Internal Revenue Bulletin 2006-38 (PDF rendition): IRS Revenue Procedures

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

Bulletin No. 200
6-38
September 18, 20
06
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Notice 2006–76, page 459.
This notice provides examples to illustrate and confirm the ap-
plication of section 937(b) of the Code and regulations sections
1.937–2T and –3T in determining whether income is derived
from sources within a U.S. possession or territory specified in
section 937(a)(1) or whether income is effectively connected
with the conduct of a trade or business within such a U.S. pos-
session or territory.
Rev. Proc
. 2006–37, page 499.
This proc
edure modifies Rev. Proc. 2006–12, 2006–3 I.R.B.
310, to al
low a taxpayer to utilize the advance consent pro-
cedures o
f Rev. Proc. 97–27, as modified and amplified by
Rev. Proc
. 2002–19, as amplified and clarified by Rev. Proc.
2002–54,
when seeking a change to a method of account-
ing prov
ided in regulations sections 1.263(a)–4, 1.263(a)–5,
or 1.167
(a)–3(b) in conjunction with a change for the same
item to a
method of accounting utilizing the 3
1
/2month rule
authori
zed by regulations section 1.461–4(d)(6)(ii) or the recur-
ring it
em exception authorized by regulations section 1.461–5.
Rev. Pr
oc. 2006–12 modified.
EMPLOYEE PLANS
T.D. 9280, page 450.
Final regulations under section 411(d)(6) of the Code provide
guidance on the application of the anti-cutback rules.
ADMINISTRATIVE
Rev. Proc. 2006–34, page 460.
This procedure provides specifications for filing Form 1042–S,
Foreign Person’s U.S. Source Income Subject to Withholding,
electronically or magnetically. The procedure will be repro-
duced as the current revision of Publication 1187. Rev. Proc.
2004–63 superseded.
Rev. Proc.
2006–36, page 498.
This proce
dure sets forth the Service’s procedures for other
governmen
t agencies or members of the public to request the
creation
of special statistical studies and compilations involving
return in
formation pursuant to section 6108(b) of the Code, and
sets fort
h the criteria for determining reasonable fees for costs
associat
ed with the creation of the special statistical studies
and compi
lations.
Announcement 2006–67, page 509.
This document contains corrections to temporary regulations
(T.D. 9260, 2006–23 I.R.B. 1001) that relate to the applica-
tion of separate foreign tax credit limitations to dividends re-
ceived from noncontrolled section 902 corporations under sec-
tion 904(d)(4).
Announcement 2006–68, page 510.
This document contains corrections to final regulations (T.D.
9272, 2006–35 I.R.B. 332) that relate to income that is as-
sociated with a residual interest in a Real Estate Mortgage In-
vestment Conduit (REMIC) and that is allocated through certain
entities to foreign persons who have invested in those entities.
Announcements of Disbarments and Suspensions begin on page 501.
Fi
nding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
September 18, 20062006–38 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 162.—Trade or
Business Expenses
The Service modifies Rev. Proc. 2006–12,
2006–3 I.R.B. 310, to allow a taxpayer to utilize the
advance consent procedures of Rev. Proc. 97–27,
1997–1 C.B. 680, as modified and amplified by
Rev. Proc. 2002–19, 2002–1 C.B. 696, as ampli-
fied and clarified by Rev. Proc. 2002–54, 2002–2
C.B. 432, when seeking a change to a method of
accounting provided in §§ 1.263(a)–4, 1.263(a)–5,
or 1.167(a)–3(b) of the Income Tax Regulations in
conjunction with a change for the same item to a
method of accounting utilizing the 3½ month rule
authorized by § 1.461–4(d)(6)(ii) or the recurring
item exception authorized by § 1.461–5. See Rev.
Proc. 2006-37, page 499.
Section 263.—Capital
Expenditures
26 CFR 1.263(a)–4: Amounts paid to acquire or cre-
ate intangibles.
26 CFR 1.263(a)–5: Amounts paid or incurred to fa-
cilitate an acquisition of a trade or business, a change
in the capital structure of a business entity, and cer-
tain other transactions.
The Service modifies Rev. Proc. 2006–12,
2006–3 I.R.B. 310, to allow a taxpayer to utilize the
advance consent procedures of Rev. Proc. 97–27,
1997–1 C.B. 680, as modified and amplified by
Rev. Proc. 2002–19, 2002–1 C.B. 696, as ampli-
fied and clarified by Rev. Proc. 2002–54, 2002–2
C.B. 432, when seeking a change to a method of
accounting provided in §§ 1.263(a)–4, 1.263(a)–5,
or 1.167(a)–3(b) of the Income Tax Regulations in
conjunction with a change for the same item to a
method of accounting utilizing the 3½ month rule
authorized by § 1.461–4(d)(6)(ii) or the recurring
item exception authorized by § 1.461–5. See Rev.
Proc. 2006-37, page 499.
Section 411.—Minimum
Vesting Standards
26 CFR 1.411(d)–3: Section 411(d)(6) protected ben-
efits.
T.D. 9280
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Part 1
Section 411(d)(6) Protected
Benefits
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains fi-
nal regulations providing guidance on cer-
tain issues under section 411(d)(6) of the
Internal Revenue Code (Code), including
the interaction between the anti-cutback
rules of section 411(d)(6) and the nonfor-
feitability requirements of section 411(a).
These regulations also provide a utiliza-
tion test under which certain plan amend-
ments are permitted to eliminate or re-
duce certain early retirement benefits, re-
tirement-type subsidies, or optional forms
of benefit. These regulations generally af-
fect sponsors of, and participants and ben-
eficiaries in, qualified retirement plans.
DATES:Effective Date:These regulations
are effective August 9, 2006.
Applicability Date:For dates of appli-
cability, see §1.411(d)–3(j) of these regu-
lations.
FOR FURTHER INFORMATION
CONTACT: Pamela R. Kinard at (202)
622–6060 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to 26 CFR part 1 under section 411(d)(6)
of the Code. These regulations revise
§1.411(d)–3 to provide guidance on the
application of section 411(d)(6) to a plan
amendment that places greater restrictions
or conditions on a participant’s rights to
section 411(d)(6) protected benefits, even
if the amendment merely adds a restriction
or condition that is permitted under the
vesting rules of section 411(a)(3) through
(11). These rules are intended to reflect
Central Laborers’ Pension Fund v. Heinz,
541 U.S. 739 (2004). These regulations
also set forth standards for the utilization
test, which is a permitted method of elim-
inating optional forms of benefit that are
burdensome to the plan and ofde minimis
value to plan participants.
Section 401(a)(7) provides that a trust
does not constitute a qualified trust un-
less its related plan satisfies the require-
ments of section 411. Section 411(a) gen-
erally provides that an employee’s right to
the accrued benefit derived from employer
contributions must become nonforfeitable
within a specified period of service. Sec-
tion 411(a)(3) provides circumstances un-
der which an employee’s benefit is permit-
ted to be forfeited without violating sec-
tion 411(a). Section 411(a)(3)(B) provides
that a right to an accrued benefit derived
from employer contributions is not treated
as forfeitable solely because the plan pro-
vides that the payment of benefits is sus-
pended for such period as the employee is
employed, subsequent to the commence-
ment of payment of such benefits, either
(1) by the employerwho maintains the
plan under which such benefits were be-
ing paid, in the case of a plan other than a
multiemployer plan, or (2) in the case of a
multiemployer plan, in the same industry,
the same trade or craft, and the same geo-
graphic area covered by the plan as when
such benefits commenced.
The definition of employment for
which benefit payments are permitted
tobesuspendedissetforthin29CFR
2530.203–3 of the Department of La-
bor Regulations, which interprets section
203(a)(3)(B) of the Employee Retirement
Income Security Act of 1974 (ERISA),
as amended, the counterpart to section
411(a)(3)(B) of the Code. Employment
that satisfies the conditions described
in section 203(a)(3)(B) of ERISA and
2006–38 I.R.B.450September 18, 2006

the regulations are referred to as “sec-
tion 203(a)(3)(B) service.” See 29 CFR
2530.203–3(c).
Under section 411(a)(10), a plan
amendment changing the plan’s vesting
schedule must satisfy certain require-
ments. Section 411(a)(10)(A) provides
that a plan amendment changing any
vesting schedule under the plan does not
satisfy the minimum vesting standards
of section 411(a)(2) if the nonforfeitable
percentage of the accrued benefit derived
from employer contributions (determined
as of the applicable amendment date)
1
of any employee who is a participant in
the plan is less than the nonforfeitable
percentage computed under the plan with-
out regard to the amendment. Section
411(a)(10)(B) provides that a plan amend-
ment changing any vesting schedule under
the plan does not satisfy the minimum
vesting standards of section 411(a)(2) un-
less each participant with at least 3 years
of service is permitted to elect to have his
or her nonforfeitable percentage computed
under the plan without regard to the plan
amendment.
Section 411(d)(6)(A) provides that a
plan is treated as not satisfying the re-
quirements of section 411 if the accrued
benefit of a participant is decreased by
an amendment of the plan, other than an
amendment described in section 412(c)(8)
of the Code or section 4281 of ERISA.
Section 411(d)(6)(B) provides that a plan
amendment that has the effect of elim-
inating or reducing an early retirement
benefit or a retirement-type subsidy, or
eliminating an optional form of benefit,
with respect to benefits attributable to ser-
vice before the amendment, is treated as
impermissibly reducing accrued benefits.
This protection applies with respect to
an employee who satisfies the preamend-
ment conditions for the subsidy either
before or after the amendment. Section
411(d)(6)(B) also authorizes the Secretary
of the Treasury to provide, through regu-
lations, that section 411(d)(6)(B) does not
apply to any plan amendment that elim-
inates an optional form of benefit (other
than a plan amendment that has the effect
of eliminating or reducing an early retire-
ment benefit or a retirement-type subsidy).
Section 645(b)(1) of the Economic
Growth and Tax Relief Reconciliation
Act of 2001, Public Law 107–16 (115
Stat. 38) (EGTRRA) amended section
411(d)(6)(B) of the Code to direct the Sec-
retary of the Treasury to issue regulations
providing that section 411(d)(6)(B) does
not apply to any amendment that reduces
or eliminates early retirement benefits
or retirement-type subsidies that create
significant burdensor complexities for
the plan and plan participants unless such
amendment adversely affects the rights of
any participant in a more thande minimis
manner.
Section204(g)ofERISA contains par-
allel rules to section 411(d)(6) of the Code,
including a similar directive to the Secre-
tary of the Treasury to issue regulations
providing that section 204(g) of ERISA
does not apply to any amendment that re-
duces or eliminates early retirement ben-
efits or retirement-type subsidies that cre-
ate significant burdens or complexities for
the plan and plan participants unless such
amendment adversely affects the rights of
any participant in a more thande minimis
manner. Under section 101 of Reorganiza-
tion Plan No. 4 of 1978 (43 FR 47713) and
section 204(g) of ERISA, the Secretary of
the Treasury has interpretive jurisdiction
over the subject matter addressed in these
regulations for purposes of ERISA, as well
as the Code. Thus, these final regulations
issued under section 411(d)(6) of the Code
also apply for purposes of section 204(g)
of ERISA.
InCentral Laborers’, the plaintiffs
were two inactive participants in a multi-
employer pension plan who commenced
payment of their benefits in 1996 after
qualifying for subsidized early retirement
payments. The plan terms required that
payments be suspended if a participant
engaged in “disqualifying employment.”
At the time of their commencement of
benefits, the plan defined disqualifying
employment to include only employment
covered by the plan, but not work as a
construction supervisor. Both participants
were employed as construction supervi-
sors after they commenced payment of
benefits. After the two participants’ ben-
efit payments had commenced in 1996,
theplanwasamendedin1998toexpand
its definition of disqualifying employment
to include any employment in the same
trade or craft, industry, and geographic
area covered by the plan, and the plan
stopped payments to the two participants
on account of their disqualifying employ-
ment as construction supervisors. The two
participants sued to recover the suspended
payments, claiming that the amendment
expanding the plan’s suspension provi-
sions violated section 204(g) of ERISA.
The Supreme Court, holding for the
two participants, ruled that section 204(g)
of ERISA prohibits a plan amendment ex-
panding the categories of post-retirement
employment that result in suspension of
the payment of early retirement benefits
already accrued. The Court held that,
while ERISA permits certain conditions
that are elements of the benefit itself (such
as suspensions under section 411(a)(3)(B)
of the Code and section 203(a)(3)(B) of
ERISA), such a condition may not be im-
posed on a benefit after the benefit has
accrued, and that the right to receive ben-
efit payments on a certain date may not
be limited by a new condition narrow-
ing that right. The Court agreed with the
7
th
Circuit that “[a] participant’s benefits
cannot be understood without reference
to the conditions imposed on receiving
those benefits, and an amendment placing
materially greater restrictions on the re-
ceipt of the benefit ‘reduces’ the benefit
just as surely as a decrease in the size of
the monthly benefit.”Central Laborers’,
547 U.S. at 744, quotingHeinz v. Central
Laborers’ Pension Fund, 303 F.3d 802,
805 (7
th
Cir. 2002).
On July 11, 1988, final regulations
(T.D. 8212) under section 411(d)(6) were
published in theFederal Register(53 FR
26050). Those regulations are contained
in §1.411(d)–4 (the 1988 regulations).
On August 12, 2005, final regulations
(T.D. 9219, 2005–38 I.R.B. 538) under
section 411(d)(6) were published in the
Federal Register(70 FR 47109) (the
2005 final regulations). Those 2005 final
regulations, which are largely contained
in §1.411(d)–3, set forth conditions under
which a plan amendment is permitted to
eliminate an optional form of benefit and
to eliminate or reduce an early retirement
benefit or a retirement-type subsidy that
creates significant burdens or complexi-
ties for the plan and its participants, but
only if the elimination does not adversely
affect the rights of any participant in a
1
The termapplicable amendment datemeans the later of the effective date of the amendment or the date that the amendment is adopted. See §1.411(d)–3(g)(4).
September 18, 20064512006–38 I.R.B.

