Internal Revenue Bulletin 2013-11 (PDF rendition): IRS Revenue Rulings

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

Bulletin No. 201
3-11
March 11, 2013
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2013–7, page 608.
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 March 2013.
T.D. 9606, page 586.
Final regulations under section 304 of the Code addresses
sales of stock between related corporations. The regulations fi-
nalize proposed regulations and remove temporary regulations
that apply to certain sales of stock that are recharacterized
as contributions and redemptions, but that are structured with
a principal purpose of redesignating the issuing corporation
or the acquiring corporation. The regulations affect persons
treated as receiving distributions in redemption of stock as a
result of such transactions.
Rev. Proc. 2013–17, page 612.
General rules and specifications for substitute forms and
schedules.This procedure provides guidelines and general
requirements for the development, printing, and approval of
substitute tax forms. This procedure will be reproduced as
the next revision of Publication 1167. Rev. Proc. 2011–61
superseded.
Rev. Proc. 2013–19, page 648.
This procedure extends the deadline to comply with the manda-
tory language requirements in Rev. Proc. 2013–14. Revenue
Procedure 2013–14 modified.
EMPLOYEE PLANS
Notice 2013–11, page 610.
This notice provides guidance on the 25-year average seg-
ment rates that are applied to adjust the otherwise applicable
24-month average segment rates that are used to compute
the minimum contribution requirements for single-employer de-
fined benefit plans under section 430 of the Code and section
303 of the Employee Retirement Income Security Act of 1974
(ERISA) for plan years beginning in 2013. The guidance re-
flects the changes made to the Code and ERISA by the Moving
Ahead for Progress in the 21st Century Act (MAP-21), Pub. L.
112–141.
Announcement 2013–15, page 652.
This announcement contains a revised Exhibit: Sample Notice
to Interested Parties, attached to Rev. Proc. 2013–6, 2013–1
I.R.B. 198. The Exhibit is revised to include the correct ad-
dresses for submitting applications for determination letters
and comments submitted by interested parties, in accordance
with the corrections to Rev. Proc. 2013–6 made by Ann.
2013–13, 2013–9 I.R.B. 532. Rev. Proc. 2013–6 revised.
(Continued on the next page)
Finding Lists begin on page ii.

EXEMPT ORGANIZATIONS
T.D. 9605, page 587.
REG–155929–06, page 650.
Final and temporary regulations under section 509 of the Code,
required by the Pension Protection Act of 2006, provide rules
for supporting organizations that are operated “in connection
with” their supported organization(s) (called “Type III supporting
organizations”). These final regulations specify the information
that Type III supporting organizations are required to provide
their supported organizations. The final regulations also pro-
vided the criteria that Type III supporting organizations must
satisfy in order to qualify as “functionally integrated.” For those
Type III supporting organizations that do not qualify as func-
tionally integrated, the temporary regulations require an annual
payout of the greater of 3.5 percent of the fair market value of
non-exempt-use assets or 85 percent of adjusted net income.
EMPLOYMENT TAX
Rev. Proc. 2013–17, page 612.
General rules and specifications for substitute forms and
schedules.This procedure provides guidelines and general
requirements for the development, printing, and approval of
substitute tax forms. This procedure will be reproduced as
the next revision of Publication 1167. Rev. Proc. 2011–61
superseded.
EXCISE TAX
T.D. 9605, page 587.
REG–155929–06, page 650.
Final and temporary regulations under section 509 of the Code,
required by the Pension Protection Act of 2006, provide rules
for supporting organizations that are operated “in connection
with” their supported organization(s) (called “Type III supporting
organizations”). These final regulations specify the information
that Type III supporting organizations are required to provide
their supported organizations. The final regulations also pro-
vided the criteria that Type III supporting organizations must
satisfy in order to qualify as “functionally integrated.” For those
Type III supporting organizations that do not qualify as func-
tionally integrated, the temporary regulations require an annual
payout of the greater of 3.5 percent of the fair market value of
non-exempt-use assets or 85 percent of adjusted net income.
TAX CONVENTIONS
Announcement 2013–14, page 651.
The following is a copy of the Competent Authority Agreement
(“the Agreement”) released to the public on January 31, 2013,
by the Competent Authorities of the United States and Norway
regarding the eligibility of entities that are treated as fiscally
transparent under the laws of either Contracting State to bene-
fit under the Convention Between the United States of America
and the Kingdom of Norway for the Avoidance of Double Taxa-
tion and the Prevention of Fiscal Evasion with Respect to Taxes
on Income and Property, signed on December 3, 1971, and as
amended by the Protocol signed on September 19, 1980 (the
“Treaty”).
ADMINISTRATIVE
Announcement 2013–12, page 651.
Eliminating printing on paper of the Internal Revenue
Bulletin.The IRS is no longer printing paper copies of the In-
ternal Revenue Bulletin (IRB), which the IRS distributed directly
to certain stakeholders. Also, the IRS will not create the Cumu-
lative Bulletin (CB) after the 2008–2 edition.
March 11, 20132013–11 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis.
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 in
cludes 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 and
suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The co
ntents 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.
2013–11 I.R.B.March 11, 2013

March 11, 20132013–11 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
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 March 2013.
See Rev. Rul. 2013-7, page 608.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of March 2013. See Rev.
Rul. 2013-7, page 608.
Section 304.—Redemption
Through Use of Related
Corporations
26 CFR 1.304–4: Special rules for the use of related
corporations to avoid the application of section 304.
T.D. 9606
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Use of Controlled Corporations
to Avoid the Application of
Section 304
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains fi-
nal regulations addressing sales of stock
between related corporations. The regula-
tions finalize proposed regulations and re-
move temporary regulations that apply to
certain sales of stock that are recharacter-
ized as contributionsand redemptions, but
that are structured with a principal purpose
of redesignating the issuing corporation or
the acquiring corporation. The regulations
affect persons treated asreceiving distribu-
tions in redemption of stock as a result of
such transactions.
DATES
:Effective Date:These regulations
are ef
fective on December 24, 2012.
Applicabilit
yDate:These regulations
apply to acqui
sitions of stock occurring on
or after Decem
ber 29, 2009.
FOR FURTHER IN
FORMATION
CONTACT: Rya
n A. Bowen, (202)
622–3860 (no
t a toll-free number).
SUPPLEMENTA
RY INFORMATION:
Background
On December 3
0, 2009, the IRS and
the Treasury
Department published final
and temporar
y regulations and a notice of
proposed ru
lemaking by cross-reference to
temporary r
egulations in theFederal Reg-
ister(74 FR
69021, T.D. 9477, 2010–6
I.R.B. 385;
REG–132232–08, 2010–6
I.R.B. 401
[74 FR 69043]) (2009 regu-
lations) u
nder section 304. A correction
to the 2009
regulations was published
in theFede
ral Registeron February 26,
2010 (75 FR
8796). The 2009 regulations
amended t
he anti-abuse rule of §1.304–4T,
which was
published in theFederal Reg-
isteron J
une 14, 1988 (T.D. 8209, 1988–2
C.B. 174)
, to address transactions that are
subject t
o section 304 but are structured
with a pr
incipal purpose of avoiding the
applica
tion of section 304 to certain cor-
poratio
ns. No public hearing on the 2009
regulat
ions was requested or held, and no
written
comments were received. Accord-
ingly,
this Treasury decision adopts the
2009 re
gulations without change as final
regula
tions and removes the temporary
regula
tions under section 304.
Specia
lAnalyses
It has b
een determined that this Trea-
sury de
cision is not a significant regula-
tory a
ction as defined in Executive Order
12866
. Therefore, a regulatory assessment
is not
required. It also has been determined
that s
ection 553(b) and (d) of the Admin-
istra
tive Procedure Act (5 U.S.C. Chapter
6) do
not apply to these regulations. For
appl
icability of the Regulatory Flexibility
Act (
5 U.S.C. Chapter 6), it is hereby cer-
tifi
ed that this rule will not have a sig-
nifi
cant economic impact on a substantial
numb
er of small entities. These regula-
tio
ns primarily will affect large corpora-
tions. Thus, t
he number of affected small
entities will
not be substantial. Pursuant
to section 780
5(f) of the Internal Revenue
Code, the not
ice of proposed rulemaking
preceding th
is regulation was submitted to
the Chief Cou
nsel for Advocacy of the
Small Busine
ss Administration for com-
ments on its
impact on small business.
Drafting Information
The principal author of the regula-
tions is Ryan A. Bowen of the Office of
Associate Chief Counsel (International).
However, other personnel from the IRS
and the Treasury Department participated
in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—I
NCOME 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 1.304–4 is revised to
read as follows:
§1.304–4 Special rules for the use
of related corporations to avoid the
application of section 304.
(a)Sco
pe and purpose. This section
applie
s to determine the amount of a prop-
erty di
stribution constituting a dividend
(and th
e source thereof) under section
304(b)
(2), for certain transactions involv-
ing co
ntrolled corporations. The purpose
of thi
s section is to prevent the avoidance
of the
application of section 304 to a con-
troll
ed corporation.
(b)Am
ount and source of dividend.For
purpo
ses of determining the amount con-
stitu
ting a dividend (and source thereof)
unde
r section 304(b)(2), the following
rule
s shall apply:
(1)D
eemed acquiring corporation.
Acor
poration (deemed acquiring corpo-
rati
on) shall be treated as acquiring for
2013–11 I.R.B.586March 11, 2013

property the stock of a corporation (is-
suing corporation) acquired for property
by another corporation (acquiring corpo-
ration) that is controlled by the deemed
acquiring corporation, if a principal pur-
pose for creating, organizing, or funding
the acquiring corporation by any means
(including through capital contributions or
debt) is to avoid the application of section
304 to the deemed acquiring corporation.
See paragraph (c)Example 1of this sec-
tion for an illustration of this paragraph.
(2)Deemed issuing corporation.The
acquiring corporation shall be treated as
acquiring for property the stock of a corpo-
ration (deemed issuing corporation) con-
trolled by the issuing corporation if, in con-
nection with the acquisition for property
of stock of the issuing corporation by the
acquiring corporation, the issuing corpo-
ration acquired stock of the deemed issu-
ing corporation with a principal purpose of
avoiding the application of section 304 to
the deemed issuing corporation. See para-
graph (c)Example 2of this section for an
illustration of this paragraph.
(c)Examples. The rules of this section
are illustrated by the following examples:
Example 1.(i)Facts. P, a domestic corpora-
tion, wholly owns CFC1, a controlled foreign cor-
poration with substantialaccumulated earnings and
profits. CFC1 is organized in Country X, which im-
poses a high rate of tax on the income of CFC1. P
also wholly owns CFC2, a controlled foreign cor-
poration with accumulated earnings and profits of
$200x. CFC2 is organized in Country Y, which im-
poses a low rate of tax on the income of CFC2. P
wishes to own all of its foreign corporations in a di-
rect chain and to repatriate the cash of CFC2. In or-
der to avoid having to obtain Country X approval for
the acquisition of CFC1 (a Country X corporation)
by CFC2 (a Country Y corporation) and to avoid the
dividend distribution from CFC2 to P that would re-
sult if CFC2 were the acquiring corporation, P causes
CFC2 to form CFC3 in Country X and to contribute
$100x to CFC3. CFC3 then acquires all of the stock
of CFC1 from P for $100x.
(ii)Result. Because a principal purpose for cre-
ating, organizing, or funding CFC3 (acquiring corpo-
ration) is to avoid the application of section 304 to
CFC2 (deemed acquiring corporation), under para-
graph (b)(1) of this section, for purposes of deter-
mining the amount of the $100x distribution con-
stituting a dividend (and source thereof) under sec-
tion 304(b)(2), CFC2 shall be treated as acquiring
the stock of CFC1 (issuing corporation) from P for
$100x. As a result, P receives a $100x distribution
out of the earnings and profits of CFC2 to which sec-
tion 301(c)(1) applies.
Example 2.(i)Facts. P, a domestic corporation,
wholly owns CFC1, a controlled foreign corporation
with substantial accumulated earnings and profits.
The CFC1 stock has a basis of $100x. CFC1 is
organized in Country X. P also wholly owns CFC2, a
controlled foreign corporation with zero accumulated
earnings and profits. CFC2 is organized in Country
Y. P wishes to own all of its foreign corporations in a
direct chain and to repatriate the cash of CFC2. In or-
der to avoid having to obtain Country X approval for
the acquisition of CFC1 (a Country X corporation)
by CFC2 (a Country Y corporation) and to avoid
a dividend distribution from CFC1 to P, P forms a
new corporation (CFC3) in Country X and transfers
the stock of CFC1 to CFC3 in exchange for CFC3
stock. P then transfers the stock of CFC3 to CFC2 in
exchange for $100x.
(ii)Result. Because a principal purpose for the
transfer of the stock of CFC1 (deemed issuing cor-
poration) by P to CFC3 (issuing corporation) is to
avoid the application of section 304 to CFC1, under
paragraph (b)(2) of this section, for purposes of de-
termining the amount of the $100x distribution con-
stituting a dividend (and source thereof) under sec-
tion 304(b)(2), CFC2 (acquiring corporation) shall be
treated as acquiring thestock of CFC1 from P for
$100x . As a result, P receives a $100x distribution
out of the earnings and profits of CFC1 to which sec-
tion 301(c)(1) applies.
(d)Effective/applicability date.This
section applies to acquisitions of stock oc-
curring on or after December 29, 2009.
§1.304–4T [Removed]
Par. 3. Section 1.304–4T is removed.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved December 12, 2012.
Mark J. Mazur,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on December 21,
2012, 8:45 a.m., and published in th
e issue of the Federal
Register for December 26, 2012, 77 F.R. 75844)
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 March 2013. See Rev. Rul.
2013-7, page 608.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2013. See Rev. Rul. 2013-7, page 608.
Section 467.—Certain
Payments for the Use of
Property or Se
rvices
The adjusted a
pplicable federal short-term, mid-
term, and long
-term rates are set forth for the month
of March 2013.
See Rev. Rul. 2013-7, page 608.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2013. See Rev. Rul. 2013-7, page 608.
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 March 2013. See Rev.
Rul. 2013-7, page 608.
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 March 2013. See Rev. Rul. 2013-7, page 608.
Section 509.—Private
Foundation Defined
26 CFR 1.509(a)–4: Supporting organizations.
T.D. 9605
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Payout Requirements for Type
III Supporting Organizations
That Are Not Functionally
Integrated
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final and temporary regula-
tions.
SUMMARY: This document contains both
final regulations and temporary regula-
tions regarding the requirements to qualify
March 11, 20135872013–11 I.R.B.

as a Type III supporting organization that
is operated in connection with one or
more supported organizations. The reg-
ulations reflect changes to the law made
by the Pension Protection Act of 2006.
The regulations will affect Type III sup-
porting organizations and their supported
organizations. The text of the temporary
regulations also serves as the text of the
proposed regulations (REG–155929–06)
set forth in this issue of the Bulletin.
DATES:Effective Date:These regulations
are effective on December 28, 2012.
FOR FURTHER INFORMATION
CONTACT: Preston J. Quesenberry at
(202) 622–6070 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in the final regulations has been
reviewed and approved by the Office
of Management and Budget in accor-
dance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507(d)) un-
der control number 1545–2157. The
collection of information in the final
regulations is in §1.509(a)–4(i)(2) and
§1.509(a)–4(i)(6)(v). The collection of
information under §1.509(a)–4(i)(2) flows
from section 509(f)(1)(A) of the Internal
Revenue Code (Code), which requires a
Type III supporting organization to pro-
vide to each of its supported organizations
such information as the Secretary may
require to ensure that the Type III sup-
porting organization is responsive to the
needs or demands of its supported organ-
ization(s). The collection of information
under §1.509(a)–4(i)(6)(v) is required only
if a Type III supporting organization that is
not functionally integrated wishes for cer-
tain amounts set aside for a specific project
to count toward the distribution require-
ment imposed by §1.509(a)–4(i)(5)(ii).
The likely recordkeepers are Type III sup-
porting organizations and certain of their
supported organizations.
Estimated total annual reporting bur-
den: 15,122 hours.
Estimated average annual burden hours
per recordkeeper: 2 hours.
Estimated number of recordkeepers:
7,556.
Estimated frequency of collection of
such information: Annual.
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 return in-
formation are confidential, as required by
26 U.S.C. 6103.
Background
This document contains amendments to
the Income Tax Regulations (26 CFR part
1) and Foundation Excise Tax Regulations
(26 CFR part 53) regarding organiza-
tions described in section 509(a)(3) of
the Code. An organization described in
section 501(c)(3) of the Code is classified
as either a private foundation or a pub-
lic charity. To be classified as a public
charity, an organization must meet the
requirements of section 509(a)(1), (2), (3),
or (4). Organizations described in section
509(a)(3) are known as supporting organi-
zations. Supporting organizations achieve
their public charity status by providing
support to one or more organizations de-
scribed in section 509(a)(1) or (2), which
in this context are referred to as supported
organizations.
To meet the requirements of section
509(a)(3), an organization must satisfy an
organizational test, an operational test, a
relationship test, and a disqualified per-
son control test. The organizational and
operational tests require that the support-
ing organization be organized and at all
times thereafter operated exclusively for
the benefit of, to perform the functions of,
or to carry out the purposes of one or more
supported organizations. The relationship
test requires the supporting organization to
establish one of three types of relationships
with one or more supported organizations.
Finally, the disqualified person control test
requires that the supporting organization
not be controlled directly or indirectly by
certain disqualified persons. Although
each of these tests is a necessary require-
ment for an organization to establish that
it qualifies as a supporting organization,
these final regulations and temporary reg-
ulations focus primarily on one of the
relationship tests: the test for support-
ing organizations that are “operated in
connection with” their supported organi-
zation(s), otherwise known as “Type III”
supporting organizations. Specifically, the
temporary regulations address the amount
that Type III supporting organizations that
are not “functionally integrated” must an-
nually distribute and explain how assets
are valued for purposes of this distribution
requirement. The final regulations de-
scribe all of the other requirements of the
relationship test for Type III supporting
organizations.
1.Three Types of Supporting
Organizations
To meet the requirements of section
509(a)(3), a supporting organization must
satisfy one of three relationship tests
with respect to its supported organiza-
tion(s). A supporting organization that
is operated, supervised or controlled by
one or more supported organizations is
commonly known as a Type I supporting
organization. The relationship of a Type I
supporting organization with its supported
organization(s) is comparable to that of a
corporate parent-subsidiary relationship.
A supporting organization that is super-
vised or controlled in connection with
one or more supported organizations is
commonly known as a Type II supporting
organization. The relationship of a Type II
supporting organization with its supported
organization(s) involves common supervi-
sion or control by the persons supervising
or controlling both the supporting organ-
ization and the supported organizations.
A supporting organization that is operated
in connection with one or more supported
organizations is commonly known as a
Type III supporting organization.
2.Qualification Requirements for Type
III Supporting Organizations Prior to
Enactment of the Pension Protection Act
of 2006
Prior to the enactment of the Pen-
sion Protection Act of 2006, Public Law
109–280 (120 Stat. 780 (2006)) (PPA),
the regulations under section 509(a)(3)
(hereinafter referred to as the “existing”
regulations) generally provided that an
organization is “operated in connection
2013–11 I.R.B.588March 11, 2013

with” one or more supported organizations
if it meets a “responsiveness test” and an
“integral part test.”
a.Responsiveness test
Existing §1.509(a)–4(i)(2)(i) provides
that an organizationmeets the responsive-
ness test if the organization is responsive to
the needs or demands of its supported or-
ganizations. Existing §1.509(a)–4(i)(2)(ii)
(hereinafter referred to as the “significant
voice responsiveness test”) provides that
a supporting organization can demonstrate
responsiveness to a supported organiza-
tion if the relationship between the sup-
porting and supported organization meets
one of the following three criteria: (1) the
supported organization appoints or elects
one or more of the officers, directors, or
trustees of the supporting organization; (2)
one or more members of the governing
body of the supported organization serve
as officers, directors, or trustees of, or
hold other important offices in, the sup-
porting organization; or (3) the officers, di-
rectors, or trustees of the supporting organ-
ization maintain a close continuous work-
ing relationship with the officers, direc-
tors, or trustees of the supported organi-
zation. In addition, as a result of one of
these three criteria being satisfied, the sup-
ported organization has to have a “signif-
icant voice” in the investment policies of
the supporting organization, the timing and
the manner of making grants, the selection
of the grant recipients of the supporting or-
ganization, and in otherwise directing the
use of the income or assets of the support-
ing organization.
The existing regulations also provide
an alternative means for charitable trusts
to satisfy the responsiveness test. Under
existing §1.509(a)–4(i)(2)(iii), a support-
ing organization is responsive if: (1) it
is a charitable trust under State law; (2)
each specified supported organization is
a named beneficiary under the charitable
trust’s governing instrument; and (3) each
beneficiary organization has the power to
enforce the trust and compel an account-
ing under State law.
In the case of an organization that is
supporting one or more supported orga-
nizations before November 20, 1970, ex-
isting §1.509(a)–4(i)(1)(ii) provides that
additional facts andcircumstances, such
as a historic and continuing relationship
between the supporting organization and
its supported organization(s), also can be
taken into account to establish compliance
with the responsiveness test.
b.Integral part test
The integral part test under existing
§1.509(a)–4(i)(3)(i) requires a support-
ing organization to maintain a significant
involvement in the operations of one or
more supported organizations that are de-
pendent upon the supporting organization
for the type of support that it provides.
Under the existing regulations, there are
two alternative ways to meet the integral
part test: (1) the “but for” test under exist-
ing §1.509(a)–4(i)(3)(ii); or (2) the payout
test under existing §1.509(a)–4(i)(3)(iii).
Under existing §1.509(a)–4(i)(3)(ii),
the “but for” test is satisfied if the activities
engaged in by the supporting organiza-
tion for or on behalf of the supported
organizations are activities to perform the
functions of, or to carry out the purposes
of, such organizations, and, but for the
involvement of the supporting organiza-
tion, would normally be engaged in by the
supported organizations themselves.
The payout test under existing
§1.509(a)–4(i)(3)(iii) requires a support-
ing organization to: (1) make payments of
substantially all of its income to or for the
use of one or more supported organiza-
tions; (2) provide enough support to one or
more supported organizations to ensure the
attentiveness of such organization(s) to the
operations of the supporting organization;
and (3) pay a substantial amount of the to-
tal support of the supporting organization
to those supported organizations that meet
the attentiveness requirement. The phrase
“substantially all of its income” in existing
§1.509(a)–4(i)(3)(iii) has been interpreted
to mean at least 85 percent of adjusted net
income. See Rev. Rul. 76–208, 1976–1
C.B. 161.
3.PPA Changes to Qualification
Requirements for Type III Supporting
Organizations
The PPA made five changes to the re-
quirements an organization must meet to
qualify as a Type III supporting organiza-
tion:
(1) It removed the ability to rely solely
on the alternative test for charitable trusts
as a means of meeting the responsiveness
test;
(2) To ensure that a “significant
amount” is paid to supported organiza-
tions, it directed the Secretary of the Trea-
sury to establish a new payout requirement
for Type III supporting organizations that
are not “functionally integrated” (with the
term “functionally integrated” referring to
Type III supporting organizations that are
not required to meeta payout requirement
due to their activities related to performing
the functions of, or carrying out the pur-
poses of, their supported organization(s));
(3) It required a Type III supporting or-
ganization to annually provide to each of
its supported organizations such informa-
tion as the Secretarymay require to ensure
that the supporting organization is respon-
sive to the needs or demands of its sup-
ported organization(s);
(4) It prohibited a Type III support-
ingorganizationfromsupportinganysup-
ported organization not organized in the
United States; and
(5) It prohibited a Type I or Type III
supporting organization from accepting a
gift or contribution from a person who,
alone or together with certain related per-
sons, directly or indirectly controls the
governing body of a supported organiza-
tion of the Type I or Type III supporting
organization.
4.Advanced Notice of Proposed
Rulemaking
On August 2, 2007, the Treasury De-
partment and the IRS published in theFed-
eral Register(72 FR 42335) an advanced
notice of proposed rulemaking (ANPRM)
(REG–155929–06). The ANPRM de-
scribed proposed rules to implement the
PPA changes to the Type III supporting
organization requirements and solicited
comments regarding those proposed rules.
Forty comments were received in response
to the ANPRM and were considered in
drafting the notice of proposed rulemaking
and these final and temporary regulations.
No public hearing was requested or held.
5.Notice of Proposed Rulemaking
On September 24, 2009, the Treasury
Department and the IRS published in
theFederal Register(74 FR 48672) a
notice of proposed rulemaking (NPRM)
March 11, 20135892013–11 I.R.B.

(REG–155929–06). The NPRM con-
tained proposed regulations (the “2009
proposed regulations”) setting forth the
requirements to qualify as a Type III sup-
porting organization under the PPA. The
IRS received more than 30 comments in
response to the NPRM. These comments
were considered in drafting these final and
temporary regulations and are available for
public inspection atwww.regulations.gov
or upon request. No public hearing was
requested or held.
After reviewing all comments received,
the Treasury Department and the IRS be-
lieve that certain topics require further
consideration. The Treasury Department
and the IRS will continue to study these
topics and will request comments on these
topics in a separate notice of proposed
rulemaking. Nonetheless, the Treasury
Department and the IRS believe that im-
mediate effective guidance is needed for
Type III supporting organizations. Ac-
cordingly, the Treasury Department and
the IRS are issuing both final regulations
and temporary regulations. The provi-
sions in the 2009 proposed regulations re-
garding the amount that non-functionally
integrated Type III supporting organiza-
tions must annually distribute have been
significantly revised in response to com-
ments. As a result, these provisions (as
well as provisions related to how assets
are valued for purposes of this distribution
requirement) are being issued as tempo-
rary and proposed regulations, to permit
additional opportunity for comment. The
other provisions of the 2009 proposed
regulations are being issued as final regu-
lations, which are substantially similar to
the 2009 proposed regulations but reflect
certain revisions that were made based on
comments received. The comments and
revisions are discussed in the following
section.
Explanation of Provisions and
Summary of Comments
Based largely on comments received
from commenters, the final and temporary
regulations make revisions to various pro-
visions in the 2009 proposed regulations,
including (1) the definition of “supported
organization” in §1.509(a)–4(a)(6); (2)
the prohibition on receiving gifts or con-
tributions from persons that control the
governing body of a supported organi-
zation set forth in §1.509(a)–4(f)(5); (3)
the notification requirement set forth in
§1.509(a)–4(i)(2); (4) the responsiveness
test set forth in §1.509(a)–4(i)(3); (5) the
requirements to qualify as a functionally
integrated Type III supporting organiza-
tion set forth in §1.509(a)–4(i)(4); (6) the
requirements to qualify as a non-function-
ally integrated (NFI) Type III supporting
organization set forth in §1.509(a)–4(i)(5);
and (7) the transition rules provided in
§1.509(a)–4(i)(11).
1.Definition of Supported Organization
Section 1.509(a)–4(a)(5) defines a
“publicly supported organization” as “an
organization described in section 509(a)(1)
or (2).” This defined term is used through-
out §1.509(a)–4. The 2009 proposed
regulations proposed removing the term
“publicly supported organization” wher-
ever it appears in §1.509(a)–4 and replac-
ing it with a new defined term, “supported
organization.” The new defined term “sup-
ported organization” was narrower than
the term “publicly supported organization”
because it was limited to those organiza-
tions described in section 509(a)(1) or (2)
that the supporting organization was orga-
nized and operated to support. As a result,
the new defined term does not necessarily
work in every instance in §1.509(a)–4 in
which the term “publicly supported organ-
ization” is used. Accordingly, the final
regulations maintain the term “publicly
supported organization” and continue to
use it in every paragraph of §1.509(a)–4
other than §1.509(a)–4(i).
The final regulations also revise the
definition of “supported organization”
in the 2009 proposed regulations and
apply the term only in newly amended
§1.509(a)–4(i). While the definition of
supported organization provided in the
2009 proposed regulations tracked the lan-
guage of section 509(f)(3), the final regu-
lations clarify the definition of supported
organization by cross-referencing the pre-
viously-existing §1.509(a)–4(d)(4) and
§1.509(a)–4(d)(2)(iv). Thus, for purposes
of §1.509(a)–4(i), a supported organiza-
tion of a Type III supporting organization
is defined as any publicly supported organ-
ization designated by name in the support-
ing organization’s articles of organization.
In addition, a supported organization of
a Type III supporting organization can
include a publicly supported organization
that is not designated by name in the sup-
porting organization’s articles if there has
been a historic and continuing relationship
between the supporting organization and
the publicly supported organization and,
by reason of such relationship, there has
developed a substantial identity of inter-
ests between such organizations.
2.Gifts from Controlling Donors
Like the 2009 proposed regulations, the
final regulations prohibit a Type I or Type
III supporting organization from accept-
ing a gift or contribution from a person
who, alone or together with certain related
persons, directly or indirectly controls the
governing body of a supported organiza-
tion of the Type I or Type III supporting
organization, or from persons related to a
person possessing such control. For these
purposes, related persons include family
members and 35-percent controlled enti-
ties within the meaning of section 4958(f).
One commenter requested a definition
of “control” for purposes of this provi-
sion. The Treasury Department and the
IRS agree that a definition of “control” for
these purposes would be beneficial and in-
tend to issue proposed regulations in the
near future that will provide such a defi-
nition.
3.Requirement to Notify Supported
Organizations
Like the 2009 proposed regulations,
these final regulations require that, for
each taxable year, a Type III supporting
organization must provide to each of its
supported organizations: (1) a written
notice addressed to a principal officer of
the supported organization describing the
amount and type of support provided to the
supported organization; (2) a copy of the
supporting organization’s most recently
filed Form 990, “Return of Organization
Exempt from Income Tax,” or other annual
informationreturnrequiredtobefiled
under section 6033; and (3) a copy of the
supporting organization’s governing doc-
uments, including any amendments. The
required notification documents must be
postmarked or electronically transmitted
by the last day of the fifth calendar month
following the close of the supporting or-
ganization’s taxable year.
2013–11 I.R.B.590March 11, 2013

