsection417maybeprovidedtoapar-
ticipant as much as 180 days before the
annuity starting date (or, for a notice un-
der section 402(f), the distribution date).
These regulations would affect adminis-
trators of, employers maintaining, partic-
ipants in, and beneficiaries of tax-favored
retirement plans.
DATES: Written or electronic comments
and requests to speakat the public hearing
must be received by January 7, 2009.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–107318–08), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washing-
ton D.C. 20044. Submissions may be
hand-delivered Monday through Friday
betweenthehoursof8a.m. and4p.m.
to: CC:PA:LPD:PR (REG–107318–08),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, N.W.,
Washington, D.C., or sent electroni-
cally via the Federal eRulemaking Por-
tal athttp://www.regulations.gov(IRS
REG–107318–08).
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
Michael P. Brewerat (202) 622–6090;
concerning submission of comments or
to request to speak at the public hearing,
Funmi Taylor at (202) 622–7180 (not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Manage-
ment and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the
collection of information should be sent to
theOffice of Management and Budget,
Attn: Desk Officer for the Department
of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC
20503, with copies to theInternal Rev-
enue Service, Attn: IRS Reports Clear-
ance Officer, SE:W:CAR:MP:T:T:SP;
Washington, DC 20224. Comments on
the collection of information should be re-
ceived by December 8, 2008. Comments
are specifically requested concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the Internal
Revenue Service, including whether the
information will have practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information;
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collections of information may
be minimized, including through the appli-
cation of automated collection techniques
or other forms of information technology;
and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide information.
The collection of information
in these proposed regulations is in
§1.411(a)–11(c)(2) of the Income Tax
Regulations. This collection of infor-
mationisrequiredtocomplywiththe
statutory notice requirements of section
411(a), and is expected to be included in
the notices currentlyprovided to employ-
ees that inform them of their rights and
benefits under the plan. The likely record-
keepers are businesses or other for-profit
institutions and nonprofit institutions and
organizations.
Estimated total annual recordkeeping
burden: 100,000 hours.
Estimated average annual burden hours
per recordkeeper: 1 hour.
Estimated number of recordkeepers:
100,000.
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 Of-
fice of Management and Budget.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
November 10, 200811312008–45 I.R.B.

Background
A. Notice of Consequences of Failing to
Defer
Section 411(a)(11)(A) provides that, if
the present value of any nonforfeitable ac-
crued benefit exceeds $5,000, a qualified
plan must provide that such benefit may
not be immediately distributed without the
consent of the participant. Similarly, sec-
tion 203(e) of the Employee Retirement
Income Security Act of 1974, as amended
(ERISA), provides that if the present value
of any nonforfeitable accrued benefit with
respect to a participant in a plan exceeds
$5,000, the benefit may not be immedi-
ately distributed without the consent of the
participant.
Section 1102(b)(1) of the Pension Pro-
tection Act of 2006 (PPA ’06), 109 Public
Law 280, 120 Stat. 780, instructs the Sec-
retary of the Treasury to modify the regula-
tions under section 411(a)(11) of the Code
“to provide that the description of a par-
ticipant’s right, if any, to defer receipt of
a distribution shall also describe the con-
sequences of failing to defer such receipt.”
Section 1102(b)(2)(A) of PPA ’06 provides
that the modifications required by section
1102(b)(1) of PPA ’06 shall apply to years
beginning after December 31, 2006. Sec-
tion 1102(b)(2)(B) of PPA ’06, however,
states that a plan shall not be treated as
failing to meet the requirements of section
411(a)(11) with respect to any description
of the consequences of failing to defer pro-
vided “within 90 days after the Secretary
of the Treasury issues the modifications re-
quired by [section 1102(b)(1) of PPA ’06]
if the plan administrator makes a reason-
able attempt to comply with such require-
ments.”
Section 1.411(a)–11(c)(2)(i) states that,
in order for a plan to obtain valid con-
sent under section 411(a)(11), “so long as a
benefit is immediately distributable, a par-
ticipant must be informed of the right, if
any, to defer receipt of the distribution.”
Section 1.411(a)–11(c)(4) states that a dis-
tribution is immediately distributable prior
to the later of the time a participant has at-
tained normal retirement age or age 62.
Q&A–32 of Notice 2007–7, 2007–5
I.R.B. 395, provides that a plan admin-
istrator is required to revise the notice
required under section 411 to reflect the
modifications made by section 1102(b)
of PPA ’06 for notices provided in plan
years beginning after December 31, 2006.
Notice 2007–7 further provides that, pur-
suant to section 1102(b)(2)(B) of PPA ’06,
a plan will not be treated as failing to meet
the new requirements of section 1102(b)
of PPA ’06 if the plan administrator makes
a reasonable attempt to comply with the
new requirements with respect to a notice
that is provided prior to the 90th day after
the issuance of regulations reflecting the
modifications required by such section
1102(b) of PPA ’06. See §601.601(b)(2)
(ii)(b).
Q&A–33 of Notice 2007–7 includes
a safe harbor that would be considered a
reasonable attempt to comply with the re-
quirement in section 1102(b)(1) of PPA ’06
that a description of a participant’s right
to defer receipt of a distribution include
a description of the consequences of
failing to defer. In particular, Q&A–33
provides that a description that is written
in a manner reasonably calculated to be
understood by the average participant and
that includes the following information is
a reasonable attempt to comply with the
requirements of section 1102(b)(2)(B) of
PPA ’06: (a) in the case of a defined benefit
plan, a description of how much larger
benefits will be if the commencement
of distributions is deferred; (b) in the
case of a defined contribution plan, a
description indicating the investment
options available under the plan (including
fees) that will be available if distributions
are deferred; and (c) the portion of the
summary plan description that contains
any special rules that might materially
affect a participant’sdecision to defer. For
purposes of clause (a), a plan administrator
can use a description that includes the
financial effect of deferring distributions,
as described in §1.417(a)(3)–1(d)(2)(i),
based solely on the normal form of benefit.
Q&A–31 of Notice 2007–7 provides
that the provisions of section 1102 apply to
plan years that begin after December 31,
2006. Q&A–31 explains that this means
that the new rules relating to the content of
the notices apply only to notices issued in
those plan years, without regard to the an-
nuity starting date for the distributions.
B. Expansion of Applicable Election
Period
Section 401(a)(11)(A)(i) provides that,
except as provided in section 417, a plan
that is qualified under section 401(a) must
provide the accrued benefit payable to a
vested participant who does not die before
the annuity starting date in the form of a
qualified joint and survivor annuity.
Section 417(a)(1)(A) provides that, in
general, a plan satisfies section 401(a)(11)
only if each participant may elect at any
time during the “applicable election pe-
riod” to waive the qualified joint and sur-
vivor annuity form of benefit (and to re-
voke the waiver), and certain other require-
ments are satisfied. Before PPA ’06, sec-
tion 417(a)(6)(A) provided that the “appli-
cable election period” for a participant to
waive the qualified joint and survivor an-
nuity form of distribution was the 90-day
period ending on the annuity starting date.
Section 1102(a)(1)(A) of PPA ’06
amended section 417(a)(6)(A) by chang-
ing the 90-day “applicable election pe-
riod” for electing a distribution subject to
the qualified joint and survivor annuity
(QJSA) rules of sections 401(a)(11) and
417 in a form other than a QJSA to a
180-day applicable election period. Sec-
tion 1102(a)(2)(A) of PPA ’06 made a par-
allel amendment to section 205(c)(7)(A)
of ERISA by striking “90-day” and insert-
ing “180-day”.
Sections1102(a)(1)(B)and
1102(a)(2)(B) of PPA ’06 provide that the
Secretary of the Treasury shall modify
the regulations relating to section 417
of the Code and section 205 of ERISA
by substituting “180 days” for “90 days”
each place it appears.
Section 1102(a)(3) of PPA ’06 provides
that the amendments to the applicable elec-
tion period apply to years beginning after
December 31, 2006.
C. Expansion of Period for Notices
Section 417(a)(3)(A) of the Code and
section 205(c)(3)(A) of ERISA provide
that a plan must provide to each par-
ticipant, “within a reasonable period of
time before the annuity starting date” and
consistent with such regulations as the
Secretary of the Treasury may prescribe,
a written explanation that describes the
terms and conditions of the qualified joint
2008–45 I.R.B.1132November 10, 2008