more thande minimismanner. However,
those regulations reserved two topics for
later guidance—a utilization test and the
interaction of the permitted forfeiture rules
under section 411(a) with the anti-cutback
rules under section 411(d)(6) after taking
into account the decision inCentral La-
borers’.
In connection with the 2005 final reg-
ulations, a notice of public rulemaking
(REG–156518–04, 2005–38 I.R.B. 582)
under section 411(d)(6) of the Code was
published in theFederal Register(70 FR
47155) (the 2005 proposed regulations)
to address the two reserved topics dis-
cussed in this preamble. On December
6, 2005, the IRS held a public hearing on
the 2005 proposed regulations. Written
comments responding to the notice of pub-
lic rulemaking were also received. After
consideration of all the comments, the
2005 proposed regulations are adopted, as
amended by this Treasury Decision. The
revisions are discussed in this preamble.
Explanation of Provisions
Application of Section 411(d)(6) to Plan
Amendments Affecting Vesting
In applying the holding inCentral La-
borers’, these regulations retain the rule
in the 2005 proposed regulations that pro-
vides that a plan amendment that places
greater restrictions or conditions on a par-
ticipant’s rights to section 411(d)(6) pro-
tected benefits by adding or modifying a
plan provision relating to suspension of
benefit payments during a period of em-
ployment or reemployment violates sec-
tion 411(d)(6). This rule applies for peri-
ods beginning on or after June 7, 2004, the
date of the decision inCentral Laborers’.
For relief limiting the retroactive applica-
tion ofCentral Laborers’, see the discus-
sion under the heading “Effective Dates”
in this preamble.
These regulations also address a
broader question of the interaction of
the vesting rules in section 411(a) with the
requirements of section 411(d)(6), apply-
ing the reasoning inCentral Laborers’to
other situations. These regulations gener-
ally retain the rule in the 2005 proposed
regulations that a plan amendment that
decreases a participant’s accrued benefits,
or otherwise places greater restrictions
or conditions on a participant’s rights
to section 411(d)(6)protected benefits,
violates section 411(d)(6), even if the
amendment merely adds a restriction or
condition that is otherwise permitted un-
der the vesting rules in section 411(a)(3)
through (11).
2
These regulations also pro-
vide examples of the application of this
rule, including an example illustrating,
for changes in a plan’s vesting schedule,
the protection of a participant’s right to
have post-amendment vesting of the par-
ticipant’s pre-amendment accrued benefit
determined under the old vesting schedule.
Of course, these regulations also retain the
rule that such a plan amendment is permit-
ted under section 411(d)(6) to the extent
it applies to benefits accruing after the
applicable amendment date.
Some commentators agreed with the
rule in the 2005 proposed regulations that
adopts the holding and rationale ofCen-
tral Laborers’, but other commentators
raised concerns about the scope of the
rule. Several commentators argued that
Central Laborers’only addresses the in-
teraction of section 411(d)(6) with the
suspension of benefit rules under section
411(a)(3)(B), and does not require the ex-
tension of its holding to plan amendments
relating to the other vesting provisions
under section 411(a). Those commenta-
tors recommended that the regulations be
revised to narrow the scope of the rule
in the 2005 proposed regulations to the
fact pattern inCentral Laborers’.Other
commentators recommended that the fi-
nal regulations provide that, for a plan
amendment changing the plan’s vesting
schedule, the rule in the 2005 proposed
regulations does not apply, so that section
411(a)(10) would provide the exclusive re-
quirements for vesting schedule changes.
Some of these commentators supported
this request by stating that the rule in the
2005 proposed regulations had the effect
of rendering section 411(a)(10) moot.
After consideration of the comments re-
lating to the rule in the 2005 proposed
regulations, the Treasury Department and
the IRS believe that the holding and ra-
tionale in theCentral Laborers’decision
control and, thus, the rule in the 2005 pro-
posed regulations should be retained, sub-
ject to certain modifications. In this re-
gard, the Treasury Department and the IRS
note that the protection provided by sec-
tion 411(a)(10) applies with respect to fu-
ture accruals, whereas the protection ex-
tended by these regulations to changes in a
vesting schedule applies only with respect
to benefits accrued before the applicable
amendment date. However, in light of the
comments, these final regulations provide
a limited exception from the requirement
in the 2005 proposed regulations for a plan
changing its vesting computation period.
Under this exception, a plan amendment
that satisfies the rules for changing a plan’s
vesting computation period, as set forth in
applicable Department of Labor Regula-
tions,
3
does not fail to satisfy the require-
ments under section 411(d)(6) merely be-
cause the plan changes the plan’s vesting
computation period.
Utilization Test
These regulations generally retain the
rule in the 2005 proposed regulations
that a plan is permitted to be amended to
eliminate optional forms of benefit that
comprise a generalized optional form
4
for a participant with respect to benefits
accrued before the applicable amendment
date if certain requirements relating to
the use of the generalized optional form
are satisfied. Under the utilization test,
a plan is not permitted to eliminate any
core option
5
offered under the plan and
the plan amendment eliminating the gen-
eralized optional form cannot apply to
an optional form of benefit with an an-
nuity commencement date that is earlier
than the number of days in the maximum
QJSA explanation period (for example, a
2
However, note that section 411(d)(6) does not prohibit a plan amendment that reduces or suspends benefits under a multiemployer plan as permitted under section 411(a)(3)(F) (e.g.,aplan
amendment to reduce benefits as permitted under section 418D or to suspend benefit payments as permitted under section 418E).
3
See 29 CFR 2530.203–2(c) for rules relating to changing a plan’s vesting computation period. See also §§1.411(a)–8(b)(3) and 1.411(a)–8T(b)(3).
4
The termgeneralized optional formis defined in §1.411(d)–3(g)(8) as a group of optional forms of benefit that are identical except for differences due to the actuarial factors that areused
to determine the amount of the distributions under thoseoptional forms of benefit and the annuity starting dates.
5
The termcore optionis defined in §1.411(d)–3(g)(5) as a straight life annuity, a 75% joint and contingent annuity, a 10-year term certain and life annuity, and the most valuable option for a
participant with a short life expectancy.
2006–38 I.R.B.452September 18, 2006

90-day period) after the date the amend-
ment is adopted. The utilization test,
along with the redundancy method and the
core options method, are three permitted
methods for eliminating or reducing sec-
tion 411(d)(6)(B) protected benefits. See
§1.411(d)–3(c), (d), and (e) of the 2005
final regulations for rules relating to the
redundancy and core options methods.
These regulations provide that, in or-
der to eliminate a noncore optional form
of benefit under the utilization test, the
plan must satisfy two conditions. First, the
generalized optional form must have been
available to at least a minimum number
of participants who are taken into account
during the relevant look-back period. Sec-
ond, no participant must have elected the
optional form of benefit that is part of the
generalized optional form with an annu-
ity commencement date that is within the
look-back period.
Under the 2005 proposed regulations,
the look-back period was generally the 2
plan years immediately preceding the date
on which the plan amendment eliminat-
ing the general optional form is adopted.
These regulations modify the look-back
period from the 2005 proposed regulations
to include the portion of the plan year in
which the plan amendment is adopted that
precedes the date of adoption (the pre-
adoption period). Adding the pre-adoption
period to the look-back period ensures that
participants who elected the generalized
optional form with an annuity commence-
ment date within the year of adoption are
taken into account. However, in order to
reduce burdens for plans, the regulations
permit a plan to exclude from the look-
back period the calendar month in which
the amendment is adopted and the 1 or
2 preceding calendar months (to the ex-
tent those preceding months are within the
pre-adoption period). These regulations
also retain the rule under the 2005 pro-
posed regulations permitting a plan to ex-
tend the look-back period to include an ad-
ditional 1, 2, or 3 plan years.
Under the utilization test in the 2005
proposed regulations, the generalized op-
tional form being eliminated must have
been available to at least 100 participants
who are taken into account during the
look-back period. A participant is gener-
ally taken into account only if, during the
look-back period, the participant was eli-
gible to commence payment of an optional
form of benefit that is part of the gen-
eralized optional form being eliminated.
However, the 2005 proposed regulations
provided that a participant is not taken
into account if the participant did not elect
any optional form of benefit with an annu-
ity commencement date that is within the
look-back period, elected an optional form
of benefit that includes a single-sum distri-
bution that applies with respect to at least
25% of the participant’s accrued benefit,
elected an optional form of benefit that
was only available during a limited period
of time that contained a retirement-type
subsidy that was not extended to the gener-
alized optional form being eliminated, or
elected an optional form of benefit with an
annuity commencement date that is more
than 10 years before normal retirement
age.
Commentators recommended that the
regulations be revised to provide an alter-
native for smaller plans that cannot meet
the 100-participant requirement, even with
the 5-year look-back rule. Commenta-
tors also recommended that the utiliza-
tion test be revised to permit a plan to
use the utilization test to eliminate a gen-
eral optional form even if a small per-
centage of participantselected the general-
ized optional form. The percentages pro-
posedbythecommentatorsrangedfrom
1% to 5% of the participants. Commen-
tators further recommended that the reg-
ulations be revised to permit participants
who elected single-sum distributions to be
taken into account in determining the ap-
plicable number of participants.
In light of these comments, these regu-
lations include a number of revisions. In
applying the utilization test, the general-
ized optional form must be available to at
least the applicable number of participants
who are taken into account. These regu-
lations define the termapplicable number
of participantsas 50 participants. These
regulations also set forth a special rule that
permits a plan to take into account any par-
ticipant who elects a single-sum distribu-
tion that applied with respect to at least
25% of the participant’s accrued benefit,
provided the applicable number of partici-
pants is increased to 1,000 participants.
The Treasury Department and IRS con-
tinue to believe that the utilization test,
by its nature, determines which optional
forms are considered valuable to partici-
pants. This determination is made by ref-
erence to participants’ elections. The fact
that, during a 2-year period, no participant
in a substantial number of participant elec-
tions elected any optional form of benefit
that is within a generalized optional form
is a compelling indication that elimination
of that generalized optional form would
not adversely affect the rights of any par-
ticipant in a more thande minimisman-
ner. Conversely, if at least one participant
in the sample elected the generalized op-
tional form, that election would provide
significant evidence that the elimination
of the generalized optional form could ad-
versely affect the rights of some other par-
ticipant in a more thande minimisman-
ner. In addition, a plan that satisfies the
requirements of the utilization test is per-
mitted to be amended to eliminate all of
the optional forms of benefit that comprise
a generalized optional form without hav-
ing to satisfy separately the requirements
of §1.411(d)–3(e). Thus, these regulations
retain the requirement from the 2005 pro-
posed regulations that no participant must
have elected any optional form that is part
of the generalized optional form that is be-
ing eliminated.
Other Issues
These regulations also include a few
modifications to the 2005 final regulations.
Specifically, the regulations include spe-
cific reference to amendments permitted
under sections 418D and 418E (relating to,
respectively, to multiemployer plans in re-
organization and accrued benefits attrib-
utable to employer contributions that are
not eligible for the Pension Benefit Guar-
anty Corporation’s guarantee) as not be-
ing subject to the requirements of section
411(d)(6). See section 411(a)(3)(F), which
permits the reduction and suspension of
accrued benefits by a multiemployer plan
pursuant to sections 418D and 418E, as
well as section 4281 of ERISA.
These regulations also revise the
method for determining whether an op-
tional form of benefit is within a family
of optional forms of benefit for purposes
of eliminating redundant optional forms
of benefit in situations in which a plan
permits a participant to make different
distribution elections with respect to two
or more separate portions of the partici-
pant’s accrued benefit. Comments were
received recommending that the regu-
September 18, 20064532006–38 I.R.B.