Several commenters suggested that the
due date for the required notification be
amendedtocorrespondtotheForm990
due date, with extensions. Alternatively,
some commenters requested clarification
that the “most recently filed Form 990” can
be a Form 990 filed in a prior year.
The Form 990 is due by the 15th day
of the fifth calendar month following the
close of the filing organization’s taxable
year. However, an organization required
to file a Form 990 can request two three-
month extensions (the first of which is
granted automatically) by filing a Form
8868, “Application for Extension of Time
to File an Exempt Organization Return.”
As a result, if the due date for the required
notification were the same as the Form 990
due date, with extensions, a supported or-
ganization might not receive its notifica-
tion from a supporting organization until
almost a year after the close of the sup-
porting organization’s preceding taxable
year. In such cases, a supported organ-
ization would have little or no opportu-
nity to use the information in the notifica-
tion to make recommendations regarding
the amount and type of support it wishes
to receive from the supporting organiza-
tion during the taxable year it receives the
notification. In addition, if the due date
for the notification were the same as the
due date for the Form 990, with exten-
sions, a supported organization would not
know when to expect or request a notifi-
cation from a supporting organization un-
less it knew whether or not a supporting
organization requested extensions in any
given year. For these reasons, the final reg-
ulations retain the due date of the last day
of the fifth calendar month following the
close of the supporting organization’s tax-
able year.
However, the Treasury Department and
the IRS agree with commenters that if an
organization has not filed a Form 990 for
a taxable year by the last day of the fifth
calendar month following the close of the
taxable year (because, for example, it has
received an extension), the organization’s
“most recently filed” Form 990 as of that
last day of the fifth calendar month is the
Form 990 for the supporting organization’s
immediately preceding taxable year. As a
result, the final regulations clarify the re-
lationship between the filing date of the
Form 990 and the date notification is pro-
vided by referring to the Form 990 “that
was most recently filed as of the date the
notification is provided” rather than sim-
ply the “most recently filed Form 990.”
Thus, for example, if a Type III supporting
organization reporting on a calendar year
basis has not filed its 2013 Form 990 by
May 31, 2014, because it requested an ex-
tension, it can satisfy the Form 990 portion
of its notification requirement for 2013
(which it needs to meet by May 31, 2014)
by providing a copy of the 2012 Form 990
that it filed in 2013.
In addition, the Treasury Department
and the IRS recognize that some Type III
supporting organizations that request ex-
tensions to file their Forms 990 may need
additional time to prepare their first notifi-
cation. As a result, as described further in
section 8.a. of this preamble, the final reg-
ulations provide transition relief for sup-
porting organizations in existence on the
effective date of these final and temporary
regulations under which the due date for a
Type III supporting organization’s first re-
quired notification is the later of the last
day of the fifth calendar month following
the close of the supporting organization’s
taxable year or the due date for the Form
990 for that taxable year, including exten-
sions.
One commenter requested clarification
that the required written notice must de-
scribe the amount and type of support the
supporting organization provided to the
supported organization in the supporting
organization’s “immediately preceding
taxable year,” rather than “in the past
year,” as provided in the 2009 proposed
regulations. The final regulations clarify
that the written notice must describe the
support provided in the supporting organ-
ization’s taxable year ending immediately
before the taxable year in which the writ-
ten notice is provided. Thus, for example,
if a Type III supporting organization op-
erating on a calendar year provided the
required notification for 2013 on May 31,
2014, the written notice would describe
the support the supporting organization
provided in 2013.
Another commenter stated that the term
“principal officer” as used in the 2009 pro-
posed regulations is ambiguous and re-
quested that the regulations expressly des-
ignate the treasurer or chief financial offi-
cer (CFO) as the principal officer to whom
notification should be given. The final reg-
ulations make clear that a person who, re-
gardless of title, has ultimate responsibility
for managing the finances of a supported
organization (which could include a CFO
or treasurer) can be a principal officer of
that organization for purposes of the noti-
fication requirement.In addition, the final
regulations provide that a principal officer
can include a person who, regardless of ti-
tle, has ultimate responsibility for imple-
menting the decisions of the supported or-
ganization’s governing body or for super-
vising the management, administration, or
operation of the supported organization.
One commenter recommended that a
supporting organization be permitted to
send the required written notice to the
supported organization’s general address
rather than to its principal officer. The
Treasury Department and the IRS have
concluded that the notification should be
sent to a principal officer of the supported
organization to ensure receipt by a per-
son with sufficient responsibility over the
organization. Accordingly, the final and
temporary regulations do not adopt this
comment.
The same commenter asked that sup-
porting organizations be allowed to satisfy
the notification requirement by sending
supported organizations an internet link
to the Form 990. Like the 2009 proposed
regulations, the final regulations provide
that the notification requirement may be
satisfied by electronic media, which can
include a working internet link. However,
because all components of the notification
requirement must be satisfied, providing
only an internet link to the Form 990
would not be sufficient.
One commenter recommended that a
Type III supporting organization that is
included in a groupexemption and sup-
ports not only the central organization in
the group exemption but also the other
subordinate organizations that are part
of the group exemption should only be
required to provide notice to the central
organization, not to all of the other subor-
dinate organizations. Another commenter
stated that notification is unnecessary if
the principal officer of the supported or-
ganization is also theprincipal officer of
the supporting organization. Because sec-
tion 509(f)(1)(A) of the Code provides that
Type III supporting organizations must
provide the requirednotification “to each
supported organization,” the Treasury De-
partment and the IRS have concluded that
March 11, 20135912013–11 I.R.B.

a Type III supporting organization must
provide notice to all of the organizations
it is organized to support. Accordingly,
the final and temporary regulations do not
adopt these comments.
Finally, because section 6104(d)(3)(A)
of the Code and §301.6104(d)–1(b)(4)(ii)
except the name and address of contrib-
utors from the general requirement that
tax-exempt organizations disclose their an-
nual information returns, the final regu-
lations clarify that asupporting organiza-
tion may redact the name and address of
any contributor to the organization from
the Form 990 (or other annual information
return) it is required to provide to the sup-
ported organization(s) as part of the notifi-
cation requirement.
4.Responsiveness Test
Like the 2009 proposed regulations,
in implementing section 1241(c) of
the PPA, the final regulations remove
the alternative responsiveness test for
charitable trusts contained in existing
§1.509(a)–4(i)(2)(iii). Accordingly, the
final regulations provide that all Type III
supporting organizations must satisfy the
“significant voice” responsiveness test
by (1) demonstrating one of three neces-
sary relationships between their officers,
directors, or trustees and those of their
supported organization(s), and (2) show-
ing that this relationship results in the
officers, directors, or trustees of the sup-
ported organization having a significant
voice in directing the use of the income
and assets of the supporting organization.
Numerous commenters suggested that
Example 1of §1.509(a)–4(i)(3)(iv) of the
2009 proposed regulations, which illus-
trates how a charitable trust may satisfy
the significant voice responsiveness test,
imposes too onerous of a requirement for
meeting the responsiveness test by de-
scribing “quarterly face-to face-meetings”
between a bank trustee’s representative
and an officer of the supported organiza-
tion. However,Example 1does not impose
specific requirementson charitable trusts
seeking to satisfy the responsiveness test;
rather, the example merely illustrates one
way the officers, directors, or trustees of
a supported organization could maintain a
close and continuous relationship with the
officers, directors, or trustees of a support-
ing organization organized as a trust and
thereby have a significant voice in direct-
ing the use of the income or assets of that
supporting organization. In order to better
illustrate options for satisfying the signif-
icant voice responsiveness test,Example
1has been amended in the final regula-
tions to refer to “quarterly face-to-face
or telephonic meetings” rather than only
face-to-face meetings. As a general mat-
ter, the Treasury Department and the IRS
anticipate that charitable trusts will be
able to demonstrate that they satisfy the
responsiveness test in a variety of ways,
and whether a supported organization has
a close and continuous relationship with,
or a significant voice in directing the use
of the income or assets of, a supporting
organization will be determined based on
all the relevant facts and circumstances.
A few commenters requested additional
examples of how Type III supporting or-
ganizations can satisfy the responsiveness
test. The final and temporary regulations
do not provide any such additional exam-
ples, but these comments will continue to
be considered. The Treasury Department
and the IRS intend to issue proposed reg-
ulations in the near future that amend the
responsiveness test by clarifying that Type
III supporting organizations must be re-
sponsive to all of their supported organi-
zations. In the preamble to those proposed
regulations, the Treasury Department and
the IRS intend to request additional com-
ments regarding examples of how to sat-
isfy the responsiveness test.
Several commenters requested clarifi-
cation that the responsiveness test does not
require a supporting organization to follow
all of the directions or recommendations
of a supported organization’s officers, di-
rectors, or trustees and that the latter’s role
can be only advisory. The Treasury De-
partment and the IRS have concluded that
the term “significant voice” makes clear
that the responsiveness test requires only
that the officers, directors, or trustees of a
supported organization have the ability to
influence the supporting organization’s de-
cisions regarding the supporting organiza-
tion’s use of its income or assets — not that
the officers, directors, or trustees of the
supported organization have control over
such decisions.
One commenter noted that some trust
instruments specify the recipients, timing,
manner, and amount of grants and re-
quested that the regulations provide that a
supported organization can still be deemed
to have a significant voice over these mat-
ters if its supporting organization has such
a governing instrument. The Treasury
Department and the IRS are continuing to
consider the best approach for supporting
organizations with such trust instruments
andintendtoissueproposedregulations
in the near future that will provide further
clarification on this issue.
Finally, the 2009 proposed regulations
stated that a supporting organization is re-
sponsive to the needs or demands of a
supported organization if it satisfies the
requirements of §1.509(a)–4(i)(3)(ii) and
(iii). In order to conform more closely to
existing §1.509(a)–4(i)(2)(i), the final reg-
ulations amend this language to state that
a supporting organization must satisfy the
requirements of §1.509(a)–4(i)(3)(ii) and
(iii) in order to satisfy the responsiveness
test.
5.Integral Part Test – Functionally
Integrated Type III Supporting
Organizations
Like the 2009 proposed regulations, the
final regulations provide that a Type III
supporting organization is functionally in-
tegrated, and thus not subject to a distribu-
tion requirement, if it either: (1) engages
in activities substantially all of which di-
rectly further the exempt purposes of the
supported organization(s) to which it is re-
sponsive by performing the functions of,
or carrying out the purposes of, such sup-
ported organization(s) and which, but for
the involvement of the supporting organi-
zation, would normally be engaged in by
the supported organization(s); or (2) is the
parent of each of its supported organiza-
tions. In addition, the final regulations re-
serve a provision for a special rule for sup-
porting organizations that support a gov-
ernmental supported organization.
a.Substantially all activities directly
further the exempt purposes of supported
organizations
With respect to the test to qualify as
functionally integrated by engaging in
activities substantially all of which di-
rectly further the exempt purposes of
the supported organization(s), one com-
menter recommended that the term “di-
rectly further the exempt purposes” be
2013–11 I.R.B.592March 11, 2013

defined with reference to the phrase “di-
rectly for the active conduct of activities
constituting” the exempt purposes, as
used in the definition of a private operat-
ing foundation under section 4942(j)(3)
and the accompanying regulations at
§53.4942(b)–1(b)(1). The same com-
menter noted that §53.4942(b)–1(b)(2)
treats certain grants, scholarships, or other
payments made or awarded by a private
operating foundation to individual bene-
ficiaries as qualifying distributions made
directly for the active conduct of exempt
activities as long as those payments are
to support active programs in which the
operating foundation maintains significant
involvement. This commenter recom-
mended that similar grants, scholarships,
or other payments made or awarded by
Type III supporting organizations should
be treated as activities that directly further
the exempt purposes of a supported organ-
ization (“direct furtherance activities”).
The Treasury Department and the IRS
agree that the meaning of the phrase “di-
rectly further the exempt purposes,” as
used in the functionally integrated test, is
similar to the meaning of the phrase “di-
rectly for the active conduct of activities
constituting” the exempt purposes, as used
in the definition of a private operating
foundation and as described in detail in
§53.4942(b)–1(b)(1). Consequently, in
defining direct furtherance activities, the
final regulations use language similar to
that used in §53.4942(b)–1(b)(1) by clari-
fying that direct furtherance activities are
activities conducted by the supporting or-
ganization itself, rather than by a supported
organization. However, most of the re-
maining language in §53.4942(b)–1(b)(1)
used to define “directly for the active
conduct of activities” is not used in the
definition of direct furtherance activities
in the final regulations because the former
definition is based only on expenditures
while the latter concept is based more
broadly on the activities of a Type III
supporting organization. As a result, the
definition of direct furtherance activities
in the final regulations is otherwise the
same as the definition contained in the
2009 proposed regulations.
The final regulations also provide that
certain payments to individual beneficia-
ries similar to those that would qualify
as “directly for the active conduct of
activities constituting” a private operat-
ing foundation’s exempt purposes under
§53.4942(b)–1(b)(2) will be treated as di-
rect furtherance activities under the Type
III supporting organization functionally
integrated test. Similar to the payments
to individual beneficiaries described in
§53.4942(b)–1(b)(2), the final regula-
tions provide that making or awarding
grants, scholarships, or other payments
to individual beneficiaries will be treated
as an activity that directly furthers the
exempt purposes of a supported organ-
ization only if the making or awarding
of such payments is part of an active
program of the supporting organization
that directly furthers the exempt purposes
of the supported organization(s) and in
which the supporting organization main-
tains significant involvement (as defined
in §53.4942(b)–1(b)(2)(ii)). However,
unlike distributions directly for the active
conduct of activities constituting a private
operating foundation’s exempt purposes,
the direct furtherance activities of a func-
tionally integrated Type III supporting
organization must directly further the ex-
empt purposes of one or more supported
organizations. As a result, the final regula-
tions impose three additional requirements
that a supporting organization’s grants,
scholarships, or other payments to indi-
vidual beneficiaries must satisfy in order
to be considered direct furtherance activ-
ities. First, the individual beneficiaries
must be members of the charitable class
benefitted by a supported organization.
Second, the officers, directors, or trustees
of that supported organization must have
a significant voice in the timing of the
payments, the manner of making them,
and the selection of recipients. Third, the
individual beneficiaries must be selected
on an objective and nondiscriminatory
basis (as described in §53.4945–4(b)).
A number of commenters suggested
that fundraising, making grants, and in-
vesting and managing non-exempt-use
assets should be considered direct fur-
therance activities in certain situations,
including those in which the supported or-
ganization (1) is a community foundation
or other publicly-supported grantmaker,
(2) is a religiously-affiliated entity, (3) has
a close historic and continuing relation-
ship with the supporting organization, or
(4) created the supporting organization
specifically to house fundraising, grant-
making, and/or investment activities. One
commenter further suggested that a Type
III supporting organization’s fundraising,
grantmaking, and/or investment and man-
agement of non-exempt-use assets should
be treated as direct furtherance activi-
ties as long as a “preponderance” of the
supporting organization’s other activities
otherwise directly further the supported
organization’s exempt purposes. Another
commenter recommended that the regula-
tions include an exception that would treat
a supporting organization as functionally
integrated (or otherwise not subject to a
distribution requirement) even if it en-
gaged in grantmaking and the production
of investment income as more than an
insubstantial part of its activities as long
as it (1) has not received any contribution
from its founder or family members since
1970, (2) has no substantial contributor
(or family member thereof) who is alive,
and (3) has already distributed to its sup-
ported organization(s), in the aggregate,
an amount equal to the amount of its donor
contributions.
The Treasury Department and the IRS
have determined that a Type III supporting
organization should qualify as functionally
integrated, and therefore not be subject to
the payout requirement, if substantially all
of its support for its supported organiza-
tion(s) consists of charitable activities that
the supporting organization itself directly
carries out (as distinguished from charita-
ble activities carried out by the supported
organization(s) that the supporting organ-
ization helps finance by producing and
distributing income). This is because a
supporting organization that operates sub-
stantial, direct charitable programs itself
may need more flexibility in structuring its
annual operational budget than the annual
payout requirement for NFI Type III sup-
porting organizations would allow. The
examples of activities that commenters
want to be treated as direct furtherance
activities or to otherwise qualify them for
an exception from the distribution require-
ment — all of which involve producing
income and distributing a portion of it to
the supported organization — are not con-
sistent with this rationale and hence the
Treasury Department and the IRS do not
adopt these comments.
Commenters also requested additional
guidance on how direct furtherance activi-
ties will be measured for purposes of de-
termining whether they constitute “sub-
March 11, 20135932013–11 I.R.B.

stantially all” of a supporting organiza-
tion’s activities. A number of commenters
suggested that all facts and circumstances
shouldbeconsideredinmakingthisdeter-
mination, including not only the support-
ing organization’s expenditures but also,
for example, the time and effort spent by
the organization’s employees and volun-
teers. The final regulations clarify that
all pertinent facts and circumstances are
considered in measuring activities for pur-
poses of determining whether substantially
all of an organization’s activities are direct
furtherance activities.
One commenter stated that the exam-
ple in the 2009 proposed regulations of a
supporting organization that qualifies as a
functionally integrated Type III supporting
organization by performing publishing and
printing functions for churches was not
“realistic” because several churches would
be unlikely to jointly establish such a pub-
lishing operation. Instead of a publishing
operation, this commenter suggested that
churches would be more likely to jointly
establish a charitable organization that per-
forms a social welfare function. As a re-
sult, the final regulations replace the exam-
ple of a nonprofit publishing organization
with an example of a nonprofit food pantry.
b.Being the parent of each supported
organization
Like the 2009 proposed regulations,
the final regulations provide that a Type
III supporting organization can qualify
as functionally integrated by being the
parent of each supported organization. In
defining “parent” for these purposes, the
final regulations repeat the definition set
forth in the 2009 proposed regulations
and state that a supporting organization
is the parent of a supported organization
if the supporting organization exercises
a substantial degree of direction over the
policies, programs, and activities of the
supported organization, and a majority of
the officers, directors, or trustees of the
supported organization is appointed or
elected, directly or indirectly, by the gov-
erning body, members of the governing
body, or officers of the supporting organ-
ization acting in their official capacity.
However, the Treasury Department and
the IRS have determined that this defini-
tion of “parent” is insufficiently specific.
Consequently, the Treasury Department
and the IRS intend to issue proposed regu-
lations in the near future that will provide
a new definition of parent that specifically
addresses the power to remove and re-
place officers, directors, or trustees of the
supported organization.
c.Supporting a governmental supported
organization
The 2009 proposed regulations pro-
vided a “governmental entity exception”
under which a Type III supporting or-
ganization that supports one supported
organization whose assets are subject to
the appropriations process of a federal,
state, local, or Indian tribal government
may treat grantmaking to the supported
organization and investing and managing
non-exempt-use assets on behalf of the
supported organization as direct further-
ance activities, as long as a substantial
part of the supporting organization’s total
activities are otherwise direct furtherance
activities.
Several commenters requested that
this governmental entity exception be ex-
panded to allow supporting organizations
to support more than one supported or-
ganization. For example, commenters rec-
ommended that a supporting organization
be allowed to qualify for this exception
if it supports (1) up to five governmental
supported organizations; (2) not only a
governmental entity but also other sup-
ported organizations that are responsive
to, and have a substantial operational con-
nection with, that governmental entity;
or (3) a governmental system, such as a
parent and subsidiary units.
The Treasury Department and the IRS
are continuing to consider these comments
regarding the governmental entity excep-
tionandintendtoissueproposedregula-
tions in the near future that will provide
guidance on how supporting organizations
can qualify as functionally integrated by
supporting a governmental entity. These
proposed regulations will also provide one
or more examples of how a Type III sup-
porting organization can qualify as func-
tionally integrated by supporting a gov-
ernmental entity (similar to the examples
contained in the 2009 proposed regulations
but omitted from these final and temporary
regulations).
In the meantime, as discussed further in
section 8.b. of this preamble, Type III sup-
porting organizations can qualify as func-
tionally integrated by meeting the require-
ments of the “but for” test under existing
§1.509(a)–4(i)(3)(ii) until the first day of
their second taxable year beginning after
December 28, 2012. The Treasury Depart-
ment and the IRS intend to release the pro-
posed regulations onthe governmental en-
tity rule sufficiently in advance of the be-
ginning of this second taxable year to en-
able Type III SOs to determine their eligi-
bility. The Treasury Department and the
IRS also anticipate that, for taxable years
beginning prior to the date of issuance of
the future final regulations on the govern-
mental entity rule, Type III SOs would be
permitted to rely on the governmental en-
tity rule as stated in either the future pro-
posed or final regulations.
6.Integral Part Test – Non-Functionally
Integrated Type III Supporting
Organizations
a.Distribution requirement
The 2009 proposed regulations pro-
vided that a NFI Type III supporting organ-
ization would have to annually distribute a
“distributable amount” equal to 5 percent
of the fair market value of its non-ex-
empt-use assets. The Treasury Department
and the IRS decided to base this distri-
bution requirement on non-exempt-use
assets, rather than on income, due to con-
cerns that the income-based payout test
under existing §1.509(a)–4(i)(3)(iii) could
result in little or nothing being paid to
charity if the supporting organization’s
assets produced little to no income.
Several commenters stated that the
5-percent payout rate in the 2009 pro-
posed regulations would be too high and
would erode a supporting organization’s
assets over time on a real (inflation-ad-
justed) basis. A few commenters noted
that private non-operating foundations
must annually pay out 5 percent of their
non-exempt-use assets under section 4942
of the Code but stated that NFI Type III
supporting organizations should not be
subject to the same payout rate as private
non-operating foundations because they
are distinguishable from these founda-
tions. For example, some commenters
noted that private non-operating foun-
dations can fund any number of charita-
ble organizations ina given year, while
2013–11 I.R.B.594March 11, 2013

Type III supporting organizations are ob-
ligated to benefit designated supported
organizations and also must satisfy the re-
sponsiveness and attentiveness tests with
respect to these supported organizations.
Commenters also noted that substantial
contributors to a supporting organization
(as well as certain related persons) cannot
control the supporting organization, while
private foundations face no such restric-
tion. Some of these commenters noted
that lower effective payout requirements
are imposed on private operating founda-
tions and medical research organizations
and recommended that similar payout
requirements should apply to NFI Type
III supporting organizations. Other com-
menters asked that the final regulations
maintain the payout test under existing
§1.509(a)–4(i)(3)(iii), which requires pay-
ments of substantially all of the supporting
organization’s income.
The Treasury Department and the IRS
recognize that NFI Type III supporting or-
ganizations face a number of requirements
and restrictions that do not apply to pri-
vate foundations, including the organiza-
tional, operational, and disqualified person
control tests under section 509(a)(3) and
the responsiveness and attentiveness test
under the regulations regarding Type III
supporting organizations. These require-
ments and restrictions should significantly
reduce the likelihood that substantial con-
tributors to a NFI Type III supporting or-
ganization will be able to use the support-
ing organization’s assets to further their
own interests. These requirements also
result in a relationship between the sup-
porting organization and the supported or-
ganizations that does not necessarily ex-
ist between private foundations and their
grantees.
As a result, the Treasury Department
and the IRS have determined that an as-
set-based payout percentage lower than
the payout percentage for private non-op-
erating foundations is justified for NFI
Type III supporting organizations. At the
same time, the payout test under existing
§1.509(a)–4(i)(3)(iii), which requires pay-
ments of substantially all of the supporting
organization’s income (with “substantially
all” considered to mean 85 percent or
more), has helped prevent unreasonable
accumulations of income by NFI Type
III supporting organizations that generate
significant amounts of current income in
a particular taxable year. Accordingly,
the temporary regulations require NFI
Type III supporting organizations to an-
nually distribute a “distributable amount”
equal to the greater of 85 percent of ad-
justed net income or 3.5 percent of the
fair market value of the supporting or-
ganization’s non-exempt-use assets. For
these purposes, “adjusted net income”
is determined by applying the principles
of section 4942(f) and §53.4942(a)–2(d).
Because this distributable amount is sig-
nificantly different than the distributable
amount described in the 2009 proposed
regulations, the Treasury Department and
the IRS have issued the provisions describ-
ing the distributable amount as temporary
and proposed regulations to provide an
opportunity for comment.
In recommending an asset-based pay-
out percentage of less than 5 percent, a
number of commenters emphasized that
supporting organizations have a relation-
ship with their supported organizations
that private foundations do not have with
their grantees and that this relationship
helps ensure responsiveness to the needs
and demands of the supported organiza-
tion. The Treasury Department and the
IRS considered this relationship in de-
termining the appropriate payout rate for
NFI Type III supporting organizations.
Accordingly, the Treasury Department
and the IRS intend to ensure that this
relationship exists between a supporting
organization and each of its supported
organizations by proposing regulations
requiring that NFI Type III supporting
organizations meet the responsiveness test
with respect to each of their supported
organizations.
Many commenters recommended that
the distributable amount be based on
the average fair market value of non-ex-
empt-use assets over the three years (as
opposed to just one year) preceding the
year of the required distribution, in or-
der to reduce fluctuations in payments
to the supported organization(s) from
year to year and avoid significant cuts to
supported organizations’ budgets during
downward market fluctuations. The Trea-
sury Department and the IRS expect that
the new notification requirement and the
application of the “significant voice” re-
sponsiveness test to all Type III supporting
organizations, including those organized
as trusts, will give supported organizations
the opportunity to influence the timing
of payments. In addition, the Treasury
Department and the IRS expect that the
significantly lower payout percentage set
forth in the temporary regulations should
provide NFI Type III supporting organiza-
tions with additional flexibility to respond
to requests from supported organizations
to adjust the timing of payments to antic-
ipate and respond to market fluctuations.
Flexibility to respond to such requests
from supported organizations is also made
possible by the carryover rule that the final
regulations adopt without change from
the 2009 proposed regulations. This rule
allows a Type III supporting organization
that distributes more than its annual dis-
tributable amount during a taxable year
to carry over that excess amount for five
subsequent taxable years. Accordingly,
the final and temporary regulations do
not adopt the three-year valuation period
suggested by commenters and, like the
2009 proposed regulations, provide that
the distributable amount is based on the
fair market value of the organization’s
non-exempt-use assets in the immediately
preceding taxable year.
One commenter asked that the reason-
able cause exception to the distribution
requirement be expanded to expressly
include times of great financial distress.
Like the 2009 proposed regulations, the
final regulations allow the Secretary to
provide for a temporary reduction in the
annual distributable amount in the case of
a disaster or emergency, which the Trea-
sury Department and the IRS intend to
include a time of great financial distress.
Thus, the final and temporary regulations
do not make any changes to the reasonable
cause exception.
b.Distributions that count toward the
distribution requirement
A number of commenters recom-
mended that a NFI Type III supporting
organization should, like a private foun-
dation, be able to count toward its distri-
bution requirement amounts set aside for
specific charitable projects that accom-
plish the exempt purposes of one or more
supported organization(s). In response to
this recommendation, the final regulations
provide that a supporting organization may
count a set-aside toward its distribution
requirement if it establishes to the satisfac-
March 11, 20135952013–11 I.R.B.