and survivor annuity and certain other
information. Similarly, section 402(f)(1)
provides that a plan administrator must,
“within a reasonable period of time” be-
fore making an eligible rollover distribu-
tion, provide to recipients an explanation
of certain tax consequences of the distri-
bution.
Section 1102(a)(1)(B) of PPA ’06 pro-
vides that the Secretary of the Treasury
shall modify the regulations under sections
402(f), 411(a)(11), and 417 by substituting
“180 days” for “90 days” each place it
appears in §§1.402(f)–1, 1.411(a)–11(c),
and 1.417(e)–1(b). Similarly, section
1102(a)(2)(B) of PPA ’06 provides that the
Secretary of the Treasury shall modify the
regulations relating to sections 203(e) and
205 of ERISA by substituting “180 days”
for “90 days” each place it appears.
Section 1102(a)(3) provides that the
amendments to the notice periods apply to
years beginning after December 31, 2006.
Q&A–31 of Notice 2007–7 explains that
the 180-day period for distributing notices
applies to notices distributed in a plan year
that begins after December 31, 2006.
D. Requirements under ERISA
ERISA section 203(e) is the parallel
provision to section 411(a)(11) of the Code
and ERISA section 205 is the ERISA par-
allel to section 417 of the Code. Pursuant
to section 101 of Reorganization Plan No.
4 of 1978, 29 U.S.C. 1001nt (the Reorga-
nization Plan), the Secretary of the Trea-
sury generally has authority to issue regu-
lations under parts 2 and 3 of subtitle B of
title I of ERISA, including sections 203(e)
and 205 of ERISA. Thus, the changes re-
quired by section 1102 of PPA ’06 would
apply as well for purposes of ERISA sec-
tions 203(e) and 205.
Explanation of Provisions
A. Notice of Consequences of Failing to
Defer
These proposed regulations would pro-
vide that the notice required by section
411(a)(11) advising a participant of the
right, if any, to defer receipt of a distri-
bution must also inform the participant of
the consequences of failing to defer such
receipt. The proposed regulations would
also provide guidance on the relevant in-
formation that must be provided to a par-
ticipant in order to satisfy the requirement
that the participant be notified of the con-
sequences of failing to defer.
Specifically, these proposed regulations
would require that the participant be pro-
vided a description of specified federal tax
implications of failing to defer and, in the
case of a defined benefit plan, a state-
ment of the amount payable to the par-
ticipant under the normal form of bene-
fit both upon immediate commencement
and when the benefit is no longer imme-
diately distributable (that is, the later of
age 62 or attainment of normal retirement
age). Section 1.417(a)(3)–1(c)(2)(ii) per-
mits a plan to provide participants with a
QJSA explanation, which does not vary
based on the participant’s marital status,
of the relative value of optional forms of
benefit compared to the value of a QJSA.
These proposed regulations would permit
the statement of the amount payable to not
be based on the participant’s marital sta-
tus, to the extent the plan is permitted un-
der §1.417(a)(3)–1(c)(2)(ii) to use a QJSA
explanation that does not vary based on
whether the participant is married or un-
married.
The proposed regulations would also
require the information in the notice to in-
clude, in the case of a defined contribu-
tion plan, a statementthatsomecurrently
available investment options in the plan
may not be generally available on simi-
lar terms outside the plan and contact in-
formation for obtaining additional infor-
mation on the generalavailability outside
the plan of currently available investment
options in the plan. In addition, the pro-
posed regulations would require the notice
to include, in the case of a defined contri-
bution plan, a statement that fees and ex-
penses (including administrative or invest-
ment-related fees) outside the plan may be
different from fees and expenses that ap-
ply to the participant’s account and contact
information for obtaining information on
such fees.
The proposed regulations also include
an additional category of information that
must be provided relating to any provi-
sions of the plan (and provisions of any ac-
cident or health plan maintained by the em-
ployer) that could reasonably be expected
to materially affect a participant’s decision
whether to defer receipt of the distribu-
tion. Thus, for example, the proposed reg-
ulations would require a description of the
eligibility requirements for retiree health
benefits if such benefits are limited to par-
ticipants who have an undistributed benefit
under the employer’s retirement plan.
In general, the proposed regulations
would also provide that the required in-
formation regarding the consequences
of a participant’s failing to defer receipt
of a distribution must appear together.
However, the proposed regulations would
permit a cross-reference to where the
required information may be found in
notices or other information provided or
made available to the participant, as long
as the notice of consequences of failing
to defer includes a statement of how the
referenced information may be obtained
without charge and explains why the refer-
enced information is relevant to a decision
whether to defer.
B. Expansion of Applicable Election
Period and Period for Notices
Consistent with sections 1102(a)(1)(A)
and (1)(B) and 1102(a)(2)(A) and (2)(B)
of PPA ’06, the proposed regulations
would both (1) expand the definition of
applicable election period to up to 180
days, and (2) expand the time period
for notices issued under sections 402(f),
411(a)(11), and 417 to allow the notices
to be issued up to 180 days prior to the
annuity starting date (or, in the case of
a notice under section 402(f), the date
of distribution). Specifically, the pro-
posed regulations would substitute “180
days” for “90 days” and “180-day” for
“90-day” each place those terms appear
in §1.401(a)–13(g)(4)(ii), §1.401(a)–20,
A–3(b)(1), A–4, A–10(a), A–16, and
A–24(a)(1), §1.402(f)–1, §1.411(a)–11(c),
and §1.417(e)–1(b).
Pursuant to section 101 of the Reorga-
nization Plan, the Secretary of Treasury
has the authority to issue regulations un-
der ERISA sections 203(e) and 205. Thus,
these proposed regulations that apply to
sections 402(f), 411(a)(11), and 417 of the
Code would apply as well for purposes of
sections 203(e) and 205 of ERISA.
Proposed Effective/Applicability Date
These regulations are proposed to be-
come effective for notices provided (and
election periods beginning) on or after the
first day of the first plan year beginning on
or after January 1, 2010. However, in no
November 10, 200811332008–45 I.R.B.

event will the regulations become effective
for notices provided (and election periods
beginning) earlier than the first day of the
first plan year beginning 90 days after pub-
lication of final regulations in theFederal
Register.
With respect to the regulations relating
to the notice of consequences of failing
to defer the receipt of distributions, until
these regulations become effective, a plan
will be treated as complying if: (1) the plan
complies either with these proposed regu-
lations or with Q&A–32 and Q&A–33 in
Notice 2007–7; or (2) if the plan adminis-
trator makes a reasonable attempt to com-
ply with the requirement that the descrip-
tion of a participant’s right, if any, to defer
receipt of a distribution shall also describe
the consequences of failing to defer such
receipt.
With respect to the proposed regula-
tions relating to the expanded applicable
election period and the expanded period
for notices, plans may rely on these pro-
posed regulations for notices provided
(and election periods beginning) during
the period beginning on the first day of the
first plan year beginning on or after Jan-
uary 1, 2007 and ending on the effective
date of final regulations.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It also has been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
It is hereby certified that the collection
of information contained in this regulation
will not have a significant economic im-
pact on a substantial number of small en-
tities. This certification is based on sev-
eral factors, includingthat the regulation
merely provides guidance to implement a
statutorily-requirednotice, and that the in-
cremental burden in the regulation would
be minimal because it only requires includ-
ing additional information in notices al-
ready provided by all of the affected enti-
ties. Accordingly, a Regulatory Flexibility
Analysis under the Regulatory Flexibility
Act (5 U.S.C. chapter 6) is not required.
Pursuant to section 7805(f) of the Code,
this notice of proposed rulemaking will be
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administration
for comment on its impact on small busi-
ness.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (one signed
and eight (8) copies) or electronic com-
ments that are submitted timely to the IRS.
All comments will be available for public
inspection and copying.
A public hearing has been scheduled
for Friday, February 20, 2009, at 10 a.m.
in the IRS Auditorium, Internal Rev-
enue Building, 1111 Constitution Avenue,
N.W., Washington, DC. Due to building
security procedures, visitors must enter
at the Constitution Avenue entrance. In
addition, all visitors must present photo
identification to enter the building. Be-
cause of access restrictions, visitors will
not be admitted beyond the immediate
entrance area more than 30 minutes before
the hearing starts. For information about
having your name placed on the building
access list to attend the hearing, see the
FOR FURTHER INFORMATION CON-
TACT section of this preamble.
Persons who wish to present oral com-
ments at the hearing must submit written or
electronic comments by January 7, 2009,
and submit an outline of the topics to be
discussed and the amount of time to be de-
voted to each topic (a signed original and
eight (8) copies) by January 16, 2009. A
period of 10 minutes will be allotted to
each person for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receivingoutlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal author of these regula-
tions is Michael P. Brewer, Office of Di-
vision Counsel/Associate Chief Counsel
(Tax Exempt and Government Entities).
However, other personnel from the Office
of Chief Counsel, IRS, and the Depart-
ment of Treasury participated in the devel-
opment of these regulations.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read as follows:
Authority: 26 U.S.C. 7805 * * *
§1.401(a)–13; §1.401(a)–20; §1.402(f)–1;
§1.411(a)–11; §1.417(e)–1 [Amended]
Par. 2. For each entry listed in the
“Location” column, remove the language
in the “Remove” column and add the lan-
guage in the “Add” column in its place.
LocationRemoveAdd
1.401(a)–13(g)(4)(ii), first sentence90 days180 days
1.401(a)–20, A–4, third sentence90 days180 days
1.401(a)–20, A–10(a), fifth and sixth
sentences
90 days180 days
1.401(a)–20, A–16, sixth sentence90 days180 days
1.401(a)–20, A–24(a)(1), fifth sentence 90 days180 days
1.402(f)–1, A–2(a), first sentence90 days180 days
2008–45 I.R.B.1134November 10, 2008