lations be revised to permit a plan that
provides different elections with respect to
separate portions of a participant’s benefit
(for example, plans with one set of gener-
ally applicable distribution options and a
second set of distribution options that ap-
ply only to a participant’s benefit earned
while employed by a former employer)
to be permitted to apply the redundancy
rules separately to each set of distribution
options.
In light of this comment, these regula-
tions permit a plan toapply the redundancy
rules separately to each portion of the par-
ticipant’s benefit to which separate distri-
bution elections apply as if that portion
were the participant’s entire benefit. This
change is similar to the bifurcation rule in
§1.417(a)(3)–1(c)(5)(iii), which permits a
plan that permits a participant to make sep-
arate distribution elections with respect to
two or more portions of the participant’s
benefit to describe the financial effect and
relative value of combined optional forms
of benefit separately for each such portion
of the benefit, ratherthan for each optional
form of benefit (for example, each combi-
nation of possible elections).
Effective Dates
Applicability Dates for Amendments
Relating to Vesting
With respect to a plan amendment that
places greater restrictions or conditions on
a participant’s rights to section 411(d)(6)
protected benefits by adding or modifying
a plan provision relating to suspension of
benefit payments, the rules in these regu-
lations apply for periods beginning on or
after June 7, 2004. However, for a plan
amendment that places greater restrictions
or conditions on a participant’s rights to
section 411(d)(6) protected benefits with
respect to vesting, other than a plan amend-
ment relating to a suspension of benefit
payments, the rules in these regulations ap-
ply to plan amendments adopted after Au-
gust 9, 2006.
Applicability Date for Change to
Redundancy Rule Regarding Bifurcation
of Benefits
The change to the regulations permit-
ting a plan to apply the redundancy rules
separately to each portion of a participant’s
benefit to which separate distribution elec-
tions apply is applicable for amendments
adopted after August 9, 2006.
Applicability Date for Utilization Test
The rules provided in the utilization test
are applicable for amendments adopted af-
ter December 31, 2006.
Relief Limiting the Retroactive Application
of Central Laborers’
Rev. Proc. 2005–23, 2005–1 C.B.
991, as modified by Rev. Proc. 2005–76,
2005–50 I.R.B. 1139, limits the retroac-
tive application ofCentral Laborers’for
qualified plans under section 401(a) pur-
suant to the Commissioner’s authority
under section 7805(b)(8). Rev. Proc.
2005–23 provides that a qualified plan
will not be treated as having failed to sat-
isfy the requirements of section 401(a)
merely because a plan amendment that
was adopted before June 7, 2004, violated
section 411(d)(6) by adding or expanding
a provision under which a suspension of
benefit provision occurs. To receive this
treatment, a plan must adopt a reforming
plan amendment, comply operationally
with the reforming amendment, and pro-
vide to affected participants notice of the
right to elect retroactively to commence
payment of benefits. All of these actions
must be completed on or before January
1, 2007.
In response to the 2005 proposed reg-
ulations, some commentators expressed
concern on how section 411(d)(6) would
apply to plan amendments adopted many
years in the past when both the rules for
interpreting the suspension of benefit pro-
visions under section 411(a)(3)(B) and
the rules for satisfying section 411(d)(6)
were still being developed. Commentators
specifically raised the issue of whether the
adoption of a benefit suspension amend-
ment in response to the final suspension
of benefit regulations issued by the De-
partment of Labor would violate section
411(d)(6).
6
In light of these comments and taking
into account the Supreme Court’s sugges-
tion for relief inCentral Laborers’,
7
the
Treasury Department and IRS believe that
it is appropriate not to require that a plan
correct under Rev. Proc. 2005–23 in or-
der to qualify for relief from disqualifica-
tion under section 401(a) for a plan amend-
ment that added or expanded a suspension
of benefit provision if the amendment was
adopted before the effective date of the
1988 regulations under section 411(d)(6).
Providing this section 7805(b) treatment
for any such amendment is appropriate be-
cause it would be difficult to determine
whether a plan amendment adding or ex-
panding a suspension of benefit payment
that was adopted at that time violated sec-
tion 411(d)(6). In addition, any correc-
tion made for any affected plan participant
would likely be insignificant (especially in
light of subsequent accruals), while creat-
ing significant administrative burdens for
the plan.
Accordingly, pursuant to the Com-
missioner’s authority under section
7805(b)(8), a plan will not fail to sat-
isfy section 401(a) merely because the
plan was amended to add or expand a
suspension of benefit provision, provided
that the amendment was adopted before
January 1, 1989. In thecase of collectively
bargained plans, this relief applies to plan
amendments adopted before January 1,
1991. These dates are based on the effec-
tive dates of the 1988 regulations under
§1.411(d)–4 for plans generally existing
as of August 1, 1986.
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
6
See 29 CFR 2530.203–3, providing rules that permit a plan to withhold permanently a plan participant’s benefit payments on account of a continuation of employment or reemployment after
the payments commenced. See also Notice 82–23, 1982–2 C.B. 752 (providing guidance on the need to amend and the timing for a plan to be amended to comply with the final suspension
of benefit regulations).
7
The Court stated in Central Laborers’:
Nothing we hold today requires the IRS to revisit the tax-exempt status in past years of plans that were amended in reliance on the agency’s representations in its manual by expanding the
categories of work that would trigger suspension of benefit payments as to already-accrued benefits.The Internal Revenue Code gives the Commissioner discretion to decline to apply
decisions of this Court retroactively. . . . This would doubtless be an appropriate occasion for exercise of that discretion.
Central Laborers’, 541 U.S. at 748, n.4.
2006–38 I.R.B.454September 18, 2006

is not required. It has also been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations. In addition,
because no collection of information is im-
posed on small entities, the provisions of
the Regulatory Flexibility Act (5 U.S.C.
chapter 6) do not apply, and therefore, a
Regulatory Flexibility Analysis is not re-
quired. Pursuant to section 7805(b) of the
Code, the notice of proposed rulemaking
preceding these regulations was submitted
to the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal author of these regula-
tions is Pamela R. Kinard of the Office
of the Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities), Internal Revenue Service. How-
ever, personnel from other offices of the
Internal Revenue Service and Treasury
Department participated in their develop-
ment.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.411(a)–8 is amended
by adding paragraph (c)(3) to read as fol-
lows:
§1.411(a)–8 Changes in vesting schedule.
*****
(c) * * *
(3)Relationship with section 411(d)(6).
For additional requirements relating to
section 411(d)(6), see §1.411(d)–3(a)(3).
*****
Par. 3. Section 1.411(d)–3 is amended
by:
1. Revising the first sentence of para-
graph (a)(1).
2. Revising paragraphs (a)(3) and (f).
3. AddingExamples 3and4to para-
graph (a)(4),Example 3to paragraph
(b)(4), andExample 6to paragraph (h).
4. Adding paragraphs (c)(6), (j)(3),
(j)(4), and (j)(5).
The revisions and additions read as fol-
lows:
§1.411(d)–3 Section 411(d)(6) protected
benefits.
(a)Protection of accrued benefits—(1)
General rule. Under section 411(d)(6)(A),
a plan is not a qualified plan (and a trust
forming a part of such plan is not a quali-
fied trust) if a plan amendment decreases
the accrued benefit of any plan participant,
except as provided in section 412(c)(8),
section 4281 of the Employee Retirement
Income Security Act of 1974 as amended
(ERISA), or other applicable law (see,
for example, sections 418D and 418E of
the Internal Revenue Code, and section
1541(a)(2) of the Taxpayer Relief Act of
1997, Public Law 105–34 (111 Stat. 788,
1085)). * * *
*****
(3)Application of section 411(a) non-
forfeitability provisions with respect to
section 411(d)(6) protected benefits—(i)
In general. The rules of this paragraph
(a) apply to a plan amendment that de-
creases a participant’s accrued benefits,
or otherwise places greater restrictions
or conditions on a participant’s rights to
section 411(d)(6) protected benefits, even
if the amendment merely adds a restriction
or condition that is permitted under the
vesting rules in section 411(a)(3) through
(11). However, such an amendment does
not violate section 411(d)(6) to the extent
it applies with respect to benefits that ac-
crue after the applicable amendment date.
See section 411(a)(10) and §1.411(a)–8
for additional rules relating to changes in
a plan’s vesting schedule.
(ii)Exception for changes in a plan’s
vesting computation period.Notwith-
standing paragraph (a)(3)(i) of this sec-
tion, a plan amendment that satisfies the
applicable requirements under 29 CFR
2530.203–2(c) (rules relating to vesting
computation periods) does not fail to sat-
isfy the requirements of section 411(d)(6)
merely because the plan amendment
changes the plan’s vesting computation
period.
*****
(4) * * *
Example 3.(i)Facts. Employer N maintains Plan
C, a qualified defined benefit plan under which an
employee becomes a participant upon completion of
1 year of service and is vested in 100% of the em-
ployer-derived accrued benefit upon completion of
5 years of service. Plan C provides that a former
employee’s years of service prior to a break in ser-
vice will be reinstated upon completion of 1 year
of service after being rehired. Plan C has partici-
pants who have fewer than 5 years of service and
whoareaccordingly0%vestedintheiremployer-de-
rived accrued benefits. On December 31, 2007, ef-
fective January 1, 2008, Plan C is amended, in ac-
cordance with section 411(a)(6)(D), to provide that
any nonvested participant who has at least 5 consec-
utive 1-year breaks in service and whose number of
consecutive 1-year breaks in service exceeds his or
her number of years of service before the breaks will
have his or her pre-break service disregarded in de-
termining vesting under the plan.
(ii)Conclusion. Underparagraph(a)(3)ofthis
section, the plan amendment does not satisfy the
requirements of this paragraph (a), and thus violates
section 411(d)(6), because the amendment places
greater restrictions or conditions on the rights to
section 411(d)(6) protected benefits, as of January 1,
2008, for participants who have fewer than 5 years of
service, by restricting the ability of those participants
to receive further vesting protections on benefits
accrued as of that date.
Example 4.(i)Facts. (A) Employer O sponsors
Plan D, a qualified profit sharing plan under which
each employee has a nonforfeitable right to a percent-
age of his or her employer-derived accrued benefit
based on the following table:
September 18, 20064552006–38 I.R.B.

Completed years of serviceNonforfeitable percentage
Fewer than 30%
320%
440%
5
60%
680%
7100%
(B) In January 2006, Employer O acquires Com-
pany X, which maintains Plan E, a qualified profit
sharing plan under which each employee who has
completed 5 years of service has a nonforfeitable
right to 100% of the employer-derived accrued ben-
efit. In 2007, Plan E is merged into Plan D. On the
effectivedateforthemerger,PlanDisamended
to provide that the vesting schedule for participants
of Plan E is the 7-year graded vesting schedule of
Plan D. In accordance withsection 411(a)(10)(A),
the plan amendment provides that any participant of
Plan E who had completed 5 years of service prior
to the amendment is fully vested. In addition, as re-
quired under section 411(a)(10)(B), the amendment
provides that any participant in Plan E who has at
least 3 years of service prior to the amendment is
permitted to make an irrevocable election to have
the vesting of his or her nonforfeitable right to the
employer-derived accrued benefit determined under
either the 5-year cliff vesting schedule or the 7-year
graded vesting schedule.Participant G, who has an
account balance of $10,000 on the applicable amend-
ment date, is a participant in Plan E with 2 years of
service as of the applicable amendment date. As of
the date of the merger, Participant G’s nonforfeitable
right to G’s employer-derived accrued benefit is 0%
under both the 7-year graded vesting schedule of
Plan D and the 5-year cliff vesting schedule of Plan
E.
(ii)Conclusion. Under paragraph (a)(3) of this
section, the plan amendment does not satisfy the re-
quirements of this paragraph (a) and violates section
411(d)(6), because the amendment places greater
restrictions or conditions on the rights to section
411(d)(6) protected benefits with respect to G and
any participant who has fewer than 5 years of service
and who elected (or was made subject to) the new
vesting schedule. A method of avoiding a section
411(d)(6) violation with respect to account balances
attributable to benefits accrued as of the applicable
amendment date and earnings thereon would be for
Plan D to provide for the vested percentage of G
and each other participant in Plan E to be no less
than the greater of the vesting percentages under the
two vesting schedules (forexample, for G and each
other participant in Plan E to be 20% vested upon
completion of 3 years of service, 40% vested upon
completion of 4 years of service, and fully vested
upon completion of 5 years of service) for those
account balancesand earnings.
*****
(b) * * *
(4)* * *
Example 3.(i)Facts. Plan C, a multiemployer
defined benefit plan in which participation is limited
to electricians in the construction industry, provides
that a participant may elect to commence distribu-
tions only if the participant is not currently employed
by a participating employer and provides that, if the
participant has a specifiednumber of years of service
and attains a specified age, the distribution is with-
out any actuarial reduction for commencement be-
fore normal retirement age. Since the plan’s incep-
tion, Plan C has provided for suspension of pension
benefits during periods of disqualifying employment
(ERISA section 203(a)(3)(B) service). Before 2007,
the plan defined disqualifying employment to include
any job as an electrician in the particular industry and
geographic location to which Plan C applies. This
definition of disqualifying employment did not cover
a job as an electrician supervisor. In 2005, Participant
E, having rendered the specified number of years of
service and attained the specified age to retire with a
fully subsidized early retirement benefit, retires from
E’s job as an electrician with Employer Y and starts
a position with Employer Z as an electrician super-
visor. Employer Z is not a participating employer in
Plan C but is an employer in the same industry and
geographic location as Employer Y. When E left ser-
vice with Employer Y, E’s position as an electrician
supervisor was not disqualifying employment for pur-
poses of Plan C’s suspension of pension benefit pro-
vision, and E elected to commence benefit payments
in 2005. In 2006, effective January 1, 2007, Plan C
is amended to expand the definition of disqualifying
employment to include any job (including supervi-
sory positions) as an electrician in the same industry
and geographic location to which Plan C applies. The
plan’s definition of disqualifying employment satis-
fies the requirements of section 411(a)(3)(B). On Jan-
uary 1, 2007, E’s pension benefits are suspended be-
cause of E’s disqualifying employment as an electri-
cian supervisor.
(ii)Conclusion. Under paragraphs (a)(3) and
(b)(1) of this section, the 2007 plan amendment
violates section 411(d)(6), because the amendment
places greater restrictions or conditions on a partici-
pant’s rights to section 411(d)(6) protected benefits
to the extent it applies with respect to benefits that
accrued before January 1, 2007. The result would
be the same even if the amendment did not apply
to former employees and instead applied only to
participants who were actively employed at the time
of the applicable amendment.
*****
(c) * * *
(6)Separate application of redundancy
rules for bifurcated benefits. If a plan per-
mits the participant to make different dis-
tribution elections with respect to two or
more separate portions of the participant’s
benefit, the rules of this paragraph (c) are
permitted to be applied separately to each
such portion of the participant’s benefit as
if that portion were the participant’s entire
benefit. Thus, for example, if one set of
distribution elections applies to a portion
of the participant’s accrued benefit and an-
other set of distribution elections applies
to the other portion of the participant’s ac-
crued benefit, then with respect to one por-
tion of the participant’s benefit, the deter-
mination of whether any optional form of
benefit is within a family of optional forms
of benefit is permitted to be made disre-
garding elections that apply to the other
portion of the participant’s benefit. Sim-
ilarly, if a participant can elect to receive
any portion of the accrued benefit in a sin-
gle sum and the remainder pursuant to a set
of distribution elections, the rules of this
paragraph (c) are permitted to be applied
separately to the set of distribution elec-
tions that apply to the portion of the partici-
pant’s accrued benefit that is not payable in
a single sum (for example, for the portion
of a participant’s benefit that is not paid in
a single sum, the determination of whether
any optional form of benefit is within a
family of optional forms of benefit is per-
mitted to be made disregarding the fact that
the other portion of the participant’s bene-
fitispaidinasinglesum).
*****
(f)Utilization test—(1)General rule.A
plan is permitted to be amended to elim-
inate all of the optional forms of benefit
that comprise a generalized optional form
(as defined in paragraph (g)(8) of this sec-
tion) for a participant with respect to ben-
efits accrued before the applicable amend-
ment date if—
(i) None of the optional forms of bene-
fit being eliminated is a core option, within
the meaning of paragraph (g)(5) of this
section;
2006–38 I.R.B.456September 18, 2006