tion of the IRS, in a manner similar to that
required of private foundations making
set-asides under section 4942(g)(2)(B)(i)
and the accompanying regulations, that
the project is one that can be better ac-
complished by the set-aside than by the
immediate payment of funds. In partic-
ular, the supporting organization must
apply for IRS approval of the set-aside
before the end of the taxable year in which
the amount is set aside, establish to the
satisfaction of the IRS that the amount set
aside will be paid for the specific project
within 60 months after it is set aside and
that the project is one that can better be
accomplished by the set-aside than by the
immediate payment of funds, and meet the
other approval and information require-
ments set forth in §53.4942(a)–3(b)(7)(i).
The supporting organization must also
obtain a written statement from the sup-
ported organization, signed by one of the
supported organization’s principal officers
under penalty of perjury. This written
statement must confirm that the specific
project accomplishes the exempt purposes
of the supported organization and that the
supported organization approves the sup-
porting organization’s determination that
the project is one that can be better accom-
plishedbytheset-asidethanbytheim-
mediate payment of funds or distribution
of assets. The final and temporary regu-
lations do not incorporate a test similar to
the “cash distribution test” for set-asides
described in section 4942(g)(2)(B)(ii) and
the accompanying regulations because
such a test would not provide sufficient
assurance that the project is one better ac-
complished by means of a set aside than by
an immediate distribution to the supported
organization.
A few commenters requested that the
regulations clarify that a supporting organ-
ization will be able to count toward the
distribution requirement expenditures on
activities that directly further the exempt
purposes of its supported organization(s).
Accordingly, the final regulations provide
that a NFI Type III supporting organiza-
tion can count toward the distribution re-
quirement amounts expended on activities
that directly further the exempt purposes
of the supported organization(s) to which
the supporting organization is responsive
and that, but for the involvement of the
supporting organization, would normally
beengagedinbythesupportedorgani-
zation(s) (that is, that meet the require-
ments of §1.509(a)–4(i)(4)(i)(A)). How-
ever, in the case of such a direct further-
ance activity that generates revenue for the
supporting organization, the supporting or-
ganization can only count expenditures on
that activity toward its distribution require-
ment to the extent the expenditures exceed
the revenue derived. Thus, for example,
if a NFI Type III supporting organization
spent $1 million in a taxable year oper-
ating a museum that generated $800,000
in receipts for the supporting organization
during that same year, the supporting or-
ganization could only count $200,000 of
the $1 million spent toward the distribu-
tion requirement (assuming the operation
of the museum was an activity described
in §1.509(a)–4(i)(4)(i)(A)).
Like the 2009 proposed regulations, the
final regulations provide that reasonable
and necessary administrative expenses
also count toward the distribution re-
quirement. The final regulations clarify,
however, that such expenses must be paid
to accomplish the exempt purposes of
the supported organization(s) and thus
do not include expenses incurred in the
production of investment income. The
list of distributions that count toward
the distribution requirement contained in
§1.509(a)–4(i)(6) is not an exhaustive list
and other distributions may count toward
the distribution requirement. The Trea-
sury Department and the IRS intend to
propose regulations in the near future that
will more fully describe the expenditures
(including expenditures for administrative
and additional charitable activities) that do
and do not count toward the distribution
requirement.
One commenter recommended that
§1.509(a)–4(i)(6)(i) of the 2009 proposed
regulations be revised to conform to
§1.509(a)–4(i)(5)(ii) of the 2009 proposed
regulations by providing that distributions
made “for the use of” one or more sup-
ported organizations, as well as “to” one or
more supported organizations, can count
toward satisfying the distribution require-
ment. The commenter stated that such a
conforming provision would clarify that
supporting organizations have the flexi-
bility to make payments to third parties
directly “on behalf of” supported organi-
zations. The Treasury Department and the
IRS do not agree that the term “for the use
of” is synonymous with “on behalf of”
or that it permits grants to organizations
other than the supported organizations to
count toward the distribution requirement.
Accordingly, the final and temporary reg-
ulations do not adopt this comment.
Several commenters recommended
that program-related investments (PRIs),
which count toward satisfying a private
foundation’s distribution requirement un-
der section 4942, should count toward the
distribution requirement of NFI Type III
supporting organizations. One commenter
further recommended that the value of a
PRI be excluded in calculating a support-
ing organization’s distributable amount for
a taxable year. These final and temporary
regulations do not specifically address
whether or not PRIs may count toward the
distribution requirement for NFI Type III
supporting organizations or be excluded
in calculating a supporting organization’s
distributable amount for a taxable year.
The Treasury Department and IRS are
continuing to consider these comments
and intend to provide further clarification
in future proposed regulations.
c.Attentiveness requirement
Like the 2009 proposed regula-
tions, the final regulations modify the
attentiveness requirement in existing
§1.509(a)–4(i)(3)(iii) to provide that an
organization must distribute one-third or
more of its required, annual distributable
amount to one or more supported organi-
zations that are attentive to the supporting
organization and with respect to which
the supporting organization meets the
responsiveness test. Also like the 2009
proposed regulations, the final regula-
tions provide that, to demonstrate that a
supported organization is attentive, a sup-
porting organization must: (1) provide 10
percent or more of the supported organi-
zation’s total support; (2) provide support
that is necessary to avoid the interruption
of the carrying on of a particular function
or activity of the supported organization;
or (3) provide an amount of support that,
based on “all pertinent factors,” is a suf-
ficient part of a supported organization’s
total support. For purposes of the second
test listed above, support is considered
necessary if the supporting organization or
the supported organization earmarks the
support for a particular program or activity
of the supported organization, even if such
2013–11 I.R.B.596March 11, 2013

program or activity is not the supported
organization’s primary activity, as long
as the program or activity is a substantial
one.
One commenter suggested that the reg-
ulations clarify that,for purposes of deter-
mining whether a supporting organization
provides 10 percent of a supported organi-
zation’s total support, the supported organ-
ization’s total support is its total support
received in the immediately preceding tax-
able year. The final regulations adopt this
comment.
Other commenters recommended
changes to portions of the attentiveness
test in the 2009 proposed regulations
that are substantiallyidentical to those in
the existing regulations. The final and
temporary regulations do not amend or
supplement any of these portions of the
attentiveness test,none of which were
directly changed or affected by the PPA.
One commenter requested that the reg-
ulations include a safe harbor under which
the attentiveness test would be automat-
ically satisfied if a certain stated dollar
amount of support (possibly indexed for
inflation) were distributed to a supported
organization. The final and temporary reg-
ulations do not adopt this suggestion be-
cause of the difficulty in identifying a spe-
cific dollar threshold that would be suffi-
cient in all cases to ensure the supported
organization’s attentiveness.
Finally, one commenter requested guid-
ance on how a supporting organization
to a community foundation could satisfy
the attentiveness test if it makes distri-
butions to third-party organizations that
fulfill the mission of the supported organ-
ization(s). Grants to organizations other
than the supported organization will not
ensure the attentiveness of a supported
organization. Moreover, Type III sup-
porting organizations generally are not
permitted to make grants to organizations
other than their supported organizations.
See §1.509(a)–4(e)(1). Thus, the final
and temporary regulations do not permit
supporting organizations to satisfy the at-
tentiveness test by making distributions to
third-party organizations.
d.Valuation of assets
In describing how a NFI Type III
supporting organization determines the
fair market value of its non-exempt-use
assets for purposes of determining its
distributable amount, the 2009 proposed
regulations incorporated language used in
§53.4942(a)–2(c), which describes how
a private foundation values its assets for
purposes of determining its distributable
amount. The 2009 proposed regula-
tions also incorporated language used in
§53.4942(a)–2(c) in describing the assets
(including exempt-use assets) that are ex-
cluded in determiningthe distributable
amount.
Rather than duplicate all of the lan-
guage in §53.4942(a)–2(c), the temporary
regulations accomplish the same result
as the 2009 proposed regulations by
cross-referencing §53.4942(a)–2(c). More
specifically, the temporary regulations
state that the determination of the aggre-
gate fair market value of a NFI Type III
supporting organization’s non-exempt-use
assets will be made using the valuation
methods described in §53.4942(a)–2(c).
The temporary regulations also state
that, for these purposes, the “non-ex-
empt-use” assets of the supporting organ-
ization do not include assets described
in §53.4942(a)–2(c)(2) or assets used (or
held for use) to carry out the exempt pur-
poses of the supported organization(s) (as
defined by applying the principles de-
scribed in §53.4942(a)–2(c)(3)).
The Treasury Department and the
IRS do not intend for cross-referencing
(rather than duplicating the language of)
§53.4942(a)–2(c) to result in any sub-
stantive changes from the 2009 proposed
regulations in how NFI Type III supporting
organizations value their assets or in what
assets are excluded in determining the dis-
tributable amount. However, to the extent
that cross-referencing §53.4942(a)–2(c)
could result in any unintended uncertainty
on this point, the Treasury Department and
the IRS have issued this change in tempo-
rary and proposed regulations to provide
an opportunity for comment.
7.Consequences of Failure to Meet
Requirements
A Type III supporting organization that
fails to meet the requirements of these final
and temporary regulations — and that also
fails to meet the requirements of a Type
I or II supporting organization and other-
wise fails to qualify as a public charity un-
der section 509(a)(1), (2), or (4) — will
be classified as a private foundation. Once
classified as a private foundation, the sec-
tion 507 rules regarding termination of pri-
vate foundation status apply.
One commenter requested that the reg-
ulations reclassify a Type III supporting or-
ganization that fails to meet the require-
ments of the regulations as a private foun-
dation as of the beginning of the taxable
year in which the failure occurred only
for purposes of section 507 and section
4940 (regarding excise taxes on net invest-
ment income) and as of the first day of the
next taxable year for all other provisions
of Chapter 42 (which contains other excise
taxes applicable to private foundations).
This commenter also recommended that,
for purposes of Chapter 42, the identity of
substantial contributors to a supporting or-
ganization within the meaning of section
507(d)(2) be determined by taking into ac-
count only contributions received after the
date the organization is reclassified as a
private foundation.
In addition, this same commenter made
two recommendations related to termina-
tion of private foundation status under sec-
tion 507. First, the commenter recom-
mended that a Type III supporting organi-
zation that is reclassified as a private foun-
dation for certain “non-structural” reasons
(such as accepting gifts from persons that
control the supported organization(s), fail-
ing to provide an annual notice, not making
the required payout, or not satisfying the
attentiveness test) be treated as having re-
ceived an advance ruling that it can be ex-
pected to satisfy the requirements of a sup-
porting organization during the 60-month
termination period under §1.507–2(d) if
the supporting organization includes cer-
tain explanatory information in its notice
of termination of private foundation sta-
tus. Second, the commenter recommended
allowing a supporting organization to pro-
vide a notice of termination after the com-
mencement of the 60-month termination
period in appropriate cases — for exam-
ple, during the one or two years after the
regulations become effective.
The PPA changes did not impact the
timing of when a Type III supporting
organization is reclassified as a private
foundation or when the various provisions
of Chapter 42 apply after the Type III
supporting organization fails to meet one
or more of the requirements necessary to
maintain its classification as a Type III
March 11, 20135972013–11 I.R.B.

supporting organization (or other type of
public charity). The PPA changes also did
not impact the contributions that are taken
into account when determining whether
donors are substantial contributors. With
respect to termination of private foun-
dation status under section 507, section
507(b)(1)(B)(ii) states that organizations
terminating their private foundation status
to operate as a supporting organization
or other public charity must notify the
Secretary before, not after, the commence-
ment of the 60-month termination period.
Accordingly, the final and temporary reg-
ulations do not adopt this commenter’s
recommendations.
8.Transition and Other Relief Provisions
a.Notification requirement
The final regulations provide that a
Type III supporting organization in exis-
tence on December 28, 2012, the effective
date of the final regulations, must meet
its notification requirement for its taxable
year that includes December 28, 2012, by
the later of the last day of the fifth calendar
month following the close of that taxable
year or the due date, including extensions,
of its Form 990 (or other annual informa-
tion return described in section 6033) for
that taxable year. Thus, for example, a
Type III supporting organization reporting
on a calendar year basis that does not have
to file its 2012 Form 990 until Novem-
ber 15, 2013, because it was granted two
three-month extensions of time to file will
have until November 15, 2013, to satisfy
its notification requirement for 2012.
b.Responsiveness test
The final regulations, like the 2009 pro-
posed regulations, provide that additional
facts and circumstances, such as a his-
toric and continuing relationship with sup-
ported organization(s), may be taken into
account in establishing compliance with
the responsiveness test for organizations
that were supporting such supported or-
ganization(s) prior to November 20, 1970.
One commenter asked that the final reg-
ulations clarify whether this alternative re-
sponsiveness test for pre-November 20,
1970 organizations requires a Type III sup-
porting organization to also satisfy the sig-
nificant voice prong of the responsiveness
test under §1.509(a)–4(i)(3)(iii). Consis-
tent with the existing regulations, the fi-
nal regulations clarify that the significant
voice prong is simply one factor along with
other facts and circumstances that will be
taken into account in determining com-
pliance with the responsiveness test for
pre-November 20, 1970 organizations.
c.Integral part test
The final regulations provide transition
rules with respect to the integral part test
for Type III supporting organizations in ex-
istence on December 28, 2012, the effec-
tive date of the final regulations. The 2009
proposed regulations included a transition
rule under which an organization that met
and continued to meet the requirements of
existing §1.509(a)–4(i)(3)(ii) (that is, an
organization meeting the integral part test
by satisfying the “but for” test) would be
treated as meeting the requirements of a
functionally integrated Type III supporting
organization set forth in §1.509(a)–4(i)(4)
until the first day of the organization’s first
taxable year beginning after the publica-
tion of the final or temporary regulations.
However, the Treasury Department and
the IRS realize that because the final reg-
ulations are being published on December
28, 2012, Type III supporting organiza-
tions reporting on a calendar year basis
that wish to qualify as functionally inte-
grated may need additional time to comply
with §1.509(a)–4(i)(4). As a result, the
final regulations amend this transition
rule to provide that a Type III support-
ing organization that met and continues
to meet the “but for” test under existing
§1.509(a)–4(i)(3)(ii) will be treated as
meeting the requirements of a functionally
integrated Type III supporting organiza-
tion set forth in §1.509(a)–4(i)(4) until
the first day of the organization’s second
taxable year beginning after December 28,
2012.
Like the 2009 proposed regulations,
the final regulations provide that a Type
III supporting organization in existence on
December 28, 2012, that met and contin-
ues to meet the requirements of existing
§1.509(a)–4(i)(3)(iii) (that is, an organ-
ization meeting the integral part test by
satisfying the existing “payout” test) will
be treated as meeting the requirements of
a NFI Type III supporting organization set
forth in §1.509(a)–4(i)(5) until the first
day of the organization’s second taxable
year beginning after December 28, 2012.
However, for purposes of determining
whether a Type III supporting organization
treated as NFI under this transition relief
creates an “excess amount” that can be car-
ried over for five years, the distributable
amount for the supporting organization’s
first taxable year beginning after Decem-
ber 28, 2012, is the greater of 85 percent of
net adjusted income or 3.5 percent of the
value of assets in the immediately preced-
ing taxable year (that is, the distributable
amount as ordinarily determined under the
temporary regulations).
Section 1.509(a)–4(i)(11)(iii) of the
2009 proposed regulations provided that
the distributable amount for NFI Type III
supporting organizations is zero for the
first taxable year beginning after the effec-
tive date of the finalor temporary regula-
tions. The Treasury Department and the
IRS did not intend for this provision to ap-
ply to a NFI Type III supporting organiza-
tion that had been meeting the payout test
under existing §1.509(a)–4(i)(3)(iii), as
is clear from the example provided in the
preamble to the 2009 proposed regulations
illustrating the application of the transition
rules for a NFI Type III supporting or-
ganization. Rather, §1.509(a)–4(i)(11)(iii)
of the 2009 proposed regulations more
appropriately applies only to Type III
supporting organizations that had been
meeting the “but for” test under existing
§1.509(a)–4(i)(3)(ii) in the taxable year
of the final regulations’ publication but
seek to qualify as NFI (rather than func-
tionally integrated) Type III supporting
organizations in succeeding taxable years.
Indeed, one commenter specifically asked
for clarification regarding the transition
relief applicable to Type III supporting
organizations that had been satisfying the
existing “but for” test but intend to convert
to NFI status because they cannot or do not
wish to qualify as functionally integrated
under the final regulations.
The final regulations provide clarifi-
cation regarding these transition rules. In
particular, the final regulations provide
that a Type III supporting organization
in existence on December 28, 2012, that
meets the requirements of the “but for”
test under existing §1.509(a)–4(i)(3)(ii)
in its taxable year including, December
28, 2012, but not in its first taxable year
beginning after December 28, 2012, is
2013–11 I.R.B.598March 11, 2013

a NFI Type III supporting organization
during that first taxable year and will be
treated as having a distributable amount of
zero for purposes of meeting the distribu-
tion and attentiveness requirements under
§1.509(a)–4(i)(5)(ii)–(iii). Notwithstand-
ing this transition relief, for purposes of
determining whether such a NFI Type III
supporting organization creates an “excess
amount” that can be carried over for five
years, the distributable amount for the first
taxable year beginning after December 28,
2012, is the greater of 85 percent of net
adjusted income or 3.5 percent of the value
of assets in the immediately preceding tax-
able year (that is, the distributable amount
as ordinarily determined under the tempo-
rary regulations). The same rule applies
for purposes of determining the excess
amount of an organization that has a dis-
tributable amount of zero in its first taxable
year as a NFI Type III supporting organi-
zation under §1.509(a)–4(i)(5)(ii)(D).
Beginning in the second taxable year
beginning after December 28, 2012, and
in all succeeding taxable years, all Type
III supporting organizations must meet ei-
ther the requirements of §1.509(a)–4(i)(4)
or §1.509(a)–4(i)(5). A Type III support-
ing organization intending to meet the re-
quirements of a NFI Type III supporting
organization under §1.509(a)–4(i)(5) in its
second taxable year beginning after De-
cember 28, 2012, should value its assets in
accordance with the valuation methods de-
scribed in the final regulations beginning
in its first taxable year beginning after De-
cember 28, 2012.
In addition, a Type III supporting or-
ganization treated as a functionally inte-
grated Type III supporting organization
during its first taxable year beginning
after December 28, 2012, by virtue of
satisfying the “but for” test under existing
§1.509(a)–4(i)(3)(ii) but intending to meet
the requirements of a NFI Type III support-
ing organization under §1.509(a)–4(i)(5)
during its second taxable year begin-
ning after December 28, 2012, will have
a distributable amount for that second
taxable year based on its income or the
value of its assets in the immediately
preceding taxable year. Such a Type III
supporting organization will not have a
distributable amount of zero in its second
taxable year beginning after December
28, 2012, notwithstanding the general rule
under §1.509(a)–4(i)(5)(ii)(D) that the
distributable amount for the first taxable
year an organization is treated as a NFI
Type III supporting organization is zero.
Two commenters requested that the
regulations provide transition relief to NFI
Type III supporting organizations whose
governing instrument or other instru-
ment prohibits distributions from capital
or corpus, similar to the transition rules
provided to certain private foundations
organized before May 27, 1969, under
§53.4942(a)–2(e). The final regulations
provide transition relief to each NFI Type
III supporting organization organized be-
fore September 24, 2009, that commences
judicial proceedingsbefore June 26, 2013,
that are necessary to reform its governing
or other instrument to allow it to meet
the distribution requirement. During any
taxable year in which such a judicial
proceeding is pending, a NFI Type III sup-
porting organization is excepted from the
distribution requirement to the extent it is
prevented from meeting the requirement
by one or more mandatory provisions in its
governing instrument or other instrument
that prohibits distributions from capital
or corpus. The transition relief applies
only if the governing or other instrument
at issue was executed (and the mandatory
provisions were in effect) before Septem-
ber 24, 2009, the date the 2009 proposed
regulations were published in theFederal
Register, and if the judicial proceeding is
not subject to any unreasonable delay for
which the supporting organization is re-
sponsible. Beginning with the first taxable
year following the termination of a judi-
cial proceeding, a NFI Type III supporting
organization must satisfy the distribution
requirement regardless of the outcome
of the judicial proceeding — a require-
ment materially identical to the require-
ments imposed by §53.4942(a)–2(e)(3)
on pre-May 27, 1969 private foundations
whose governing instruments prohibited
distributions out of capital or corpus.
Numerous commenters responded to
the request in the 2009 proposed regu-
lations for comments regarding the need
for a transition rule for NFI Type III sup-
porting organizations whose assets consist
predominantly of assets that are not read-
ily marketable. Commenters suggested
a longer transition period, varying from
four to ten years, for supporting organiza-
tions with such assets. Some commenters
suggested providing the longer transition
period to all supporting organizations with
a sufficiently high proportion (for exam-
ple, a “material” threshold of 20 percent
or more) of not-readily-marketable assets.
Other commenters recommended allow-
ing a NFI Type III supporting organization
to exclude the value of its not-readily-mar-
ketable assets from the assets used to cal-
culate the distributable amount during the
longer transition period (while possibly
also requiring the organization to pay out
substantially all of the income generated
by its not-readily-marketable assets). A
few commenters recommended a phase-in
of the required distribution rate during a
transition period (either for all NFI Type
III supporting organizations or those hold-
ing substantial not-readily-marketable
assets). As an alternative to transition
relief, one commenter recommended a
reasonable cause exception for NFI Type
III supporting organizations that are un-
able to reasonably liquidate their assets
that are not readily marketable.
The final and temporary regulations do
not include a transition rule, or a reason-
able cause exception, for NFI Type III sup-
porting organizationswith assets that are
not readily marketable. After considera-
tion of the comments received, the Trea-
sury Department and the IRS have con-
cluded that any such transition rule would
unfairly impose a higher distribution re-
quirement on those NFI Type III support-
ing organizations thatinvested primarily
in liquid assets, as compared to those or-
ganizations that stayed heavily invested in
not-readily-marketable assets. Moreover,
all NFI Type III supporting organizations
have at least two years after December 28,
2012, to satisfy the distribution require-
ment, and the Treasury Department and the
IRS have concluded that this transition re-
lief will give supporting organizations suf-
ficient time to make any sales of not-read-
ily-marketable assets that may be neces-
sary to meet the distribution requirement.
Finally, like the 2009 proposed reg-
ulations, the final regulations continue
to provide that a trust that on Novem-
ber 20, 1970, met and continues to
meet the requirements under existing
§1.509(a)–4(i)(4) and §1.509(a)–4(i)(9)
of the final regulations will satisfy the
integral part test as a NFI Type III support-
ing organization under§1.509(a)–4(i)(5).
One organization questioned why a
pre-November 20, 1970 trust that meets
March 11, 20135992013–11 I.R.B.

all of the requirements set forth in
§1.509(a)–4(i)(9) should have to petition
the IRS for a ruling. In lieu of a rul-
ing, the commenter requested a form on
which the trust’s trustee could certify that
the trust meets all of the requirements
of §1.509(a)–4(i)(9) or, if a ruling were
required, some assurance that the trust
could operate on the assumption that it
met the requirements of §1.509(a)–4(i)(9)
until a ruling was issued. Like existing
§1.509(a)–4(i)(4),§1.509(a)–4(i)(9) of
the final regulations states that applicable
trustsmay(not “must”) obtain a ruling that
they meet the requirements set forth in the
provision. Accordingly, a trust that meets
the requirements of §1.509(a)–4(i)(9) is
not required to obtain a ruling. The final
and temporary regulations do not alter this
long-standing, optional ruling procedure.
c.Regulations under section 4943
This Treasury decision also includes
final regulations under section 4943 that
provide two transition rules to address
excess business holdings for Type III sup-
porting organizations affected by the PPA.
The Treasury Department and the IRS did
not receive any comments on these tran-
sition rules. The final regulations adopt
the 2009 proposed regulations without
change.
9.Miscellaneous
Several other incidental changes were
made throughout the final regulations in
order to increase clarity and consistency,
none of which are intended to modify the
substance of the 2009 proposed regula-
tions.
10.Effective/applicability date
Both the final and temporary regula-
tions are effective and applicable on De-
cember 28, 2012. However, supporting or-
ganizations should note that section 509(f),
which was added by the PPA, is effec-
tive on and after August 17, 2006. In the
case of section 509(f)(1)(B), which pro-
hibits Type III supporting organizations
from supporting foreign organizations, a
transition rule applies under which Type
III supporting organizations that were sup-
porting a foreign organization on August
17, 2006, could continue supporting the
foreign organization until the first day of
its third taxable year beginning after Au-
gust 17, 2006. In addition, pursuant to sec-
tion 1241(c) of the PPA, the responsive-
ness test for charitable trusts in existing
§1.509(a)–4(i)(2)(iii) cannot support clas-
sification as a Type III supporting organ-
ization, effective August 17, 2007, in the
case of trusts operated in connection with
a supported organization on August 17,
2006. See PPA section 1241(e)(2)(A).
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It has also been deter-
mined that section 553(b) of the Adminis-
trative Procedure Act(5 U.S.C. chapter 5)
does not apply to the temporary or the fi-
nal regulations. For the applicability of the
Regulatory Flexibility Act (5 U.S.C. chap-
ter 6) to the temporary regulations, refer
to the Special Analyses section of the pre-
amble to the cross-reference notice of pro-
posedrulemakingpublishedinthisissueof
the Bulletin.
It is hereby certified that the collection
of information contained in the final reg-
ulations will not have a significant eco-
nomic impact on a substantial number of
small entities. This certification is based
on the fact that the final regulations will
not impact a substantial number of small
entities.
Based on IRS Statistics of Income data
for 2009, there are 1,238,201 active non-
profit charitable organizations recognized
by the IRS under section 501(c)(3), of
which only 7,556 organizations self-iden-
tified as Type III supporting organizations.
Thus, the number of organizations af-
fected by the collection of information
under §1.509(a)–4(i)(2) will not be sub-
stantial. In addition, the collection of
information under §1.509(a)–4(i)(2) will
impose a minimal burden on the affected
organizations because all of the informa-
tion that must be provided is information
that the organizationsare already required
to maintain. Therefore, the collection of
information under §1.509(a)–4(i)(2) will
not have a significant economic impact.
The collection of information under
§1.509(a)–4(i)(6)(v) is required only if
a NFI Type III supporting organization
wishes to obtain the benefit of having cer-
tain amounts set aside for a specific project
count toward the distribution requirement
imposed by these proposed regulations.
Based on IRS Statistics of Income data for
2009, only 4,438 organizations self-iden-
tified as Type III supporting organizations
that are not functionally integrated. Be-
cause only a very small proportion of pri-
vate foundations (less than 0.02 percent)
submit ruling requests for set-asides each
year, the Treasury Department and the IRS
similarly expect that this elective provi-
sion will apply to only a very small subset
of NFI Type III supporting organizations
in any given year. Therefore, the number
of organizations affected by the collection
of information under §1.509(a)–4(i)(6)(v)
will not be substantial. Accordingly, a reg-
ulatory flexibility analysis is not required
for the final regulations.
Pursuant to section 7805(f) of the Code,
the 2009 proposed regulations preceding
the final regulations were submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
their impact on small business and no com-
ments were received. The temporary reg-
ulations (and the cross-reference notice of
proposed rulemaking published in this is-
sue of the Bulletin) will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
their impact on small business.
Drafting Information
The principal authors of these reg-
ulations are Preston J. Quesenberry,
and Stephanie N. Robbins, Office of
Associate Chief Counsel (Tax-Exempt
and Government Entities). However,
other personnel from the Treasury
Department and the IRS participated in
their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1, 53, and
602 are 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 * * *
2013–11 I.R.B.600March 11, 2013

Par. 2. Section 1.509(a)–4 is amended
by:
1. Adding paragraphs (a)(6), (f)(5), and
(l).
2. Revising paragraph (i).
The revision and additions read as fol-
lows:
§1.509(a)–4 Supporting organizations.
(a) * * *
(6) For purposes of paragraph (i) of
this section, the term “supported organiza-
tion” means a specifiedpublicly supported
organization described in paragraphs
(d)(2)(iv) or (d)(4) of this section.
*****
(f) * * *
(5)Contributions from controlling
donors—(i)In general. For any taxable
year, a supporting organization shall not
be considered to be operated, supervised,
or controlled by, or operated in connection
with, one or more publicly supported or-
ganizations, if the supporting organization
accepts any gift or contribution from any
person who is—
(A) A person (other than an organiza-
tion described in section 509(a)(1), (2),
or (4)) who directly or indirectly con-
trols, either alone or together with persons
described in paragraphs (f)(5)(i)(B) or
(f)(5)(i)(C) of this section, the governing
body of a specified publicly supported
organization supported by such supporting
organization;
(B) A member of the family (deter-
mined under section 4958(f)(4)) of an indi-
vidual described in paragraph (f)(5)(i)(A)
of this section; or
(C) A 35-percent controlled entity
(as defined in section 4958(f)(3) by sub-
stituting“clause(i)or(ii)ofsection
509(f)(2)(B)” for “subparagraph (A) or (B)
of paragraph (1)” in paragraph (f)(3)(A)(i)
thereof).
(ii)Meaning of control. [Reserved]
*****
(i)Meaning of operated in connection
with—(1)General rule. For each taxable
year, a supporting organization is operated
in connection with one or more supported
organizations (that is, is a “Type III sup-
porting organization”) only if it is not
disqualified by reason of paragraph (f)(5)
(relating to acceptance of contributions
from controlling donors) or paragraph
(i)(10) (relating to foreign supported orga-
nizations) of this section, and it satisfies—
(i) The notification requirement, which
is set forth in paragraph (i)(2) of this sec-
tion;
(ii) The responsiveness test, which is set
forth in paragraph (i)(3) of this section; and
(iii) The integral part test, which is
satisfied by maintaining significant in-
volvement in the operations of one or more
supported organizations and providing
support on which the supported organiza-
tion(s) are dependent; in order to satisfy
this test, the supporting organization must
meet the requirements either for—
(A) Functionally integrated Type III
supporting organizations set forth in para-
graph (i)(4) of this section; or
(B) Non-functionally integrated Type
III supporting organizations set forth in
paragraph (i)(5) of this section.
(2)Notification requirement—(i)An-
nual notification. For each taxable year,
a Type III supporting organization must
provide the following documents to each
of its supported organizations:
(A)Awrittennoticeaddressedtoaprin-
cipal officer of the supported organization
describing the type and amount of all of the
support the supporting organization pro-
vided to the supported organization during
the supporting organization’s taxable year
immediately preceding the taxable year in
which the written notice is provided (and
during any other taxable year of the sup-
porting organization ending after Decem-
ber 28, 2012, for which such support infor-
mation has not previously been provided);
(B) A copy of the supporting organi-
zation’s Form 990, “Return of Organiza-
tion Exempt from Income Tax,” or other an-
nual information return required to be filed
under section 6033 (although the support-
ing organization may redact from the re-
turn the name and address of any contrib-
utor to the organization) that was most re-
cently filed as of the date the notification is
provided (and any such return for any other
taxable year of the supporting organization
ending after December 28, 2012, that has
not previously been provided to the sup-
ported organization); and
(C) A copy of the supporting organi-
zation’s governing documents as in effect
on the date the notification is provided, in-
cluding its articles of organization and by-
laws (if any) and any amendments to such
documents, unless such documents have
been previously provided and not subse-
quently amended.
(ii)Electronic media. The notifica-
tion documents required by this paragraph
(i)(2) may be provided by electronic me-
dia.
(iii)Due date. The notification docu-
ments required by this paragraph (i)(2) for
any taxable year shall be postmarked or
electronically transmitted by the last day
of the fifth calendar month following the
close of that taxable year.
(iv)Principal officer. For purposes of
paragraph (i)(2)(i)(A) of this section, a
principal officer includes, but is not lim-
ited to, a person who, regardless of title,
has ultimate responsibility for—
(A) Implementing the decisions of the
governing body of a supported organiza-
tion;
(B) Supervising the management, ad-
ministration, or operation of the supported
organization; or
(C) Managing the finances of the sup-
ported organization.
(3)Responsiveness test—(i)
General
rule. A supporting organization meets the
responsiveness test if it is responsive to the
needs or demands of a supported organi-
zation. Except as provided in paragraph
(i)(3)(v) of this section, in order to meet
this test, a supporting organization must
satisfy the requirements of paragraphs
(i)(3)(ii) and (i)(3)(iii) of this section.
(ii)Relationship of officers, directors,
or trustees. A supporting organization sat-
isfies the requirements of this paragraph
(i)(3)(ii) with respect to a supported organ-
ization only if—
(A) One or more officers, directors, or
trustees of the supporting organization are
elected or appointed by the officers, direc-
tors, trustees, or membership of the sup-
ported organization;
(B) One or more members of the gov-
erning body of the supported organization
are also officers, directors, or trustees of,
or hold other important offices in, the sup-
porting organization; or
(C) The officers, directors, or trustees
of the supporting organization maintain a
close and continuous working relationship
with the officers, directors, or trustees of
the supported organization.
(iii)Significant voice. A supporting
organization satisfies the requirements of
this paragraph (i)(3)(iii) only if, by reason
of paragraphs (i)(3)(ii)(A), (i)(3)(ii)(B), or
March 11, 20136012013–11 I.R.B.