LocationRemoveAdd
1.411(a)–11(c)(2)(ii)90 days180 days
1.411(a)–11(c)(2)(iii)(A), first sentence 90 days180 days
1.417(e)–1(b)(3)(i)90 days180 days
1.417(e)–1(b)(3)(ii), first sentence90 days180 days
1.417(e)–1(b)(3)(iii)90 days180 days
1.417(e)–1(b)(3)(vi), second sentence90 days180 days
1.417(e)–1(b)(3)(vii)90 days180 days
1.417(e)–1(b)(3)(vii)90-day180-day
§1
.411(a)–11 [Amended]
Pa
r. 3. Section 1.411(a)–11 is amended
as
follows:
1.
The second sentence of paragraph
(c
)(2)(i) is revised.
2.
The second sentence of paragraph
(c
)(2)(iii)(B)(3) is revised.
3.
Paragraphs (c)(2)(vi) and (h) are
ad
ded.
Th
e additions and revisions read as fol-
lo
ws:
§1
.411(a)–11 Restriction and valuation
o
f distributions.
*
****
(c
)***
(2
)Consent—(i)***Inaddition,
so
long as a benefit is immediately dis-
t
ributable, a participant must be informed
o
f the right, if any, to defer receipt of the
d
istribution and of the consequences of
f
ailing to defer such receipt. * * *
*****
(iii) * * *
(B)***
(3) * * * The summary described in
paragraph (c)(2)(iii)(B)(2)ofthissection
must advise the participant of the right, if
any, to defer receipt ofthe distribution and
of the consequences of failing to defer such
receipt, must set forth a summary of the
distribution options under the plan, must
refer the participant to the most recent ver-
sion of the notice (and, in the case of a no-
tice provided in any document containing
informationinadditiontothenotice,must
identify that document and must provide a
reasonable indication of where the notice
may be found in that document, such as by
index reference or by section heading), and
must advise the participant that, upon re-
quest, a copy of the notice will be provided
without charge.
**
***
(v
i)Consequences of failing to de-
fe
r—(A) A notice under this paragraph
(c
)(2) that is required to describe the con-
s
equences of failing to defer receipt of
a
distribution until it is no longer imme-
d
iately distributable must, to the extent
a
pplicable under the plan and in a manner
d
esigned to be easily understood, provide
the participant with the information set
out in paragraphs (c)(2)(vi)(A)(1) through
(5) of this section and explain why it is
relevant to a decision whether to defer.
(1) A description of the following fed-
eral tax implications of failing to defer:
differences in the timing of inclusion in
taxable income of an immediately com-
mencing distribution that is not rolled over
(or not eligible to be rolled over) and a
distribution that is deferred until it is no
longer immediately distributable (includ-
ing, as applicable, differences in the tax-
ation of distributions of designated Roth
contributions within the meaning of sec-
tion 402A); application of the 10% addi-
tional tax on certain distributions before
age 59
1
/2under section 72(t); and, in the
case of a defined contribution plan, loss
of the opportunity upon immediate com-
mencement for future tax-favored treat-
ment of earnings if the distribution is not
rolled over (or not eligible to be rolled
over) to an eligible retirement plan de-
scribed in section 402(c)(8)(B).
(2) In the case of a defined benefit
plan, a statement of the amount payable
to the participant under the normal form
of benefit both upon immediate com-
mencement and upon commencement
when the benefit is no longer immedi-
ately distributable (assuming no future
benefit accruals). The statement need not
vary based on the participant’s marital
status if the plan is permitted, pursuant
to
§1.417(a)(3)–1(c)(2)(ii), to provide a
QJ
SA explanation that does not vary based
o
n the participant’s marital status.
(3
) In the case of a defined contribution
p
lan, a statement that some currently avail-
a
ble investment options in the plan may
n
ot be generally available on similar terms
o
utside the plan and contact information
f
or obtaining additional information on the
general availability outside the plan of cur-
rently available investment options in the
plan.
(4) In the case of a defined contribu-
tion plan, a statement that fees and ex-
penses (including administrative or invest-
ment-related fees) outside the plan may be
different from fees and expenses that ap-
ply to the participant’s account and contact
information for obtaining additional infor-
mation on the fees and expenses that apply
to the participant’s account.
(5) An explanation of any provisions
of the plan (and provisions of an acci-
dent or health plan maintained by the em-
ployer) that could reasonably be expected
to materially affect a participant’s decision
whether to defer receipt of the distribu-
tion. Such provisions would include, for
example: plan terms under which a partic-
ipant who fails to defer may lose eligibility
for retiree health coverage or eligibility for
early retirement subsidies or social secu-
rity supplements; plan terms under which
the benefit of a rehired participant who
failed to defer may be adversely affected
by the decision not to defer; and, in the
case of a defined contribution plan, plan
terms under which undistributed benefits
that otherwise are nonforfeitable become
forfeitable upon the participant’s death.
(B)Location of information; incorpo-
ration by reference. In general, the infor-
mationrequiredtobeprovidedinano-
tice under this paragraph (c)(2)(vi) must
November 10, 200811352008–45 I.R.B.

appear together (for example, in a list of
consequences of failing to defer). How-
ever, the notice will not be treated as fail-
ing to satisfy the requirements of this para-
graph (c)(2)(vi) merely because the no-
tice includes a cross-reference to where
the required information may be found in
notices or other information provided or
made available to the participant, as long
as the notice of consequences of failing
to defer includes a statement of how the
referenced information may be obtained
without charge and explains why the refer-
enced information is relevant to a decision
whether to defer.
*****
(h)Consequences of Failing to Defer
Effective/Applicability Date. The provi-
sions in paragraph (c) of this section that
describe the requirement to notify partici-
pants of the consequences of failing to de-
fer are effective for notices provided on or
after the first day of the first plan year be-
ginning on or after January 1, 2010.
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on October 8,
2008, 8:45 a.m., and published in the issue of the Federal
Register for October 9, 2008, 73 F.R. 59575)
Foundations Status of Certain
Organizations
Announcement 2008–104
The following organizations have failed
to establish or have been unable to main-
tain their status as public charities or as op-
erating foundations. Accordingly, grantors
and contributors may not, after this date,
rely on previous rulings or designations
in the Cumulative List of Organizations
(Publication 78), or on the presumption
arising from the filing of notices under sec-
tion 508(b) of the Code. This listing does
notindicate that the organizations have lost
their status as organizations described in
section 501(c)(3), eligible to receive de-
ductible contributions.
Former Public Charities. The follow-
ing organizations (which have been treated
as organizations thatare not private foun-
dations described in section 509(a) of the
Code) are now classified as private foun-
dations:
135 Club, Bethlehem, PA
Alpha Omega of Illinois NFP, Elgin, IL
Angel Village, Inc., Hendersonville, TN
Anthony D. Amico Memorial Scholarship
Fund, Plainview, NY
Art to the Nations, San Francisco, CA
Arts Creating Unity Institute, Inc.,
Los Angeles, CA
Aware Effectiveness, Inc., Pasadena, CA
Babylon Foundation, Inc.,
Los Angeles, CA
Bethany II Housing Development Corp.,
New York, NY
Bethel Outreach Development Center,
Inc., Wilmington, DE
Beyond Excellence, Inc., Houston, TX
BMV Helping Hands, Libertyville, IL
Bridge Foundation, Sacramento, CA
Bucksport Development Corporation,
Inc., Bucksport, ME
Building Independence, Inc., Chetek, WI
C Project, Freeport, NY
Carlton Manor Housing Corporation,
Culver City, CA
Casa Piedra, Inc., Leominster, MA
Center for Sports and Entertainment,
Ventura, CA
Children’s Wildfire Fund,
Shady Cove, OR
Colony Building Corp. Center,
Beasley, TX
Community and Addiction Services ETC,
Spokane Valley, WA
Consortium for Community Care, Inc.,
Calabasas, CA
Cottage Foundation, Houston, TX
C T I Training & Development NFP,
Chicago, IL
Dare to Dream Foundation,
Santa Monica, CA
Darsey Foundation, Inc., Bellaire, TX
Delta Center for Rural Development, Inc.,
Helena, AR
Dr. Albert A. Nwokeuku Foundation,
Inc., Baltimore, MD
East African Health and Wellness Center,
Minneapolis, MN
Education Technology & Arts, Inc. ETA,
Inc., Hopkins, SC
Egypt Plantation Museum, Inc.,
Wharton, TX
Ezzell Resource Group, Inc.,
Brooklyn, NY
Family and Community Educational
Services, Inc., Readyville, TN
Family Education Resource Center,
Bullhead City, AZ
Family Unity International, Inc.,
Staten Island, NY
Fort Smith Riverfront Boxing Club,
Fort Smith, AR
Fred K. Koken Foundation, Juneau, AK
Fresh Start Coaching, Pittsburgh, PA
Friends of Castillo de San Marcos National
Monument, Inc., St. Augustine, FL
Golden Star Christian Community
Outreach Center, Philadelphia, PA
Grundy County R-V School District
Foundation, Inc., Galt, MS
Helping Our Elderly Live Better,
Washington, DC
HHFA Foundation, Inc., White Plains, NY
Highly Favored Ministries, Arlington, TX
Holodec Environmental Foundation,
Salt Lake City, UT
Home Quest, Inc.,
Egg Harbor Township, NJ
Hope for Restoration, Plano, TX
Horizon Foundation, LTD, Brookfield, WI
In Moms Arms, Long Beach, CA
Intensive Care of Youth, Jacksonville, NC
International Sailing & Boating Hall of
Fame, Jensen Beach, FL
Island Community News, Inc., Kihei, HI
James Cooley Historic Foundation,
San Diego, CA
Jordans Crossing, Inc., Newark, OH
Julius Boys Home, Inc., Los Angeles, CA
Kingston Community Organization for
Community Concerns, Inc., Shelby, NC
Ladies of Charissa Civic Club,
San Antonio, TX
Life Enrichments Center, Inc., Adult Day
Services, Arlington, TX
Limbs for Life Charitable Foundation,
Allendale, NJ
Living Free Health Foundation, Inc.,
Annandale, VA
Living Hope Outreach Ministries,
Kennettt, MO
Lyon Estates, Inc., Union, MS
May the Blessings Be Foundation,
Waller, TX
Melvin Lee Foundation Holistic Center,
Kansas City, MO
Mentoring and More, Inc., Yorkville, IL
Meta Point, Inc., Moreno Valley, CA
Mid-Way Ministries, Canaseraga, NY
Millenium Second Chance Educational
Center, Inc., Camilla, GA
Movie Foundation, Van Nuys, CA
National Association of Minority
Contractors Colorado, Littleton, CO
National Network of Organ Donors, Inc.,
Palm Beach Gardens, FL
2008–45 I.R.B.1136November 10, 2008