(ii) The plan amendment is not applica-
ble with respect to an optional form of ben-
efit with an annuity commencement date
that is earlier than the number of days
in the maximum QJSA explanation pe-
riod (as defined in paragraph (g)(9) of this
section) after the date the amendment is
adopted;
(iii) During the look-back period—
(A) The generalized optional form has
been available to at least the applicable
number of participants who are taken into
account under paragraph (f)(3) and (4) of
this section; and
(B) No participant has elected any op-
tional form of benefit that is part of the
generalized optional form with an annu-
ity commencement date that is within the
look-back period.
(2)Look-back period—(i)In general.
For purposes of this paragraph (f), the
look-back period is the period that in-
cludes—
(A) The portion of the plan year in
which such plan amendment is adopted
that precedes the date of adoption (the pre-
adoption period); and
(B) The 2 plan years immediately pre-
ceding the pre-adoption period.
(ii)Special look-back period
rules—(A)12-month plan year.Inthe
look-back period, at least 1 of the plan
years must be a 12-month plan year.
(B)Permitted 3-month exclusion in the
pre-adoption period. A plan is permitted
to exclude from the look-back period the
calendar month in which the amendment
is adopted and the preceding 1 or 2 calen-
dar months to the extent those preceding
months are contained within the pre-adop-
tion period.
(C)Permission to extend the look-back
period. In order to have a look-back pe-
riod that satisfies the minimum applica-
ble number of participants requirement in
paragraph (f)(1)(iii)(A) of this section, the
look-back period described in paragraph
(f)(2)(i)(B) of this section is permitted to
be expanded, so as to include the 3, 4, or 5
plan years immediately preceding the plan
year in which the amendment is adopted.
Thus, in determining the look-back pe-
riod, a plan is permitted to substitute the
3, 4, or 5 plan years immediately preced-
ing the pre-adoption period for the 2 plan
years described in paragraph (f)(2)(i)(B)
of this section. However, if a plan does
not satisfy the minimum applicable num-
ber of participants requirement of para-
graph (f)(1)(iii)(A) of this section using the
pre-adoption period and the immediately
preceding 5 plan years, the plan is not per-
mitted to be amended in accordance with
the utilization test in this paragraph (f).
(3)Participants taken into account.A
participant is taken into account for pur-
posesofthisparagraph(f)onlyifthepar-
ticipant was eligible to elect to commence
payment of an optional form of benefit that
is part of the generalized optional form be-
ing eliminated with an annuity commence-
ment date that is within the look-back pe-
riod. However, a participant is not taken
into account if the participant—
(i) Did not elect any optional form of
benefit with an annuity commencement
date that was within the look-back period;
(ii) Elected an optional form of benefit
that included a single-sum distribution that
applied with respect to at least 25% of the
participant’s accrued benefit;
(iii) Elected an optional form of bene-
fit that was only available during a limited
period of time and that contained a retire-
ment-type subsidy where the subsidy that
is part of the generalized optional form be-
ing eliminated was not extended to any op-
tional form of benefit with the same annu-
ity commencement date; or
(iv) Elected an optional form of benefit
with an annuity commencement date that
was more than 10 years before normal re-
tirement age.
(4)Determining the applicable number
of participants. For purposes of applying
the rules in this paragraph (f), the appli-
cable number of participants is 50 partic-
ipants. However, notwithstanding para-
graph (f)(3)(ii) of this section, a plan is
permitted to take into account any partic-
ipant who elected an optional form of ben-
efit that included a single-sum distribution
that applied with respect to at least 25% of
the participant’s accrued benefit, but only
if the applicable number of participants is
increased to 1,000 participants.
(5)Default elections. For purposes of
this paragraph (f), an election includes the
payment of an optional form of benefit that
applies in the absence of an affirmative
election.
*****
(h) * * *
Example 6.(i)Facts involving elimination of
noncore options using utilization test—(A)In gen-
eral. Plan G is a calendar year defined benefit plan
under which participants may elect to commence
distributions after termination of employment in the
following actuarially equivalent forms, with spousal
consent, if applicable: a straight life annuity; a 50%,
75%, or 100% joint and contingent annuity; or a
5-year, 10-year, or a 15-year term certain and life an-
nuity. A participant is permitted to elect a single-sum
distribution if the present value of the participant’s
nonforfeitable accrued benefit is not greater than
$5,000. The annuities offered under the plan are
generally available both with and without a social
security leveling feature. The social security leveling
feature provides for an assumed commencement of
social security benefits at any age selected by the
participant between the ages of 62 and 67. Under
Plan G, the normal retirement age is defined as age
65.
(B)Utilization test. In 2007, the plan sponsor
of Plan G, after reviewing participants’ benefit elec-
tions, determines that, during the period from January
1, 2005, through June 30, 2007, no participant has
elected a 5-year term certain and life annuity with a
social security leveling option. During that period,
Plan G has made the 5-year term certain and life
annuity with a social security leveling option avail-
able to 142 participants who were at least age 55 and
who elected optional forms of benefit with an annu-
ity commencement dates during that period. In ad-
dition, during that period, 20 of the 142 participants
elected a single-sum distribution and there was no re-
tirement-type subsidy available for a limited period of
time. Plan G, in accordancewith paragraph (f)(1) of
this section, is amended on September 15, 2007, ef-
fective as of January 1, 2008, to eliminate all 5-year
term certain and life annuities with a social security
leveling option for all annuity commencement dates
on or after January 1, 2008.
(ii)Conclusion. The amendment satisfies the re-
quirements of paragraph (f) of this section. First, the
5-year term certain and life annuity with a social se-
curity leveling option is not a core option as defined
in paragraph (g)(5) of this section. Second, the plan
amendment is not applicable with respect to an op-
tional form of benefit with an annuity commence-
ment date that is earlier than the number of days in the
maximum QJSA explanation period after the date the
amendment is adopted. Third, the 5-year term certain
and life annuity with a social security leveling option
has been available to at least 50 participants who are
taken into account for purposes of paragraph (f) of
this section during the look-back period. Fourth, dur-
ing the look-back period, no participant elected any
optional form that is part ofthe generalized optional
form being eliminated (for example, the 5-year term
and life annuity with a social security leveling op-
tion).
*****
(j) * * *
(3)Effective dates for rules relating
to section 411(a) nonforfeitability pro-
visions—(i)Application of suspension of
benefit rules to section 411(d)(6) protected
benefits. With respect to a plan amend-
ment that places greater restrictions or
conditions on a participant’s rights to sec-
tion 411(d)(6) protected benefits by adding
or modifying a plan provision relating to
September 18, 20064572006–38 I.R.B.

suspension of benefit payments during a
period of employment or reemployment,
the rules provided in paragraph (a)(3) of
this section apply to periods beginning on
or after June 7, 2004.
(ii)Application of section 411(a)
nonforfeitability provisions to section
411(d)(6) protected benefits. With respect
to a plan amendment that places greater
restrictions or conditions on a participant’s
rights to section 411(d)(6) protected bene-
fits other than a plan amendment described
in paragraph (j)(3)(i) of this section, the
rules provided in paragraph (a)(3) of this
section apply to plan amendments adopted
after August 9, 2006.
(4)Effective date for change to redun-
dancy rule regarding bifurcation of bene-
fits. The rules provided in paragraph (c)(6)
of this section are applicable for amend-
ments adopted after August 9, 2006.
(5)Effective date for rules relating to
utilization test. The rules provided in para-
graph (f) of this section are applicable for
amendments adopted after December 31,
2006.
*****
Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement.
Approved July 31, 2006.
Eric Solomon,
Acting Deputy Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on August 8,
2006, 8:45 a.m., and published in the issue of the Federal
Register for August 9, 2006, 71. F.R. 45379)
Section 446.—General Rule
for Methods of Accounting
26 CFR 1.446–1: General rule for methods of ac-
counting.
The Service modifies Rev. Proc. 2006–12,
2006–3 I.R.B. 310, to allow a taxpayer to utilize the
advance consent procedures of Rev. Proc. 97–27,
1997–1 C.B. 680, as modified and amplified by
Rev. Proc. 2002–19, 2002–1 C.B. 696, as ampli-
fied and clarified by Rev. Proc. 2002–54, 2002–2
C.B. 432, when seeking a change to a method of
accounting provided in §§ 1.263(a)–4, 1.263(a)–5,
or 1.167(a)–3(b) of the Income Tax Regulations in
conjunction with a change for the same item to a
method of accounting utilizing the 3½ month rule
authorized by § 1.461–4(d)(6)(ii) or the recurring
item exception authorized by § 1.461–5. See Rev.
Proc. 2006-37, page 499.
Section 461.—General
Rule for Taxable Year
of Deduction
The Service modifies Rev. Proc. 2006–12,
2006–3 I.R.B. 310, to allow a taxpayer to utilize the
advance consent procedures of Rev. Proc. 97–27,
1997–1 C.B. 680, as modified and amplified by
Rev. Proc. 2002–19, 2002–1 C.B. 696, as ampli-
fied and clarified by Rev. Proc. 2002–54, 2002–2
C.B. 432, when seeking a change to a method of
accounting provided in §§ 1.263(a)–4, 1.263(a)–5,
or 1.167(a)–3(b) of the Income Tax Regulations in
conjunction with a change for the same item to a
method of accounting utilizing the 3½ month rule
authorized by § 1.461–4(d)(6)(ii) or the recurring
item exception authorized by § 1.461–5. See Rev.
Proc. 2006-37, page 499.
2006–38 I.R.B.458September 18, 2006

Part III. Administrative, Procedural, and Miscellaneous
Examples Under Section
937(b)
Notice 2006–76
SECTION 1. PURPOSE
This notice provides additional exam-
ples to illustrate and confirm the applica-
tion of section 937(b) and Temp. Treas.
Reg. §§ 1.937–2T and –3T in determining
whether income is derived from sources
within a U.S. possession or territory speci-
fied in section 937(a)(1) (hereinafter “U.S.
territory”) or whether income is effectively
connected with the conduct of a trade or
business within a U.S. territory. The ex-
amples address solely the application of
the rules under section 937(b) and do not
address any other issue, including the cir-
cumstances in which a taxpayer would be
engaged in the conduct of a trade or busi-
ness within the United States within the
meaning of section 864 or how any trans-
action should be appropriately character-
ized. The Treasury Department and the
Internal Revenue Service (IRS) intend to
include these or substantially similar ex-
amples in additionalguidance to be pro-
vided on the application of the so-called
U.S. income rulein final regulations under
section 937(b). Until additional examples
are included in final regulations, taxpayers
maytreattheexamplessetforthinthisno-
tice as illustrative of the rules in the tem-
porary regulations.
SECTION 2. BACKGROUND
.01 Section 937(b)
Section 937 was added to the Inter-
nal Revenue Code by section 908 of the
American Jobs Creation Act (Public Law
108–357). Section 937(a) provides rules
for determining whether an individual is a
bona fideresident of a U.S. territory. Sec-
tion 937(b) provides rules for determining
whether income is derived from sources
within a U.S. territory and whether income
is effectively connected with the conduct
of a trade or business within a U.S. ter-
ritory. Section 937(b)(1) provides that,
except as provided in section 937(b)(2),
rules similar to the rules for determining
whether income is income from sources
within the United States or is effectively
connected with the conduct of a trade or
business within the United States shall ap-
ply for purposes of determining whether
income is from sourceswithin a U.S. terri-
tory or effectively connected with the con-
duct of a trade or business within a U.S.
territory.
Section 937(b)(2) sets forth the U.S.
income rule, which provides that income
treated as income from sources within the
United States or as effectively connected
with the conduct of a trade or business
within the United States is not treated as in-
come from sources within a U.S. territory
or as effectively connected with the con-
duct of a trade or business within a U.S. ter-
ritory. Section 937(b) grants the Secretary
regulatory authority to provide exceptions
to the rules provided in sections 937(b)(1)
and (b)(2).
.02 Treasury Regulations under section
937(b)
On April 11, 2005, Treasury and the
IRS published in the Federal Register
temporary regulations (T.D. 9194, 2005–1
C.B. 1016 [70 FR 18920–01], as cor-
rected at 70 FR 32489–01), which pro-
vided rules to implement section 937 and
to conform existing regulations to other
legislative changes with respect to U.S.
territories. A notice of proposed rulemak-
ing (REG–159243–03, 2005–1 C.B. 1075
[70 FR 18949–01]) cross-referencing the
temporary regulations was published in
the Federal Register on the same day. A
public hearing was held on July 21, 2005.
Final regulations relating to the residence
rules under section 937(a) were issued as
T.D. 9248, 2006–9 I.R.B. 524, on January
31, 2006. Final regulations under section
937(b) will be issued in a forthcoming
Treasury decision.
In general, the proposed and temporary
regulations under section 937(b)(1) pro-
vide that the principles of sections 861
through 865 and the regulations thereun-
der are to be applied in determining gross
and taxable income from sources within
and without a U.S. territory.SeeTemp.
Treas. Reg. § 1.937–2T(b). The proposed
and temporary regulations further provide
that the principles of section 864(c) and the
regulations thereunder are to be applied in
determining whether income is effectively
connected with the conduct of a trade or
business in a U.S. territory.SeeTemp.
Treas. Reg. § 1.937–3T(b).
The proposed and temporary regula-
tions under section 937(b)(2) incorporate
the U.S. income rule, which limits ap-
plication of the principles of the source
and effectively connected income rules
under sections 861 through 865 in order
to prevent erosion of the U.S. tax base.
SeeTemp. Treas. Reg. §§ 1.937–2T(c)(1)
and –3T(c)(1);see alsoH.R. Rep. No.
108–755, at 794 (2004). Although the pro-
posed and temporary regulations include
several examples applying section 937(b)
and Temp. Treas. Reg. §§ 1.937–2T and
–3T, some of the comments received by
Treasury and the IRS indicate an urgent
need for additional examples illustrating
the operation of the U.S. income rule. Ac-
cordingly, this notice provides two such
examples.
Treasury and the IRS plan to include
these or substantially similar examples in
final regulations. Until regulations under
section 937(b) are issued in final form, tax-
payers may treat the examples set forth in
this notice as illustrative of the rules in the
temporary regulations. In addition, Trea-
sury and the IRS continue to consider com-
ments received that have requested excep-
tions or other modifications to the U.S. in-
come rule.
SECTION 3. EXAMPLES
The following examples illustrate the
application of section 937(b):
Example 1. (i) Facts. Corporation A, a corpo-
ration organized in a U.S. territory (Territory X), is
engaged in a business consisting of the development
of computer software and the sale of that software.
Corporation A has its sole place of business in Ter-
ritory X. Assume for purposes of this example that
Corporation A is not engaged in the conduct of a
trade or business in the United States. Corporation
A receives orders for its software from customers in
the United States and around the world. After orders
are accepted, Corporation A’s software is either: (1)
loaded onto compact discsat Corporation A’s Terri-
tory X facility and shipped via common carrier, or
(2) downloaded from Corporation A’s server in Ter-
ritory X. The sales contract provides that the rights,
title, and interest in the product will pass from Cor-
poration A to the customer either at Corporation A’s
place of business in Territory X (if shipped in com-
pact disc form) or at Corporation A’s server in Ter-
ritory X (if electronicallydownloaded). Assume for
purposes of this example that each transaction is clas-
sified as a sale of a copyrighted article under Treas.
Reg. §§ 1.861–18(c)(1)(ii) and (f)(2).
September 18, 20064592006–38 I.R.B.