(i)(3)(ii)(C) of this section, the officers,
directors, or trustees of the supported or-
ganization have a significant voice in the
investment policies of the supporting or-
ganization, the timing of grants, the man-
ner of making grants, and the selection of
grant recipients by such supporting organ-
ization, and in otherwise directing the use
of the income or assets of the supporting
organization.
(iv)Examples. The provisions of this
paragraph (i)(3) may be illustrated by the
following examples:
Example 1. X, an organization described in sec-
tion 501(c)(3), is a trust created under the last will and
testament of Decedent. The trustee of X (Trustee) is
a bank. Under the trust instrument, X supports M,
a private university described in section 509(a)(1).
The trust instrument provides that Trustee has dis-
cretion regarding the timing and amount of distribu-
tions consistent with the Trustee’s fiduciary duties.
Representatives of Trustee and an officer of M have
quarterly face-to-face or telephonic meetings during
which they discuss M’s projected needs and ways in
which M would like X to use its income and invest its
assets. Additionally, Trustee communicates regularly
with that officer of M regarding X’s investments and
plans for distributions from X. Trustee provides the
officer of M with quarterly investment statements, the
information required under paragraph (i)(2) of this
section, and an annual accounting statement. Based
on these facts, X meets the responsiveness test of this
paragraph (i)(3) with respect to M.
Example 2. Y is an organization described in sec-
tion 501(c)(3) and is a trust under State law. The
trustee of Y (Trustee) is a bank. Y supports charities
P, Q, and R, each an organization described in section
509(a)(1). Y makes annual cash payments to P, Q,
and R. Once a year, Trustee sends to P, Q, and R the
cash payment, the information required under para-
graph (i)(2) of this section, and an accounting state-
ment. Trustee has no other communication with P, Q,
or R. Y does not meet the responsiveness test of this
paragraph (i)(3).
(v)Exception for pre-November 20,
1970 organizations. In the case of a sup-
porting organization that was supporting
or benefiting a supported organization
before November 20, 1970, additional
facts and circumstances, such as a historic
and continuing relationship between the
organizations, may be taken into account,
in addition to the factors described in
paragraphs (i)(3)(ii) and (i)(3)(iii) of this
section, to establish compliance with the
responsiveness test.
(4)Integral part test—functionally
integrated Type III supporting organi-
zation—(i)General rule. A supporting
organization meets the integral part test
and will be considered functionally in-
tegrated within the meaning of section
4943(f)(5)(B), if it—
(A) Engages in activities substantially
all of which directly further the exempt
purposes of one or more supported orga-
nizations and otherwise meets the require-
ments described in paragraph (i)(4)(ii) of
this section;
(B) Is the parent of each of its supported
organizations, as described in paragraph
(i)(4)(iii) of this section; or
(C) Supports a governmental supported
organization and otherwise meets the re-
quirements of paragraph (i)(4)(iv) of this
section.
(ii)Substantially all activities directly
further exempt purposes—(A)In general.
A supporting organization meets the re-
quirements of this paragraph (i)(4)(ii) if
it engages in activities substantially all of
which—
(1) Directly further the exempt pur-
poses of one or more supported organiza-
tions to which the supporting organization
is responsive by performing the functions
of, or carrying out the purposes of, such
supported organization(s); and
(2) But for the involvement of the sup-
porting organization, would normally be
engaged in by such supported organiza-
tion(s).
(B)Meaning of substantially all.For
purposes of paragraph (i)(4)(ii)(A) of this
section, in determining whether substan-
tially all of a supporting organization’s
activities directly further the exempt pur-
poses of one or more supported organiza-
tion(s) to which the supporting organiza-
tion is responsive, all pertinent facts and
circumstances will be taken into consider-
ation.
(C)Meaning of directly further.Ac-
tivities “directly further” the exempt pur-
poses of one or more supported organiza-
tions for purposes of this paragraph (i)(4)
only if they are conducted by the support-
ing organization itself, rather than by a
supported organization. Holding title to
and managing exempt-use assets described
in §1.509(a)–4T(i)(8)(ii) are activities that
directly further the exempt purposes of the
supported organization within the meaning
of this paragraph (i)(4). Conversely, ex-
cept as provided in paragraph (i)(4)(ii)(D)
of this section, fundraising, making grants
(whether to the supported organization or
to third parties), and investing and man-
aging non-exempt-use assets are not activ-
ities that directly further the exempt pur-
poses of the supported organization within
the meaning of this paragraph (i)(4).
(D)Payments to individual beneficia-
ries. The making or awarding of grants,
scholarships, or other payments to individ-
ual beneficiaries who are members of the
charitable class benefited by a supported
organization will be treated as an activity
that directly furthers the exempt purposes
of that supported organization for purposes
of this paragraph (i)(4) only if—
(1) The individual beneficiaries are se-
lected on an objective and nondiscrimina-
tory basis (as described in §53.4945–4(b));
(2) The officers, directors, or trustees of
the supported organization have a signifi-
cant voice in the timing of the payments,
the manner of making them, and the selec-
tion of recipients; and
(3)Themakingorawardingofsuch
payments is part of an active program
of the supporting organization that di-
rectly furthers the exempt purposes of
the supported organization and in which
the supporting organization maintains
significant involvement, as defined in
§53.4942(b)–1(b)(2)(ii) (except that “sup-
porting organization”shall be substituted
for “foundation”).
(iii)Parent of supported organiza-
tion(s). For purposes of paragraph
(i)(4)(i)(B) of this section, a supporting
organization is the parent of a supported
organization if the supporting organization
exercises a substantial degree of direction
over the policies, programs, and activities
of the supported organization and a major-
ity of the officers, directors, or trustees of
the supported organization is appointed or
elected, directly or indirectly, by the gov-
erning body, members of the governing
body, or officers (acting in their official
capacity) of the supporting organization.
(iv)Supporting a governmental entity.
[Reserved]
(v)Examples. The provisions of this
paragraph (i)(4) may be illustrated by the
following examples:
Example 1. N, an organization described in sec-
tion 501(c)(3), is the parent organization of a health-
care system consisting of two hospitals (Q and R) and
an outpatient clinic (S), each of which is described in
section 509(a)(1), and a taxable subsidiary (T). N is
the sole member of each of Q, R, and S. Under the
charter and bylaws of each of Q, R, and S, N appoints
all members of the board ofdirectors of each corpora-
tion. N engages in the overall coordination and super-
vision of the healthcare system’s exempt subsidiary
corporations Q, R, and S in approval of their budgets,
strategic planning, marketing, resource allocation, se-
2013–11 I.R.B.602March 11, 2013

curing tax-exempt bond financing, and community
education. N also managesand invests assets that
serve as endowments of Q, R, and S. Based on these
facts, N qualifies as a functionally integrated Type III
supporting organization under paragraph (i)(4)(i)(B)
of this section.
Example 2. V, an organization described in sec-
tion 501(c)(3), is organized and operated as a support-
ing organization to L, a church described in section
509(a)(1). V meets the responsiveness test described
inparagraph(i)(3)ofthissectionwithrespecttoL.L
transferred to V title to the buildings in which L con-
ducts religious services, Bible study, and community
enrichment programs. Substantially all of V’s activ-
ities consist of holding and maintaining these build-
ings, which L continues to use, free of charge, to fur-
ther its exempt purposes. But for the activities of V,
L would hold and maintain the buildings. Based on
these facts, V satisfies the requirements of paragraph
(i)(4)(ii) of this section.
Example 3. O is a local nonprofit food pantry
described in section 501(c)(3). O collects donated
food from local growers, grocery stores, and indi-
viduals and distributes this food free of charge to
poor and needy people in O’s community. O is or-
ganized and operated as a supporting organization to
eight churches of a particular denomination located in
O’s community, each of which is described in section
509(a)(1). Control of O is vested in a five-member
Board of Directors, which includes an official from
one of the churches as well as four lay members of
the churches’ congregations. The officers of O main-
tain a close and continuing working relationship with
each of the eight churches and as a result of such rela-
tionship, each of the eightchurches has a significant
voice in directing the use of the income and assets of
O. As a result, O is responsive to its supported or-
ganizations. All of O’s activities directly further the
exempt purposes of the eight supported organizations
to which it is responsive. Additionally, but for the
activities of O, the churches would normally operate
food pantries themselves. Based on these facts, O sat-
isfies the requirements of paragraph (i)(4)(ii) of this
section.
Example 4. M, an organization described in sec-
tion 501(c)(3), was created by B, an individual, to
provide scholarships for students of U, a private sec-
ondary school and an organization described in sec-
tion 509(a)(1). U establishes the scholarship criteria,
publicizes the scholarshipprogram, solicits and re-
views applications, and selects the scholarship recip-
ients. M invests its assets and disburses the funds for
scholarships to the recipients selected by U. M does
not provide the scholarships as part of an active pro-
gram in which it maintains significant involvement,
as defined in §53.4942(b)–1(b)(2)(ii). Based on these
facts, M does not satisfy the requirements of para-
graph (i)(4)(ii) of this section.
Example 5. J, an organization described in
section 501(c)(3), is organized as a supporting organ-
ization to community foundation G, an organization
described in section 509(a)(1). J meets the respon-
siveness test described in paragraph (i)(3) of this
section with respect to G. In addition to maintaining
field-of-interest funds, sponsoring donor advised
funds, and conducting general grantmaking activ-
ities, G also engages in activities to beautify and
maintain local parks. Substantially all of J’s activities
consist of maintaining all of the local parks in the area
of community foundation G by performing activities
such as establishing and maintaining trails, planting
trees, and removing trash. But for the activities of J,
G would normally engage in these efforts to beautify
and maintain the local parks. Based on these facts,
J satisfies the requirements of paragraph (i)(4)(ii) of
this section.
(5)Integral part test — non-function-
ally integrated Type III supporting organi-
zation—(i)General rule. A supporting or-
ganization meets the integral part test and
will be considered non-functionally inte-
grated if it satisfies either—
(A) The distribution requirement of
paragraph (i)(5)(ii) of this section and the
attentiveness requirement of paragraph
(i)(5)(iii) of this section; or
(B) The pre-November 20, 1970 trust
requirements of paragraph (i)(9) of this
section.
(ii)Distribution requirement—(A)
Annual distribution. With respect to
each taxable year, a supporting organi-
zation must distribute to or for the use
of one or more supported organizations
an amount equaling or exceeding the
supporting organization’s distributable
amount for the taxable year, as defined in
§1.509(a)–4T(i)(5)(ii)(B), on or before the
last day of the taxable year.
(B)Distributable amount.[Re-
served]. For further guidance, see
§1.509(a)–4T(i)(5)(ii)(B).
(C)Minimum asset amount.[Re-
served]. For further guidance, see
§1.509(a)–4T(i)(5)(ii)(C).
(D)First taxable year. The dis-
tributable amount for the first taxable year
an organization is treated as a non-func-
tionally integrated Type III supporting
organization is zero. Notwithstanding
the foregoing, for purposes of determin-
ing whether an excess amount is created
under paragraph (i)(7)(ii) of this sec-
tion, the distributable amount for the first
taxable year an organization is treated
as a non-functionally integrated Type
III supporting organization is the dis-
tributable amount that would apply under
§1.509(a)–4T(i)(5)(ii)(B) in the absence
of this paragraph (i)(5)(ii)(D).
(E)Emergency temporary reduction.
The Secretary may provide by publica-
tion in the Internal Revenue Bulletin (see
§601.601(d)(2)(ii)(b) of this chapter) for
a temporary reduction in the distributable
amount in the case of a disaster or emer-
gency.
(F)Reasonable cause exception.A
non-functionally integrated Type III sup-
porting organization that fails to meet the
distribution requirement of this paragraph
(i)(5)(ii) will not be classified as a private
foundation for the taxable year in which it
fails to meet the distribution requirement
if the organization establishes to the satis-
faction of the Secretary that—
(1) The failure was due solely to unfore-
seen events or circumstances that are be-
yond the organization’s control, a clerical
error, or an incorrect valuation of assets;
(2) The failure was due to reasonable
cause and not to willful neglect; and
(3) The distribution requirement is met
within 180 days after the organization
is first able to distribute its distributable
amount notwithstanding the unforeseen
events or circumstances, or 180 days after
the date the incorrect valuation or clerical
error was or should have been discovered;
however, no amounts paid to meet a dis-
tribution requirement for a prior taxable
year under this paragraph (i)(5)(ii)(F)(3)
may be counted toward the distribution
requirement for the taxable year in which
such amounts are paid.
(iii)Attentiveness requirement—(A)
General rule. With respect to each taxable
year, a non-functionally integrated Type
III supporting organization must distrib-
ute one-third or more of its distributable
amount to one or more supported organi-
zations that are attentive to the operations
of the supporting organization (within
the meaning of paragraph (i)(5)(iii)(B) of
this section) and to which the support-
ing organization is responsive (within the
meaning of paragraph (i)(3) of this sec-
tion).
(B)Attentiveness. A supported organi-
zation is attentive to the operations of the
supporting organization during a taxable
year if, in the taxable year, at least one of
the following requirements is satisfied:
(1) The supporting organization dis-
tributes to the supported organization
amounts equaling or exceeding 10 per-
cent of the supported organization’s total
support (or, in the case of a particular
department or school of a university, hos-
pital, or church, the total support of the
department or school) received during the
supported organization’s last taxable year
ending before the beginning of the sup-
porting organization’s taxable year.
March 11, 20136032013–11 I.R.B.

(2) The amount of support received
from the supporting organization is neces-
sary to avoid the interruption of the carry-
ing on of a particular function or activity
of the supported organization. The support
is necessary if the supporting organization
or the supported organization earmarks the
support for a particular program or activity
of the supported organization, even if such
program or activity is not the supported
organization’s primary program or activ-
ity, as long as such program or activity is
a substantial one.
(3) Based on the consideration of all
pertinent factors, including the number of
supported organizations, the length and na-
ture of the relationship between the sup-
ported organization and supporting organ-
ization, and the purpose to which the funds
are put, the amount of support received
from the supporting organization is a suf-
ficient part of a supported organization’s
total support (or, in the case of a partic-
ular department or school of a university,
hospital, or church, the total support of
the department or school) to ensure atten-
tiveness. Normally the attentiveness of
a supported organization is influenced by
the amounts received from the supporting
organization. Thus, the more substantial
the amount involved in terms of a per-
centage of the supported organization’s to-
tal support, the greater the likelihood that
the required degree of attentiveness will be
present. However, in determining whether
the amount received from the supporting
organization is sufficient to ensure the at-
tentiveness of the supported organization
to the operations of the supporting organ-
ization (including attentiveness to the na-
ture and yield of the supporting organiza-
tion’s investments), evidence of actual at-
tentiveness by the supported organization
is of almost equal importance. A sup-
ported organization is not considered to be
attentive solely because it has enforceable
rights against the supporting organization
under state law.
(C)Distribution to donor advised fund
disregarded. Notwithstanding paragraph
(i)(5)(iii)(B) of this section, in determin-
ing whether a supported organization will
be considered attentive to the operations
of a supporting organization, any amount
received from the supporting organization
that is held by the supported organization
in a donor advised fund described in sec-
tion 4966(d)(2) will be disregarded.
(D)Examples.This paragraph
(i)(5)(iii) is illustrated by the following
examples:
Example 1. K, an organization described in sec-
tion 501(c)(3), annually pays an aggregate amount
equaling or exceeding its distributable amount de-
scribed in §1.509(a)–4T(i)(5)(ii)(B) to L, a museum
described in section 509(a)(2). K meets the respon-
siveness test described in paragraph (i)(3) of this sec-
tion with respect to L. In recent years, L has ear-
marked the income received from K to underwrite
the cost of carrying on a chamber music series con-
sisting of 12 performances a year that are performed
for the general public free of charge at its premises.
The chamber music series is not L’s primary activ-
ity but it is a substantial activity. L could not con-
tinue the performances without K’s support. Based
on these facts, K meets the requirements of paragraph
(i)(5)(iii)(B)(2)ofthissection.
Example 2. M, an organization described in sec-
tion 501(c)(3), annually pays an aggregate amount
equaling or exceeding its distributable amount de-
scribed in §1.509(a)–4T(i)(5)(ii)(B) to the Law
School of N University, an organization described
in section 509(a)(1). M meets the responsiveness
test described in paragraph (i)(3) of this section with
respect to N. M has earmarked the income paid over
to N’s Law School to endow a chair in International
Law. Without M’s continued support, N could not
continue to maintain this chair. The chair is not
N’s primary activity but it is a substantial activity.
Based on these facts, M meets the requirements of
paragraph (i)(5)(iii)(B)(2)ofthissection.
Example 3. R is a charitable trust created un-
der the will of B, who died in 1969. R’s purpose
is to hold assets as an endowment for S (a hospi-
tal), T (a university), and U (a national medical re-
search organization), all organizations described in
section 509(a)(1) and specifically named in the trust
instrument, and to distribute all of the income each
year in equal shares amongthe three named benefi-
ciaries. Each year, R pays to S, T, and U an aggre-
gate amount equaling or exceeding its distributable
amount described in §1.509(a)–4T(i)(5)(ii)(B). Such
payments equal less than one percent of the total sup-
port that each supported organization received in its
most recently completed taxable year. Based on these
facts, R does not meet the requirements of paragraph
(i)(5)(iii)(B)(1) of this section. However, because B
died prior to November 20, 1970, R could meet the
requirements of paragraph (i)(5)(i)(B) of this section
upon meeting all of the requirements of paragraph
(i)(9) of this section.
Example 4. O is an organization described in
section 501(c)(3). O is organized to support five pri-
vate universities, V, W, X, Y, and Z, each of which is
described in section 509(a)(1). O meets the respon-
siveness test under paragraph (i)(3) of this section
only as to V. Each year, O distributes an aggregate
amount that equals its distributable amount described
in §1.509(a)–4T(i)(5)(ii)(B) and distributes an equal
amount to each of the five universities. Accord-
ingly, O distributes only one-fifth of its distributable
amount to a supported organization to which O is
also responsive (V). Because O does not distribute
at least one-third of its distributable amount to sup-
ported organizations that are both attentive to the
operations of O and to which the O is responsive, O
does not meet the attentiveness requirements of this
paragraph (i)(5)(iii).
(6)Distributions that count toward dis-
tribution requirement. For purposes of
this paragraph (i)(6), the amount of a dis-
tribution made to a supported organiza-
tion is the amount of cash distributed or
the fair-market value of the property dis-
tributed as of the date the distribution is
made. The amount of a distribution will
be determined solely on the cash receipts
and disbursements method of accounting
described in section 446(c)(1). Distribu-
tions by the supporting organization that
count toward the distribution requirement
imposed in paragraph (i)(5)(ii) of this sec-
tion shall include, but not be limited to—
(i) Any amount paid to a supported or-
ganization to accomplish the supported or-
ganization’s exempt purposes;
(ii) Any amount paid by the supporting
organization to perform an activity that
satisfies the requirements of paragraph
(i)(4)(ii) of this section, but only to the
extent such amount exceeds any income
derived by the supporting organization
from the activity;
(iii) Any reasonable and necessary ad-
ministrative expenses paid to accomplish
the exempt purposes of the supported or-
ganization(s), which do not include ex-
penses incurred in the production of in-
vestment income;
(iv) Any amount paid to acquire
an exempt-use asset described in
§1.509(a)–4T(i)(8)(ii); and
(v) Any amount set aside for a spe-
cific project that accomplishes the exempt
purposes of a supported organization to
which the supporting organization is re-
sponsive, with such set aside counting to-
ward the distribution requirement for the
taxable year in which the amount is set
aside but not in the year in which it is actu-
ally paid, if at the time of the set-aside, the
supporting organization—
(A) Obtains a written statement from
each supported organization whose ex-
empt purposes the specific project accom-
plishes, signed under penalty of perjury
by one of the supported organization’s
principal officers, as defined in para-
graph (i)(2)(iv) of this section, stating
that the supported organization approves
the project as one that accomplishes one
or more of the supported organization’s
exempt purposes and also approves the
supporting organization’s determination
2013–11 I.R.B.604March 11, 2013

that the project is one that can be better
accomplished by such a set-aside than by
the immediate payment of funds;
(B) Establishes to the satisfaction of the
Commissioner, by meeting the approval
and information requirements described
in §53.4942(a)–3(b)(7)(i) of this chapter
and by providing the written statement
described in paragraph (i)(6)(v)(A) of this
section, that the amount set aside will
be paid for the specific project within
60 months after it is set aside and that
the project is one that can better be ac-
complished by the set-aside than by the
immediate payment of funds; and
(C) Evidences the set-aside by the en-
try of a dollar amount on the books and
records of the supporting organization as
a pledge or obligation to be paid at a future
date or dates within 60 months of the set
aside.
(7)Carryover of excess amounts—(i)
In general. If with respect to any taxable
year, an excess amount, as defined in para-
graph(i)(7)(ii)ofthis section, is created,
such excess amount may be used to reduce
the distributable amount in any of the five
taxable years immediately following the
taxable year in which the excess amount
is created. An excess amount created in a
taxable year can only be carried over for
five taxable years.
(ii)Excess amount. An excess amount
is created for any taxable year begin-
ning after December 28, 2012, if the
total distributions made in that taxable
year that count toward the distribution
requirement exceedthe supporting or-
ganization’s distributable amount for
the taxable year, as determined under
§1.509(a)–4T(i)(5)(ii)(B). With respect
to any taxable year to which an excess
amount is carried over, in determining
whether an excess amount is created in
that taxable year, the distributable amount
is first reduced by any excess amounts car-
ried over (with the oldest excess amounts
applied first) and then by any distributions
made in that taxable year.
(8)Valuation of non-exempt-use assets.
[Reserved]. For further guidance, see
§1.509(a)–4T(i)(8).
(9)Alternateintegralparttestforcer-
tain trusts. A trust (whether or not exempt
from taxation under section 501(a)) that
on November 20, 1970, met and contin-
ues to meet the requirements of paragraphs
(i)(9)(i) through (i)(9)(v) of this section,
shall be treated as meeting the require-
ments of paragraph (i)(5) of this section if
for taxable years beginning after October
16, 1972, the trustee of such trust makes
annual written reports to all of the trust’s
supported organizations, setting forth a de-
scription of the trust’s assets, including a
detailed list of the assets and the income
produced by such assets. A trust that meets
the requirements of this paragraph (i)(9)
may request a ruling that it is described
in section 509(a)(3) in such manner as
the Commissioner may prescribe. The re-
quirements of this paragraph (i)(9) are as
follows:
(i) All the unexpired interests in the
trust are devoted to one or more pur-
poses described in section 170(c)(1) or
(c)(2)(B) and a deduction was allowed
with respect to such interests under sec-
tions 170, 545(b)(2), 556(b)(2), 642(c),
2055, 2106(a)(2), 2522, or corresponding
provisions of prior law (or would have
been allowed such a deduction if the trust
had not been created before 1913).
(ii) The trust was created prior to
November 20, 1970, and did not receive
any grant, contribution, bequest or other
transfer on or after such date. For purposes
of this paragraph (i)(9)(ii), a split-interest
trust described in section 4947(a)(2) that
was created prior to November 20, 1970,
was irrevocable on such date, and that
becomes a charitable trust described in
section 4947(a)(1) after such date shall
be treated as having been created prior to
such date.
(iii) The trust is required by its gov-
erning instrument to distribute all of its
net income currently to a designated ben-
eficiary supported organization. If more
than one beneficiary supported organiza-
tion is designated in the governing instru-
ment of a trust, all of the net income must
be distributable and must be distributed
currently to each of such supported orga-
nizations in fixed shares pursuant to such
governing instrument. For purposes of this
paragraph (i)(9)(iii), the governing instru-
ment of a charitable trust shall be treated
as requiring distribution to a designated
supported organization when the trust in-
strument describes the charitable purpose
of the trust so completely that such de-
scription can apply to only one existing
supported organization and is of sufficient
particularity as to vest in such organiza-
tion rights against the trust enforceable in
a court possessing equitable powers.
(iv) The trustee of the trust does not
have discretion to vary either the ben-
eficiary supported organizations or the
amounts payable to the supported orga-
nizations. For purposes of this paragraph
(i)(9)(iv), a trustee shall not be treated as
having such discretion if the trustee has
discretion to make payments of princi-
pal to the single supported organization
that is currently entitled to receive all of
the trust’s income or if the trust instru-
ment provides that the trustee may cease
making income payments to a particular
supported organization in the event of cer-
tain specific occurrences, such as the loss
of exemption under section 501(c)(3) or
classification under section 509(a)(1) or
(a)(2) by the supported organization or the
failure of the supported organization to
carry out its charitable purpose properly.
(v) None of the trustees would be dis-
qualified persons within the meaning of
section 4946(a) (other than foundation
managers under section 4946(a)(1)(B))
with respect to the trust if such trust were
treated as a private foundation.
(10)Foreign supported organizations.
A supporting organization is not operated
in connection with one or more supported
organizations if it supports any supported
organization organized outside of the
United States.
(11)Transition rules—(i)Notification
requirement. A Type III supporting organ-
ization will be treated as having satisfied
the notification requirement described in
paragraph (i)(2) of this section for its tax-
able year that includes December 28, 2012,
if the required notification is postmarked
or electronically transmitted by the later of
the last day of the fifth calendar month fol-
lowing the close of that taxable year or the
due date (including extensions) of the sup-
porting organization’s annual information
return described in section 6033 for that
taxable year.
(ii)Integral part test—(A)Qualifi-
cation as a functionally integrated Type
III supporting organization.ATypeIII
supporting organization in existence on
December 28, 2012, that met and con-
tinues to meet the requirements of Treas.
Reg. §1.509(a)–4(i)(3)(ii), as in effect
prior to December 28, 2012, will be treated
as meeting the requirements of paragraph
(i)(4) of this section until the first day
March 11, 20136052013–11 I.R.B.

of the organization’s second taxable year
beginning after December 28, 2012.
(B)Qualification as a non-functionally
integrated Type III supporting organiza-
tion. A Type III supporting organization in
existence on December 28, 2012, that met
and continues to meet the requirements
of Treas. Reg. §1.509(a)–4(i)(3)(iii), as
in effect prior to December 28, 2012,
will be treated as meeting the require-
ments of paragraph (i)(5)(i)(A) of this
section until the first day of its second
taxable year beginning after December
28, 2012. Notwithstanding the foregoing,
in determining whether an excess amount
is created under paragraph (i)(7)(ii) of
this section in the first taxable year be-
ginning after December 28, 2012, the
distributable amount for that taxable year
of a Type III supporting organization
treated as meeting the requirements of
paragraph (i)(5)(i)(A) of this section under
this paragraph (i)(11)(ii)(B) is the amount
described in §1.509(a)–4T(i)(5)(ii)(B).
(C)Transitioning to a non-functionally
integrated Type III supporting organiza-
tion in the first taxable year after effective
date. A Type III supporting organization
in existence on December 28, 2012, that
meets the requirements of Treas. Reg.
§1.509(a)–4(i)(3)(ii), as in effect prior to
December 28, 2012, in its taxable year
including December 28, 2012, but not in
its first taxable year beginning after De-
cember 28, 2012, is a non-functionally in-
tegrated Type III supporting organization
and will be treated as having a distributable
amount of zero for purposes of meeting the
requirements of paragraph (i)(5)(i)(A) of
this section during the organization’s first
taxable year beginning after December 28,
2012. Notwithstanding the foregoing, in
determining whether an excess amount is
created under paragraph (i)(7)(ii) of this
section in the first taxable year beginning
after December 28, 2012, the distributable
amount for that taxable year of a Type
III supporting organization described in
this paragraph (i)(11)(ii)(C) is the amount
described in §1.509(a)–4T(i)(5)(ii)(B),
determined without regard to paragraph
(i)(5)(ii)(D) of this section.
(D)Second taxable year after effective
date. Beginning in the second taxable year
beginning after December 28, 2012, and
in all succeeding taxable years, all Type
III supporting organizations described in
this paragraph (i)(11)(ii) must meet ei-
ther the requirements of paragraph (i)(4)
or (i)(5) of this section. If a Type III
supporting organization described in para-
graph (i)(11)(ii)(A) of this section does
not meet the requirements of paragraph
(i)(4) of this section during its second
taxable year beginning after December
28, 2012, its distributable amount for that
second taxable year will be determined
under §1.509(a)–4T(i)(5)(ii)(B), without
regard to paragraph (i)(5)(ii)(D) of this
section. Any Type III supporting organi-
zation intending to meet the requirements
of paragraph (i)(5) of this section in its
second taxable year beginning after De-
cember 28, 2012, must value its assets in
accordance with §1.509(a)–4T(i)(8) be-
ginning in its first taxable year beginning
after December 28, 2012.
(E)Judicial proceedings to reform in-
struments. During any taxable years in
which there is pending a judicial pro-
ceeding that meets the requirements of
this paragraph (i)(11)(ii)(E), a non-func-
tionally integrated Type III supporting
organization organized before Septem-
ber 24, 2009, will not have to comply
with the distribution requirement under
paragraph(i)(5)(ii)ofthissectiontothe
extent such compliance would be incon-
sistent with mandatory provisions of a
governing instrument or other instrument
executed before September 24, 2009, that
prohibits distributing capital or corpus.
Beginning with the first taxable year fol-
lowing the taxable year in which such
judicial proceeding is terminated, such
a non-functionally integrated Type III
supporting organization must satisfy the
distribution requirement under paragraph
(i)(5)(ii) of this section, regardless of the
outcome of the judicial proceeding. Thus,
if, during a taxable year after such a ju-
dicial proceeding, an organization fails to
comply with paragraph (i)(5)(ii) of this
section, the organization will not qual-
ify as a non-functionally integrated Type
III supporting organization, regardless
of whether such failure to comply was
a result of the organization operating in
accordance with its governing instrument
or other instrument. To meet the require-
ments of this paragraph (i)(11)(ii)(E), a
judicial proceeding must be—
(1) Necessary to reform, or to excuse
the supporting organization from compli-
ance with, a governinginstrument or other
instrument (as in effect on September 24,
2009, and all times thereafter) in order
to permit the organization to satisfy para-
graph (i)(5)(ii) of this section;
(2) Commenced before June 26, 2013;
and
(3) Not subject to any unreasonable de-
lay for which the supporting organization
is responsible.
*****
(l)Effective/applicability date. Para-
graphs (a)(6), (f)(5), and (i) of this section
are effective on December 28, 2012.
Par. 3. Section 1.509(a)–4T is added to
read as follows:
§1.509(a)–4T Supporting organizations
(temporary).
(a) through (i)(5)(ii)(A) [Reserved].
For further guidance, see §1.509(a)–4(a)
through (i)(5)(ii)(A).
(B)Distributable amount. Except as
provided in §§1.509(a)–4(i)(5)(ii)(D) and
1.509(a)–4(i)(5)(ii)(E), the distributable
amount for a taxable year is an amount
equal to the greater of 85 percent of
the supporting organization’s adjusted
net income (as determined by apply-
ing the principles of section 4942(f) and
§53.4942(a)–2(d) of this chapter) for the
taxable year immediately preceding the
taxable year of the required distribution
(“immediately preceding taxable year”) or
its minimum asset amount (as defined in
paragraph (i)(5)(ii)(C) of this section) for
the immediately preceding taxable year,
reduced by the amount of taxes imposed on
the supporting organization under subtitle
A of the Internal Revenue Code during the
immediately preceding taxable year.
(C)Minimum asset amount.Forpur-
poses of this paragraph (i)(5), a support-
ing organization’s minimum asset amount
for the immediately preceding taxable year
is 3.5 percent of the excess of the aggre-
gate fair market value of all of the sup-
porting organization’s non-exempt-use as-
sets (determined under paragraph (i)(8) of
this section) in thatimmediately preceding
taxable year over the acquisition indebted-
ness with respect to such non-exempt-use
assets (determined under section 514(c)(1)
without regard to the taxable year in which
the indebtedness was incurred), increased
by—
(1) Amounts received or accrued during
the immediately preceding taxable year as
repayments of amounts which were taken
2013–11 I.R.B.606March 11, 2013