Need Neighborhood Education and
Economic Development, Jackson, MS
New Beginnings Cultural Center,
Harrisburg, PA
Nishi Kaigan Dojo, Berkeley, CA
Nutrition & Health Partnership, Inc.,
Wellesley, MA
One Vision Ministries, New River, AZ
Open Arms Outreach Community Center,
Inc., Decatur, GA
Palm Bay High Instrumental Music
Parents Association, Melbourne, FL
Play Your Game, Beaverton, OR
Positive Networking Services, Inc.,
Portsmouth, VA
Precious Tots DottiesLearning Academy
at Fort Worth Texas, Arlington, TX
Prodigal Daughters Association,
Calumet City, IL
Project Help, Inc., Latrobe, PA
Pryors Ponderosa, Inc., Lancaster, CA
Region A Connect NC Commission, Inc.,
Sylva, NC
Religious Without Borders Initiative, Inc.,
Plattsburgh, NY
Roger Hodges Ministries, Amarillo, TX
Rural Learning Center, Howard, SD
Sister to Sister II, Inc., St. Louis, MO
Spoken Word Ministries, Inc.,
Jackson, MS
St. Louis Women’s Final Four, Inc.,
St. Louis, MO
STAR Flight Fund, Inc., Austin, TX
TDB Community Development Corp.,
Chester, VA
Teen Pregnancy Outreach Development
Center Shelter, Inc., Whitesburg, GA
That So Pretty Ceramics, Austin, TX
Theatre Exile, Inc., New York, NY
Timothy Judd Foundation, Houston, TX
Travis County Development Corporation,
Austin, TX
Twenty Three Middle, Inc.,
Newburyport, MA
Umoja Art Village, Inc., Chicago, IL
Union City Action Network, Newark, CA
Unity Fellowship Community
Development Center, Detroit, MI
Unlimited Dimensions Adolescent
Group Home and Learning Resource,
New Orleans, LA
Village Child Group Home,
Sacramento, CA
Virginia Wyche Wilson Community
Development Agency, Jacksonville, FL
Vision of Missions Tabernacle CDC, Inc.,
Philadelphia, PA
Vision Services Group, Inc., Charlotte, NC
Whistle Away Crime, Inc., Littleton, CO
Williamson County Conservation
Foundation, Inc., Round Rock, TX
Women of Destiny Ministries
International, Inc., Foothill Ranch, CA
Womens Leadership Network,
Laguna Beach, CA
Womens Social Impact Workshop, Inc.,
Philadelphia, PA
Youth Sports University, Lancaster, CA
If an organization listed above submits
information that warrants the renewal of
its classification as a public charity or as
a private operating foundation, the Inter-
nal Revenue Service will issue a ruling or
determination letter with the revised clas-
sification as to foundation status. Grantors
and contributors may thereafter rely upon
such ruling or determination letter as pro-
vided in section 1.509(a)–7 of the Income
Tax Regulations. It is not the practice of
the Service to announce such revised clas-
sification of foundation status in the Inter-
nal Revenue Bulletin.
Request for Applications to
Participate in the 2009 IRS
Individuale-filePartnership
Program
Announcement 2008–106
The Stakeholder Partnerships, Educa-
tion and Communication (SPEC) organ-
ization within the Internal Revenue Ser-
vice (IRS) is continuing its efforts to es-
tablish IRSe-filepartnerships with vari-
ous entities. The IRS is seeking non-mon-
etary e-file partnerships for Filing Season
2009. No applications for funding (mone-
tary compensation) will be considered. A
commercial business, non-profit organiza-
tion, state government or local government
may submit applications. Applications are
not solicited from other Federal govern-
ment agencies. The program is an annual
program and covers the periodJanuary
16 through October 15, 2009. All prior
year partners must reapply for Filing
Season 2009.
BACKGROUND
The IRS Restructuring and Reform
Act of 1998 (RRA 98) authorized the
IRS Commissioner to promote the ben-
efits of and encourage the use of e-file
services. RRA 98 enables the IRS to en-
ter into non-monetary partnerships with
businesses to offer low cost income tax
preparation and electronic filing for quali-
fied taxpayers.
Continued opportunities for growth in
electronic tax administration are evident.
For Filing Season 2008, the IRS received
90 million electronically filed returns, an
increase of 12.4% over the previous year.
Visit the IRS website,http://www.irs.gov,
for the most current results from market re-
search on individual taxpayers, including
demographic data and psychographic stud-
ies. This research includes attitudinal sur-
veys, customer satisfaction surveys, Public
Service communications, tracking studies
and any focus group results.
The IRS accepts many forms and sched-
ules for electronic filing. Visit the IRS.gov
website for a completelisting of accepted
forms and schedules.
FILING SEASON 2009
For Filing Season 2009, the IRS will
continue to focus on the 1040 series in-
come tax returns covering “IRSe-fileUs-
ingaTaxPreparer”and“IRSe-fileUs-
ing a Personal Computer.” Additional em-
phasis continues to be placed on the fol-
lowing features: electronic signature op-
tions, Federal/State e-file, and electronic
payment options for balance due and esti-
mated payment options.
A major area of emphasis is to reach
those taxpayers who continue to file com-
puter prepared paper returns (v-code). Re-
search indicates that the number of v-code
returns continues to increase (76% of all
v-code returns are prepared by paid prepar-
ers). Emphasis should be placed on con-
verting v-code filers to electronically file
their returns through advertising the bene-
fits of e-file.
Participants should also reach those in-
dividuals eligible for the Earned Income
Tax Credit (EITC). It’s important to note
that military families may qualify for EITC
since supplemental payments and combat
pay are exempt from the income calcula-
tions.
Participants are encouraged to focus on
reducing the number of errors made on
electronically filed returns, including those
returns claiming EITC. The “EITC Assis-
November 10, 200811372008–45 I.R.B.