(ii) Analysis. Under the principles of section
863(a), as applied pursuant to Temp. Treas. Reg.
§ 1.937–2T(b), because Corporation A passes the
rights, title, and interest to the copyrighted articles in
Territory X, Corporation A’s sales income is sourced
to Territory X. Corporation A’s sales income is also
effectively connected with the conduct of a trade or
business in Territory X, under the principles of sec-
tion 864(c)(3) as applied pursuant to Temp. Treas.
Reg. § 1.937–3T(b). Corporation A’s income is
not from sources within the United States, nor is it
effectively connected with the conduct of a trade or
business in the United States. Accordingly, the U.S.
income rule of section 937(b)(2) and Temp. Treas.
Reg. §§ 1.937–2T(c)(1) and 1.937–3T(c)(1) does not
operate to prevent Corporation A’s sales income from
being Territory X source and Territory X effectively
connected income undersection 937(b)(1).
Example 2. (i) Facts. Corporation B, a corpo-
ration organized in Territory X, has its sole place of
business in Territory X. Assume for purposes of this
example that Corporation B is not engaged in the con-
duct of a trade or business in the United States. Cor-
poration B employs a software business model gener-
ally referred to as an “application service provider.”
Employees of Corporation B in Territory X develop
software and maintain it on Corporation B’s server in
Territory X. Corporation B’s customers in the United
States and around the world transmit detailed data
about their own customers to Corporation B’s server
and electronic storage facility in Territory X. The cus-
tomers pay a monthly fee to Corporation B under a
“Subscription Agreement,” and they can use the soft-
ware to generate reports analyzing the data at any
time but do not receive a copy of the software. Cor-
poration B’s software allows its customers to gener-
ate the reports from their location and to keep track
of their relationships with their own customers. As-
sume for purposes of this example that Corporation
B’s income from these transactions is derived from
the provision of services.
(ii) Analysis. Under the principles of section
861(a)(3) and Treas. Reg. § 1.861–4(a), as applied
pursuant to Temp. Treas. Reg. § 1.937–2T(b),
because Corporation B performs personal services
wholly within Territory X, the compensation Corpo-
ration B receives for services is sourced to Territory
X. Corporation B’s services income is also effec-
tively connected with the conduct of a trade or
business in Territory X, under the principles of sec-
tion 864(c)(3) as applied pursuant to Temp. Treas.
Reg. § 1.937–3T(b). Corporation B’s income is
not from sources within the United States, nor is it
effectively connected with the conduct of a trade
or business in the United States. Accordingly, the
U.S. income rule of section 937(b)(2) and Temp.
Treas. Reg. §§ 1.937–2T(c)(1) and 1.937–3T(c)(1)
does not operate to prevent Corporation B’s services
income from being Territory X source or Territory X
effectively connected income within the meaning of
section 937(b)(1).
SECTION 4. EFFECTIVE DATE
The examples in this notice illustrate
the principles of section 937(b) and the
temporary regulations, which generally
apply to taxable years ending after Octo-
ber 22, 2004, except with respect to the
U.S. income rule of section 937(b)(2) and
Temp. Treas. Reg. §§ 1.937–2T(c)(1) and
1.937–3T(c)(1), which apply to income
earned after December 31, 2004.
SECTION 5. DRAFTING
INFORMATION
The principal author of this notice is
Cleve Lisecki of the Office of Associate
Chief Counsel (International). For further
information regarding this notice, contact
Mr. Lisecki at (202) 435–5262 (not a toll-
free call).
NOTE:
Following is a list of related instructions and forms for filing Form 1042–S Electronically/Magnetically:
•Current Instructions for Form 1042–S
•Form 4419 — Application for Filing Information Returns Electronically/Magnetically
•Form 4804 — Transmittal of Information Returns Reported Magnetically
•Form 8508 — Request for Waiver From Filing Information Returns Electronically/Magnetically
•Form 8809 — Application for Extension of Time To File Information Returns
•Notice 210 — Preparation Instructions for Media Labels
•Publication 515 — Withholding of Tax on Nonresident Aliens and Foreign Entities (for general information and expla-
nation of tax law associated with Form 1042–S)
•Publication 901 — U.S. Tax Treaties
The Internal Revenue Service (IRS), Enterprise Computer Center at Martinsburg (ECC-MTB) encourages filers to make copies
of the blank forms in the back of this publication for future use. These forms can also be obtained by calling 1–800–TAX–FORM
(1–800–829–3676). You can also download forms and publications from the IRS Web Site atwww.irs.gov.
2006–38 I.R.B.460September 18, 2006

IMPORTANT NOTES:
IRS/ECC-MTB now offers anInternet connection at h
ttp://fire.irs.govfor electronic filing.
The FIRE System will be down from Dec. 22, 2006, through Jan. 2, 2007, for upgrading. It
is not operational during this time for submissions.
For files submitted on the FIRE System, it is the responsibility of the filer to check the status
within 5 business days to verify the results of your transmission.ECC-MTB will no longer
mail error reports for files which are bad.See Part B, Sec. 1, .03.
IRS/ECC-MTB no longer accepts 3
1
/2-inch diskettes for filing information returns.
For tax year 2008 forms filed in calendar year 2009, IRS/ECC-MTB will no longer accept
tape cartridges. Electronic filing will be the ONLY acceptable method for filing Form
1042–S at ECC-MTB.
Rev. Proc. 2006–34
TABLE OF CONTENTS
Part A. General
SEC. 1. PURPOSE................................................................................................. 463
SEC. 2. NATURE OF CHANGES—CURRENT YEAR (TAX YEAR2006).................................................. 463
SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, ENTERPRISE COMPUTING CENTER AT
MARTINSBURG
....................................................................................... 464
SEC. 4. FILING REQUIREMENTS.................................................................................. 465
SEC. 5. VENDOR LIST............................................................................................. 465
SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS
ELECTRONICALLY/MAGNETICALLY
.................................................................. 466
SEC. 7. TEST FILES............................................................................................... 466
SEC. 8. FILING OF INFORMATION RETURNS MAGNETICALLY AND RETENTION REQUIREMENTS.................... 467
SEC. 9. DUE DATES............................................................................................... 467
SEC. 10. PROCESSING OF INFORMATION RETURNS MAGNETICALLY AT IRS/ECC-MTB.............................. 468
SEC. 11. VALIDATION OF INFORMATION RETURNS AT IRS SERVICE CENTER....................................... 468
SEC. 12. COMMON SUBMISSION PROBLEMS....................................................................... 469
SEC. 13.AMENDED RETURNS...................................................................................... 470
SEC. 14. TAXPAYER IDENTIFICATION NUMBER (TIN)............................................................... 471
SEC. 15. EFFECT ON PAPER RETURNS AND STATEMENTS TO RECIPIENTS.......................................... 472
SEC. 16. DEFINITION OF TERMS.................................................................................. 472
SEC. 17. STATE ABBREVIATIONS.................................................................................. 475
Part B. Electronic Filing Specifications
SEC. 1. GENERAL................................................................................................ 476
September 18, 20064612006–38 I.R.B.

SEC. 2. ADVANTAGES OF FILING ELECTRONICALLY............................................................... 476
SEC. 3. ELECTRONIC FILING APPROVAL PROCEDURE............................................................. 476
SEC. 4. TEST FILES............................................................................................... 477
SEC. 5. ELECTRONIC SUBMISSIONS............................................................................... 477
SEC. 6. PIN REQUIREMENTS...................................................................................... 477
SEC. 7. ELECTRONIC FILING SPECIFICATIONS.................................................................... 478
SEC. 8. CONNECTING TO THE FIRE SYSTEM....................................................................... 478
SEC. 9. COMMON PROBLEMS AND QUESTIONS ASSOCIATED WITH ELECTRONIC FILING........................... 480
Part C. Tape Cartridge Filing Specifications
SEC. 1. GENERAL................................................................................................. 480
SEC. 2. TAPE CARTRIDGE FILING SPECIFICATIONS................................................................ 481
Part D. Record Format Specifications and Record Layouts
SEC. 1. TRANSMITTER “T” RECORD............................................................................... 481
SEC. 2. WITHHOLDING AGENT “W” RECORD...................................................................... 483
SEC. 3. RECIPIENT “Q” RECORD.................................................................................. 487
SEC. 4. RECONCILIATION “C” RECORD........................................................................... 492
SEC. 5. END OF TRANSMISSION “F” RECORD...................................................................... 493
Part E. Extensions of Time and Waivers
SEC. 1. GENERAL — EXTENSIONS................................................................................. 494
SEC. 2. SPECIFICATIONS FOR ELECTRONIC/MAGNETIC FILING OF EXTENSIONS OF TIME.......................... 495
SEC. 3. RECORD LAYOUT — EXTENSION OF TIME................................................................. 496
SEC. 4. EXTENSION OF TIME FOR RECIPIENT COPIES OF INFORMATION RETURNS................................. 497
SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS
ELECTRONICALLY/MAGNETICALLY
.................................................................. 497
Use this Revenue Procedure to prepare Tax Year2006and prior year information returns for submission to Internal Revenue Service
(IRS) using any of the following:
- Electronic Filing
- Tape Cartridge
This Revenue Procedure is not revised every year. Updates will beprinted as needed in the Internal Revenue Bulletin. General
Instructions for Form 1042–S are revised every year. Be sure to consult current instructions when preparing Form 1042–S.
2006–38 I.R.B.462September 18, 2006

Part A. General
Revenue Procedures are generally revised annually to reflect legislative and form changes. Comments concerning this Revenue
Procedure, or suggestions for making it more helpful, can be addressed to:
Internal Revenue Service
Enterprise Computing Center — Martinsburg
Attn: Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
Sec. 1. Purpose
.01The purpose of this Revenue Procedure is to provide the specifications for filing Form 1042–S with IRS electronically through
the FIRE (Filing Information Returns Electronically) System or magnetically, using IBM 3480, 3490, 3490E, 3590, or 3590E com-
patible tape cartridges. This Revenue Procedure must be used to prepare current and prior year information returnsfiled beginning
January 1, 2007, and received by IRS/ECC-MTB or postmarked by December 31, 2007.
.02Generally, the box names on the paper Form 1042–S correspond with the fields used to file electronically/magnetically; how-
ever, if discrepancies occur, the instructions in this Revenue Procedure govern.
.03This Revenue Procedure supersedes Rev. Proc. 2004–63 published as Publication 1187, Specifications for Filing Form 1042–S,
Foreign Person’s U.S. Source Income Subject to Withholding, Electronically or Magnetically.
.04Refer to Part A, Sec.16, for definitions of terms used in this publication.
.05Specifications for filing Forms W–2, Wage and Tax Statements, electronically/magnetically are available from the Social Secu-
rity Administration (SSA)only. Filers can call 1–800–SSA–6270 to obtain the phone number of the SSA Employer Service Liaison
Officer for their area.
.06IRS/ECC-MTB doesnotprocess Forms W–2. Paperand/ormagnetic media for Forms W–2 must be sent to SSA. IRS/ECC-
MTB does, however, process waiver requests (Form 8508) and extension of time to file requests (Form 8809) for Forms W–2 and
requests for an extension of time to provide the employee copies of Forms W–2.
.07The following Revenue Procedures and publications provide moredetailed filing procedures for certain information returns:
(a)2006 Instructions for Form 1042–S.
(b)Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, W–2G, and 1042–S.
(c)Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated
Tips, Electronically or Magnetically.
(d)Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W–2G, Electronically or Magnetically.
Sec. 2. Nature of Changes—Current Year (Tax Year2006)
.01Editorial changes of a clarifying nature have been made throughoutthis publication. Please read the entire publication carefully.
.02The procedure for submitting amended returns has completely changed. Please review Part A, Sec. 13, Amended Returns
carefully before submitting amended Forms 1042–S.
.03For files submitted on the Fire System, it is the responsibility of the filer to check the status of the file within 5 business days
to verify the results of the transmission. ECC-MTB will no longer mail error reports to filers for files that are bad. Information about
the errors including the number of errors, a description and the first occurrence will be provided on the FIRE System. If additional
information is needed to understand the errors, the filer can call toll-free 1–866–455–7438.
.04Paper filing of Form 1042–S and 1042–T is now handled by the Ogden Service Center, P.O. Box 409101, Ogden, UT 84409.
.05The following changes were made to Withholding Agent ‘W’ Record:
(a)Type of Return Indicator, position 2, has changed. There are now two indicators to select from, 0 (zero) for original return
and 1 (one) for amended return.There is no longer a void return.
(b)The new field ‘Withholding Agent Contact Name’, positions 273–317, was added.
(c)The new field ‘Withholding Agent’s Department Title’, positions 318–362, was added.
(d)The Contact Phone Number and Extension was moved to positions 363–382.
(e)The Final Return Indicator was moved to position 383.
(f)Positions 384–770 are now reserved.
.06The following change was made to the Recipient ‘Q’ Record:
(a)Type of Return Indicator, position 2, has changed. There are now two indicators to select from, 0 (zero) for original return
and 1 (one) for amended return.There is no longer a void return.
September 18, 20064632006–38 I.R.B.