into account by the organization to meet
the distribution requirement imposed in
§1.509(a)–4(i)(5)(ii)(A) for any taxable
year;
(2) Amounts received or accrued dur-
ing the immediately preceding taxable
year from the sale or other disposition
of property to the extent that the ac-
quisitionofsuchpropertywastaken
into account by the organization to meet
the distribution requirement imposed in
§1.509(a)–4(i)(5)(ii)(A) for any taxable
year; and
(3) Any amount set aside under
§1.509(a)–4(i)(6)(v) to the extent it is
determined during the immediately pre-
ceding taxable year that such amount is
not necessary for the purposes for which it
was set aside and such amount was taken
into account by the organization to meet
the distribution requirement imposed in
§1.509(a)–4(i)(5)(ii)(A) for any taxable
year.
(i)(5)(ii)(D) through (i)(7) [Re-
served]. For further guidance, see
§1.509(a)–4(i)(5)(ii)(D) through (i)(7).
(8)Valuation of non-exempt-use as-
sets. For purposes of determining its
distributable amount for a taxable year,
a supporting organization determines its
minimum asset amount, as defined in
paragraph (i)(5)(ii)(C) of this section, by
determining the aggregate fair market
value of all of its non-exempt-use as-
sets in the immediately preceding taxable
year. For these purposes, the determina-
tion of the aggregate fair market value of
all non-exempt-use assets shall be made
using the valuation methods described
in §53.4942(a)–2(c) of this chapter. The
aggregate fair market value of the support-
ing organization’s non-exempt-use assets
shall not be reduced by any amount that
is set aside under §1.509(a)–4(i)(6)(v).
For these purposes, the non-exempt-use
assets of the supporting organization are
all assets of the supporting organization
other than—
(i)Assetsdescribedin
§53.4942(a)–2(c)(2)(i) through (iv) of this
chapter (with “supporting organization”
being substituted for “foundation” or
“private foundation” and “August 17,
2006” being substituted for “December
31, 1969”); and
(ii) Exempt-use assets, which are assets
that are used (or held for use) to carry
out the exempt purposes of the supporting
organization’s supported organization(s)
(determined by applying the principles
described in §53.4942(a)–2(c)(3) of this
chapter) by either—
(A) The supporting organization; or
(B) One or more supported organiza-
tions, but only if the supporting organiza-
tion makes the asset available to the sup-
ported organization(s) at no cost (or nomi-
nal rent) to the supported organization(s).
(i)(9) through (l) [Reserved]. For
further guidance, see §1.509(a)–4(i)(9)
through (l).
(m)Effective/applicability date.This
section is effective on December 28, 2012.
The applicability of this section expires on
or before December 21, 2015.
PART 53—FOUNDATION AND
SIMILAR EXCISE TAXES
Par. 4. The authority citation for part
53 continues to read as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 5. Section 53.4943–11 is amended
by revising the section heading and adding
paragraphs (f) and (g) to read as follows:
§53.4943–11 Effective/applicability date.
*****
(f)Special transitional rule for pri-
vate foundations that qualified as Type III
supporting organizations before August
17, 2006. The present holdings of a pri-
vate foundation that qualified as a Type
III supporting organization under section
509(a)(3) immediately before August 17,
2006, and that was reclassified as a pri-
vate foundation under section 509(a) on
or after August 17, 2006, solely as a result
of the rules enacted by section 1241 of the
Pension Protection Act of 2006, Public
Law 109–280 (120 Stat. 780), will be
determined using the same rules that apply
to Type III supporting organizations under
section 4943(f)(7).
(g)Special transitional rule for Type III
supporting organizations created as trusts
before November 20, 1970.Atrustthat
qualifies as a Type III supporting organi-
zation under section 509(a)(3) and meets
the requirements of §1.509(a)–4(i)(9) of
this chapter will be treated as a “func-
tionally integrated Type III supporting
organization” for purposes of section
4943(f)(3)(A).
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 6. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 7. In §602.101, paragraph (b) is
amended by adding the following entry in
numerical order to the table to read as fol-
lows:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
control No.
*****
1.509(a)–4
...........................................................
1545–2157
*****
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved December 19, 2012.
Mark J. Mazur,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on December 21,
2012, 4:15 p.m., and published in the issue of the Federal
Register
for December 28, 2012, 77 F.R. 76382)
March 11, 20136072013–11 I.R.B.

Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of March 2013. See Rev.
Rul. 2013-7, page 608.
Section 807.—
Rules for
Certain Rese
rves
The adjusted
applicable federal short-term, mid-
term, and lon
g-term rates are set forth for the month
of March 2013
. See Rev. Rul. 2013-7, page 608.
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 March 2013. See Rev. Rul. 2013-7, page 608.
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 March 2013.
Rev. Rul. 2013–7
This revenue ruling provides various
prescribed rates for federal income tax
purposes for March 2013 (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. 2013–7 TABLE 1
Applicable Federal Rates (AFR) for March 2013
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR.22%.22%.22%.22%
110% AFR.24%.24%.24%.24%
120% AFR.26%.26%.26%.26%
130% AFR.29%.29%.29%.29%
Mid-term
AFR1.09%1.09%1.09%1.09%
110% AFR1.20%1.20%1.20%1.20%
120% AFR1.31%1.31%1.31%1.31%
130% AFR1.43%1.42%1.42%1.42%
150% AFR1.65%
1.64%1.64%1.63%
175% AFR
1.92%1.91%1.91%1.90%
Long-term
AFR2.66%2.64%2.63%2.63%
110% AFR2.92%2.90%2.89%2.88%
120% AFR3.20%3.17%3.16%
3.15%
130% AFR3.46%3.43%3.42%3.41%
2013–11 I.R.B.608March 11, 2013

REV. RUL. 2013–7 TABLE 2
Adjusted AFR for March 2013
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adj
usted
AFR
.22%.22%.22%.22%
Mid-term adjusted AFR
1.05%1.05%1.05%1.05%
Long-term adjusted
AFR
2.66%2.64%2.63%2.63%
REV. RUL. 2013
–7 TABLE 3
Rates Under Section 382 for March 2013
Adjusted federal long-term rate for the current month2.66%
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.)2.77%
REV. RUL. 2013–7 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for March 2013
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 credit7.43%
Appropriate percentage for the 30% present value low-income housing credit3.18%
REV. RUL. 2013–7 TABLE 5
Rate Under Section 7520 for March 2013
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 interest1.4%
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 March 2013. See Rev. Rul. 2013-7, page 608.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2013. See Rev. Rul. 2013-7, page 608.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2013. See Rev. Rul. 2013-7, page 608.
March 11, 20136092013–11 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
25-Year Average Segment
Rates and Adjusted 24-Month
Average Segment Rates Used
for Pension Funding for Plan
Years Beginning in 2013
Notice 2013–11
This notice provides guidance on the
25-year average segment rates that are
applied to adjust the otherwise applica-
ble 24-month average segment rates that
are used to compute the minimum contri-
bution requirements for single-employer
defined benefit plans under § 430 of the
Internal Revenue Code (Code) and § 303
of the Employee Retirement Income Se-
curity Act of 1974 (ERISA) for plan years
beginning in 2013. The guidance reflects
the changes made to the Code and ERISA
by the Moving Ahead for Progress in the
21st Century Act (MAP–21), Pub. L.
No.112–141.
BACKGROUND
Section 430 specifies the minimum
funding requirements that generally ap-
ply to single-employer defined benefit
pension plans pursuant to § 412. Section
430(h)(2) specifies interest rates that are
used for purposes of calculating the min-
imum required contribution. The interest
rates that are used for this purpose are
a set of three segment rates described in
§ 430(h)(2)(C)(i), (ii), and (iii), or, alter-
natively, a full yield curve as described in
§ 430(h)(2)(D)(ii).
Each segment rate described in
§ 430(h)(2)(C)(i), (ii), and (iii) is, for
any month, the single rate of interest de-
termined by the Secretary for the month
on the basis of the applicable corporate
bond yield curve for that month, taking
into account only that portion of the yield
curve applicable to that segment. Section
430(h)(2)(D)(i) provides that the Secre-
tary shall prescribe a corporate bond yield
curve applicable for each month. The
applicable corporate bond yield curve is,
with respect to any month, a yield curve
which reflects a 24-month average (the
average of the yield curve values for the
preceding month and the prior 23 months)
of the yields on investment grade corpo-
rate bonds with varying maturities that are
in the top 3 quality levels available. Under
§ 430(h)(2)(D)(ii), an employer may elect
to use the corporate bond yield curve de-
termined without regard to the 24-month
averaging in lieu of the segment rates.
Section 40211(a) of MAP–21 adds
§ 430(h)(2)(C)(iv), generally effective for
plan years beginning on or after January 1,
2012. Section 430(h)(2)(C)(iv) provides
that, for a plan year, each of the three seg-
ment rates described in § 430(h)(2)(C)(i),
(ii), and (iii) is adjusted as necessary to fall
within a specified range that is determined
based on a percentage of the average of
the corresponding segment rates for the
25-year period ending on September 30
preceding the calendar year that includes
the first day of that plan year. Under
§ 430(h)(2)(C)(iv)(II), for plan years be-
ginning in 2013, each segment rate is
adjusted so that it is no less than 85% and
no more than 115% of the corresponding
25-year average segment rate. For later
plan years, this range is gradually ex-
panded, so that the segment rates for plan
years beginning after 2015 are no less than
70% and no more than 130% of the corre-
sponding 25-year average segment rates.
Section 430(h)(2)(C)(iv)(I) provides that
the Secretary may prescribe equivalent
rates for any years in the 25-year period
for which segment rates are not available.
Section 430(h)(2)(F) (as amended
by MAP–21) provides that each month
the Secretary shall publish the corporate
bond yield curve, the segment rates in
§ 430(h)(2)(C), and the 25-year average
of the segment rates. Section 430(h)(2)(F)
also provides that the Secretary shall pub-
lish a description of the methodology used
to determine the yield curve and the seg-
ment rates in sufficient detail to enable
plans to make reasonable predictions re-
garding the yield curveand rates for future
months.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve and
the 24-month average corporate bond seg-
ment rates. Notice 2012–55, 2012–36
I.R.B. 332, provides information on the
determination of the25-year average seg-
ment rates for plan years beginning in
2012.
DEVELOPMENT OF 25-YEAR
AVERAGE SEGMENT RATES FOR
PLAN YEARS BEGINNING IN 2013
The Treasury Department has con-
structed the corporate bond yield curves
for the period October 1987 to September
2005 using the method used for construct-
ing the corporate bond yield curves for
current periods. Using these historical
yield curves, segment rates were calcu-
lated for each month from October 1987
to September 2005. Annual averages of
those segment rates are listed in the Ap-
pendix at the end of this notice.
Based on the segment rates from Octo-
ber 1987 to September 2012, the 25-year
averages for the period ending September
30, 2012, of the first, second, and third seg-
ment rates are 5.81, 7.23 and 7.95 percent,
respectively.
ADJUSTED 24-MONTH AVERAGE
SEGMENT RATES
In prior notices, the Treasury Depart-
ment and the Internal Revenue Service
issued 24-month average segment rates
that did not reflect the adjustment re-
quired by § 430(h)(2)(C)(iv) (as added
by MAP-21) for plan years beginning in
2013. The table below contains previously
issued 24-month average segment rates
without adjustment, and, for plan years
beginning in 2013, the adjusted 24-month
average segment ratestaking into account
the 85–115% corridor around the 25-year
average segment rates:
2013–11 I.R.B.610March 11, 2013

24-Month Average Segment
Rates Not Adjusted
Adjusted 24-Month Average
Segment Rates, Based on
Applicable Percentage of 25-Year
Average Rates
For Plan
Years
Beginning
In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
First
Segment
Second
Segment
Third
Segment
2013February2013
1.58
4.34
5.38
4.94
6.15
6.76
2013January20131.624.40
5.45
4.94
6.15
6.76
2013December20121.664.47
5.52
4.94
6.15
6.76
2013November20121.69
4.535.60
4.94
6.15
6.76
2013October20121.72
4.585.67
4.94
6.15
6.76
2013September2012
1.75
4.62
5.72
4.94
6.15
6.76
DRAFTING INFORMATION
The principal author of this notice
is Tony Montanaro of the Employee
Plans, Tax Exempt and Government
Entities Division.However, other
personnel from the Internal Revenue
Service and the Treasury Department
participated in preparing this notice.
Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
APPENDIX
ANNUAL AVERAGE SEGMENT RATES
USED TO DEVELOP THE 25-YEAR AVERAGE AS OF SEPTEMBER 30, 2012
Table 1: Annual Averages of 24-Month Segment Rates
Annual Period
From October
o
fYear
To September
o
fYear
First
S
egment
Second
S
egment
Third
S
egment
11987-19888.19
9.52
9.86
21988-19898.789.8310.01
31989-19909.229.619.67
41990-19919.139.449.66
5
1991-19928.36
9.25
9.89
61992-19936.818.499.66
71993-1994
5.557.59
8.98
81994-
1995
6.037.628.64
9
1995
-19966.667.73
8.51
101996-19976.447.378.18
111997-19986.337.187.92
121998-19996.036.73
7.51
131999-20006.206.91
7.59
142000-20016.73
7.50
8.02
15
2001-2002
5.90
7.297.96
162002-20034.27
6.567.57
172003-20043.16
5.88
7.17
182004-
2005
3.06
5.53
6.80
19
2005
-20064.02
5.49
6.40
202006-20074.99
5.66
6.29
212007-2008
5.215.97
6.48
222008-2009
5.236.546.75
232009-20104.38
6.57
6.71
242010-20112.67
5.66
6.41
25
2011-20121.904.926.04
March 11, 20136112013–11 I.R.B.

Note.This revenue procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifications for
Substitute Forms and Schedules.
Rev. Proc. 2013–17
TABLE OF CONTENTS
Part 1
Introduction to Substitute Forms
SECTION 1.1 — OVERVIEW OF REVENUE PROCEDURE 2013–17..................................................... 613
SECTION 1.2 — IRS CONTACTS.................................................................................... 614
SECTION 1.3 — WHAT’S NEW..................................................................................... 615
SECTION 1.4 — DEFINITIONS..................................................................................... 615
SECTION 1.5 — AGREEMENT..................................................................................... 617
Part 2 General Guidelines for Submissions and Approvals
SECTION 2.1 — GENERAL SPECIFICATIONS FOR APPROVAL....................................................... 618
SECTION 2.2 — HIGHLIGHTS OF PERMITTED CHANGES AND REQUIREMENTS..................................... 619
SECTION 2.3 — VOUCHERS....................................................................................... 619
SECTION 2.4 — RESTRICTIONS ON CHANGES..................................................................... 621
SECTION 2.5 — GUIDELINES FOR OBTAINING IRS APPROVAL...................................................... 621
SECTION 2.6 — OFFICE OF MANAGEMENT AND BUDGET (OMB) REQUIREMENTS FOR ALL
SUBSTITUTE FORMS
................................................................................. 624
Part 3 Physical Aspects and Requirements
SECTION 3.1 — GENERAL GUIDELINES FOR SUBSTITUTE FORMS.................................................. 625
SECTION 3.2 — PAPER............................................................................................ 626
SECTION 3.3 — PRINTING........................................................................................ 627
SECTION 3.4 — MARGINS......................................................................................... 628
SECTION 3.5 — EXAMPLES OF APPROVED FORMATS.............................................................. 629
SECTION 3.6 — MISCELLANEOUS INFORMATION FOR SUBSTITUTE FORMS........................................ 629
Part 4 Additional Resources
SECTION 4.1 — GUIDANCE FROM OTHER REVENUE PROCEDURES................................................. 630
SECTION 4.2 — ELECTRONIC TAX PRODUCTS..................................................................... 630
SECTION 4.3 — IRS TAX PRODUCTS ON DVD (PUBLICATION 1796)................................................... 630
Part 5 Requirements for Specific Tax Returns
SECTION 5.1 — TAX RETURNS (FORMS 1040, 1040A, 1120, ETC.)...................................................... 631
SECTION 5.2 — CHANGES PERMITTED TO GRAPHICS (FORMS 1040A AND 1040)..................................... 632
2013–11 I.R.B.612March 11, 2013

SECTION 5.3 — CHANGES PERMITTED TO FORM 1040A GRAPHICS................................................. 633
SECTION 5.4 — CHANGES PERMITTED TO FORM 1040 GRAPHICS.................................................. 633
Part 6 Format and Content of Substitute Returns
SECTION 6.1 — ACCEPTABLE FORMATS FOR SUBSTITUTE FORMS AND SCHEDULES................................ 634
SECTION 6.2 — ADDITIONAL INSTRUCTIONS FOR ALL FORMS..................................................... 635
Part 7 Miscellaneous Forms and Programs
SECTION 7.1 — SPECIFICATIONS FOR SUBSTITUTE SCHEDULES K-1................................................ 637
SECTION 7.2 — GUIDELINES FOR SUBSTITUTE FORMS 8655........................................................ 641
Part 8 Additional Information
SECTION 8.1 — FORMS FOR ELECTRONICALLY FILED RETURNS................................................... 642
SECTION 8.2 — EFFECT ON OTHER DOCUMENTS.................................................................. 642
Part 1
Introduction to Substitute Forms
Section 1.1 — Overview of Revenue Procedure 2013–17
1.1.1 PurposeThe purpose of this revenue procedure is to provide guidelines and general requirements
for the development, printing, and approval of substitute tax forms. Approval will be based on
these guidelines. After review and approval,submitted forms will beaccepted as substitutes
for official IRS forms.
1.1.2
Unique Forms
Certain unique specialized forms require the use of other additional publications to supple-
ment this publication. SeePart 4.
1.1.3
Scope
The IRS accepts quality substitute tax forms thatare consistent with the official forms and
have no adverse impact on our processing. The IRS Substitute Forms Unit administers the
formal acceptance and processing of these formsnationwide. While this program deals with
paper documents, it also reviews for approval other processing and filing forms such as those
used in electronic filing.
Only those substitute forms that comply fully with these requirements areacceptable. This
revenue procedure is updated as required to reflect pertinent tax year form changes and to meet
processing and/or legislative requirements.
1.1.4
Forms Covered by This Revenue
Procedure
The following types of forms are covered by this revenue procedure:
•IRS tax forms and their related schedules,
•Worksheets as they appear in instruction packages,
•Applications for permission to file returnselectronically and forms used as required docu-
mentation for electronically filed returns,
•Powers of Attorney,
•Over-the-counter estimated tax payment vouchers, and
•Forms and schedules relating to partnerships, exempt organizations, and employee plans.
March 11, 20136132013–11 I.R.B.

1.1.5
Forms Not Covered by This
Revenue Procedure
The following types of forms are not covered by this revenue procedure:
•W-2 and W-3 (see Publication 1141 for information on these forms),
•W-2c and W-3c (see Publication 1223 for information on these forms),
•941, Schedule B (Form 941) and Schedule R (Form 941) (see Publication 4436 for infor-
mation on these forms),
•1096, 1097-BTC, 1098 series, 1099 series, 3921, 3922, 5498 series, W-2G, 1042-S, and
8935 (see Publication 1179 for information on these forms),
•8027 (see Publication 1239 for information on this form),
•Forms 1040-ES (OCR) and 1041-ES (OCR), which may not be reproduced,
•Forms 5500, 5500-SF and associated schedules (For more information on these forms, see
the Department of Labor website atwww.efast.dol.gov.),
•Forms 5300, 5307, 8717, and 8905, bar-coded forms requiring separate approval,
•FinCEN forms, TD F 90–22 forms, and Form 8300,
•Requests for information or documentation initiated by the IRS,
•Forms used internally by the IRS,
•State tax forms,
•Forms developed outside the IRS, and
•General Instructions and Specific Instructions (These are not reviewed by the Substitute
Forms Program Unit).
Section 1.2 — IRS Contacts
1.2.1
Where To Send Substitute Forms
Send your substitute forms for approval to the following offices (do not send forms with
taxpayer data):
Form
Office and Address
All FinCEN family of forms, TD F 90–22
family of forms, and Form 8300
Enterprise Computing Center Detroit
(ECC-D) BSA Compliance Branch P.O.
Box 32063 Detroit, MI 48232–0063
Form 8300, FBAR, and Casino CTR
[FinCEN Form 103]
Enterprise Computing Center Detroit
(ECC-D) BSA Compliance Branch P.O.
Box 32621 Detroit, MI 48232–0621
5500, 5500-SF, and Schedules for Form
5500
Check EFAST2 information at the
Department of Labor’s website at
www.efast.dol.gov
5300, 5307, 8717, and 8905
Sandra.K.Barnes@irs.gov
Software developer vouchers (SeeSections
2.3.7 — 2.3.9.)
Internal Revenue Service Attn: Doris
Bethea, C5–226 5000 Ellin Rd. Lanham,
MD 20706Doris.E.Bethea@irs.gov
All others (except W-2, W-2c, W-3, W-3c,
941, Schedules B and R (Form 941), 1096,
1097-BTC, 1098, 1099, 3921, 3922, 5498,
W-2G, 1042-S, 8027 and 8935) covered by
this publication
Internal Revenue Service Attn: Substitute
Forms Program SE:W:CAR:MP:T:M:S, IR
6526 1111 Constitution Avenue, NW Room
6526 Washington, DC 20224
In addition, the Substitute Forms Program Unit can be contacted via email at
substituteforms@irs.gov. Please include “PDF Submissions” on the subject line.
For questions about Forms W-2 and W-3, refer to IRS Publication 1141, General Rules
and Specifications for Substitute Forms W-2 and W-3. For Forms W-2c and W-3c, refer to
IRS Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.
2013–11 I.R.B.614March 11, 2013

For Form 941 and Schedules B and R (Form 941), refer to IRS Publication 4436, General
Rules and Specifications for Substitute Form 941, Schedule B (Form 941) and Schedule R
(Form 941). For Forms 1096, 1097-BTC, 1098, 1099, 3921, 3922, 5498, W-2G, 1042-S, and
8935, refer to IRS Publication 1179, General Rules and Specificationsfor Substitute Forms
1096, 1098, 1099, 5498, and Certain Other Information Returns. For Form 8027, refer to IRS
Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return
of Tip Income and Allocated Tips, Electronically.
Section 1.3 — What’s New
1.3.1 What’s NewThe following changes have been made to Publication 1167 since the last revision (Decem-
ber 2011).
•Tax deductions and credits have been extended for tax year 2012.The following tax
deductions and credits have been extended for tax year 2012 by the American Taxpayer
Relief Act of 2012, P.L. 112–240: *The election to deduct state and local sales taxes instead
of state and local income taxes, *Mortgage insurance premium deduction, *The deduction
for certain domestic production activities in Puerto Rico, *Energy efficient appliance credit,
*Credit for employer differential wage payments, *Credit for increasing research activities,
*Empowerment zone credit, *Indian employment credit, *Biodiesel and renewable diesel
fuels credit.
•Qualified disability trust.For 2012, qualified disability trusts can claim an exemption of
up to $3,800. The exemption is no longer phased out .
•Bankruptcy estate filing threshold.For tax years beginning in2012, the requirement to
file a return for a bankruptcy estate applies only if gross income is at least $9,750.
•Schedule K-1 (Form 1065).On the Schedule K-1 (Form 1065), we added new item I2 for
the partnership to indicate whether the partner is a retirement plan (IRA/SEP/Keogh/etc.).
•Principal Business Activity (PBA) Codes.In the instructions, the list of Principal Busi-
ness Activity (PBA) Codes have been revised.
•No separate payment card reporting requirements.Gross receipts received via payment
card (credit and debit cards) and third party network payments are not separately reported
on Form 1065 and Form 1120S.
•Partners that are foreign governments under section 892.On page 3 of the form, we
added line 20 to Schedule B, asking the filer to enter the number of partners that are foreign
governments under section 892.
•Editorial changes.We made editorial changes throughout, redundancies were eliminated
as much as possible.
Section 1.4 — Definitions
1.4.1 Substitute FormA tax form (or related schedule) that differsinanywayfromtheofficialversionandis
intended to replace the form that is printed and distributed by the IRS. This term also covers
those approved substitute forms exhibited in this revenue procedure.
1.4.2 Printed/Preprinted FormA printed form that has marginal perforations for use with automated and high-speed print-
ing equipment.
1.4.3 Preprinted Pin-Fed FormA preprinted form in which the taxpayer’s tax entry information has been inserted by a
computer, computer printer, or other computer-type equipment.
March 11, 20136152013–11 I.R.B.

1.4.4 Computer Prepared
Substitute Form
1.4.5 Computer Generated
Substitute Tax Return or Form
A tax return or form that is entirely designed and printed using a computer printer on plain
white paper. This return or form must conform to the physical layout of the corresponding
IRS form, although the typeface may differ. The text should match the text on the officially
printed form as closely as possible. Condensed text and abbreviations will be considered on a
case-by-case basis.
Exception.All jurats (perjury statements)must be reproduced verbatim.
1.4.6 Manually Prepared FormA preprinted reproduced form in which the taxpayer’s tax entry information is entered by
an individual using a pen, pencil, typewriter, or other non-automated equipment.
1.4.7 GraphicsParts of a printed tax form that are not tax amount entries or required text. Examples of
graphics are line numbers, captions, shadings,special indicators, borders, rules, and strokes
created by typesetting, photographics, photocomposition, etc.
1.4.8 Acceptable Reproduced
Form
A legible photocopy or an exactreplica of an original form.
1.4.9 Supporting Statement
(Supplemental Schedule)
A document providing detailed information to support a line entry on an official or approved
substitute form and filed with (attached to) a tax return.
Note.A supporting statement is not a tax form and does not take the place of an official form.
1.4.10 Specific Form TermsThe following specific terms are used throughout this revenue procedure in reference to all
substitute forms: format, sequence, line reference, item caption,and data entry field.
1.4.11 FormatThe overall physical arrangement and general layout of a substitute form.
1.4.12 SequenceSequence is an integral part of the total format requirement. The substitute form should
show the same numeric and logical placement order of data, as shown on the official form.
1.4.13 Line ReferenceThe line numbers, letters, or alphanumericsused to identify each captioned line on an offi-
cial form. These line references are printedto the immediate left of each caption and/or data
entry field.
1.4.14 Item CaptionThe text on each line of a form, which identifies the data required.
1.4.15 Data Entry FieldDesignated areas for the entry of data such as dollar amounts, quantities, responses and
checkboxes.
1.4.16 Advance DraftA draft version of a new or revised form may be posted to the IRS website
(http://www.irs.gov/app/picklist/list/draftTaxForms.html)for information purposes. Substitute
forms may be submitted based on these advancedrafts, but any submitter that receives forms
approval based on these early drafts is responsible for monitoring and revising forms to mirror
any revisions in the final forms provided by the IRS.
2013–11 I.R.B.616March 11, 2013

1.4.17 ApprovalGenerally, approval could be in writing or assumed after 20 business days from our receipt
for forms that have not been substantially changed by the IRS. Also, this does not apply to
newly created or substantially revised IRS forms.
Section 1.5 — Agreement
1.5.1 Important Stipulation of
This Revenue Procedure
Any person or company who uses substitute forms and makes all or part of the changes
specified in this revenue procedure agrees to the following stipulations.
•The IRS presumes that any required changes are made in accordance with these procedures
and will not be disruptive to the processing of the tax return.
•Should any of the changes be disruptive to the IRS’s processing of the tax return, the person
or company agrees to accept the determination of the IRS as to whether the form may
continue to be filed.
•The person or company agrees to work with the IRS in correcting noted deficiencies. No-
tification of deficiencies may be made by any combination of fax, letter, email, or phone
contact and may include the request for there-submission of unacceptable forms.
1.5.2 Response Policy and
Stipulations
The Substitute Forms Unit (the Unit) will email confirmation, as much as possible, of receipt
of your forms submission. Your submission canbe considered approved if you do not receive
a response from the Unit within20 business days of the receipt date. If the Unit anticipates
problems in completing the review of your submission within the 20 business day period, the
Unit will send an interim email notifying you of the extended period for review.
Once the substitute forms have been approved by the Substitute Forms Unit, you can release
them after the final versions of the forms have been issued by the IRS. Before releasing the
forms, you are responsible for updating forms approved as draft and for making form changes
we requested.
The policy has the following stipulations.
•This 20-day policy applies to electronic submissions only. It does not apply to substitute
forms submitted for approval by paper or fax.
•The policy applies to submissions of 15 (optimal) or fewer items. Submissions of more
than 15 items may require additional review time.
•If you send a large number of submissions within a short period of time, processing may
be delayed.
•Delays in processing could occur if the Unit finds significant errors in your submission.
The Unit will send you an interim email in this case.
•Any anticipated problems in processing your submission within the 20-day period will
generate an interim email on or about the 15th business day.
•If any significant inaccuracies are discovered after the 20-day period,the Unit reserves the
right to inform you and will require that changes be made to correct the inaccuracies.
•The policy does not apply to substantially revised forms or to new forms created by the
IRS for which you have already made an initial submission.
March 11, 20136172013–11 I.R.B.