tant” is an interactive web-based tool de-
signed to help tax professionals determine
whether or not their clients are eligible for
EITC, and why. The “EITC Assistant” is
a step taken by the IRS to maximize tax-
payer participation, minimize EITC errors
while increasing compliance. You can find
the “EITC Assistant” on the IRS website at
http://www.irs.gov/eitc.
The Hispanic population is the fastest
growing minority segment in the U.S. Par-
ticipants are encouraged to market their
e-file services to this segment of the pop-
ulation and offer the Spanish versions for
online filing and/or downloadable soft-
ware.
The IRS expects all accepted partners
to market, promote and offer e-file product
and services through October 15, 2009.
The IRS will supply the partners with
the key marketing messages that support
electronic filing during the Filing Sea-
son (January through April 15, 2009) and
post-Filing Season (April through Octo-
ber 15, 2009). These messages should be
used in your promotion of electronic filing
and displayed on the websites of Partici-
pants. Utilization of these messages will
ensure uniformity and maximize public
awareness. For additional information on
the various e-file programs, features, and
market research, visit the IRS website at
http://www.irs.gov.
Participants will receive hyperlinks
from IRS.gov (Partners Page) – to the Par-
ticipant’s website. Potential Participants
may request links for the following cate-
gories:
•e-file Solutions for Taxpayers
•Software and Other Tools for Your
e-file Business
•e-file Opportunitiesfor Financial Insti-
tutions and Employers
•Pay Your Taxes Electronically
Safeguarding Taxpayer Data
The security of taxpayer accounts and
personal information is a top priority for
the IRS. Tax professionals must imple-
ment safeguards to protect taxpayer’s
data. It is not only the law, but it is good
business practice, as it increases customer
confidence and trust. Refer to Publica-
tion 4557,Safeguarding Taxpayer Data,
a Guide for Your Business,whichde-
scribes the various security provisions
and rules that impact tax professionals.
The document assists tax professionals
in understanding their requirements for
protecting the privacy and confidentiality
of taxpayer data, and provides guidance
on implementing the necessary security
controls within their business to satisfy
these requirements. Publication 4557 can
be accessed athttp://www.irs.gov.
PARTICIPATION STANDARDS &
REQUIREMENTS
Participants will abide by the following
standards and requirements, if applicable:
•The Participant was actively engaged
in the electronic tax preparation and
filing industry in 2007 and 2008.
•The Participant will offer their tax
preparation and e-file services to the
individual taxpayer. The IRS will not
post advertisements offering both free
tax preparation and free e-file on the
IRS.gov Partners Page. Promotion
on IRS.gov of free services, services
that include both free tax preparation
and free e-filing, is reserved for Free
File Alliance members only. Visit
www.freefilealliance.orgto find out
how to become a member of the Free
File Alliance or visitwww.irs.govfor
more details on free file.
•The Participant will market, promote
and offer e-file services through Octo-
ber 15, 2009. The Participant should
use the key marketing messages, pro-
vided by the IRS, for the promotion
of Filing Season and Post Filing Sea-
son electronic filing and place them on
your website.
•The Participant (Electronic Return
Originator, Intermediate Service
Provider, Software Developer, and
Transmitter) must be in good standing
with the IRS, comply with the e-file
requirements stated in the IRS Rev-
enue Procedure 2007–40 (announced
in IR Bulletin 2007–26 dated June 25,
2007), current versions of Publications
1345, 1345A, 1346, 3112, and pass
the annual Suitability and Participants
Acceptance Testing (PATS) conducted
bytheIRS.YoucanfindtheIRSe-file
technical publications on the IRS web-
site athttp://www.irs.gov.
•The participant will comply with
requirements in Publication 1346,
Electronic Return File Specifi-
cations for Individual Income
Tax Returns,http://www.irs.gov/
taxpros/providers/article/
0,,id=97974,00.html.Anew
sequence (0300) is being added
to capture the volumes of
returns (English and Spanish)
e-filed through IRS.gov with
participatingcompanies
http://www.irs.gov/efile/lists/
0,,id=101223,00.html. An indicator
“A” for English returns and
an indicator “S” for Spanish
returns (if applicable) will be used
by Participants in their record
layouts. Refer to the “Record
Layouts Nature of Change Page”
of Publication 1346 to find more
detailed information. IRS will
not use the indicators to build a
marketing database. In addition,
the indicators will not be used to
compile company-specific data or
propriety data. The database will
only be used to create aggregate
data profiles of all users.
•The Participant will comply with the
privacy provisions of 26 U.S.C. §7216
and U.S.C.§ 6103.
•The Participant will be required to
prove and display third-party certifica-
tions for the privacy/security/authen-
ticity of its online service. The Par-
ticipant’s website should display the
third-party certification and privacy
seals. Participants must use software
that will enable their websites to state
their privacy practices in a standard
machine-readable format that can be
retrieved automatically and interpreted
easilybyusers.
•Participants will comply with the se-
curity provisions in applicable De-
partment of Treasury/IRS rules in-
cluding, but not limited to, 31C.F.R.
Part 10, IRS Rev. Proc. 2005–60,
current versions of IRS Publications
1345, 1345A, and 3112, and 26 U.S.C.
§7216. In addition, Participants must
comply with the Federal Trade Com-
mission’s Gramm-Leach-Bliley Act
to protect the security of taxpayer
information. Refer to Publication
4557,Safeguarding Taxpayer Data,
a Guide for Your Business, for guid-
ance on various security rules and
provisions that impact tax profession-
als. The document can be accessed at
http://www.irs.gov.
2008–45 I.R.B.1138November 10, 2008

•Participants must comply with IRS’
new security and privacy require-
ments for Authorized IRS e-file
Providers participating in elec-
tronic filing of individual income
tax returns for the 2009 Filing Sea-
son. Some of the new requirements
may apply to online filing only. A
draft of the requirements exists
on IRS.govhttp://www.irs.gov/efile/
article/0,,id=186487,00.html.When
the requirements are finalized, they
will be included in the electronic
version of the 2009 Publication 1345.
These new requirements will become
effective January 1, 2009.
•The Participant will offer their prod-
ucts and services to filers of the indi-
vidual 1040 Series returns, including
complex returns, balance due returns,
Federal/State returns, and 1040EZ re-
turns.
•The Participant will clearly disclose its
customer service support options (in-
cluding associated fees, if any) and
privacy policy on the landing page of
its website. Participants must provide
taxpayers with a business contact point
by on-line form, email, mail, facsimile
or telephone number which the Partic-
ipant maintains and reviews.
•The Participant is encouraged to
offer the Spanish versions for online
filing and/or downloadable software.
The Participant who offers Spanish
versions for online filing and/or down-
loadable software will have customer
service support to assist Hispanic tax-
payers.
•The Participant will target v-coders
and individuals eligible for EITC.
•The Participant will focus on reduc-
ing the number of errors on electroni-
cally prepared returns, including those
returns claiming EITC.
•The Participant will offer a variety of
e-file features including the Self-Se-
lect PIN, Electronic Payment Options,
Federal/State e-file, Direct Deposit of
Refunds, etc.
•The Participant will be permitted only
one (1)hyperlink on IRS.gov per cate-
gory:
•e-file Solutions for Taxpayer
http://www.irs.gov/efile/lists/
0,,id=101223,00.html
•Software and Other Tools for Your
e-file Business
http://www.irs.gov/efile/lists/
0,,id=101225,00.html
•e-file Opportunities for Financial
Institutions and Employers
http://www.irs.gov/efile/lists/
0,,id=101233,00.html
•Pay Your Taxes Electronically
http://www.irs.gov/efile/lists/
0,,id=101227,00.html
•The Participant will provide the IRS
with a description (not to exceed 200
characters including spaces) for each
hyperlink placed on the IRSe-filePart-
ners Page. The hyperlink description
may describe multiple offers/services.
•The Participant will not have a URL(s)
containing the word “IRS.”
•The Participant will be required to sup-
plytheIRSwithalinktotheirweb-
site in their application orno less than
ten (10) business daysbefore the site
is expected to go live (start date of elec-
tronic filing). All sites must be exam-
ined before they can be posted on the
IRSe-filePartners Page. The purpose
of the review is to ensure each Partici-
pant’s website complies with the stan-
dards and requirements set forth in this
announcement.
•The Participant will adhere to the
IRSe-filerule for registration of
websites which enables IRS to more
quickly identify fraud schemes, in-
cluding phishing. Failure to do so
could result in suspension or ex-
pulsion from participation in IRS
e-file. For more information, visit
http://www.irs.gov/efile/index.html.
•The Participant will adhere to industry
best practices to ensure the taxpayer re-
turn information entrusted to them is
secure and the privacy of such infor-
mation is maintained. In any instance
where a Participant contracts with a
service provider to obtain technology
services, it will adhere to this standard.
To the extent multiple Participants rely
on a single service provider for front
or back office services (not ISP ser-
vices), it is even more critical that such
taxpayer security and privacy be main-
tained with respect to others who share
these services.
•A Participant’s website will be func-
tionally adequate and consistent with
the Participant’s offer in permitting a
taxpayer to complete their return. Fail-
ure to comply may result in the Partici-
pant’s removal from the Partners Page.
•Whenever taxpayers are requested or
required to provide their SSN, it must
be part of a secure session. Participants
are not permitted to use SSNs as a re-
quested field for registration purposes
or for establishing a taxpayer account
on-line.
•The Participant will display the IRS
e-filelogo on the landing page of its
website.The e-file logo should be a
click-through to the IRS e-file land-
ing pagewww.irs.gov/efile.Ifthe
e-file logo is displayed on other web
pages in addition to the landing page
of the Participant, the logo(s) should
be a click-through to the IRS e-file
landing page. The e-file logo and
guidelines can be downloaded from
http://www.irs.gov.
•The Participant’s website will not con-
tain inappropriate content. Participant
websites must meet the following cri-
teria:
•The site clearly relates to and com-
plements existing information,
products and services on IRS.gov.
•The site contains relevant and use-
ful content that will benefit our
customers.
•The site contains accurate and
timely information.
•The site provides information at no
cost. The Participant will not link
to sites whose primary purpose is
to sell products or services (unless
it is part of an approved agreement
with IRS).
•The site has an excellent overall
quality and professional image.
•The site is easy to navigate.
•Thesiteisacrediblesourcefor
information. The site must be free
of typos and errors so that it does
not detract from the readability of
the site.
•The site does not exhibit hate, bias,
or discrimination.
•The site does not contain mislead-
ing or unsubstantiated claims or
conflict with the mission of the
IRS.
November 10, 200811392008–45 I.R.B.