(b)The new field U.S. Tax Withheld Indicator, position 761 was added. There are 3 values to choose from, 0 (zero) for correctly
reported, 1 (one) for over withheld, and 2 for under withheld.
Sec.3.WhereToFileandHowtoContacttheIRS,Enterprise Computing Center at Martinsburg
.01All information returns filed electronically or magnetically are processed at IRS/ECC-MTB. Files containing information re-
turns and requests for IRS electronic filing and tape cartridge information are sent to the following address:
IRS–Enterprise Computing Center — Martinsburg
Attn: 1042–S Reporting
230 Murall Drive
Kearneysville, WV 25430
.02 Allrequests for an extension of time to file information returns with IRS/ECC-MTB or to the recipients, and requests for undue
hardship waivers filed on Form 8508, are sent to the following address:
IRS–Enterprise Computing Center — Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
.03The telephone numbers for electronic or tape cartridge inquiries
submissions are:
Information Reporting Program Customer Service Section
TOLL-FREE 1–866–455–7438 or
Outside the U.S. 304–263–8700
email at m
ccirp@irs.gov
304–267–3367 — TDD
(Telecommunication Device for the Deaf)
304–264–5602 — Fax Machine
Electronic Filing — FIRE System
h
ttp://fire.irs.gov
TO OBTAIN FORMS:
1–800–TAX–FORM (1–800–829–3676)
www.irs.gov — IRS Web Site access to forms and publications.
.04Current Instructions for Form 1042–S have been included in the Publication 1187 for your convenience. The Form 1042–T is
used only to transmit Copy A ofpaperForms 1042–S. If filing paper returns, follow the mailing instructions on Form 1042–T and
submit the paper returns to theOgden Service Center, P.O. Box 409101, Ogden, UT 84409.
.05Requests for paper Form 1042–S should be made by calling the IRS toll-free number1–800–TAX–FORM (1–800–829–3676)
or via the IRS Web Site atw
ww.irs.gov.
.06Questions pertaining to magnetic media filing of Forms W–2mustbe directed to the Social Security Administration (SSA).
Filers can call 1–800–772–6270 to obtain the phone number of the SSA Employer Service Liaison Officer for their area.
.07Filersshould notcontact IRS/ECC-MTB if they have received a penalty notice and need additional information or are request-
ing an abatement of the penalty. A penalty notice contains an IRSrepresentative’s name and/or phone number for contact purposes;
or, the filer may be instructed to respond in writing to the address provided. IRS/ECC-MTB doesnotissue penalty notices and does
nothave the authority to abate penalties. For penalty information, refer to the Penalty section of thecurrent Instructions for Form
1042–S.
.08A taxpayer or authorized representative may request a copy of a tax return, including Form W–2 filed with a return, by submitting
Form 4506, Request for Copy of Tax Return, to IRS. This form may be obtained by calling1–800–TAX–FORM (1–800–829–3676).
For any questions regarding this form, call 215–516–2000 and select option 1. This is not a toll-free number.
2006–38 I.R.B.464September 18, 2006

.09The Information Reporting Program Customer Service Section (IRP/CSS), located at IRS/ECC-MTB, answers electronic, tape
cartridge, paper filing and tax law questions from the payer community relating to the filing of business information returns (Forms
1096, 1098, 1099, 5498, 8027, and W–2G).IRP/CSS also answers questions relating to the electronic/tapecartridge filing of
Forms 1042–S. Call toll-free 1–800–455–7438 ext. 6 for specific information on 1042–S filing.Inquiries dealing with backup
withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers are also addressed by
IRP/CSS. Assistance is available year-round to payers, transmitters, and employers nationwide, Monday through Friday, 8:30 a.m.
to 4:30 p.m. Eastern Standard Time, by calling toll-free1–866–455–7438or via email at m
ccirp@irs.gov. Do not include SSNs or
EINs on emails since this is not a secure line. The Telecommunications Device for the Deaf(TDD)toll number is304–267–3367.
Call as soon as questions arise to avoid the busy filing seasons. Recipients of information returns (payees) should continue to contact
1–800–829–1040 with any questions on how to report the information returns data on their tax returns.
Note: The Customer Service Section does not answer tax law questions concerning the requirements for withholding of tax
on payments of U.S. source income to foreign persons under Chapter 3 of the Code. If you need such assistance, you may call
215–516–2000 and select option 1 (not a toll-free number) or write to: Philadelphia Internal Revenue Service, International
Section, P.O. Box 920, Bensalem, PA 19020–8518.
Sec. 4. Filing Requirements
.01The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provide that any person, including a corporation,
partnership, individual, estate, and trust, who is required to file250 or more information returns must file such returns electroni-
cally/magnetically. Withholding agents who meet the threshold of 250 or more Forms 1042–S are required to submit their information
electronically or magnetically.
Note: Even though filers with less than 250 information returns are not required to submit the information returns electroni-
cally or magnetically and may submit them on paper, IRS encourages filers to transmit those information returns electronically
or magnetically.
.02These requirements apply separately to both originals and amended records filed electronically/magnetically.
.03All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification
Number (TIN), [Social Security Number (SSN), Employer Identification Number (EIN), Individual Taxpayer Identification Number
(ITIN), or Qualified Intermediary Employer Identification Number (QI-EIN), Withholding Foreign Partnership Employer Identifica-
tion Number (WP-EIN), Withholding Foreign Trust Employer Identification Number (WT-EIN)]. Forexample, if a corporation with
several branches or locations uses the same EIN, the corporation must aggregate the total volume of returns to be filed for that EIN
and apply the filing requirements to each type of return accordingly.
.04Filers who are required to submit their information returns on magnetic media may choose to submit their documents by elec-
tronic filing. IRS/ECC-MTB has one method for filinginformation returns electronically; see Part B.
.05The above requirements do not apply if the filer establishes hardship (see Part D, Sec. 5).
Sec. 5. Vendor List
.01IRS/ECC-MTB prepares a list of vendors whosupport electronic or tapecartridge filing. The Vendor List (Pub. 1582) contains
the names of service bureaus that will produce files on tape cartridges or via electronic filing. It also contains the names of vendors
who provide software packages for filers whowish to produce electronic or tape cartridge files on their own computer systems. This
list is compiled as a courtesy and in no way implies IRS/ECC-MTB approval or endorsement.
.02If filers meeting the filing requirementsengage a service bureau to prepare media ontheir behalf, the filers should be careful
not to report duplicate data, which may cause penalty notices to be generated.
.03The Vendor List, Publication 1582, is updated periodically. Themost recent revision will be available on the IRS website at
www.irs.gov.
.04A vendor who offers a software package, has the ability to produce tape cartridges for customers, or has the capability to
electronically file information returns, and would like to be included on the list, must submit a written request to IRS/ECC-MTB. The
request should include:
(a)Company name,
(b)Address (include city, state, and ZIP code),
(c)Telephone number (include area code),
(d)Email address,
(e)Contact person,
(f)Type(s) of service provided (e.g.,service bureau and/or software),
(g)Type(s) of media offered (e.g., tape cartridge, or electronic filing),
September 18, 20064652006–38 I.R.B.

(h)Type(s) of return(s)
Sec. 6. Form 4419, Application for Filing Information Returns Electronically/Magnetically
.01Transmitters are required to submit Form 4419, Application forFiling Information Returns Electronically/Magnetically, to
request authorization to file information returns with IRS/ECC-MTB. A single Form 4419 may be filed. IRS/ECC-MTB encourages
transmitters who file for multiple withholding agents or qualified intermediaries to submit one application and to use the assigned
Transmitter Control Code (TCC) for all. Please make sure you submit your electronic/magnetic files using the correct TCC.
Note: EXCEPTIONS — An additional Form 4419 is required for filing Forms 1098, 1099, 5498 and W2–G and Form 8027,
Employer’s Annual Information Return of Tip Income and Allocated Tips. See back of Form 4419 for detailed instructions.
.02Tape cartridge, and electronically filed returns may not be submitted to IRS/ECC-MTB until the application has been approved.
Please read the instructions on the back of Form4419 carefully. A Form 4419 is included inthe Publication 1187 for the filer’s use.
This form may be photocopied. Additional forms may be obtained by calling1–800–TAX–FORM (1–800–829–3676).Theformis
also available atwww.irs.gov.
.03Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) beginning with the digits“22”will be assigned
andincludedinanapprovalletter.TheTCCmustbe coded in the Transmitter “T” Record. If a transmitter uses more than one TCC
to file, each TCC must be reported on separate media orin separate transmissions if filing electronically.
.04Ifanyof the information (name, TIN or address) on the Form 4419 changes, please notify IRS/ECC-MTB in writing so the
IRS/ECC-MTB database can be updated. However, a change in the method by which information returns are being submitted is not
information which needs to be updated (e.g.,cartridge to electronic). The transmitter should include the TCC in all correspondence.
.05Form 4419 may be submitted anytime during the year; however, itmustbe submitted to IRS/ECC-MTB at least 30 days before
the due date of the return(s) for current year processing. This will allow IRS/ECC-MTB the minimum amount of time necessary
to process and respond to applications. In the event that computerequipment or software is not compatible with IRS/ECC-MTB, a
waiver may be requested to file returns on paper documents.
.06IRS/ECC-MTB encourages a transmitter who files for multiplewithholding agents to submit one application and to use the
assigned TCC for all withholding agents.
.07If a withholding agent’s files are prepared by a service bureau, it may not be necessary for the withholding agent to submit an
application to obtain a TCC. Some service bureaus will producefiles, code their own TCC on the media, and send it to IRS/ECC-
MTB for the withholding agent. Other service bureaus will prepare tape cartridges and return the media to the withholding agent for
submission to IRS/ECC-MTB. These servicebureaus may require the withholding agent toobtain a TCC to be coded in the Transmitter
“T” Record. Withholding agents should contact their service bureaus for further information.
.08Once a transmitter is approved to file electronically or magnetically, it is not necessary to reapply each yearunless:
(a)The withholding agent has discontinued filing electronically or magnetically for two consecutive years; the withholding
agent’s TCC may have been reassigned by IRS/ECC-MTB. Withholding agents who are aware that the TCC assigned will
nolongerbeusedarerequestedtonotifyIRS/ECC-MTB so these numbers may be reassigned;or
(b)The withholding agent’s tape cartridge files were transmitted in the past by a service bureau using the service bureau’s TCC,
but now the withholding agent has computer equipment compatible with that of IRS/ECC-MTB and wishes to prepare his
or her own files. The withholding agent must request a TCC by filing Form 4419.
.09One Form 4419 may be submitted regardless of how many types of media or methods are used to file the return. Multiple TCCs
will only be issued to withholding agents with multiple TINs. Only one TCC will be issued per TIN unless the filer has checked the
application for the following forms in addition to the Form 1042–S: Forms 1098, 1099, 5498, W–2G, and/or 8027. A separate TCC
will be assigned for these forms.
.10Approval to file does not imply endorsementby IRS/ECC-MTB of any computer software or of the quality of tax preparation
services provided by a service bureau or software vendor.
Sec. 7. Test Files
.01IRS/ECC-MTB strongly encourages all electronic or tape cartridge filers to submit a test. The test file must consist of a sample
of each type of record:
(a)Transmitter “T” Record
(b)Withholding Agent “W” Record
(c)Multiple Recipient “Q” Records(at least 20)
(d)Reconciliation “C” Record
(e)End of Transmission “F” Record
.02Use the Test Indicator“TEST”(upper case) in Field Positions 195–198 ofthe “T” Record to show this is a test file.
2006–38 I.R.B.466September 18, 2006