Part 2
General Guidelines for Submissions and Approvals
Section 2.1 — General Specifications for Approval
2.1.1
Overview
If you produce any tax forms following only those changes specifically outlined by the
Substitute Forms Unit, you can generate your ownsubstitute forms without further approval.
If your changes are more extensive, you must get IRS approval before using substitute forms.
More extensive changes can include the use of typefaces and sizes other than those found on
the official form and the condensing of line item descriptions to save space.
Note.The 20-day turnaround policy may not apply to extensive changes.
2.1.2
Email Submissions
The Substitute Forms Program accepts substitute forms submissions via email. The email
address issubstituteforms@irs.gov. Please include the term “PDF Submissions” on the subject
line.
Follow these guidelines.
•Your submission should include all the forms you wish to submit in one attached pdf file.
Do not email each form individually.
•Small (optimally 15 forms), rather than large, submissions should expedite processing. A
submission should contain a maximum of 15 forms.
•An approval check sheet listing the forms you are submitting should always be included in
the pdf file along with the forms. See a sample check sheet in Exhibit D.
•Optimize pdf files before submitting.
•The maximum allowable email attachment is 2.5 megabytes.
•The Substitute Forms Unit accepts zip files.
•To alleviate delays during the peak time ofSeptember through December, submit advance
draft forms as early as possible.
If the guidelines are not followed, you may need to resu
bmit.
Emailing pdf submissions will not expedite review and approval. The pdf submissions will
be assigned a control number and put in queue along with mailed-in paper submissions. In
addition to submitting forms via email, you may send your submissions to:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:M:S, IR 6526
1111 Constitution Avenue, NW
Washington, DC 20224
2.1.3
Expediting the Process
Follow these basic guidelinesfor expediting the process.
•Always include a check sheet for the Substitute Forms Unit’s response.
•Follow Publication 1167 for general substitute form guidelines. Follow the specialized
publications produced by the Substitute Forms Unit for other specific forms.
•To spread out the workload, send in draft versions of substitute forms when they are posted.
Note.Be sure to make any changes to approved drafts before releasing final versions.
2.1.4
Schedules
Schedules are considered to be an integral part of a complete tax return. A schedule may be
included as part of a form or printed separately.
2013–11 I.R.B.618March 11, 2013

2.1.5
Examples of Schedules That Must
Be Submitted with the Return
Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an ex-
ample of this situation. Its Schedules A through U have pages numbered as part of the basic
return. For Form 706 to be considered for approval, the entire form including Schedules A
through PC must be submitted.
2.1.6
Examples of Schedules That Can
Be Submitted Separately
However, Schedules C, D, and E and Form 1040 are examples of schedules that can be
submitted separately. Although printed by the IRS as a supplement to Form 1040, none of
these schedules are required to be filed with Form 1040. These schedules may be separated
from Form 1040 and submitted as substitute forms.
2.1.7 Use and Distribution of
Unapproved Forms
The IRS is continuing a program to identify and contact tax return preparers, forms devel-
opers, and software publishers who use or distribute unapproved forms that do not conform to
this revenue procedure. The use of unapproved forms hinders the processing of the returns.
Section 2.2 — Highlights of Permitted Changes and Requirements
2.2.1
Methods of Reproducing Internal
Revenue Service Forms
There are methods of reproducingIRS printed tax forms suitable for use as substitutes with-
out prior approval.
•You can photocopy most tax forms and use them instead of the official ones. The entire
substitute form, including entries, must be legible.
•You can reproduce any current tax form as cut sheets, snap sets, and marginally punched,
pin-fed forms as long as you use an official IRS version as the master copy.
•You can reproduce a form that requires a signature as a valid substitute form. Many tax
forms (including returns) have a taxpayer signature requirement as part of the form layout.
The jurat/perjury statement/ signature lineareas must be retained and worded exactly as on
the official form. The requirement for a signature, by itself, does not prohibit a tax form
from being properly computer-generated.
Section 2.3 — Vouchers
2.3.1
Overview
All payment vouchers (Forms 940-V, 941-V, 943-V, 945-V, 1040-ES, 1040-V, 1041-V and
2290-V) must be reproduced in conjunction with their forms. Substitute vouchers must be the
same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser
printer may include a scan line.
2.3.2
Scan Line Specifications
Item:NNNNNNNNNAA XXXXNNNNNNNNN NNN
ABCDEFG
A.Social Security Number/Employer Identification Number (SSN/EIN) has 9
numeric (N) spaces.
B.Check Digits have 2 alpha (A) spaces.
C.Name Control has 4 alphanumeric (X) spaces.
D.Master File Tax (MFT) Code has 2 numeric (N) spaces (see below).
E.Taxpayer Identification Number (TIN) Type has 1 numeric (N) space (see
below).
March 11, 20136192013–11 I.R.B.

F.Tax Period has 6 numeric (N) spaces in year/month format (YYYYMM).
G.Transaction Code has 3 numeric (N) spaces.
2.3.3
MFT Code
Code Number for Forms:
•1040 (family) — 30,
•940 — 10,
•941 — 01,
•943 — 11,
•944 — 14,
•945 — 16,
•1041-V — 05,
•2290 — 60, and
•4868 — 30.
2.3.4
TIN Type
Type Number for:
•Form 1040 (family), 4868 — 0, and
•Forms 940, 941, 943, 944, 945, 1041-V and 2290 — 2.
2.3.5
Voucher Size
The voucher size must be exactly 8.0′′x3.25′′(Forms 1040-ES and 1041-ES must be 7.625′′
x3.0′′). The document scan line must be vertically positioned 0.25 inches from the bottom of
the scan line to the bottom of the voucher. The last character on the right of the scan line must
be placed 3.5 inches from the right leading edge of the document. The minimum required
horizontal clear space betweencharacters is .014 inches. The line to be scanned must have a
clear band 0.25 inches in height from top to bottom of the scan line, and from border to border
of the document. “Clear band” means no printing except for dropout ink.
2.3.6
Print and Paper Weight
Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts
may not be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred
paper weight is 20 to 24 pound OCR bond.
2.3.7
Specifications for Software
Developers
Certain vouchers may be reproduced for usein the IRS lockbox system. These include
the 1040-V, 1040-ES, 1041-V, the 940 family, and 2290 vouchers. Software developers must
follow these specific guidelines to produce scannable vouchers strictly for lockbox purposes.
Also seeExhibit C.
•The total depth must be 3.25 inches.
•The scan line must be .5 inches from the bottom edge and 1.75 inches from the left edge
of the voucher and left-justified.
•Software developers vouchers must be 8.5 inches wide (instead of 8 inches with a cut line).
Therefore, no vertical cut line is required.
•Scan line positioning must be exact.
•Do not use the over-the-counter format voucher and add the scan line to it.
•All scanned data must be in 12-point OCR A font.
•The 4-digit NACTP ID code should be placed under the payment indicator arrow.
•Windowed envelopes must not display the scan line in order to avoid disclosure and privacy
issues.
Note.All software developers must ensure that their software uses OCR A font so taxpayers
will be able to print the vouchers in the correct font.
2013–11 I.R.B.620March 11, 2013

2.3.8
Specific Line Positions
Follow these line specifications for entering taxpayer data in the lockbox vouchers.
Start RowStart
Column
Width
End
Column
Line Specifications for Taxpayer
Data:
Taxpayer Name
56
6641
Taxpayer Address, Apt.
57
63641
Taxpayer City, State, ZIP
58
63641
Foreign Count
ry Name
59
63641
Foreign Province/ Country6061722
ForeignPostalCode60261641
Line Specific
ations for Mail To
Data:
Mail Name
56
433880
Mail Address
57
433880
Mail City, State, ZIP
58
433880
Line Specifications for:
Scan Line6326n/an/a
2.3.9
How to Get Approval
To receive approval, please send in 25 voucher samples yearly for each form type or sce-
narios, by December 10, for testing to the following address.
Internal Revenue Service
Attn: Doris Bethea, C5–226
5000 Ellin Road
Lanham, MD 20706
For further information, contact Doris Bethea,Doris.E.Bethea@irs.gov, at 202–283–0218.
Section 2.4 — Restrictions on Changes
2.4.1
WhatYouCannotDotoForms
Suitable for Substitute Tax Forms
You cannot, without prior IRS approval, change any IRS tax form or use your own (non-
approved) versions including graphics, unless specifically permitted by this revenue procedure.
SeeSections 2.5.7 to 2.5.11.
You cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those
areas specified inPart 5of this revenue procedure) without prior approval from the IRS Sub-
stitute Forms Unit.
Note.The 20-day turnaround policy may not apply to extensive changes.
Section 2.5 — Guidelines for Obtaining IRS Approval
2.5.1
Basic Requirements
Preparers who submit substitute privately designed, privately printed, computer generated,
or computer prepared tax forms must develop these substitutes using the guidelines established
in this part. These forms, unless there is an exception outlined by the revenue procedure, must
be approved by the IRS before being filed.
March 11, 20136212013–11 I.R.B.

2.5.2
Conditional Approval Based on
Advanced Drafts
The IRS cannot grant final approval of your substitute form until the official form has been
published. However, the IRS posts advance draft forms on its website at:
http://www.irs.gov/app/picklist/list/draftTaxForms.html.
We encourage submission of proposed substitutes of these advance draft forms and will
grant conditional approval based solely on these early drafts. These advance drafts are subject
to significant change before forms are finalized. If these advance drafts are used as the basis
for your substitute forms, you will be responsible for subsequently updating your final forms
to agree with the final officialversion. These revisions need not be resubmitted for further
approval.
Note.Approval of forms based on advance drafts will not be granted after the final version of
an official form is published.
2.5.3
Submission Procedures
Follow these general guidelines when submitting substitute forms for approval.
•Any alteration of forms must bewithin the limits acceptable to the IRS. It is possible that,
from one filing period to another, a change in law or a change in internal need (processing,
audit, compliance, etc.) may change the allowable limits for the alteration of the official
form.
•When approval of any substitute form (other than those exceptions specified in Part 1,
Section 1.2 — IRS Contacts) is requested, a sample of the proposed substitute form should
be forwarded for consideration via email or by letter to the Substitute Forms Unit at the
address shown inSection 1.2.1.
•Schedules and forms (for example, Forms 3468, 4136, etc.) that can be used with more
than one type of return (for example, 1040, 1041, 1120, etc.) should be submitted only
once for approval, regardless of the number of different tax returns with which they may
be associated. Also, all pages of multi-page forms or returns should be submitted in the
same package.
2.5.4
Approving Offices
Because only the Substitute Forms Unit is authorized to approve substitute forms, unneces-
sary delays may occur if forms are sent to the wrong office. You may receive an interim letter
about the delay. The Substitute Forms Unit may then coordinate the response with the origina-
tor responsible for revising that particular form. Such coordination may include allowing the
originator to officially approve the form. NoIRS office is authorized to allow deviations from
this revenue procedure.
2.5.5
IRS Review of Software Programs,
etc.
The IRS does not review or approve the logic of specific software programs, nor does the
IRS confirm the calculations on the forms produced by these programs. The accuracy of the
program remains the responsibility of the software package developer, distributor, or user.
The Substitute Forms Unit is primarily concerned with the pre-filing quality review of the
final forms that are expected tobe processed by IRS field offices. For this purpose, you should
submit forms without including any taxpayer information such as names, addresses, monetary
amounts, etc.
2.5.6
When To Send Proposed
Substitutes
Proposed substitutes, which are required to be submitted per this revenue procedure, should
be sent as much in advance of the filing period as possible. This is to allow adequate time for
analysis and response.
2013–11 I.R.B.622March 11, 2013

2.5.7
Accompanying Statement
When submitting sample substitutes, you should include an accompanying statement that
lists each form number and its changes from the official form (position, arrangement, appear-
ance, line numbers, additions, deletions, etc.). With eachof the items you should include a
detailed reason for the change.
When requesting approval, please include a check sheet. Check sheets expedite the approval
process. The check sheet may look like the example in Exhibit D displayed in the back of this
procedure or may be one of your own design. Please include your fax number and email address
on the check sheet.
2.5.8
Approval/Non-Approval Notice
The Substitute Forms Unit will fax or email the check sheet or an approval letter to the
originator if a fax numberhas been provided, unless:
•The requester has asked for an email response or for a formal letter, or
•Significant corrections to the submitted forms are required.
Notice of approval may impose qualificationsbefore using the substitutes. Notices of un-
approved forms may specify the changes required for approval and require re-submission of
the form(s) in question. When appropriate, you will be contacted by telephone.
2.5.9
Duration of Approval
Most signature tax returns and many of their schedules and related forms have the tax (li-
ability) year printed in the upper right corner. Approvals for these annual forms are usually
good for one calendar year (January through December of the year of filing). Quarterly tax
forms in the 94X series and Form 720 require approval for any quarter in which the form has
been revised.
Because changes are usually made to an annual form every year, each new filing season
generally requires a new submission of a substitute form. Very rarely is updating the preprinted
year the only change made to an annual form.
2.5.10
Limited Continued Use of an
Approved Change
Limited changes approved for one tax year may be allowed for the same form in the follow-
ing tax year. Examples are the use of abbreviated words, revised form spacing, compressed
text lines, and shortened captions, etc., which do not change the integrity of lines or text on the
official forms.
If substantial changes are made to the form, new substitutes must be submitted for approval.
If only minor editorial changes are made to the form, it is not subject to review. It is the re-
sponsibility of each vendor who has been granted permission to use substitute forms to monitor
and revise forms to mirror any revisions to official forms made by the Service. If there are any
questions, please contact the Substitute Forms Unit.
2.5.11
When Approval Is Not Required
If you received approval for a specific change on a form last year, you may make the same
change this year if the item is still present on the official form.
•The new substitute form does not have to be submitted to the IRS and approval based on
that change is not required.
•However, the new substitute form must conform to the official current year IRS form in
other respects: date, Office of Management and Budget (OMB) approval number, attach-
ment sequence number, Paperwork Reduction Act Notice statement, arrangement, item
caption, line number, line reference, data sequence, etc.
•The new substitute form must also comply with changes to the guidelines in this revenue
procedure. The procedure may have eliminated, added to, or otherwise changed the guide-
line(s) that affected the change approved in the prior year.
March 11, 20136232013–11 I.R.B.

•An approved change is authorized only for the period from a prior tax year substitute form
to a current tax year substitute form.
Exception.Forms with temporary, limited, or interimapprovals (or with approvals that state
a change is not allowed in any other tax year) are subject to review in subsequent years.
2.5.12
Continuous-Use Forms
Forms without preprinted tax years are called “continuous-use” forms. Continuous-use
forms are revised when a legislative change affects the form or a change will facilitate pro-
cessing. These forms frequently have revision dates that are valid for longer than one year.
2.5.13
Required Copies
Generally, you must send us one copy of each form being submitted for approval. However,
if you are producing forms for different computer systems (for example, Microsoft compatible
vs. Apple) or different types of printers and these forms differsignificantlyin appearance,
submit one copy for each type of system or printer.
2.5.14
Requestor’s Responsibility
Following receipt of an initial approval for a substitute forms package or a software output
program to print substitute forms, it is the responsibility of the originator (designer or distrib-
utor) to provide client firms or individualswith forms that meet the IRS’s requirements for
continuing acceptability. Examples of this responsibility include:
•Using the prescribed print paper, font size, legibility, state tax data deletion, etc., and
•Informing all users of substitute forms of thelegal requirements of the Paperwork Reduc-
tion Act Notice, which is generally found in the instructions for the official IRS forms.
2.5.15
Source Code
The Substitute Forms Unit will assign a unique source code to each firm that submits sub-
stitute paper forms for approval. This source code will be a permanent identifier that must be
used on every submission by a particular firm.
The source code consists of three alpha characters and should generally be printed at the
bottom left margin area on the first page of every approved substitute form.
Section 2.6 — Office of Management and Budget (OMB) Requirements for All Substitute Forms
2.6.1
OMB Requirements for All
Substitute Forms
There are legal requirementsof the Paperwork ReductionAct of 1995 (The Act). Public
Law 104–13 requires the following.
•OMB approves all IRS tax forms that are subject to the Act.
•Each IRS form contains (in the upper right corner) the OMB number, if assigned.
•Each IRS form (or its instructions) states why the IRS needs the information, how it will
be used, and whether or not the information is required to be furnished to the IRS.
This information must be provided to every user of official or substitute IRS forms or in-
structions.
2.6.2
Application of the Paperwork
Reduction Act
On forms that have been assigned OMB numbers:
•All substitute forms must contain in the upper right corner the OMB number that is on the
official form, and
•The required format is: OMB No. 1545–XXXX (Preferred) or OMB # 1545–XXXX (Ac-
ceptable).
2013–11 I.R.B.624March 11, 2013

2.6.3
Required Explanation to Users
You must inform the users of your substitute forms of the IRS use and collection require-
ments stated in the instructions for official IRS forms.
•If you provide your users or customers with the official IRS instructions, each form must
retain either the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Pa-
perwork Reduction Act Notice), or a reference to it as the IRS does on the official forms
(usually in the lower left corner of the forms).
•This notice reads, in part, “We ask for tax return information to carry out the tax laws of
the United States....”
Note.If no IRS instructions are provided to users of your forms, the exact text of the Paperwork
Reduction Act Notice (or Disclosure, PrivacyAct, and Paperwork Reduction Act Notice) must
be furnished separately or on the form.
2.6.4
Finding the OMB Number and
Paperwork Reduction Act Notice
The OMB number and the Paperwork Reduction Act Notice, or references to it, may be
found printed on an official form (or its instructions). The number and the notice are included
on the official paper format and in other formats produced by the IRS (for example, DVD
(Publication 1796) or IRS.gov download).
Part 3
Physical Aspects and Requirements
Section 3.1 — General Guidelines for Substitute Forms
3.1.1
General Information
The official form is the standard. Because a substitute form is a variation from the official
form, you should know the requirements of the official form for the year of use before you
modify it to meet your needs. The IRS provides several means of obtaining the most frequently
used tax forms. These include IRS.gov and the IRS tax products DVD (seePart 4).
3.1.2
Design
Each form must follow the design of the official form as to format arrangement, item cap-
tion, line numbers, line references, and sequence.
3.1.3
State Tax Information Prohibited
Generally, state tax information must not appear on the federal tax return, associated form,
or schedule that is filed with the IRS. Exceptions occur when amounts are claimed on, or re-
quired by, the federal return (for example, state and local income taxes, on Schedule A of Form
1040).
3.1.4
Vertical Alignment of Amount
Fields
IFaformistobe...
THEN...
Manually prepared1. The entry column must have a vertical line or some type of
indicator in the amount field to separate dollars from cents.
2. The cents column must be at least 3/10′′wide.
Computer generated1. Vertically align the amount entry fields where possible.
2. Use one of the following amount formats:
a) 0,000,000, or
b) 0,000,000.00.
Computer prepared1. You may remove the vertical line in the amount field that
separates dollars from cents.
2. Use one of the following amount formats:
a) 0,000,000, or
b) 0,000,000.00.
March 11, 20136252013–11 I.R.B.

3.1.5
Attachment Sequence Number
Many individual income tax forms have a required “attachment sequence number” located
just below the year designation in the upper right corner of the form. The IRS uses this number
to indicate the order in which forms are to be attached to the tax return for processing. Some
of the attachment sequence numbers may change from year to year.
The following applies to computer prepared forms.
•The sequence number may be printed in no less than 12-point boldface type and centered
below the form’s year designation.
•The sequence number may alsobe placed following the year designation for the tax form
and separated with an asterisk.
•The actual number may be printed without labeling it the “Attachment Sequence Number.”
3.1.6
Assembly of Forms
When developing software or forms for use by others, please inform your customers/clients
that the order in which the forms are arranged may affect the processing of the package. A
return must be arranged inthe order indicated below.
IF the form is...THEN the sequence is...
1040• Form 1040, and • Schedules and forms in attachment
sequence number order.
Anyothertaxreturn
(Form 1120, 1120S,
1065, 1041, etc.)
• The tax returns, • Directly associated schedules (Schedule D,
etc.), • Directly associated forms, • Additional schedules in
alphabetical order, and • Additional forms in numerical order.
Supporting statements should then follow in the same sequence as the forms they support.
Additional information required should be attached last.
In this way, the forms are received in the order in which theymust be processed. If you do
not send returns to the IRS in order, processing may be delayed.
3.1.7
Paid Preparer’s Information and
Signature Area
On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer Use Only” area may
not be rearranged or relocated. You may, however, add three extra lines to the paid preparer’s
address area without prior approval. This applies to other tax forms as well.
3.1.8
Some Common Reasons for
Requiring Changes to Substitute
Forms
Some reasons that substitute form submissions may require changes include the following.
•Failing to preprint certain amounts in entry spaces.
•Shading areas incorrectly.
•Failing to include a reference to the location of the Paperwork Reduction Act Notice.
•Not including parentheses for losses.
•Not including “Attach Statement” when appropriate.
•Including line references or entry spacesthat don’t match the official form.
•Printing text that is different from the official form.
•Altering the jurat (perjury statement).
Section 3.2 — Paper
3.2.1
Paper Content
The paper must be:
•Chemical wood writing paper that is equal to or better than the quality used for the official
form,
•At least 18 pound (17′′x22′′, 500 sheets), or
•At least 50 pound offset book (25′′x38′′, 500 sheets).
2013–11 I.R.B.626March 11, 2013

3.2.2
Paper with Chemical Transfer
Properties
There are several kinds of paper prohibited for substitute forms. These are:
(1) Carbon-bonded paper, and
(2) Chemical transfer paper except when the following specifications are met:
(a) Each ply within the chemical transfer set of forms must be labeled, and
(b) Only the top ply (ply one and white in color), the one that contains chemical on
the back only (coated back), may be filed with the IRS.
3.2.3
Example
A set containing three plies would be constructed as follows:ply one (coated back), “Fed-
eral Return, File with IRS”; ply two (coated front and back), “Taxpayer’s copy”; and ply three
(coated front), “Preparer’s copy.”
The file designation, “Federal Return, File with IRS” for ply one, must be printed in the
bottom right margin (just below the last line of the form) in 12-point boldface type.
It is not mandatory, but recommended, that the file designation “Federal Return, File with
IRS” be printed in a contrasting ink for visual emphasis.
3.2.4
Paper and Ink Color
It is preferred that the color and opacity of paper substantially duplicates that of the original
form. This means that your substitute must be printed in black ink and may be on white or on
the colored paper the IRS form is printed on. Forms 1040A and 1040 substitute reproductions
may be in black ink without the colored shading. The only exception to this rule is Form
1041-ES, which should be printed with a PMS 100 yellow shading in the color screened area.
This is necessary to assist us in expeditiously separating this form from the very similar Form
1040-ES.
3.2.5
Page Size
Substitute or reproduced forms and computer prepared/generated substitutes may be the
same size as the official form or they may be the standard commercial size (8
1
/2′′x11′′). The
thickness of the stock cannot be less than .003 inches.
Section 3.3 — Printing
3.3.1
Printing Medium
The private printing of all substitute tax forms must be by conventional printing processes,
photocopying, computer graphics, or similar reproduction processes.
3.3.2
Legibility
All forms must have a high standard of legibility as to printing, reproduction, and fill-in
matter. Entries of taxpayer data may be no smaller than eight points. The IRS reserves the
right to reject those with poor legibility. Theink and printing method used must ensure that no
part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quality
deterioration. This standard must be followedfor any subsequent copies or reproductions made
from an approved master substitute form, either during preparation or during IRS processing.
3.3.3
Type Font
Many federal tax forms are printed using “Helvetica” as the basic type font. It is preferred
that you use this type font when composing substitute forms.
March 11, 20136272013–11 I.R.B.

3.3.4
Print Spacing
Substitute forms should be printed using a 6 lines/inch vertical print option. They should
also be printed horizontally in 10 pitch pica (that is, 10 print characters per inch) or 12 pitch
elite (that is, 12 print positions per inch).
3.3.5
Image Size
The image size of a printed substitute form should be as close as possible to that of the
official form. You may omit any text on both computer prepared and computer generated forms
that is solely instructional.
3.3.6
Title Area Changes
To allow a large top margin for marginal printing and more lines per page, the title line(s)
for all substitute forms (not including the form’s year designation and sequence number, when
present), may be photographically reduced by40 percent or reset as one line of type. When
reset as one line, the type size may be no smaller than 14-point. You may omit “Department
of the Treasury—Internal Revenue Service” and all reference to instructions in the form’s title
area.
3.3.7
Remove Government Printing
Office Symbol and IRS Catalog
Number
When privately printing substitute tax forms, the Government Printing Office (GPO) sym-
bol and/or jacket number must be removed. Inthe same place using the same type size, print
the Employer Identification Number (EIN) of the printer or designer or the IRS assigned source
code. (We prefer this last number be printed in the lower left area of the first page of each form.)
Also, remove the IRS Catalog Number (Cat. No.) and the recycle symbol if the substitute is
not produced on recycled paper.
3.3.8
Printing on One Side of Paper
Even though the IRS uses both sides of the paper for printing official paper forms or sched-
ules, the IRS will accept your forms if only one side of the paper is used.
3.3.9
Photocopy Equipment
The IRS does not undertake to approve or disapprove the specific equipment or process
used in reproducing official forms. Photocopies of forms must be entirely legible and satisfy
the conditions stated in this and other revenue procedures.
3.3.10
Reproductions
Reproductions of official forms and substitute forms that do not meet the requirements of
this revenue procedure may not be filed instead of the official forms. Illegible photocopies are
subject to being returned to the filer for re-submission of legible copies.
3.3.11
Removal of Instructions
Generally, you may remove references to instructions. No prior approval is needed. How-
ever in some instances, you may be requestedto include references to instructions.
Exception.The words “For Paperwork Reduction Act Notice, see instructions” must be re-
tained or a similar statement indicating the location of the Notice must be provided on each
form.
Section 3.4 — Margins
3.4.1
Margin Size
The format of a reproduced tax form when printed on the page must have margins on all
sides at least as large as the margins on the official form. This allows room for IRS employees
to make necessary entries on the form during processing.
•A
1
/2-inch to
1
/4-inch margin must be maintained across the top, bottom, and both sides of
all substitute forms.
2013–11 I.R.B.628March 11, 2013

•The marginal, perforated strips containing pin-fed holes must be removed from all forms
priortofilingwiththeIRS.
3.4.2
Marginal Printing
Prior approval is not required for the marginal printing allowed when printed on an official
form or on a photocopy of an official form.
•With the exception of the actual tax forms (for example, Forms 1040, 1040A, 1040EZ,
1120, 940, 941, etc.), you may print in the left vertical margin and in the left half of the
bottom margin.
•Printing is never allowed in the top right margin of the tax form (for example, Forms 1040,
1040A, 1040EZ, 1120, 940, 941, etc.). The Service uses this area to imprint a Document
Locator Number for each return. There are no exceptions to this requirement.
Section 3.5 — Examples of Approved Formats
3.5.1
Examples of Approved Formats
From the Exhibits
Two sets of exhibits(Exhibits A-1 and 2; B-1 and 2)at the end of this revenue procedure
are examples of how these guidelines may be used. Vertical spacing is six (6) lines to the inch.
A combination of upper-case and lower-case print font is acceptable in producing substitute
forms.
ThesamelogicmaybeappliedtoanyIRSformthat is normally reproducible as a substitute
form, with the exception of the tax return forms as discussed elsewhere.
Note.These exhibits may be from a prior year and are not to be used as current su
bstitute
forms.
Section 3.6 — Miscellaneous Information for Substitute Forms
3.6.1
Filing Substitute Forms
To be acceptable for filing, a substitute form must print out in a format that will allow the
filer to follow the same instructions that accompany official forms. The form must be legible,
must be on the appropriately sized paper, and must include a jurat (perjury statement) where
one appears on the published form.
3.6.2
Caution to Software Publishers
The IRS has received returns produced by software packages with approved output where
either the form heading was altered or the lines were spaced irregularly. This produces an
illegible or unrecognizable return or a return with the wrong number of pages. We realize
that many of these problems are caused by individual printer differences but they may delay
input of return data and, in some cases, generate correspondence to the taxpayer. Therefore,
in the instructions to the purchasers of your product, both individual and professional, please
stress that their returns will be processed more efficiently if they are properly formatted. This
includes:
•Having the correct form numbers and titles at the top of the return, and
•Submitting the same number of pages as if the form were an official IRS form with the line
items on the proper pages.
3.6.3
Caution to Producers of Software
Packages
If you are producing a software package that generates name and address data onto the tax
return, do not under any circumstances program either the IRS preprinted check digits or a
practitioner derived name control to appear onanyreturnpreparedandfiledwiththeIRS.
March 11, 20136292013–11 I.R.B.