•The Participant must provide taxpay-
ers a method to obtain the status of
their tax return. Taxpayers can be
directed to“Where’s My Tax Re-
fund?”. Taxpayers can get refund
information about their Federal in-
come tax return through the IRS’
secure website 72 hours after IRS
acknowledges receipt of their re-
turn. Note: the Where’s My Refund?
URL ishttp://www.irs.gov/individuals/
article/0,,id=96596,00.html.
•The Participant will prominently dis-
play on the landing page of its website
the promotion of income tax prepara-
tion and electronic filing for individu-
als eligible for EITC.
•The Participant is encouraged to offer
a monetary incentive (reduced return
preparation and electronic filing costs)
to attract taxpayers.
•The Participant will disclose limita-
tions in the forms and schedules that
are likely to be needed to support
their offerings. The Participant should
clearly display a listing of the forms
and schedules that will be offered
either visible or accessible from the
Participant’s landing page.
•The Participant will clearly disclose
a listing of the States that their soft-
ware supports either visible or accessi-
ble from the Participant’s landing page.
•The Participant is permitted to of-
fer commercial products and services
consistent with obtaining the posi-
tive consent of the user as described
in 26 U.S.C. 7616 before offering
fee-based products and services not
related to tax preparation.
•The Participant will include a feature
in their tax preparation software that
will “time out” the session after no
changes are made for a period of time
consistent with best practices approved
by privacy seal certification programs.
•The Participant shall report security
incidents to the IRS as soon as possible
but not later than one (1) hour after
confirmation of the incident. For the
purposes of this requirement, an event
that can result in an unauthorized dis-
closure, misuse, modification, or de-
struction of taxpayer information shall
be considered a reportable security
incident. The instructions for submit-
ting incident reports will be posted on
IRS.gov.Visithttp://www.irs.gov/efile/
article/0,,id=186487,00.htmlfor a
draft of IRS’ new security and privacy
requirements for Authorized IRS e-file
Providers.
•The Participant will submit written
notification (e.g.,email)totheIRS
of changes, additions and deletions to
URLs, link descriptions, etc.
•The Participant will submit Perfor-
mance Reports to the IRS Point of
covering Filing Season and post Filing
Season activity. The reports will cover
information such ase-filestatistics,
website activity and anything else the
IRS deems necessary. The IRS Point
of Contact will provide written report-
ing instructions and requirements to
accepted Participants.
PERFORMANCE STANDARDS
•The IRS will have the accepted Par-
ticipant’s hyperlink(s) available on the
IRS website for the start of electronic
filing, subject to the participant’s pass-
ing of the annual Suitability, PATS test-
ing, and website review. Hyperlinks
will remain on the IRS e-file Partners
Page throughOctober 15, 2009, or at
the discretion of the IRS.
•The IRS will randomize on a daily ba-
sis the offers of the Participants listed
on the IRSe-filePartners Page.
•The IRS may establish a link from the
IRSe-filePartners Page to the Free File
web page andvice versa.
•The IRS will accept, if appropriate,
the Participant’s written request for
changes/additions/deletions related to
a URL, link description, etc.
•The IRS will review the Participant’s
website(s) at any time to ensure that
participation requirements are met.
•The IRS will not endorse specific of-
ferings or products, but will promote
the IRSe-filePartners Page. A “Site
Disclaimer” will be displayed upon ex-
iting the IRS website before the user
enters the Participant’s website.
PARTICIPATION TERMS
The IRS Individuale-filePartnership
Program is an annual program, and all
prospective Participants, including return-
ing Participants, must reapply each year
following the guidelines in the Internal
Revenue Bulletin announcement adver-
tised on IRS.gov. If the IRS determines
that the Participant isnot meeting the “Par-
ticipation Standards & Requirements,” the
IRS may terminate its partnership with the
Participant and remove the participant’s
hyperlink(s) from the IRSe-filePartners
Page.
•The Participant will notify the IRS im-
mediately if it wishes to terminate its
partnership with the IRS. The notifica-
tion should be submitted through email
to the IRS Point of Contact or sent
to the Point of Contact’s address in-
dicated below in “IRS Point of Con-
tact/Application Submission.”
APPLICATION PROCESS
Applications should contain the follow-
ing information,if applicable:
•Provide Primary and Secondary Points
of Contact (name, title, address,
cell/telephone number, fax number
and email address) for discussion of
your application andprogram partici-
pation.
•Identify the Applicant’s secure web-
site.
•Identify the Applicant’s tax prepara-
tion software and the States it will sup-
port.
•Identify the IRS forms and schedules
that support your offering(s).
•Include the Applicant’s Electronic
Filer Identification Number(s) (EFIN)
and/or Electronic Transmitter Identifi-
cation Number (ETIN).
•Indicate if the Applicant will offer
the Spanish versions for online filing
and/or downloadable software. De-
scribe customer service support for
assisting Hispanic taxpayers.
•Identify the Applicant’s hyperlink(s)
and provide a short description(not
to exceed 200 characters including
spaces)of the services and products
to be promoted on the IRSe-filePart-
ners Page. In addition, the Applicant
should provide the associated URL(s).
URL(s) cannot contain the word
“IRS.”Indicate the category for each
hyperlink:
•e-file Solutions for Taxpayers
•Software and Other Tools for Your
e-file Business
•e-file Opportunities for Financial
Institutions and Employers
2008–45 I.R.B.1140November 10, 2008

•Pay Your Taxes Electronically
•Identify the Applicant’s third party
administrators (i.e., VeriSign, Thawte,
Truste) that certify the privacy/secu-
rity/authenticity of its online service
and provide certification that the Ap-
plicant’s current status is active and in
good standing.
•Identify the Applicant’s communica-
tion vehicle(s) (i.e.,website,market-
ing/promotional products, etc.) to mar-
ket and promote your products and ser-
vices and IRSe-file. Describe the in-
centives, discounts,offers, benefits to
taxpayers or other specific approaches
to increasee-filevolumes.
•Describe steps the Applicant will take
to reach taxpayers that claim EITC.
This can include marketing/promo-
tional efforts, monetary incentives
(reduced return preparation and elec-
tronic filing costs).
•Describe steps the Applicant will take
to reduce errors on electronically filed
returns, including those returns claim-
ing EITC.
•Certification statement that the Appli-
cant is in compliance with the privacy
and disclosure provisions of 26 U.S.C.
7216 and 26 U.S.C. 6103.
•Certification statement that the
Applicant is in compliance with
the Federal Trade Commission’s
Gramm-Leach-Bliley (GLB) Act of
1999, Financial Privacy Rule and Safe-
guard Rules.
•Certification statement that the Appli-
cant is in compliance with IRS’ secu-
rity and privacy requirements for Au-
thorized IRS e-file Providers partici-
pating in electronic filing of individual
income tax returns.
IRS POINT OF
CONTACT/APPLICATION
SUBMISSION
Applications to participate in the
IRS Individuale-filePartnership
Program should be submitted as a
Word document through email at
*WIe-filepartners@irs.gov(Please make
sure there is an asterisk before the WI
(Wage and Investment) when submitting
an application.) An application may also
be sent to:
Internal Revenue Service
5000 Ellin Road
Lanham, MD 20706
Attention: Karen Bradley C4–132
SE:W:CAR:SPEC:FO:IMS
If you wish to have a hyperlink(s)
on the IRSe-filePartners Page for the
start of electronic filing, your applica-
tion must be submitted by December 10,
2008.If your application is received after
the deadline, there is no guarantee that it
will be accepted by the IRS.
Any questions regarding the devel-
opment of applications, the submis-
sion of Performance Reports, or any
other type of contact for this program
should be directed to Karen Bradley
at (202) 283–7034 or through email to
*WIe-filepartners@irs.gov. Please make
sure there is an asterisk (*) before the WI
(Wage and Investment) for any type of
email contact.
APPLICATION EVALUATION
All applications will be evaluated based
on the required information provided to
the IRS and the applicant’s ability to ful-
fill their responsibilities. Prior year perfor-
mance will also be considered when evalu-
ating applications fromreturning partners.
ACCEPTANCE/DENIAL OF
APPLICATION
If your application is accepted, you
will receive written notification from the
IRS. If your application is denied, you will
receive written notification from the IRS
with an explanation of the denial.
e-Help
If you have any questions related
to e-products/electronic filing, you can
contact the e-Help Desk toll-free at
1–866–255–0654. The e-Help desk assis-
tors are ready to respond to non-account
related questions and issues. You can also
go tohttp://www.irs.govwhere the IRS
houses a variety of information which im-
pacts the tax professional.
November 10, 200811412008–45 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2008–45 I.R.B.iNovember 10, 2008