.03IRS/ECC-MTB will check the file to ensure it meets the specifications of this Revenue Procedure. For current filers, sending a
test file will provide the opportunity to ensuretheir software reflects all required programming changes. Filers are reminded that no
validity, consistency, or math error tests will be conducted.
.04Tests should be sent to IRS/ECC-MTB between November 1, 2006 and February 15, 2007. Tests must be received at ECC-MTB
by February 15, 2007 in order to be processed.
.05For tests filed on tape cartridge the transmitter must include the signed Form 4804 in the same package with the corresponding
tape cartridge. Mark the “TEST” box in Block 1 on the form. Also, mark “TEST” on the external media label.
.06IRS/ECC-MTB will send a letter of acknowledgment to indicate the test results for tapecartridges identifying the fatal errors.
Resubmission of a tape cartridge test file must be received by IRS/ECC-MTB no later than December 15. See Part B, Sec. 4.03 for
information on electronic test results.
.07Magnetic media will not be returned to filers.
Note: Most validity, consistency and related math error checks within individual “Q” Records will no longer be conducted as
part of ECC-MTB’s testing procedures.
Sec. 8. Filing of Information Returns Magnetically and Retention Requirem
ents
.01Form 4804, Transmittal of Information Returns Reported Magnetically, or a computer-generated substitute, must accompany
alltape cartridge shipments.
.02IRS/ECC-MTB allows for the use of computer-generated substitutes for Form 4804. The substitutes must contain all informa-
tion requested on the original forms including the affidavit and signatureline. Photocopies are acceptable but an original signature is
required. When using computer-generated forms, be sure to mark very clearly which tax year is being reported. This will eliminate a
phone communication from IRS/ECC-MTB to question the tax year.
.03Current and prior year data may be submitted in the same shipment; however, each tax year must be on separate media, and a
separate Form 4804 must be prepared to clearly indicate each tax year.
.04Filers who have prepared their information returns in advance of the due date should submit this information to IRS/ECC-MTB
no earlier than January 1 of the year the return is due.
.05Do not report duplicate information. If a filer submits returns electronically/magnetically, identical paper documents must not
be filed. This may result in erroneous penalty notices.
.06Form 4804 may be signed by the withholding agent or the transmitter, service bureau, paying agent, or disbursing agent (all
hereafter referred to as agent) on behalf of the payer. Failure to sign the affidavit on Form 4804 may delay processing or could
result in IRS/ECC-MTB requesting a replacement file. An agent may sign the Form 4804 if the agenthas the authority to sign the
affidavit under an agency agreement (eitheroral, written, or implied) that is valid under state law and adds the caption “FOR: (name
of withholding agent/payer).”
.07Although an authorized agent may sign the affidavit, the withholding agent is responsible for the accuracy of the Form 4804
and the returns filed. The withholding agent will be liable for tax and interest penalties for failure to comply with filing requirements.
.08A self-adhesive external media label, created by the filer, must be affixed to each tape cartridge. For instructions on how to
prepare an external media label, refer to Notice 210 in the forms section of this publication.
.09On the outside of the shipping container, affix or attach a label which reads“IRB Box
of”reflecting the
number of containers in the shipment. (Filers can create a label with this information or cut out one of the labels on the special label
page provided in this publication.) If there isonly one container, mark the outside as Box1of1. For multiple containers, include the
sequence (for example, Box 1 of 3, 2 of 3, 3 of 3).
.10When submitting magnetic files include the following:
(a)AsignedForm 4804;
(b)External media label (created by filer) affixed to the tape cartridge;
(c)IRB Box
ofoutside label.
.11IRS/ECC-MTB will not pay for or accept “Cash-on-Delivery” or “Charge to IRS” shipments of tax information that an indi-
vidual or organization is legally required to submit.
.12Withholding agents should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for
at least 3 years from the due date of the returns.
Sec. 9. Due Dates
.01The due dates for filing paper returns with IRS also applies to electronic/magnetic filing of Form 1042–S which is on a calendar
year basis.
.02Form 1042–S filed electronically/magnetically must be submitted to IRS/ECC-MTB on or before March 15.
.03If any due date falls on a Saturday, Sunday, or legal holiday, the return or statement is considered timely if filed or furnished
on the next day that is not a Saturday, Sunday, or legal holiday.
September 18, 20064672006–38 I.R.B.

.04Tape cartridge returns postmarked by the United States Postal Service (USPS) on or before March 15, and delivered by United
States mail to IRS/ECC-MTB after the due date, are treated as timely under the “timely mailing as timely filing” rule. Notice 97–26,
1997–1 C.B. 413, provides rules for determining the date that is treated as the postmark date. A similar rule applies to items delivered
by private delivery services (PDSs) designated by the IRS. A PDS must be designated by the IRS before it will qualify for the timely
mailing rule. (SeeNote.) Notice 2004–83, 2004–52 I.R.B. 1030, provides the list of designated PDSs. Designation is effective until
the IRS issues a revised list. For items delivered by a non-designated PDS, the actual date of receipt by IRS/ECC-MTB will be used
as the filing date. For items delivered by a designated PDS, but through a type of service not designated in Notice 2004–83, the actual
date of receipt by IRS/ECC-MTB will be used as the filing date.
Note: Due to security regulations at ECC-MTB, the Internal Revenue police officers will only accept media from PDSs or
couriers from8:00 a.m. to 3:00 p.m., Monday through Friday.
.05Statements to recipients must be mailed on or before March 15.
Sec. 10. Processing of Information Returns Magnetically at IRS/ECC-MTB
.01All data received at IRS/ECC-MTB for processing will be given the same protection as individual income tax returns (Form
1040). IRS/ECC-MTB will process the data and determine if the records are formatted and coded according to this Revenue Procedure.
.02 If the data is formatted incorrectly, IRS/ECC-MTB willrequest a replacement file inwriting. WhenIRS/ECC-MTB
requests a replacement file, it is because we encountered errors and were unable to process the media. Filers will receive a
Media Tracking Slip (Form 9267)and letter detailing the reason(s) their media could not be processed. It is imperative that
filers maintain backup copies and/or recreate capabilities for their information return files.
•Areplacementis an information return file sent by the filerat the request of IRS/ECC-MTBbecause of errors encountered
while processing the filer’s original submission. After necessary changes have been made, the file must be resubmitted for
processing along with the Media Tracking Slip (Form 9267) which was included in the correspondence from IRS/ECC-MTB.
Filers should never send anything to IRS/ECC-MTB marked “Replacement” unless IRS/ECC-MTB has requested a replace-
ment file in writing or via the FIRE System.
.03All fields indicated as “Required” in the record layouts in Part Cmustcontain valid information.If information is not valid,
IRS/ECC-MTB will request a replacement file. For example: In the Recipient “Q” Record, position 2, Return Type Indicator, the
only valid characters are “0” or “1”. If any other character is entered, a replacement file will be requested.
.04Tape cartridge files must be corrected and returned with the Media Tracking Slip (Form 9267) to IRS/ECC-MTB within 45
days from the date of the letter. Refer to Part B, Section 6, for procedures for correcting files submitted electronically. A penalty for
failure to file correct information returns by the due date will beassessed if the files are not corrected and replaced within the 45 days
or if IRS/ECC-MTB requests replacement files more than two times.A penalty for intentional disregard of the filing requirements
will be assessed if a replacement file is not received. (For penalty information, refer to the Penalty section of the current Instructions
for Form 1042–S.)
.05A letter identifying errors encountered willbe provided. It is the responsibility of the transmitter tocheck the entire replacement
file for errors before resubmitting.
.06IRS/ECC-MTB will not return tape cartridges. Therefore, if the transmitter wants proof that IRS/ECC-MTB received a ship-
ment, the transmitter should select a service with trackingcapabilities or one that willprovide proof of delivery.
.07IRS/ECC-MTBwillworkwithfilersasmuchaspossible to assist with processing problems.
Sec. 11. Validation of Information Returns at IRS Service Center
.01The accuracy of data reported on Form 1042–S will now be reviewed and validated at the IRS Service Center. All fields
indicated as“Required”in the record layouts in Part Dm
ustcontainvalid information. If the Service identifies an error, you will
be notified and required to provide correct information.
.02 Know your recipient!See Notice 2006–35, 2006–14 I.R.B. 708, for know-your-customer rules.
.03The tax rate entered must be a valid tax rate based on the Internal Revenue Code or on a valid treaty article. The valid treaty
rate is based on the recipient’s country of residence for tax purposes. The rate selected must be justified by the appropriate treaty. A
valid Tax Rate Table can be found in the Instructions for Forms 1042–S.
.04The Gross Income amount field must reflect pretax income. The Gross Income amount is the total income paid before any
deduction of tax at source.
.05If a qualified intermediary, withholding foreign partnership, or withholding foreign trust is acting as such, either as a withhold-
ing agent or as a recipient, the TIN reported must be a QI-EIN, WP-EIN, or WT-EIN and must begin with “98”. See definition of QI
in the Instructions for Form 1042–S.
2006–38 I.R.B.468September 18, 2006

.06Country Codes used must be valid codes taken from the Country Code Table. Generally, the use of “OC” or “UC” will generate
an error condition. If a recipient is claiming treaty benefits, the Country Code can never be “OC” or “UC”.
.07If a recipient is an “Unknown Recipient” or “Withholding RatePool”, no address should be present. These are the only two
situations where a street address is not required.
.08A U.S. TIN for a recipient is now generally required, particularly for most treaty benefits. The exceptions are very limited and
are listed in the current Instructions for Form 1042–S.
.09Apply the following formula to determine U.S. Federal Tax Withheld (field positions 48–59 of the “Q” Record). All field
positions described below are in the “Q” Record.
I
ncomeCodes(15–19)AllotherIncomeCodes
Gross Income Paid (6–17)Gross Income Paid (6–17)
Withholding Allowance (18–29)X Tax Rate (42–45)
= Net Income Amount (30–41)= U.S. Federal Tax Withheld (48–59)
X Tax Rate (42–45)
= U.S. Federal Tax Withheld (48–59)
.10If the Recipient Code is 20 (Unknown Recipient), the tax ratem
ustbe 30%.
.11When making a payment to an international organization (e.g., United Nations) or a tax-exempt organization under IRC 501(a),
use Country Code “OC”. Use “UC” only when you have an “Unknown Recipient”.
.12When using Exemption Code 4, the Recipient Country of Residence Code for Tax Purposes MUST be a VALID treaty country
(e.g., tax resident of Northern Ireland use United Kingdom). Do not use Exemption Code 4 unless a reduction or exemption of tax is
basedonatreatyclaim.
.13Generally, payments under Income Codes 06 and 08 are not exempt from withholding, however, certain exceptions apply. See
the current Instructions for Form 1042–S.
.14If income is from gambling winnings (Income Code 28) or is notspecified (Income Code 50), the tax rate must generally be
30%. This type of income is only exempt from withholding at source if the exemption is based on a tax treaty that has an “Other
Income” article.
.15If Income Code 20 (Earnings as Artist or Athlete) is used, the Recipient Code must be 09. Do not use Recipient Code 01
(Individual), 02 (Corporation), or 03 (Partnership). Generally, the tax rate cannot be reduced even if a treaty may apply.
.16When paying scholarship and fellowship grants (Income Code 15), the Recipient’s Country of Residence for Tax Purposes
must be identified and cannot be “OC” or “UC”. Grants that are exempt under Code Section 117 are no longer required to be reported
on Form 1042–S.
Note: Grants that are exempt under Code 117 include only amounts provided for tuition, fees, books, and supplies to a quali-
fied student. Amounts provided for room and board can only be exempted under a tax treaty and must be reported on Form
1042–S whether exempt from tax or not.
.17If a student is receiving compensation (Income Code 19) or a teacher or a researcher isreceiving compensation (Income Code
18), all or part of which is exempted from tax under a tax treaty, the Country of Residence for Tax Purposes must be identified and
cannot be “OC” or “UC”.
Sec. 12. Common Submission Problems
.01Publication 1187 is a format document,nota tax law document. Therefore, this publication cannot provide for all possible
reporting situations. For any given record entry, it is the responsibility of the filer to make sure that the relevant tax law is applied to
the record entry being made.
1. Incorrect TIN indicator in the “W” Record
Be careful that the correct TIN Indicator is used. A U.S. withholding agent always has an EIN. Only a foreign withholding agent
that has entered into a Qualified Intermediary agreement with the IRS can have a QI-EIN. If the withholding agent is a foreign
company then a foreign address must be entered in the withholding agent address fields.
2. Blank or invalid information in the Withholding Agent’s name and address fields
The IRS error correction process requires that the “W” Recordbe checked for validity before the “Q” Record can be corrected.
Please ensure that the withholding agent’s Name, EIN, Street Address, City and State or Country is present along with the
appropriate Postal or ZIP Code. Withholding Agent’s Name Line-1mustcontain the withholding agent’s name.
September 18, 20064692006–38 I.R.B.

3. Missing Recipient TIN in the “Q” Record
A Recipient TINmustbe present in order to allow a reduction or exemption from withholding at 30% tax rate. The only major
exceptions to this rule involve payments of portfolio interest, dividends, and certain royalty payments. If the recipient doesn’t have
a TIN, one must be applied for and provided to the withholding agent before a reduction or exemption of withholding is allowed.
4. Invalid recipient name and address information
The recipient name entered in Recipient’s Name Line–1 must be the same name shown on the withholding certification document
provided to and retained by the withholding agent. Recipient’s Street Line–1 should only show the official street address. Use
Recipient’s Street Line–2 for additional internal distribution information such as mail stop numbers or attention information.
Follow the instructions for entry of foreign postal codes, cities and countries. Do not input all information in the City field.
Use the appropriate fields and codes.
5. Incorrect use of Recipient Code 20 (Unknown Recipient)
This Recipient Code may be usedonlyif no withholding certification document has been provided to and retained by the
withholding agent, or the withholding certification document provided to and retained has been determined by the withholding
agent to be incomplete or otherwise unreliable. If Recipient Code 20 is used, then Recipient Name Line–1 must contain the
words Unknown Recipient and the other name and address fields must be blank.
6. Incorrect use of Recipient Code 20 and the Tax Rate and U.S. Tax Withheld fields
If Recipient Code 20 is used, the Tax Rate and the U.S. Tax Withheld must always be 30%. Exemption Code 04 (treaty
exemption)CANNOT BE USED.
7. Incorrect use of Country Codes in the “Q” Record
There are 3 places in the “Q” Record where country information must be entered. Generally, the information entered in these three
fields should be consistent. The country list in the Instructions for Form 1042–S is comprehensive.Do notuse any code that isn’t
on the list. Read the instructions for Form 1042–S regarding the use of “OC” and “UC”.Do notuse these two codes under any
circumstance other than those specifically indicated in the Instructions for Form 1042–S.
8. Incorrect reporting of Tax Rates in the “Q” Record
A valid Tax Rate Table can be found in the Instructions for Form 1042–S. Please refer to table and only use the tax rates listed.
“Blended rates” are not allowed. If a tax rate for a given recipient changes during the year, two “Q” Records must be submitted.
9. Total amounts reported in the “C” Record do not equal the total amounts reported in the “Q” Records.
The total Gross Income and U.S. Tax Withheld reported in the “Q” Record must equal the total Gross Income and Total U.S.
Tax Withheld reported in the corresponding “C” Record.
.02Problems relating specificallyto filing Form 1042–S electronically can be found in Part B, Sec. 9.
Sec. 13. Amended Returns
.01If you filed a Form 1042–S with the IRS and later discovered an error on the filing, you must send an amended 1042–S as soon
as possible.
Note: If any information you correct on Form(s) 1042–S changes the information previously reported on Form 1042, you must
also correct the Form 1042 by filing an amended return.
.02The magnetic media filing requirement of information returnsof 250 or more applies separately to both original and amended
returns.
E
X
A
M
P
L
E
If a withholding agent has 100 Forms 1042–S to be amended, they can be filed on paper because they fall
under the 250 threshold. However, if the withholding agent has 300 Forms 1042–S to be amended, they must
be filed electronically or magnetically because they exceed the 250 threshold. If for some reason a withholding
agent cannot file the 300 amended returns on magnetic media, to avoid penalties, a request for a waiver must
be submitted before filing on paper. If a waiver is approved for original documents, any amended returns for
the same type of return will be covered under this waiver.
2006–38 I.R.B.470September 18, 2006