3.6.4
Programming to Print Forms
Whenever applicable:
•Use only the following label information format for single filers: JOHN Q. PUBLIC 310
OAK DRIVE HOMETOWN, STATE 94000
•Use only the following information for joint filers: JOHN Q. PUBLIC MARY I. PUBLIC
310 OAK DRIVE HOMETOWN, STATE 94000
Part 4
Additional Resources
Section 4.1 — Guidance From Other Revenue Procedures
4.1.1
General
The IRS publications listed below provide guidance for substitute tax forms not covered
in this revenue procedure. These publicationsare available on the IRS website. Identify the
requested document by the IRS publication number.
•Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3
.
•Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098
, 1099,
5498, and Certain Other Information Returns.
•Publication 1187, Specifications for Filing Form 1042-S, Foreign Person’s U.S. Sou
rce
Income Subject to Withholding, Electronically.
•Publication 1220, Specifications for Filing Forms 1097-BTC, 1098, 1099, 3921, 392
2,
5498, 8935, and W-2G Electronically.
•Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W
-3c.
•Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Informa
tion
Return of Tip Income and Allocated Tips, Electronically.
•Publication 1345, Handbook for Authorized IRSe-fileProviders of Individual Inco
me Tax
Returns.
•Publication 4436, General Rules and Specifications for Substitute Form 941, Sch
edule B
(Form 941) and Schedule R (Form 941).
Section 4.2 — Electronic Tax Products
4.2.1
The IRS Website
Copies of tax forms with instructions, publications, draft forms, fillable forms, prior year
forms and publications, and other tax-related information may be found on the IRS website at
IRS.gov.
Section 4.3 — IRS Tax Products on DVD (Publication 1796)
4.3.1
Information About IRS Tax
Products DVD
The DVD contains approximately 2,500 tax forms and publications for small businesses,
return preparers, and others whofrequently need current or prior year tax products. Most cur-
rent tax forms on the DVD may be filled in electronically, then printed out for submission and
saved for recordkeeping. Other products on the DVD include the Internal Revenue Bulletins,
Tax Supplements, and Internet resources for the tax professional with links to the World Wide
Web.
2013–11 I.R.B.630March 11, 2013

4.3.2
System Requirements and How To
Order the IRS Tax Products DVD
For system requirements, contact the National Technical Information Service (NTIS) at
http://www.ntis.gov. Prices are subject to change.
The cost of the DVD if purchased from NTIS via IRS.gov athttp://www.irs.gov/form-
spubs/article/0,,id=108660,00.htmlis $30 (with no handling fee).
If purchased using the following methods, thecost for each DVD is $30(plus a $6 handling
fee). These methods are:
•By phone — 1–877–CDFORMS (1–877–233–6767) — for IRS DVD purchase only,
•By fax — 703–605–6900 — for IRS DVD purchase only,
•By mail to:
Natio
nal Technical Information Service
5301
Shawnee Road
Alex
andria, VA 22312
Part 5
Requirements for Specific Tax Returns
Section 5.1 — Tax Returns (Forms 1040, 1040A, 1120, etc.)
5.1.1
Acceptable Forms
Tax forms (such as Forms 1040, 1040A, and 1120) require a signature and establish tax
liability. Computer generated versions are acceptable under the following conditions.
•These substitute forms must be printed on plain white paper.
•Substitute forms must conform to the physical layout of the corresponding IRS form al-
though the typeface may differ. The text should match the text on the officially published
form as closely as possible. Condensed textand abbreviations will be considered on a
case-by-case basis.Caution.All jurats (perjury statements) must be reproduced verbatim.
No text can be added, deleted, or changed in meaning.
•Various computer graphic print media such as laser printing, inkjet printing, etc., may be
used to produce the substitute forms.
•The substitute form must be the same number of pages and contain the same line text as
the official form.
•All substitute forms must be submitted for approval prior to their original use. You do not
need approval for a substitute form if its only change is the preprinted year and you had
received a prior year approval letter.
Exception.If the approval letter specifies a onetime exception for your form, the next
year’s form must be approved.
5.1.2
Prohibited Forms
The following are prohibited.
•Computer generated tax forms (for example, Form 1040, etc.) on lined or color barred
paper.
•Tax forms that differ from the official IRS forms in a manner that makes them non-standard
or unable to process.
5.1.3
Changes Permitted to Forms 1040
and 1040A
Certain changes (listed inSections 5.2 through 5.4) are permitted to the graphics of the form
without prior approval, but these changes apply to only acceptable preprinted forms. Changes
not requiring prior approval are good only for the annual filing period, which is the current tax
year. Such changes are valid in subsequent years only if the official form does not change.
March 11, 20136312013–11 I.R.B.

5.1.4
Other Changes Not Listed
All changes not listed inSections 5.2 through 5.4require approval from the IRS before the
form can be filed.
Section 5.2 — Changes Permitted to Graphics (Forms 1040A and 1040)
5.2.1
Adjustments
You may make minor vertical and horizontal spacing adjustments to allow for computer or
word processing printing. This includes widening the amount columns or tax entry areas if the
adjustments comply with other provisions stated in revenue procedures. No prior approval is
needed for these changes.
5.2.2
Name and Address Area
The horizontal rules and instructions within the name and address area may be removed and
the entire area left blank. No line or instruction can remain in the area. The heavy ruled border
(when present) that outlines the name, address area, and social security number must not be
removed, relocated, expanded, or contracted.
5.2.3
Required Format
When the name and address area is left blank, the following format must be used when
printing the taxpayer’s name and address.
•1st name line (35 characters maximum).
•2nd name line (35 characters maximum).
•In-care-of name line (35 characters maximum).
•City, state (25 characters maximum), one blank character, and ZIP code.
5.2.4
Conventional Name and Address
Data
When there is no in-care-of name line, the name and address will consist of only three lines
(singlefiler)orfourlines(jointfiler).Nameand address (joint filer) with no in-care-of name
line:
JOHN Z. JONES
MARY I. JONES
1234 ANYWHERE ST., APT. 111
ANYTOWN, STATE 12321
5.2.5
Example of In-Care-Of Name
Line
Name and address (single filer) with in-care-of name line:
JOHN Z. JONES
C/O THOMAS A. JONES
4311 SOMEWHERE AVE.
SAMETOWN, STATE 54345
5.2.6
SSN and Employer Identification
Number (EIN) Area
The broken vertical lines separating the format arrangement of the SSN/EIN may be re-
moved. When the vertical lines are removed, the SSN and EIN formats must be 000–00–0000
or 00–0000000, respectively.
5.2.7
Cents Column
•You may remove the vertical rule that separates the dollars from the cents.
•All entries in the amount column should have a decimal point following the whole dollar
amounts whether or not the vertical line that separates the dollars from the cents is present.
•You may omit printing the cents, but all amounts entered on the form must follow a con-
sistent format. You are strongly urged to round off the figures to whole dollar amounts,
following the official form instructions.
2013–11 I.R.B.632March 11, 2013

•When several amounts are summed together, the total should be rounded off after addition
(that is, individual amounts should not be rounded off for computation purposes).
•When printing money amounts, you must use one of the following formats: (a) 0,000,000.;
(b) 0,000,000.00.
•When there is no entry for aline, leave the line blank.
5.2.8
“Paid Preparer’s Use Only” Area
On all forms, the paid preparer’s information area may not be rearranged or relocated. You
may add three lines and remove the horizontal rules in the preparer’s address area.
Section 5.3 — Changes Permitted to Form 1040A Graphics
5.3.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only).
5.3.2
Line 4 of Form 1040A
This line may be compressed horizontally (to allow for same line entry for the name of the
qualifying child) by using the following caption: “Head of household; child’s name” (name
field).
5.3.3
Other Lines
Any line with text that takes up two or more vertical lines may be compressed to one line
by using contractions, etc., and by removing instructional references.
5.3.4
Page 2 of Form 1040A
All lines must be present and numbered in the order shown on the official form. These lines
may also be compressed.
5.3.5
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040A may be printed in black and white only with no color screening.
5.3.6
Other Changes Prohibited
No other changes to the Form 1040A graphics are allowed without prior approval except
for the removal of instructions and references to instructions.
Section 5.4 — Changes Permitted to Form 1040 Graphi
cs
5.4.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only). Specific line numbers in the following headings may have changed due to tax law
changes.
5.4.2
Line 4 of Form 1040
This line may be compressed horizontally (to allow for a larger entry area for the name of
the qualifying child) by using the following caption: “Head of household; child’s name” (name
field).
5.4.3
Line 6c of Form 1040
The vertical lines separatingcolumns (1) through (4) may be removed. The captions may
be shortened to allow a one line caption for each column.
5.4.4
Other Lines
Any other line with text that takes up two or more vertical lines may be compressed to one
line by using contractions, etc., and by removing instructional references.
March 11, 20136332013–11 I.R.B.

5.4.5
Line 21 — Other Income
The fill-in portion of this line may be expanded vertically to three lines. The amount entry
box must remain a single entry.
5.4.6
Line 44 of Form 1040 — Tax
You may change the line caption to read “Tax” and computer print the words “Total includes
tax from” and either “Form(s) 8814” or “Form 4972” or “962 election.” If both forms are used,
print both form numbers. This specific line number may have changed.
5.4.7
Line 53 of Form 1040 — Other
Credits
You may change the caption to read: “Other credits from Form” and computer print only
the form(s) that apply.
5.4.8
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040 may be printed in black and white only with no color screening.
5.4.9
Other Changes Prohibited
No other changes to the Form 1040 graphics arepermitted without prior approval except
for the removal of instructions and references to instructions.
Part 6
Format and Content of Substitute Returns
Section 6.1 — Acceptable Formats for Substitute Forms and Schedules
6.1.1
Exhibits and Use of Acceptable
Formats
Exhibits of acceptable formats for Schedule A, usually attached tothe Form 1040, and Form
2106-EZ are shown in the exhibits section of this revenue procedure.
•If your computer generated forms appear exactly like the exhibits, no prior authorization
is needed.
•You may computer generate forms not shown here, but you must design them by following
the manner and style of those in the exhibits section.
•Take care to observe other requirements and conditions in this revenue procedure. The IRS
encourages the submission of all proposed forms covered by this revenue procedure.
6.1.2
Instructions
The format of each substitute form or schedule must follow the format o
f the official form
or schedule as to item captions, line references, line numbers, seque
nce, form arrangement
and format, etc. Basically, try to make the form look like the official
one, with readability and
consistency being primary factors. You may use periods and/or other s
imilar special characters
to separate the various parts and sections of the form. Do not use alpha
or numeric characters
for these purposes. All line numbers and items must be printed even t
hough an amount is not
enteredontheline.
6.1.3
Line Numbers
When a line on an official form is designated by a number or a letter, that designation (ref-
erence code) must be used on a substitute form. The reference code must be printed to the left
of the text of each line and immediately preceding the data entry field, even if no reference
code precedes the data entry field on the officialform. If an entry field contains multiple lines
and shows the line references once on the left and right side of the form, use the same number
of line references on the substitute form.
2013–11 I.R.B.634March 11, 2013

In addition, the reference code that is immediately before the data field must either be fol-
lowed by a period or enclosed in parentheses. There also must be at least two blank spaces
between the period or the right parenthesis and the first digitofthedatafield. (SeeSection
6.1.4.)
6.1.4
Decimal Points
A decimal point (that is, a period) should be used for each money amount regardless of
whether the amount is reported in dollars and cents or in whole dollars, or whether or not the
vertical line that separates the dollars from the cents is present. The decimal points must be
vertically aligned when possible.
Example:
5
STATE&LOCALINC.TAXES..................
5.495.00
6 REALESTATETAXES......................... 6.
7 PERSONALPROPERTYTAXES................ 7.198.00
5
orSTATE&LOCALINC.TAXES...............
(5)495.00
6 REALESTATETAXES......................... (6)
7 PERSONALPROPERTYTAXES................ (7)198.00
6.1.5
Multi-Page Forms
When submitting a multi-page form, send all its pages in the same package.
Exception.If you will not be producing certain pages, please note that in your cover letter.
Section 6.2 — Additional Instructions for All Forms
6.2.1
Use of Your Own Internal Control
Numbers and Identifying Symbols
You may show the computer prepared internal control numbers and identifying symbols on
the substitute if using such numbers or symbols is acceptable to the taxpayer and the taxpayer’s
representative. Such information must not be printed in the top
1
/2inch clear area of any form
or schedule requiring a signature. Except for the actual tax return form (Forms 1040, 11ID
Number on 20, 940, 941, etc.), you may print in the left vertical and bottom left margins. The
bottom left margin you may use extends 3
1
/2inches from the left edge of the form.
6.2.2
Required Software ID Number
(Source Code) on Computer
Prepared Substitutes
In the February 2009 Government Accountability Office (GAO) report, “Many Taxpay-
ers Rely on Tax Software and IRS Needs to Assess Associated Risks” (GAO–09–297), GAO
recommended that IRS require a software identification number on all individual returns to
specifically identify the software package used to prepare each tax return. IRS already has
this capability for all e-filed returns. In addition, many tax preparation software firms already
print an IRS-issued 3-letter Source Code on paper returns that are generated by their individual
tax software. This Source Code was assigned when the firms were seeking substitute forms
approval under Publication 1167 (this publication).
In order to respond properly to this GAO recommendation, the IRS will require all tax
preparation software firms to include the 3-letter Source Code on all paper tax returns created
by their individual tax preparation software.The many firms that currently have and display
their Source Code on paper returns generated from their software should continue to do so, and
no change is necessary.
We have reviewed all software companies that passed PATS testing last filing season and
have determined that some firms do not currently have a Source Code. To save you the burden
of contacting us and for your convenience, wehave assigned Source Codes to those firms.
You should program your Source Code to be placed in the bottom left hand corner of page
one of each paper form that will be generated by your individual tax return package. You do
not need to apply for a new Source Code annually.
March 11, 20136352013–11 I.R.B.

If you already use a 3-letter Source Code and we have issued you one in error, you are unsure
if you were ever issued one, or have other questions or concerns, you may contact Tax Forms
and Publications Special Services Section atsubstituteforms@irs.gov.
6.2.3
Descriptions for Captions, Lines,
etc.
Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one
print line by using abbreviations and contractions, and by omitting articles, prepositions, etc.
However, sufficient key words must be retained to permit ready identification of the caption,
line, or item.
6.2.4
Determining Final Totals
Explanatory detail and/or intermediate calculations for determining final line totals may
be included on the substitute. We prefer that such calculations be submitted in the form of a
supporting statement. If intermediate calculations are includedon the substitute, the line on
which they appear may not be numbered or lettered. Intermediate calculations may not be
printed in the right column. This column is reserved only for official numbered and lettered
lines that correspond to the ones on the official form. Generally, you may choose the format
for intermediate calculations or subtotals on supporting statements to be submitted.
6.2.5
Instructional Text on the Official
Form
Text on the official form, which is solely instructional (for example, “See instructions.”
etc.), may generally be omitted from the substitute form.
6.2.6
Mixing Forms on the Same Page
Prohibited
You may not show more than one form or schedule on the same printout page. Both sides
of the paper may be printed for multi-page official forms, but it is unacceptable to intermix
single page schedules of forms.
For instance, Schedule E can be printed on both sides of the paper because the official form
is multi-page, with page 2 continued on the back. However, do not print Schedule E on the
front page and Schedule SE on the back, or Schedule A on the front and Form 8615 on the
back, etc. Both pages of a substitute form must match the official form. The back page may
be left blank if the back page of the official form contains only the instructions.
6.2.7
Identifying Substitutes
Identify all computer prepared substitutes clearly. Print the form designation
1
/2inch from
the top margin and 1
1
/2inches from the left margin. Print thetitle centered on the first line of
print. Print the taxable year and, where applicable, the sequence number on the same line
1
/2
inch to 1 inch from the right margin. Includethe taxpayer’s name and SSN on all forms and
attachments. Also, print the OMB number as reflected on the official form.
6.2.8
Negative Amounts
Negative (or loss) amount entries should be enclosed in brackets or parentheses or include
a minus sign. This assists in accurate computation and input of form data. The IRS pre-prints
parentheses in negative data fields on many official forms. These parentheses should be re-
tained or inserted on printouts of affected substitute forms.
2013–11 I.R.B.636March 11, 2013

Part 7
Miscellaneous Forms and Programs
Section 7.1 — Specifications for Substitute Schedules K-1
7.1.1
Requirements for Schedules K-1
That Accompany Forms 1041,
1065, 1065-B, and 1120S
Because of significant changes to improve processing, prior approval is now required for
substitute Schedules K-1 that accompany Form1041 (for estates and trusts), Form 1065 (for
partnerships), Form 1065-B (for electing large partnerships), or Form 1120S (for S corpora-
tions). Substitute Schedules K-1 should be as close as possible to exact replicas of copies of
the official IRS schedules and follow the same process for submitting other substitute forms
and schedules. Before releasing their substitute forms, software vendors are responsible for
making any subsequent changes that have been made to the final official IRS forms after the
draft forms have been posted.
You must include all information on the form. Submit Schedules K-1 to the IRS atsubsti-
tuteforms@irs.govwith “Attn: PDF Submissions” on the subject line or at:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:M:S
1111 Constitution Avenue, NW
Room 6526
Washington, DC 20224
Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S. Please allow white space around the 6-digit code.
•661112 for Form 1041,
•651112 for Form 1065, and
•671112 for Form 1120S.
Schedules K-1 that accompany Forms 1041, 1065, 1065-B, or 1120S must meet all specifi-
cations. The specifications include, but arenot limited to, the following requirements.
•You will no longer be able to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are required to use. All lines must be included.
•The words “*See attached statement for additional information.” must be preprinted in the
lower right hand side on Schedules K-1 of Forms 1041, 1065, and 1120S.
•All K-1s that are filed with the IRS should be printed on standard 8.5” x 11” paper (the
international standard (A4) of 8.27” x 11.69” may be substituted).
•Each recipient’s information must be on a separate sheet of paper. Therefore, you must
separate all continuously printed substitutes, by recipient, before filing with the IRS.
•No carbon copies or pressure-sensitive copies will be accepted.
•The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity (es-
tate, trust, partnership, or S corporation) and the recipient (beneficiary, partner, or share-
holder).
•The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1),
the related form number (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the same position and format as shown on the official IRS schedule.
•The Schedule K-1 must contain all the line items as shown on the official form, except for
the instructions, if any are printed on the back of the official Schedule K-1.
•The line items or boxes must be in the same order and arrangement as those on the official
form.
•The amount of each recipient’s share of each item must be shown. Furnishing a total amount
of each item and a percentage (or decimal equivalent) to be applied to such total amount
by the recipient does not satisfy the law and the specifications of this revenue procedure.
•State or local tax-related information may notbe included on the Schedules K-1 filed with
the IRS.
March 11, 20136372013–11 I.R.B.

•The entity may have to pay a penalty if substitute Schedules K-1 are filed that do not con-
form to specifications.
•Additionally, the IRS may consider the Schedules K-1 that do not conform to specifications
as not being able to be processed and may return Forms 1041, 1065, 1065-B, or 1120S to
the filer to be filed correctly.
Schedules K-1 that are 2-D bar-coded will continue to require prior approval from the IRS
(seeSections 7.1.3 through 7.1.5).
7.1.2
Special Requirements for
Recipient Copies of Schedules K-1
Standardization for reporting information is required for recipient copies of substitute
Schedules K-1 of Forms 1041, 1065, 1065-B, and 1120S. Uniform visual standards are
provided to increase compliance by allowing recipients and practitioners to more easily
recognize a substitute Schedule K-1. The entity must furnish to each recipient a copy of
Schedule K-1 that meets the following requirements.
•Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S. Please allow white space around the 6-digit code.
•661112 for Form 1041,
•651112 for Form 1065, and
•671112 for Form 1120S.
•You will no longer be able to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are required to use. All lines must be included.
•Both pages 1 and 2 of Schedules K-1 of Forms 1065 and 1120S must be provided to each
recipient.
•The words “*See attached statement for additional information.” must be preprinted in the
lower right hand side on Schedules K-1 of Forms 1041, 1065, and 1120S.
•The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity and
recipient.
•The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1),
the related form number (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the same position and format as shown on the official IRS schedule.
•All applicable amounts and information required to be reported must be titled and numbered
in the same manner as shown on the officialIRS schedule. The line items or boxes must
be in the same order and arrangement and must be numbered like those on the official IRS
schedule.
•The Schedule K-1 must contain all items required for use by the recipient. The instructions
to the schedule must identify the line orbox number and code, if any, for each item as
shown in the official IRS schedule.
•The amount of each recipient’s share of each item must be shown. Furnishing a total amount
of each line item and a percentage (or decimal equivalent) to be applied to such total amount
by the recipient does not satisfy the law and the specifications of this revenue procedure.
•Instructions to the recipient that are substantially similar to those on or accompanying the
official IRS schedule must be provided to aid in the proper reporting of the items on the
recipient’s income tax return. Where itemsare not reported to a recipient because they do
not apply, the related instructions may be omitted.
•The quality of the ink or other material used to generate recipients’ schedules must produce
clearly legible documents. In general, black chemical transfer inks are preferred.
•In order to assure uniformity of substitute Schedules K-1, the paper size should be standard
8.5” x 11” (the international standard (A4) of 8.27” x 11.69” may be substituted.)
•The paper weight, paper color, font type, font size, font color, and page layout must be such
that the average recipient can easily decipher the information on each page.
•State or local tax-related information may beincluded on recipient copies of substitute
Schedules K-1. All non-tax-related information should be separated from the tax informa-
tion on the substitute schedule to avoid confusion for the recipient.
•The legend “Important Tax Return Document Enclosed” must appear in a bold and con-
spicuous manner on the outside of the envelope that contains the substitute recipient copy
of Schedule K-1.
2013–11 I.R.B.638March 11, 2013

•The entity may have to pay a penalty if a substitute Schedule K-1 furnished to any recipient
does not conform to the specifications of this revenue procedure and results in impeding
processing.
7.1.3
Requirements for Schedules K-1
with Two-Dimensional (2-D) Bar
Codes
Electronic filing is now and will continue to be the preferred method of filing; however,
2-D bar code is the best alternative method for paper processing.
In an effort to improve efficiency and at the same time increase data accuracy, the IRS part-
nered with the tax software development community on a two-dimensional bar code project in
2003. Certain tax software packages have beenmodified to generate 2-D bar codes on Sched-
ules K-1. As a result, when K-1’s are printed using these programs, a bar code will print on
the page.
Rather than manually transcribe information from the Schedule K-1, the IRS will scan the
bar code and electronically upload the information from the K-1. The results will be more
efficient operation within the IRS and fewer transcription errors for your clients.
Note.If software vendors do not want to produce bar-coded Schedules K-1, they may produce
the official IRS Schedules K-1 but cannot use the expedited process for approving bar-coded
K-1s and their parent returns as outlined inSection 7.1.6.
In addition to the requirements in Sections 7.1.1 and 7.1.2, the bar-coded Schedules K-1
must meet the following specifications.
•The bar code should print in the space labeled “For IRS Use Only” on each Schedule K-1.
The entire bar code must print within the “For IRS Use Only” box surrounded by a white
space of at least
1
/4inch.
•Bar codes must print in PDF 417 format.
•The bar codes must always be in the specifiedformat with every field represented by at
least a field delimiter (carriage return). Leaving out a field in a bar code will cause every
subsequent field to be misread.
•Be sure to include the 6-digit form ID code in the upper right of Schedules K-1 of Forms
1041, 1065, and 1120S. Please allow white space around the 6-digit code.
•661112 for Form 1041,
•651112 for Form 1065, and
•671112 for Form 1120S.
7.1.4
2-D Bar Code Specifications for
Schedules K-1
Follow these general specifications for preparing all 2-D bar-coded Schedules K-1.
•Numeric fields —
•Do not include leading zeros (except Taxpayer Identification Numbers, Zip Codes, and
percentages).
•If negative value, the minus sign “-” must be present immediately to the left of the
number and part of the 12 position field.
•Do not use non-numeric characters except that the literal “STMT” can be put in money
fields.
•All money fields should be rounded to the nearest whole dollar amount — If a money
amount ends in 00 to 49 cents, drop the cents; if it ends in 50 to 99 cents, truncate the
cents and increment the dollar amount by one. Use the same rounding technique for
the bar-coded and the printed K-1s.
•All numeric-only fields are right justified (except Taxpayer Identification Numbers and
Zip Codes).
•All field lengths are expressed as maximum lengths. If the value in the field has fewer
positions or the software program does not support that many positions, put in the bar code
only those positions actually used.
•Alpha fields —
•Do not include leading blanks (left justified).
•Do not include trailing blanks.
March 11, 20136392013–11 I.R.B.

•Use uppercase alpha characters only.
•Variable fields —
•Do not include leading blanks (left justified).
•Do not include trailing blanks.
•Use uppercase alpha characters, numerics,and special characters as defined in each
field.
•Delimit each field with a carriage return.
•Express percentages as 6-digitnumbers without the percent sign. Left justify with leading
zero(s) (for percentages less than 100%) and no decimal point (decimal point is assumed
between 3rd and 4th positions). Examples: 25.32% expressed as “025320”; 105% ex-
pressed as “105000”; 8.275% expressed as “008275”; 10.24674% express as “010247”.
•It is vital that the print routine reinitialize the bar code prior to printing each succeeding
K-1. Failure to do this will result in each K-1 for a parent return having the same bar code
as the document before it.
7.1.5
Approval Process for Bar-Coded
Schedules K-1
Prior to releasing commercially available tax software that creates bar-coded Schedules K-1,
the printed schedule and the bar code must both betested. If your company is creating bar coded
Schedules K-1, you must receive certification for both the printed K-1, as well as the bar code
before offering your product for sale. Bar code testing must be done using the final official IRS
Schedule K-1. Bar code approval requests must be resubmitted for any subsequent changes to
the official IRS form that would affect the bar code. Below are instructions and a sequence of
events that will comprise the testing process.
•The IRS has released the final Schedule K-1 bar-code specifications by publishing them
on the IRS.gov website (seehttp://www.irs.gov/uac/ Schedule-K-1,-Two-Dimensional-Bar-
Code-Specification-and-Certification-Process).
•The IRS will publish a set of test documents that will be used to test the ability of tax
preparation software to create bar codes in the correct format.
•Software developers will submit two identical copies of the test documents — one to the
IRS and one to a contracted testing vendor.
•The IRS will use one set to ensure the printed schedules comply with standard substitute
forms specifications.
•If the printed forms fail to meet the substitute form criteria, the IRS will inform the software
developer of the reason for noncompliance.
•The software developer must resubmit the Schedule(s) K-1 until they pass the substitute
forms criteria.
•The testing vendor will review the bar codes to ensure they meet the published bar-code
specifications.
•If the bar code(s) does not meet published specifications, the testing vendor will contact
the software developer directly informing them of thereason for noncompliance.
•Software developers must submit new bar-coded schedules until they pass the bar-code
test.
•When the bar code passes, the testing vendor will inform the IRS that the developer has
passed the bar-code test and the IRS will issue an overall approval for both the substitute
form and the bar code.
•After receiving this consolidated response, the software vendor is free to release software
for tax preparation as long as any subsequent revisions to the schedules do not change the
fields.
•Find the mailing address for the testing vendor below. Separate and simultaneous mailings
to the IRS and the vendor will reduce testing time.
7.1.6
Procedures for Reducing Testing
Time
In order to help provide incentives to the software development community to participate
in the Schedule K-1 2-D project, the IRS has committed to expediting the testing of bar-coded
Schedules K-1 and their associated parent returns. To receive this expedited service, follow
the instructions below.
2013–11 I.R.B.640March 11, 2013

•Mail the parent returns (Forms 1065, 1120S,1041) and associated bar-coded Schedule(s)
K-1 to the appropriate address below in a separate package from all other approval requests.
Internal Revenue Service
Attn: Bar-Coded K-1
SE:W:CAR:MP:T:M:S, IR 6526
1111 Constitution Avenue, NW
Washington, DC 20224
•Mail one copy of the parent form(s) and Schedule(s) K-1 to the IRS and another copy to
the testing vendor at the address below.
Northrop Grumman Information Systems
Attn: Cecilia Siamundo/ Elizabeth Ragonese
7555 Colshire Drive
McLean, VA 22102
Phone: 703–556–3619
•Include multiple email and phone contact points in the packages.
•While the IRS can expedite bar-coded Schedules K-1 and their associated parent returns,
it cannot expedite the approvalof non-associated tax returns.
•Vendors should comply with all NACTP guidelines especially in regards to mil size and
error correction level.
•Submissions should include vendor ID code printed and in the bar code.
•If a change is made to the bar code after approval, be sure to increment the version number.
Section 7.2 — Guidelines for Substitute Forms 8655
7.2.1
Increased Standardization for
Forms 8655
Increased standardization for reporti
ng information on substitute Forms 8655 is now re-
quired to aid in processing and for compl
iance purposes. Please follow the guidelines in Sec-
tion 7.2.2.
7.2.2
Requirements for Substitute
Forms 8655
Please follow these specific requirements when producing substitute Forms 8655.
•The first line of the title must be “Reporting Agent Authorization.”
•If you want to include a reference to “State Limited Power of Attorney,” it can be in paren-
theses under the title. “State” must be the first word within the parentheses.
•You must include “Form 8655” on the form.
•While the line numbers do not have to match the official form, the sequence of the infor-
mation must be in the same order.
•The size of any variable data must be printed in a font no smaller than 10-point.
•For adequate disclosure checks, the following must be included for each taxpayer:
•Name,
•EIN, and
•Address.
•At this time, Form 944 will not be required ifForm 941 is checked. Only those forms that
the reporting agent company supports need to be listed.
•The jurat (perjury statement) must be identical with the exception of references to line
numbers.
•A contact name and number for the reporting agent is not required.
•You must include line 17, or the equivalent line, and it must include two checkboxes.
•Any state information included should be contained in a separate section of the substitute
form. Preferably this information will be in the same area as line 19 of the official form.
•All substitute Forms 8655 must be approved by the Substitute Forms Unit as outlined in
the Form 8655 specifications in Publication 1167.
March 11, 20136412013–11 I.R.B.

•If you have not already been assigned a 3-letter source code, you will be given one when
your substitute form is submitted for approval. This source code should be included in the
lower left corner of the form.
•The 20-day assumed approval policy does not apply to Form 8655 approvals.
Part 8
Additional Information
Section 8.1 — Forms for Electronically Filed Returns
8.1.1
Electronic Filing Program
Electronic filing is a method by which authorized providers transmit tax return information
to an IRS Service Center in the format of the official IRS forms. The IRS accepts both refund
and balance due forms thatare filed electronically.
8.1.2
Applying to Participate in IRS
e-file
Anyone wishing to participate in IRSe-fileof tax returns must submit ane-fileapplication.
The application can be completed and submitted electronically on the IRS website at IRS.gov
after first registering fore-services on the website.
8.1.3
Obtaining the Taxpayer Signature
/ Submission of Required Paper
Documents
Taxpayers choosing to electronically prepare and file their return will be required to use the
Self-Select PIN method as their signature.
Electronic Return Originators (EROs) cane-fileindividual income tax returns only if the
returns are signed electronically using eitherthe Self-Select or Practitioner PIN method.
Taxpayers must use Form 8453, U.S. Individual Income Tax Transmittal for an IRSe-file
Return, to send supporting documents that are required to be submitted to the IRS.
For specific information about electronic filing, refer to Publication 1345, Handbook for
Authorized IRSe-fileProviders of Individual Income Tax Returns and Publication 1346, Elec-
tronic Return File Specifications and Record Layouts for Individual Income Tax Returns.
8.1.4
Guidelines for Preparing
Substitute Forms in the Electronic
Filing Program
A participant in the electronic filing program,who wants to develop a substitute form should
follow the guidelines throughout this publication and send a sample form for approval to the
Substitute Forms Unit at the address inPart 1. If you do not prepare Substitute Form 8453
using a font in which all IRS wording fitson a single page, the form will not be accepted.
Note.Use of unapproved forms could result in suspension of the participant from the electronic
filing program.
Section 8.2 — Effect on Other Documents
8.2.1
Effect on Other Documents
This revenue procedure supersedes Revenue Procedure 2011–61, 2011–52 I.R.B. 990.
2013–11 I.R.B.642March 11, 2013

March 11, 20136432013–11 I.R.B.