Numerical Finding List
1
Bulletins 2008–27 through 2008–45
Announcements:
2008-62, 2008-27 I.R.B.74
2008-63, 2008-28 I.R.B.114
2008-64, 2008-28 I.R.B.114
2008-65, 2008-31 I.R.B.279
2008-66, 2008-29 I.R.B.164
2008-67, 2008-29 I.R.B.164
2008-68, 2008-30 I.R.B.244
2008-69, 2008-32 I.R.B.318
2008-70, 2008-32 I.R.B.318
2008-71, 2008-32 I.R.B.321
2008-72, 2008-32 I.R.B.321
2008-73, 2008-33 I.R.B.391
2008-74, 2008-33 I.R.B.392
2008-75, 2008-33 I.R.B.392
2008-76, 2008-33 I.R.B.393
2008-77, 2008-33 I.R.B.394
2008-78, 2008-34 I.R.B.453
2008-79, 2008-35 I.R.B.568
2008-80, 2008-37 I.R.B.706
2008-81, 2008-37 I.R.B.706
2008-82, 2008-37 I.R.B.708
2008-83, 2008-37 I.R.B.709
2008-84, 2008-38 I.R.B.748
2008-85, 2008-38 I.R.B.749
2008-86, 2008-40 I.R.B.843
2008-87, 2008-40 I.R.B.843
2008-88, 2008-40 I.R.B.843
2008-89, 2008-40 I.R.B.844
2008-90, 2008-41 I.R.B.896
2008-91, 2008-42 I.R.B.963
2008-92, 2008-42 I.R.B.963
2008-93, 2008-41 I.R.B.896
2008-94, 2008-42 I.R.B.964
2008-95, 2008-42 I.R.B.964
2008-96, 2008-43 I.R.B.1010
2008-97, 2008-43 I.R.B.1010
2008-98, 2008-44 I.R.B.1087
2008-99, 2008-44 I.R.B.1089
2008-100, 2008-44 I.R.B.1090
2008-101, 2008-44 I.R.B.1090
2008-102, 2008-43 I.R.B.1011
2008-104, 2008-45 I.R.B.1136
2008-106, 2008-45 I.R.B.1137
Court Decisions:
2087, 2008-41 I.R.B.845
Notices:
2008-55, 2008-27 I.R.B.11
2008-56, 2008-28 I.R.B.79
2008-57, 2008-28 I.R.B.80
Notices— Continued:
2008-58, 2008-28 I.R.B.81
2008-59, 2008-29 I.R.B.123
2008-60, 2008-30 I.R.B.178
2008-61, 2008-30 I.R.B.180
2008-62, 2008-29 I.R.B.130
2008-63, 2008-31 I.R.B.261
2008-64, 2008-31 I.R.B.268
2008-65, 2008-30 I.R.B.182
2008-66, 2008-31 I.R.B.270
2008-67, 2008-32 I.R.B.307
2008-68, 2008-34 I.R.B.418
2008-69, 2008-34 I.R.B.419
2008-70, 2008-36 I.R.B.575
2008-71, 2008-35 I.R.B.462
2008-72, 2008-43 I.R.B.998
2008-73, 2008-38 I.R.B.717
2008-74, 2008-38 I.R.B.718
2008-75, 2008-38 I.R.B.719
2008-76, 2008-39 I.R.B.768
2008-77, 2008-40 I.R.B.814
2008-78, 2008-41 I.R.B.851
2008-79, 2008-40 I.R.B.815
2008-80, 2008-40 I.R.B.820
2008-81, 2008-41 I.R.B.852
2008-82, 2008-41 I.R.B.853
2008-83, 2008-42 I.R.B.905
2008-84, 2008-41 I.R.B.855
2008-85, 2008-42 I.R.B.905
2008-86, 2008-42 I.R.B.925
2008-87, 2008-42 I.R.B.930
2008-88, 2008-42 I.R.B.933
2008-89, 2008-43 I.R.B.999
2008-90, 2008-43 I.R.B.1000
2008-91, 2008-43 I.R.B.1001
2008-92, 2008-43 I.R.B.1001
2008-93, 2008-43 I.R.B.1002
2008-94, 2008-44 I.R.B.1070
2008-95, 2008-44 I.R.B.1076
2008-96, 2008-44 I.R.B.1077
2008-97, 2008-44 I.R.B.1080
2008-98, 2008-44 I.R.B.1080
2008-100, 2008-44 I.R.B.1081
2008-101, 2008-44 I.R.B.1082
2008-102, 2008-45 I.R.B.1106
Proposed Regulations:
REG-209006-89, 2008-41 I.R.B.867
REG-157711-02, 2008-44 I.R.B.1087
REG-143544-04, 2008-42 I.R.B.947
REG-160868-04, 2008-45 I.R.B.1115
REG-161695-04, 2008-37 I.R.B.699
REG-164965-04, 2008-34 I.R.B.450
REG-142339-05, 2008-45 I.R.B.1116
REG-143453-05, 2008-32 I.R.B.310
REG-146895-05, 2008-37 I.R.B.700
Proposed Regulations— Continued:
REG-155087-05, 2008-38 I.R.B.726
REG-142680-06, 2008-35 I.R.B.565
REG-120476-07, 2008-36 I.R.B.679
REG-120844-07, 2008-39 I.R.B.770
REG-128841-07, 2008-45 I.R.B.1124
REG-129243-07, 2008-27 I.R.B.32
REG-138355-07, 2008-32 I.R.B.311
REG-140029-07, 2008-40 I.R.B.828
REG-142040-07, 2008-34 I.R.B.451
REG-142333-07, 2008-43 I.R.B.1008
REG-149404-07, 2008-40 I.R.B.839
REG-149405-07, 2008-27 I.R.B.73
REG-100464-08, 2008-32 I.R.B.313
REG-101258-08, 2008-28 I.R.B.111
REG-102122-08, 2008-31 I.R.B.278
REG-102822-08, 2008-38 I.R.B.744
REG-103146-08, 2008-37 I.R.B.701
REG-106251-08, 2008-39 I.R.B.774
REG-107318-08, 2008-45 I.R.B.1131
REG-115457-08, 2008-33 I.R.B.390
REG-121698-08, 2008-29 I.R.B.163
Revenue Procedures:
2008-32, 2008-28 I.R.B.82
2008-33, 2008-28 I.R.B.93
2008-34, 2008-27 I.R.B.13
2008-35, 2008-29 I.R.B.132
2008-36, 2008-33 I.R.B.340
2008-37, 2008-29 I.R.B.137
2008-38, 2008-29 I.R.B.139
2008-39, 2008-29 I.R.B.143
2008-40, 2008-29 I.R.B.151
2008-41, 2008-29 I.R.B.155
2008-42, 2008-29 I.R.B.160
2008-43, 2008-30 I.R.B.186
2008-44, 2008-30 I.R.B.187
2008-45, 2008-30 I.R.B.224
2008-46, 2008-30 I.R.B.238
2008-47, 2008-31 I.R.B.272
2008-48, 2008-36 I.R.B.586
2008-49, 2008-34 I.R.B.423
2008-50, 2008-35 I.R.B.464
2008-51, 2008-35 I.R.B.562
2008-52, 2008-36 I.R.B.587
2008-53, 2008-36 I.R.B.678
2008-54, 2008-38 I.R.B.722
2008-55, 2008-39 I.R.B.768
2008-56, 2008-40 I.R.B.826
2008-57, 2008-41 I.R.B.855
2008-58, 2008-41 I.R.B.856
2008-59, 2008-41 I.R.B.857
2008-60, 2008-43 I.R.B.1006
2008-61, 2008-42 I.R.B.934
2008-62, 2008-42 I.R.B.935
2008-63, 2008-42 I.R.B.946
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin
2008–26, dated June 30, 2008.
November 10, 2008ii2008–45 I.R.B.

Revenue Procedures— Continued:
2008-65, 2008-44 I.R.B.1082
2008-66, 2008-45 I.R.B.1107
Revenue Rulings:
2008-32, 2008-27 I.R.B.6
2008-33, 2008-27 I.R.B.8
2008-34, 2008-28 I.R.B.76
2008-35, 2008-29 I.R.B.116
2008-36, 2008-30 I.R.B.165
2008-37, 2008-28 I.R.B.77
2008-38, 2008-31 I.R.B.249
2008-39, 2008-31 I.R.B.252
2008-40, 2008-30 I.R.B.166
2008-41, 2008-30 I.R.B.170
2008-42, 2008-30 I.R.B.175
2008-43, 2008-31 I.R.B.258
2008-44, 2008-32 I.R.B.292
2008-45, 2008-34 I.R.B.403
2008-46, 2008-36 I.R.B.572
2008-47, 2008-39 I.R.B.760
2008-48, 2008-38 I.R.B.713
2008-49, 2008-40 I.R.B.811
2008-50, 2008-45 I.R.B.1098
Treasury Decisions:
9401, 2008-27 I.R.B.1
9402, 2008-31 I.R.B.254
9403, 2008-32 I.R.B.285
9404, 2008-32 I.R.B.280
9405, 2008-32 I.R.B.293
9406, 2008-32 I.R.B.287
9407, 2008-33 I.R.B.330
9408, 2008-33 I.R.B.323
9409, 2008-29 I.R.B.118
9410, 2008-34 I.R.B.414
9411, 2008-34 I.R.B.398
9412, 2008-37 I.R.B.687
9413, 2008-34 I.R.B.404
9414, 2008-35 I.R.B.454
9415, 2008-36 I.R.B.570
9417, 2008-37 I.R.B.693
9418, 2008-38 I.R.B.713
9419, 2008-40 I.R.B.790
9420, 2008-39 I.R.B.750
9421, 2008-39 I.R.B.755
9422, 2008-42 I.R.B.898
9423, 2008-43 I.R.B.966
9424, 2008-44 I.R.B.1012
9425, 2008-45 I.R.B.1100
2008–45 I.R.B.iiiNovember 10, 2008

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2008–27 through 2008–45
Announcements:
2008-19
Superseded by
Ann. 2008-95, 2008-42 I.R.B.964
2008-64
Corrected by
Ann. 2008-71, 2008-32 I.R.B.321
2008-72
Corrected by
Ann. 2008-78, 2008-34 I.R.B.453
Notices:
88-80
Modified by
Notice 2008-79, 2008-40 I.R.B.815
99-48
Superseded by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2000-9
Obsoleted by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
2004-2
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2004-50
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2005-11
Superseded by
T.D. 9425, 2008-45 I.R.B.1100
2005-91
Obsoleted by
T.D. 9422, 2008-42 I.R.B.898
2006-88
Modified and superseded by
Notice 2008-60, 2008-30 I.R.B.178
2007-22
Amplified by
Notice 2008-59, 2008-29 I.R.B.123
2007-36
Clarified, modified, and amplified by
Rev. Proc. 2008-54, 2008-38 I.R.B.722
2007-52
Updated and amplified by
Notice 2008-96, 2008-44 I.R.B.1077
2007-53
Updated by
Notice 2008-97, 2008-44 I.R.B.1080
Notices— Continued:
2008-41
Amended and supplemented by
Notice 2008-88, 2008-42 I.R.B.933
Proposed Regulations:
REG-161695-04
Corrected by
Ann. 2008-92, 2008-42 I.R.B.963
REG-143453-05
Hearing cancelled by
Ann. 2008-96, 2008-43 I.R.B.1010
REG-129243-07
Corrected by
Ann. 2008-75, 2008-33 I.R.B.392
REG-151135-07
Hearing scheduled by
Ann. 2008-64, 2008-28 I.R.B.114
REG-101258-08
Corrected by
Ann. 2008-73, 2008-33 I.R.B.391
REG-103146-08
Hearing scheduled by
Ann. 2008-102, 2008-43 I.R.B.1011
Revenue Procedures:
92-25
Superseded by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
92-83
Obsoleted by
Rev. Proc. 2008-37, 2008-29 I.R.B.137
2001-10
Section 6.02(1)(a) modified and amplified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2001-42
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
2002-9
Clarified, modified, amplified, and superseded by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
Modified and amplified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
2002-28
Section 7.02(1)(a) modified and amplified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2002-64
Superseded by
Rev. Proc. 2008-55, 2008-39 I.R.B.768
2005-29
Superseded by
Rev. Proc. 2008-49, 2008-34 I.R.B.423
Revenue Procedures— Continued:
2006-27
Modified and superseded by
Rev. Proc. 2008-50, 2008-35 I.R.B.464
2006-29
Superseded by
Rev. Proc. 2008-34, 2008-27 I.R.B.13
2006-34
Superseded by
Rev. Proc. 2008-44, 2008-30 I.R.B.187
2007-14
Superseded by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2007-19
Superseded by
Rev. Proc. 2008-39, 2008-29 I.R.B.143
2007-37
Updated by
Rev. Proc. 2008-62, 2008-42 I.R.B.935
2007-42
Superseded by
Rev. Proc. 2008-32, 2008-28 I.R.B.82
2007-43
Superseded by
Rev. Proc. 2008-33, 2008-28 I.R.B.93
2007-44
Modified by
Rev. Proc. 2008-56, 2008-40 I.R.B.826
2007-49
Section 3 modified and superseded by
Rev. Proc. 2008-50, 2008-35 I.R.B.464
2007-50
Superseded by
Rev. Proc. 2008-36, 2008-33 I.R.B.340
2007-63
Superseded by
Rev. Proc. 2008-59, 2008-41 I.R.B.857
2007-66
Modified and superseded by
Rev. Proc. 2008-54, 2008-38 I.R.B.722
2007-70
Modified by
Ann. 2008-63, 2008-28 I.R.B.114
2007-72
Amplified and superseded by
Rev. Proc. 2008-47, 2008-31 I.R.B.272
2008-3
Modified and amplified by
Rev. Proc. 2008-61, 2008-42 I.R.B.934
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2008–1 through 2008–26 is in Internal Revenue Bulletin 2008–26, dated June 30, 2008.
November 10, 2008iv2008–45 I.R.B.

Revenue Procedures— Continued:
2008-12
Modified and superseded by
Rev. Proc. 2008-35, 2008-29 I.R.B.132
2008-43
Modified by
Rev. Proc. 2008-52, 2008-36 I.R.B.587
2008-52
Modified by
Ann. 2008-84, 2008-38 I.R.B.748
Revenue Rulings:
67-213
Amplified by
Rev. Rul. 2008-40, 2008-30 I.R.B.166
71-234
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
76-273
Obsoleted by
T.D. 9414, 2008-35 I.R.B.454
77-480
Modified by
Rev. Proc. 2008-43, 2008-30 I.R.B.186
82-105
Obsoleted by
T.D. 9414, 2008-35 I.R.B.454
91-17
Amplified by
Rev. Proc. 2008-41, 2008-29 I.R.B.155
Rev. Proc. 2008-42, 2008-29 I.R.B.160
Superseded in part by
Rev. Proc. 2008-40, 2008-29 I.R.B.151
2005-6
Amplified by
Rev. Proc. 2008-38, 2008-29 I.R.B.139
2006-57
Modified by
Notice 2008-74, 2008-38 I.R.B.718
2008-12
Amplified by
Rev. Rul. 2008-38, 2008-31 I.R.B.249
Clarified by
Ann. 2008-65, 2008-31 I.R.B.279
Treasury Decisions:
8073
Corrected by
Ann. 2008-99, 2008-44 I.R.B.1089
9391
Corrected by
Ann. 2008-74, 2008-33 I.R.B.392
Treasury Decisions— Continued:
9417
Corrected by
Ann. 2008-91, 2008-42 I.R.B.963
2008–45 I.R.B.vNovember 10, 2008

November 10, 20082008–45 I.R.B.

2008–45 I.R.B.November 10, 2008

November 10, 20082008–45 I.R.B.

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