2013–11 I.R.B.644March 11, 2013

March 11, 20136452013–11 I.R.B.

2013–11 I.R.B.646March 11, 2013

March 11, 20136472013–11 I.R.B.

Extension of the Effective
Date of Rev. Proc. 2013–14
Rev. Proc. 2013–19
On December 26, 2012, the Trea-
sury Department and the Internal Rev-
enue Service released Revenue Procedure
2013–14, 2013–3 I.R.B. 283, which mod-
ified and superseded Rev. Proc. 2008–35,
2008–29 I.R.B. 132. Rev. Proc. 2013–14
provides updated guidance regarding con-
sents to disclose or consents to use tax
return information with respect to taxpay-
ers filing a return in the Form 1040 series
(e.g., Form 1040, Form 1040NR, Form
1040A, or Form 1040 EZ) under section
301.7216–3 of the Regulations on Pro-
cedure and Administration (26 CFR Part
301).
Section 9 of Rev. Proc. 2013–14 pro-
vides that “[a]ny consent obtained on or
after January 14, 2013 must contain the
mandatory language provided in section
5.04 of this revenue procedure.” Prior to
January 14, 2013, Rev. Proc. 2013–14
provides that consents to disclose or con-
sents to use tax return information may
contain either the mandatory language in
section 4.04 of Rev. Proc. 2008–35 or
2013–11 I.R.B.648March 11, 2013

the mandatory language in section 5.04 of
Rev. Proc. 2013–14.
EXTENSION OF THE EFFECTIVE
DATE OF REV. PROC. 2013–14
Any consent to disclose or consent to
use tax return information that a tax re-
turn preparer obtainsduring calendar year
2013 with respect to a taxpayer filing a re-
turn in the Form 1040 series may contain
either the mandatory language in section
4.04 of Rev. Proc. 2008–35 or the manda-
tory language in section 5.04 of Rev. Proc.
2013–14. Any consent to disclose or con-
sent to use tax return information obtained
on or after January 1, 2014, must con-
tain the mandatory language in Rev. Proc.
2013–14.
EFFECT ON OTHER DOCUMENTS
Revenue Procedure 2013–14 is modi-
fied.
The principal author of this revenue
procedure is Emily M. Lesniak of the
Office of the Associate Chief Counsel
(Procedure and Administration). For
further information regarding this revenue
procedure, contact Mark Shurtliff at (202)
622–4910 (not a toll-free call).
March 11, 20136492013–11 I.R.B.

Part IV. Items o
fGeneralInterest
Partial Withd
rawal of
Notice of Prop
osed
Rulemaking an
dNotice
of Proposed R
ulemaking
by Cross-Ref
erence to
Temporary R
egulation.
Payout Requ
irements for Type
III Support
ing Organizations
That Are No
t Functionally
Integrate
d
REG–15592
9–06
AGENCY: In
ternal Revenue Service
(IRS), Tr
easury.
ACTION: Pa
rtial withdrawal of notice of
proposed
rulemaking and notice of pro-
posed rul
emaking by cross-reference to
temporar
y regulation.
SUMMARY:
This document withdraws
portions
of the notice of proposed rule-
making p
ublished on September 24, 2009,
relatin
g to the payout requirements for
Type III
supporting organizations that are
not func
tionally integrated. The with-
drawal a
ffects Type III supporting organi-
zation
s that are not functionally integrated.
In this
issue of the Bulletin, the IRS is
issuin
g temporary regulations (T.D. 9605)
regard
ing the requirements to qualify as
aTypeI
II supporting organization that is
opera
tedinconnectionwithoneormore
suppo
rted organizations. Those regula-
tions
reflect changes to the law made by
the Pe
nsion Protection Act of 2006 and
will a
ffect Type III supporting organiza-
tion
s and their supported organizations.
The t
ext of those temporary regulations
publ
ished in this issue of the Bulletin also
serv
es as the text of these proposed regu-
lati
ons.
DATE
S: Written or electronic comments
and
requests for a public hearing must be
rec
eived by March 28, 2013.
ADD
RESSES: Send submissions to:
CC:
PA:LPD:PR (REG–155929–06), room
520
3, Internal Revenue Service, P.O. Box
760
4, Ben Franklin Station, Washing-
ton
, DC 20044. Submissions may be
ha
nd-delivered Monday through Friday
between the ho
urs of 8 a.m. and 4 p.m.
to CC:PA:LPD:
PR (REG–155929–06),
Courier’s Des
k, Internal Revenue Service,
1111 Constitu
tion Avenue, NW, Washing-
ton, DC, or sen
t electronically via the Fed-
eral eRulema
king Portal athttp://www.reg-
ulations.go
v/(IRS REG–155929–06).
FOR FURTHER I
NFORMATION
CONTACT: Con
cerning the proposed
regulations
, Preston J. Quesenberry at
(202) 622–6
070; concerning submissions
of comments
and requests for a public
hearing, Ol
uwafunmilayo Taylor at (202)
622–7180 (n
ot toll-free numbers).
SUPPLEMENT
ARY INFORMATION:
Background
Final and te
mporary regulations in
this issue
of the Bulletin contain amend-
ments to th
e Income Tax Regulations
(26 CFR par
t 1) regarding organizations
described
in section 509(a)(3) of the In-
ternal Rev
enue Code (Code), which are
known as s
upporting organizations. The
final and
temporary regulations provide
requirem
ents to qualify as a supporting
organiza
tion that is operated in connection
with one
or more supported organizations
(called
“Type III Supporting Organiza-
tions”)
. Those regulations reflect changes
to the la
w made by the Pension Protection
Act of 20
06, Public Law 109–280 (120
Stat. 7
80 (2006)), and will affect Type
III sup
porting organizations and their sup-
ported
organizations. The text of those
tempor
ary regulations also serves as the
text of
these proposed regulations. The
pream
ble to the final and temporary regu-
latio
ns explains the temporary regulations
and th
ese proposed regulations.
Speci
al Analyses
It has
been determined that this notice
of pro
posed rulemaking is not a significant
regul
atory action as defined in Executive
Order
12866, as supplemented by Execu-
tive
Order 13563. Therefore, a regulatory
asse
ssment is not required. It has also been
dete
rmined that section 553(b) of the Ad-
mini
strative Procedure Act (5 U.S.C. chap-
ter 5
) does not apply to these regulations,
and
because these regulations do not im-
pos
e a collection of information on small
entitles, the
Regulatory Flexibility Act (5
U.S.C. chapte
r 6) does not apply. Pursuant
to section 780
5(f) of the Code, this regula-
tion has been s
ubmitted to the Chief Coun-
sel for Advoca
cy of the Small Business
Administrat
ion for comment on its impact
on small busi
ness.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any electronic comments
or written comments (a signed original
and eight (8) copies) that are submitted
timely to the IRS. The Treasury Depart-
ment and the IRS request comments on all
aspects of the proposed rules. All com-
ments that are submitted by the public
will be available for public inspection and
copying atwww.regulations.govor upon
request. A public hearing may be sched-
uled if requested in writing by any person
that timely submits written comments. If a
public hearing is scheduled, notice of the
date, time, and place for the public hearing
will be published in theFederal Register
.
Draftin
g Information
The principal authors of these reg-
ulations are Preston J. Quesenberry,
and Stephanie N. Robbins, Office of
Associate Chief Counsel (Tax-Exempt
and Government Entities). However,
other personnel from the Treasury
Department and the IRS participated in
their development.
*****
Parti
al Withdrawal of Notice of
Propo
sed Rulemaking
Accordingly, under the authority of
26 U.S.C. 7805, §§1.509(a)–4(i)(5)(ii)(B)
and 1.509(a)–4(i)(8) of the notice of pro-
posed rulemaking (REG–155929–06) that
was published in theFederal Registeron
September 24, 2009, (78 FR 48672) are
withdrawn.
Proposed Amendments to the
Regulations
Acco
rdingly, 26 CFR part 1 is proposed
to be
amended as follows:
2013–11 I.R.B.650March 11, 2013

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 1.509(a)–4 is amended
by revising paragraphs (i)(5)(ii)(B),
(i)(5)(ii)(C), and (i)(8) to read as follows:
§1.509(a)–4 Supporting organizations.
*****
(i) * * *
(5) * * *
(ii) * * *
(B) [The text of proposed amendments
to §1.509(a)–4(i)(5)(ii)(B) is the same as
the text of §1.509(a)–4T(i)(5)(ii)(B) pub-
lished elsewhere in this issue of the Bul-
letin].
(C) [The text of proposed amendments
to §1.509(a)–4(i)(5)(ii)(C) is the same as
the text of §1.509(a)–4T(i)(5)(ii)(C) pub-
lished elsewhere in this issue of the Bul-
letin].
*****
(8) [The text of proposed amendments
to §1.509(a)–4(i)(8) is the same as the text
of §1.509(a)–4T(i)(8) published elsewhere
in this issue of the Bulletin].
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on December 21,
2012, 4:15 p
.m., and published in the issue of the Federal
Register for December 26, 2012, 77 F.R. 76426)
Announcement 2013–12
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Eliminating printing on paper of
the Internal Revenue Bulletin (IRB) and
eliminating the creation of the Cumulative
Bulletin (CB)
SUMMARY
: The IRS is no longer print-
ing pape
r copies of the IRB, which the IRS
distrib
uted directly to certain stakeholders.
The yea
rly subscription sold by the Su-
perint
endent of Documentsis unaffected.
Also, t
he IRS will not create the CB after
the 200
8–2 edition.
DATE: This announcement is effective im-
mediately.
SUPPLEMENTARY INFORMATION:
Background
The IRB is available on IRS.gov before
printed copies are available. Also, the ma-
jority of items (about two-thirds) that ap-
pear in the IRB are released with a News
Release about a month ahead of when the
item appears in the IRB. Since all items
in the IRB are available electronically, al-
most a month in advance of being available
in the printed IRB, we are eliminating the
printing of paper copies of the IRB, which
are distributed directly from the IRS. The
cost savings to printing and postage would
be $148,000 annually.
Media and Publications contacted sev-
eral IRB external stakeholders in May
2011 to elicit their comments and con-
cerns. From the stakeholders we heard
from, the most pressing concerns were for
paper copies of the January issue continue
to be printed and electronic notification of
when the new IRB is available.
Accordingly, as a cost cutting measure,
the IRS is no longer printing paper copies
of the IRB, which the IRS distributed di-
rectly to certain stakeholders. Also, the
IRS will not create the CB after the 2008–2
edition.
FOR FURTHER INFORMATION
CONTACT:
If you have comments con-
cerning this issue, you can write
to the Gerald J. Shields, LL.M.,
Internal Revenue Service,Tax
Products Coordinating Committee,
SE:W:CAR:MP:T:M:S, 1111 Constitution
Ave. NW, IR–6526, Washington, DC
20224. Do not send any tax forms to this
address.
U.S.-Norway Agreement on
Fiscally Transparent Entities
Announcement 2013–14
The following is a copy of the Com-
petent Authority Agreement (“the Agree-
ment”) that was released to the public on
January 31, 2013, by the Competent Au-
thorities of the United States and Norway
regarding the eligibility of entities that are
treated as fiscally transparent under the
laws of either Contracting State to benefit
under the Convention Between the United
States of America and the Kingdom of
Norway for the Avoidance of Double Tax-
ation and the Prevention of Fiscal Eva-
sion with Respect to Taxes on Income and
Property, signed on December 3, 1971,
and as amended by the Protocol signed on
September 19, 1980 (the “Treaty”).
The text of the Agreement is as follows:
COMPETENT AUTHORITY
AGREEMENT
The Competent Authorities of the
United States and Norway hereby enter
into the followingmutual agreement re-
garding the eligibility of entities that are
treated as fiscally transparent under the
laws of either Contracting State to benefit
under the Convention Between the United
States of America and the Kingdom of
Norway for the Avoidance of Double Tax-
ation and the Prevention of Fiscal Evasion
with Respect to Taxes on Income and
Property, signed on December 3, 1971,
and as amended by the Protocol signed on
September 19, 1980 (the “Treaty”). This
agreement clarifies the cases in which
fiscally transparent entities are entitled to
treaty benefits and clarifies the procedure
for claiming treaty benefits from Norway.
The agreement is entered into under para-
graph 2 of Article 27 (Mutual Agreement
Procedure) of the Treaty.
1) Eligibility of fiscally transparent
entities for treaty benefits
Paragraph 1(a)(ii) of Article 3 (Fiscal
Residence) of the Treaty provides, in rel-
evant part, that the term “resident of Nor-
way” means a partnership, estate or trust
only to the extent that the income derived
by such person is subject to Norwegian tax
as the income of a resident.
Paragraph1(b)(ii)ofArticle3ofthe
Treaty provides, in relevant part, that the
term “resident of the United States” means
a partnership, estate, or trust only to the ex-
tent that the income derived by such person
is subject to U.S. tax as the income of a res-
ident.
The Competent Authorities agree that
in applying paragraphs 1(a)(ii) and 1(b)(ii)
of Article 3, income from sources within
one of the Contracting States received
by an entity, wherever organized, that is
treated as fiscally transparent under the
laws of either Contracting State will be
March 11, 20136512013–11 I.R.B.

treated as income derived by a resident of
the other Contracting State to the extent
that such income is subject to tax as the
income of a resident of the other Contract-
ing State.
For an entity to be fiscally transparent,
the income subject to tax in the hands of
the resident must have the same source and
character as if the income were received
directly by the resident. It is not relevant
whether the entity would be fiscally trans-
parent for tax purposes in the other Con-
tracting State or any third jurisdiction in
which the entity is organized. For U.S. tax
purposes, a fiscally transparent entity in-
cludes any entity treated as a partnership
under subchapter K of the Internal Rev-
enue Code (Code), a “disregarded entity”
(anentitysuchasanLLCthatisdisre-
garded as an entity separate from its sin-
gle member owner), a subchapter S corpo-
ration (a domestic corporation with exclu-
sively U.S. shareholders described in sec-
tion 1361 of the Code), a “grantor trust”
describedinsection671oftheCode,et
seq., and a common trust fund within the
meaning of section 584 of the Code.
For example, if a resident of the United
States is a partner in a partnership or a
member of a limited liability company
(“LLC”) organized in the United States,
and the entity is treated for U.S. federal tax
purposes as a partnership, the resident of
the United States would be entitled to ben-
efits of the Treaty on the income that the
resident derives from Norway through the
partnership to the extent of the U.S. res-
ident’s distributive share of that income.
Similar rules would apply to a resident of
the United States that is a shareholder of a
subchapter S corporation, the single mem-
ber owner of an LLC that is a disregarded
entity, or an owner of a grantor trust that
derives income from Norway through the
grantor trust.
2)Procedures for entities that are fiscally
transparent for U.S. tax purposes to claim
treaty benefits from Norway
An entity, wherever organized, that
is treated as fiscally transparent for U.S.
federal tax purposes and that has a U.S.
resident member, partner or owner, may
claim treaty benefits from Norway on be-
half of the U.S. resident by providing the
Norwegian withholding agent with a U.S.
residency certification that identifies the
names of the fiscally transparent entity
and the U.S. resident.
For example, a partnership, whether or-
ganized in the United States, Norway, or a
third jurisdiction, may obtain a certificate
of residence on Form 6166 on behalf of its
partners, by submitting a request for cer-
tificationonForm8802(Application for
U.S. Residency Certification)totheInter-
nal Revenue Service. For those partner-
ships required to file a Form 1065,U.S.
Return of Partnership Income, generally
domestic partnerships and foreign partner-
ships with U.S. source income, the Form
6166 confirms the filing of such form and
includes the names of all partners who
have filed tax returns as U.S. residents.
The Form 6166 will inform the withhold-
ing agent to contact the partnership di-
rectly to provide information regarding the
allocation of the Norwegian source income
to the listed U.S. partners. If a foreign
partnership with U.S. partners is not re-
quired to file a Form 1065, the Form 6166
will confirm that position and otherwise
contain the same information regarding its
U.S. partners. The same procedures apply
to an LLC seeking certification if it has
more than one owner and is treated as a
partnership for U.S. tax purposes.
An S corporation may submit a Form
8802 and obtain a Form6166 certificate of
residence in a manner similar to that of a
partnership. A Form 6166 confirms the fil-
ing of an information return, Form 1120S,
U.S. Income Tax Return for an S Corpora-
tion, as required for an S corporation, and
includes a list of shareholders who filed re-
turns as U.S. residents.
A grantor trust that is owned by a U.S.
resident may submit a Form 8802 to obtain
a Form 6166 that provides that the owner
or owners listed on the form have filed tax
returns as U.S. residents.
A U.S. resident that is the single mem-
ber owner of an LLC or other entity that is
disregarded as an entity separate from its
owner for U.S. tax purposes may submit a
Form 8802 to obtain a Form 6166 that pro-
vides that the LLC or other entity is (or is
treated as) a branch, division or business
unit of its single member owner and that
such single member has filed a tax return
as a resident of the United States.
Persons applying for a Form 6166 must
identify the type of entity as well as the
countryforwhichtheyarerequestingcer-
tification. This permits the United States
to determine that a taxpayer is a resident
for U.S. tax purposes as well as for pur-
poses of the applicable treaty. See Form
8802 and the associated instructions. As
such, Norway accepts the Form 6166 as
a certification of U.S. residency for U.S.
tax purposes as well as for purposes of the
Treaty.
Agreed to by the undersigned compe-
tent authorities:
Michael Danilack
United States Competent Authority
Date
Stig Sollund
Norwegian Competent Authority
Date
Announcement 2013–15
This announcement contains a revised
Exhibit: Sample Notice to Interested
Parties, attached to Rev. Proc. 2013–6,
2013–1 I.R.B. 198. The Exhibit is re-
vised to include the correct addresses for
submitting applications for determination
letters and comments submitted by in-
terested parties, in accordance with the
corrections to Rev. Proc. 2013–6 made by
Ann. 2013–13, 2013–9 I.R.B. 532.
2013–11 I.R.B.652March 11, 2013

EXHIBIT: SAMPLE NOTICE
TO INTERESTED PARTIES
The Exhibit set forth below, may be used to satisfy the requirements of section 18 of this revenue procedure.
EXHIBIT: SAMPLE NOTICE TO INTERESTED PARTIES
1. Notice To:
[describe class or classes of interested parties]
An application is to be made to the InternalRevenue Service for an advance determination on the qualification of the following
employee pension benefit plan:
2.
(name of plan)
3.
(plan number)
4.
(name and address of applicant)
5.
(applicant EIN)
6.
(name and address of plan administrator)
7. The application will be filed on
for an advance determination as to whether the plan meets the qualification
requirements of § 401 or 403(a) of the Internal Revenue Code of 1986, with respect to the plan’s
[initial qualification,
amendment, termination, or partial termination].
The application will be filed with:
Internal Revenue Service
EP Determinations
P. O. Box 12192
Covington, KY 41012–0192
8. The employees eligible to participate under the plan are:
9. The Internal Revenue Service
[has/has not] previously issued a determination letter with respect to the
qualification of this plan.
RIGHTS OF INTERESTED PARTIES
10. You have the right to submit to EP Determinations, either individually or jointly with other interested parties, your comments
as to whether this plan meets the qualification requirements of the Internal RevenueCode. Your comments to EP Determinations
may be submitted to:
Internal Revenue Service
EP Determinations
Attn: Customer Service Manager
P. O. Box 2508
Cincinnati, OH 45202
You may instead, individually or jointly with other interested parties, request the Department of Labor to submit, on your behalf,
comments to EP Determinations regarding qualification of the plan. If the Department declines to comment on all or some of the
matters you raise, you may, individually, or jointly if your request was made to the Department jointly, submit your comments on
these matters directly to EP Determinations at the Cincinnati address above.
REQUESTS FOR COMMENTS BY THE DEPARTMENT OF LABOR
11. The Department of Labor may not comment on behalf of interested parties unless requested to do so by the lesser of 10
employees or 10 percent of the employees who qualify as interested parties. The number of persons needed for the Department to
comment with respect to this plan is
. If you request the Department to comment, your request must be in writing and
must specify the matters upon which comments are requested, and must also include:
March 11, 20136532013–11 I.R.B.

(1) the information contained in items 2 through 5 of this Notice; and
(2) the number of persons needed for the Department to comment.
A request to the Department to comment should be addressed as follows:
Deputy Assistant Secretary
Employee Benefits Security Administration
ATTN: 3001 Comment Request
U. S. Department of Labor,
200 Constitution Avenue, N.W.
Washington, D.C. 20210
COMMENTS TO THE INTERNAL REVENUE SERVICE
12. Comments submitted by you to EP Determinations must be in writing and received by it by
. However, if there
are matters that you request the Department of Labor to comment upon on your behalf, and the Department declines, you may
submit comments on these matters to EP Determinations to be received by it within 15 days from the time the Department notifies
you that it will not comment on a particular matter, or by
, whichever is later, but not after.Arequestto
the Department to comment on your behalf must be received by it by
if you wish to preserve your right to comment
on a matter upon which the Department declines to comment, or by
if you wish to waive that right.
ADDITIONAL INFORMATION
13. Detailed instructions regarding the requirements for notification of interested parties may be found in sections 17 and 18
of Rev. Proc. 2013–6. Additional information concerning thisapplication (including, where applicable, an updated copy of
the plan and related trust; the application for determination;any additional documents dealing with the application that have
been submitted to the Service; and copies of section 17 of Rev. Proc. 2013–6 are available at
during the hours of
for inspection and copying. (There is a nominal charge for copying and/or mailing.)
2013–11 I.R.B.654March 11, 2013

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.
March 11, 2013i2013–11 I.R.B.

Numerical Finding List
1
Bulletins 2013–1 through 2013–11
Announcements:
2013-1, 2013-1 I.R.B.251
2013-2, 2013-2 I.R.B.271
2013-3, 2013-2 I.R.B.271
2013-4, 2013-4 I.R.B.440
2013-5, 2013-3 I.R.B.306
2013-6, 2013-3 I.R.B.307
2013-7, 2013-3 I.R.B.308
2013-8, 2013-4 I.R.B.440
2013-9, 2013-4 I.R.B.441
2013-10, 2013-3 I.R.B.311
2013-11, 2013-6 I.R.B.483
2013-12, 2013-11 I.R.B.651
2013-13, 2013-9 I.R.B.532
2013-14, 2013-11 I.R.B.651
2013-15, 2013-11 I.R.B.652
Notices:
2013-1, 2013-3 I.R.B.281
2013-2, 2013-6 I.R.B.473
2013-3, 2013-7 I.R.B.484
2013-4, 2013-9 I.R.B.527
2013-5, 2013-9 I.R.B.529
2013-6, 2013-10 I.R.B.540
2013-7, 2013-6 I.R.B.477
2013-8, 2013-7 I.R.B.486
2013-9, 2013-9 I.R.B.529
2013-10, 2013-8 I.R.B.503
2013-11, 2013-11 I.R.B.610
2013-12, 2013-10 I.R.B.543
Proposed Regulations:
REG-155929-06, 2013-11 I.R.B.650
REG-141066-09, 2013-3 I.R.B.289
REG-148873-09, 2013-7 I.R.B.494
REG-102966-10, 2013-10 I.R.B.579
REG-122707-12, 2013-5 I.R.B.450
Revenue Procedures:
2013-1, 2013-1 I.R.B.1
2013-2, 2013-1 I.R.B.92
2013-3, 2013-1 I.R.B.113
2013-4, 2013-1 I.R.B.126
2013-5, 2013-1 I.R.B.170
2013-6, 2013-1 I.R.B.198
2013-7, 2013-1 I.R.B.233
2013-8, 2013-1 I.R.B.237
2013-9, 2013-2 I.R.B.255
2013-10, 2013-2 I.R.B.267
2013-11, 2013-2 I.R.B.269
2013-12, 2013-4 I.R.B.313
2013-13, 2013-6 I.R.B.478
Revenue Procedures— Continued:
2013-14, 2013-3 I.R.B.283
2013-15, 2013-5 I.R.B.444
2013-16, 2013-7 I.R.B.488
2013-17, 2013-11 I.R.B.612
2013-18, 2013-8 I.R.B.503
2013-19, 2013-11 I.R.B.648
Revenue Rulings:
2013-1, 2013-2 I.R.B.252
2013-2, 2013-10 I.R.B.533
2013-3, 2013-8 I.R.B.500
2013-4, 2013-9 I.R.B.520
2013-5, 2013-9 I.R.B.525
2013-7, 2013-11 I.R.B.608
Treasury Decisions:
9601, 2013-10 I.R.B.535
9603, 2013-3 I.R.B.273
9605, 2013-11 I.R.B.587
9606, 2013-11 I.R.B.586
9607, 2013-6 I.R.B.469
9608, 2013-3 I.R.B.274
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin
2012–52, dated December 27, 2012.
2013–11 I.R.B.iiMarch 11, 2013

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2013–1 through 2013–11
Notices:
2011-14
Amplified and supplemented by
Notice 2013-7, 2013-6 I.R.B.477
2011-38
Obsoleted by
REG-148873-09, 2013-7 I.R.B.494
2012-60
Superseded by
Notice 2013-1, 2013-3 I.R.B.281
Proposed Regulations:
REG-140668-07
Corrected by
Ann. 2013-6, 2013-3 I.R.B.307
Revenue Procedures:
87-57
Modified by
Rev. Proc. 2013-13, 2013-6 I.R.B.478
2004-66
Modified and superseded by
Rev. Proc. 2013-11, 2013-2 I.R.B.269
2008-35
Modified and superseded by
Rev. Proc. 2013-14, 2013-3 I.R.B.283
2008-50
Modified and superseded by
Rev. Proc. 2013-12, 2013-4 I.R.B.313
2011-49
Modified by
Rev. Proc. 2013-6, 2013-1 I.R.B.198
2011-52
Modified and partly superseded by
Rev. Proc. 2013-15, 2013-5 I.R.B.444
2011-55
Amplified and supplemented by
Notice 2013-7, 2013-6 I.R.B.477
2011-61
Superseded by
Rev. Proc. 2013-17, 2013-11 I.R.B.612
2011-62
Superseded by
Rev. Proc. 2013-18, 2013-8 I.R.B.503
2012-1
Superseded by
Rev. Proc. 2013-1, 2013-1 I.R.B.1
Revenue Procedures— Continued:
2012-2
Superseded by
Rev. Proc. 2013-2, 2013-1 I.R.B.92
2012-3
Superseded by
Rev. Proc. 2013-3, 2013-1 I.R.B.113
2012-4
Superseded by
Rev. Proc. 2013-4, 2013-1 I.R.B.126
2012-5
Superseded by
Rev. Proc. 2013-5, 2013-1 I.R.B.170
2012-6
Superseded by
Rev. Proc. 2013-6, 2013-1 I.R.B.198
2012-7
Superseded by
Rev. Proc. 2013-7, 2013-1 I.R.B.233
2012-8
Superseded by
Rev. Proc. 2013-8, 2013-1 I.R.B.237
2012-9
Superseded by
Rev. Proc. 2013-9, 2013-2 I.R.B.255
2012-10
Superseded by
Rev. Proc. 2013-10, 2013-2 I.R.B.267
2012-30
Corrected and clarified by
Ann. 2013-3, 2013-2 I.R.B.271
Updated by
Ann. 2013-10, 2013-3 I.R.B.311
2012-46
Corrected by
Ann. 2013-11, 2013-6 I.R.B.483
2013-1
Corrected by
Ann. 2013-9, 2013-4 I.R.B.441
2013-6
Revised by
Ann. 2013-15, 2013-11 I.R.B.652
Corrected by
Ann. 2013-13, 2013-9 I.R.B.532
2013-14
Modified by
Rev. Proc. 2013-19, 2013-11 I.R.B.648
Revenue Rulings:
92-19
Supplemented in part by
Rev. Rul. 2013-4, 2013-9 I.R.B.520
Treasury Decisions:
9564
Corrected by
Ann. 2013-4, 2013-4 I.R.B.440
Amended by
Ann. 2013-7, 2013-3 I.R.B.308
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2012–27 through 2012–52 is in Internal Revenue Bulletin 2012–52, dated December 27,
2012.
March 11, 2013iii2013–11 I.R.B.

Internal Revenue Service
W
ashington,DC20224
Official Business
Penalty for Private Use, $300
INTERNAL REVENUE BULLETIN
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superin-
tendent of Documents when their subscriptions must be renewed.
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are
sold on a single copy basis andare notincluded as part of the subscription to the Internal Revenue Bulletin. The IRS will not create
Cumulative Bulletins after the 2008–2 edition. Subscribers to the weekly Bulletin are notified when copies of the Cumulative Bulletin
are available. Certain issues of Cumulative Bulletins are out of print and are not available. Persons desiring available Cumulative
Bulletins, which are listed on the reverse, may purchase them from the Superintendent of Documents.
ACCESS THE INTERNAL REVENUE BULLETIN ON THE INTERNET
You may view the Internal Revenue Bulletin on the Internet at www.irs.gov. Select Businesses. Under Businesses Topics, select
More Topics. Then select Internal Revenue Bulletins.
INTERNAL REVENUE BULLETINS ON CD-ROM
Internal Revenue Bulletins are available annually as partof Publication 1796 (Tax Products CD-ROM). The CD-ROM can be
purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders)
or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, P.O. Box 979050, St. Louis, MO 63197–9000. Please allow two to
six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE INTERNAL
REVENUE BU
LLETIN
If you have
comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be p
leased to hear from you. You can email us your suggestions orcomments through the IRS Internet Home Page (www.irs.gov)
or write t
o the IRS Bulletin Unit, SE:W:CAR:MP:T:M:S, Washington, DC 20224.