.03Amended returns should be filedas soon as possible. Amended returns filed after August 1 may be subject to the maximum
penalty of $50 per return. Amended returns filed by August 1 may be subject to a lesser penalty. For information on penalties, refer to
the Penalty section of the current Instructions for Form 1042–S. However, if a withholding agent discovers errors after August 1, the
withholding agent is still required to file amended returns or be subject to a penalty for intentional disregard of the filing requirements.
If a record is incorrect, all fields on that record must be completed with the correct information. Submit amended returns only for the
returns filed in error. Do not submit the entire file. Furnish amended statements to recipients as soon as possible.
.04Amended returns must be identified on the Form 4804 and the external media label by indicating “Correction”.
Note: Do not include original returns and amended returns on the same media or in the same electronic file.
.05If filers discover that certain information returns were omitted on their original file, they mustnotcode these documents as
amended returns. The file must be coded and submitted as an original file.
.06Prior year data, original and amended,mustbe filed according to the requirements of this Revenue Procedure. If submitting
prior year amended returns, use the record format for the current year and submit on separate media. However, use the actual year
designation of the amended return in Field Positions 2–5 of the “T”Record. If filing electronically,a separate transmission must be
made for each tax year.
.07In general, filers should submit amended returnsfor returns filed within the last 3 calendar years.
.08All paper returns, whether original or amended, must be filed with IRS, Ogden Service Center, P.O. Box 409101, Ogden, UT
84409.
.09Form 4804 must be submitted with amended files submitted magnetically.
.10The “Q” Record provides a 20-position field (positions 72–91)for the recipient’s account number assigned by the withholding
agent. This number will help identify the appropriate incorrect return if more than one return is filed for a particular payee. This
number should appear on the initial return and on the amended return in order to identify and process the amended return properly.
Do not enter a TIN in this field.
.11The record sequence for filing amended returns is the same as for original returns.
.12Following is a chart showing the steps to be taken for amending Form 1042–S:
Guidelines for Filing Amended Returns Electronically/Magnetically
The record sequence for filing amended returns is the same as for original returns. Create the file in the following order exactly
the same as the original transmission:
(a)Transmitter “T” Record
(b)WithholdingAgent“W”RecordwithaReturnType Indicator of “1” (1 = Amended) in field
position 2
(c)Recipient “Q” Record(s) with thecorrect information includingthe recipient name and address,
money amounts and codes with a Return Type Indicator of “1” for amended in field position 2.
(d)Prepare a Reconciliation “C” Record summarizing the preceding amended “Q” Records.
Sample data sequence for amended records:
“T” Record
“W” Record coded as amended
“Q” Record coded as amended
“Q” Record coded as amended
“Q” Record coded as amended
“Q” Record coded as amended
“Q” Record coded as amended
“C” Record to summarize amended records
“F” Record
.14For information on when an amended Form 1042 is required, refer to Pub. 515, Withholding of Tax on Nonresident Aliens and
Foreign Entities.
Sec. 14. Taxpayer Identification Number (TIN)
.01Section 6109 of the Internal Revenue Code establishes the general requirements under which a person is required to furnish a
U.S. TIN to the person obligated to file the information return.
.02The Withholding Agent must provide its EIN, QI-EIN, WP-EIN or WT-EIN as appropriate, in the “W” Record and “T” Record
if the Withholding Agent is also the transmitter.
September 18, 20064712006–38 I.R.B.

.03A recipient U.S. TIN (SSN, ITIN, EIN,QI-EIN, WP-EIN, WT-EIN) must be provided on every “Q” Record when:
(a)Tax rate is less than 30% (See the current Instructions for Form 1042–S for exceptions)
(b)Income is effectively connected with the conduct of a trade or business in the United States
(c)Recipient claims tax treaty benefits (generally)
(d)Recipient is a Qualified Intermediary
(e)An NRA individual is claiming exemption from withholding on independent personal services
(f)Other situations may apply, see Publication 515
.04In the event the recipient does not have a U.S. TIN, the withholding agent should advise the recipient to take the necessary
steps to apply for one.
.05The recipient’s U.S. TIN and name combination are used to associate information returns reported to IRS/ECC-MTB with
corresponding information on recipients’ tax returns. It is imperative thatcorrectU.S. Taxpayer Identification Numbers (TINs) for
recipients be provided to IRS/ECC-MTB.Do not enter hyphens or alpha characters.Entering all zeros, ones, twos, etc., will have
the effect of an incorrect TIN.
.06The withholding agent and recipient names with associated TINs should be consistent with the names and TINs used on other
tax returns.
Note: A withholding agent must have a valid EIN, QI-EIN, WP-EIN, and/or WT-EIN. It is no longer valid for a withholding
agent to use SSNs and ITINs.
Sec. 15. Effect on Paper Returns and Statements to Recipients
.01Electronic/magnetic reporting of Form 1042–S eliminates the need to submit paper documents to the IRS.CAUTION: Do not
send Copy A of the paper forms to IRS for any forms filed electronically or on tape cartridge.This will result in duplicate filing.
.02Withholding agents are responsible for providing statements to the recipients as outlined in the current Instructions for Form
1042–S. Refer to those instructions for filing Form 1042–S on paper with the IRS and furnishing statements to recipients.
.03Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifica-
tions and guidelines in Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, W–2G, and
1042–S.
.04The address for filing paper Forms 1042–S and Form 1042 is:Ogden Service Center, P.O. Box 409101, Ogden, UT 84409.Do
NOTsend paper Forms 1042–S or 1042 to IRS/ECC-MTB.
Sec. 16. Definition of Terms
ElementDescription
Amended ReturnAn amended return is an information return submitted by the transmitter to amend an
information return that was previously submitted to and processed by IRS/ECC-MTB,
but contained erroneous information.
Beneficial OwnerThe beneficial owner of income is, generally, the person who is required under U.S.
tax principles to include the income in gross income on a tax return. For additional
information and special conditions see Definitions in the current Instructions for
Form 1042–S.
Employer Identification
Number (EIN)
A nine-digit number assigned by IRS for Federal tax reporting purposes.
Electronic FilingSubmission of information returnselectronically via the internet. See Part B of this
publication for specific information on electronic filing.
FileFor purposes of this Revenue Procedure,a file consists of one Transmitter “T” Record
at the beginning of the file, a Withholding Agent “W” Record, followed by the
Recipient “Q” Record(s), a Reconciliation “C” Record summarizing the number
of preceding “Q” Records and total of preceding money fields. Follow with any
additional “W”, “Q”, and “C” Record sequences as needed. The last record on the file
will be the End of Transmission “F” Record. Nothing should be reported after the End
of Transmission “F” Record. A file format diagram is located at the end of Part D.
FilerPerson (may be withholding agent and/ortransmitter) submitting information returns
to IRS.
2006–38 I.R.B.472September 18, 2006

ElementDescription
FIREFiling Information Returns Electronically (FIRE) System is the method for submitting
Forms 1042–S electronically toIRS/ECC-MTB. See Part B.
Filing YearThe calendar year in which the information returns are being submitted to IRS.
Flow-Through EntityA flow-throughentity is a foreign partnership (other than a withholding foreign
partnership) or a foreign simple or grantor trust (other than a withholding foreign
trust). For any payments for which a reduced rate of withholding under an income
tax treaty is claimed, any entity is considered to be a flow-through entity if it is
considered to be fiscally transparent under IRC Section 894 with respect to the
payment by an interest holder’s jurisdiction.
Foreign PersonA foreign person includes a nonresident alien individual, a foreign corporation,
a foreign partnership, a foreign trust, a foreign estate, and any other person that
is not a U.S. person. The term also includes a foreign branch or office of a U.S.
financial institution or U.S. clearing organization if the foreign branch is a Qualified
Intermediary. Generally, a payment to a U.S. branch of a foreign person is a payment
to a foreign person.
Gross IncomeGross income includes income from all sources, except certain items expressly
excluded by statute. Gross income is the starting point for computing adjusted gross
income and taxable income.
Individual Taxpayer Identification
Number (ITIN)
A nine-digit number issued by IRS to individuals who are required to have a U.S.
taxpayer identification number for tax purposes but are not eligible to obtain a Social
Security Number (SSN). ITIN may be used for tax purposes only.
Information ReturnThe vehicle for withholding agents to submit required tax information about a
recipient to IRS. For this Revenue Procedure, it is information about a foreign
person’s U.S. source income subject to withholding, and the information return is
Form 1042–S.
IntermediaryAn intermediary is a person that acts as a custodian, broker, nominee, or otherwise as
an agent for another person, regardless of whether that other person is the beneficial
owner of the amount paid, a flow-through entity, or another intermediary.
Magnetic MediaFor this Revenue Procedure, the term magnetic media refers to IBM 3480, 3490,
3490E, 3590, or 3590E compatible tape cartridge.
Media Tracking SlipForm 9267 accompanies correspondence sent by IRS/ECC-MTB requesting a
replacement file due to incorrect format or certain errors encountered when trying to
process the media.This form must be returnedwith the replacement file.
Nonqualified Intermediary (NQI)A Nonqualified Intermediary is a foreign intermediary that is not a U.S. person and
that is not a Qualified Intermediary.
PayerA payer is the person for whom the withholding agent acts as a paying agent pursuant
to an agreement whereby the withholdingagent agrees to withhold and report a
payment.
Presumption RulesThe presumption rules are thoserules prescribed under Chapter 3 and Chapter 61
of the Internal Revenue Code that a withholding agent must follow to determine
the status of a beneficial owner as a U.S. or foreign person when it cannot reliably
associate a payment with valid documentation.
Pro-Rata Basis ReportingIf the withholding agent has agreed that an NQI may provide information allocating
a payment to its account holders under the provisions of Regulations section
1.1441–1(e)(3)(iv)(D), and the NQI fails to allocate the payment in a withholding rate
pool to the specific recipients in the pool, the withholding agent must file a Form
1042–S for each recipient on a pro-rata basis.
September 18, 20064732006–38 I.R.B.

ElementDescription
Qualified Intermediary (QI)A Qualified Intermediary is a foreign intermediary that is a party to a withholding
agreement with the IRS, in which it agrees to comply with the relevant terms of
Chapters 3 and 61 of the Internal Revenue Codeand is in a country with approved
know-your-customer rules. See Notice 2006–35
Qualified Intermediary Employer
Identification
A nine-digit number assigned by IRS to a QI for Federal tax reporting purposes. A
QI-EIN is only to be used when a QI is acting as a qualified intermediary.
RecipientPerson (nonresident alien individual, fiduciary, foreign partnership, foreign
corporation, Qualified Intermediary, Withholding Rate Pool, or other foreign entity)
that receives payments from a withholding agent as a beneficial owner or as a
qualified intermediary acting on behalf of a beneficial owner. A non-qualified
intermediary cannot be a recipient.
Replacement FileA replacement file is an information return file sent by the filerat the request of
IRS/ECC-MTBbecause of certain errorsencountered while processing the filer’s
original submission.
Service BureauPerson or organization with whom the withholding agent has a contract to prepare
and/or submit information return files to IRS/ECC-MTB. A parent company
submitting data for a subsidiary is not considered a service bureau.
Social Security Number (SSN)A nine-digit number assigned by Social Security Administration to an individual for
wage and tax reporting purposes.
Special CharacterAny character that isnota numeric, an alpha, or a blank.
Taxpayer Identification Number (TIN)Refers to either an Employer Identification Number (EIN), Social Security Number
(SSN), Individual Taxpayer Identification Number (ITIN), or a Qualified Intermediary
Employer Identification Number (QI-EIN).
Tax YearThe year in which payments were made by a withholding agent to a recipient.
TransmitterRefers to the person or organization submitting file(s) electronically/magnetically.
The transmitter may be the payer, agent of the payer, or withholding agent.
Transmitter Control Code
(TCC)
A five-character alpha/numeric number assigned by IRS/ECC-MTB to the transmitter
prior to filing electronically or magnetically. An application Form 4419 must be
filed with IRS/ECC-MTB to receive this number. This number is inserted in the
Transmitter “T” Record (field positions 190–194) of the file andmustbe present
before the file can be processed. Transmitter Control Codes assigned to 1042–S filers
will always begin with“22”.
Unknown RecipientFor this Revenue Procedure, an unknown recipient is a recipient for which no
documentation has been received by a withholding agent or intermediary or for which
documentation received cannot be reliablyassociated. This includes incomplete
documentation. An unknown recipient is always subject to withholding at the
maximum applicable rate. No reduction of or exemption from tax may be applied
u
nderanycircumstances.
VendorVendors include service bureaus that produce information return files on tape
cartridges or via electronic filing for withholding agents. Vendors also include
companies that provide software for those who wish to produce their own media
or electronic files.
2006–38 I.R.B.474September 18, 2006

ElementDescription
Withholding AgentAny person, U.S. or foreign, thathas control, receipt, or custody of an amount subject
to withholding or who can disburse or make payments of an amount subject to
withholding. The withholding agent may be an individual, corporation, partnership,
trust, association, or any other entity. Theterm withholding agent also includes, but is
not limited to, a qualified intermediary, a nonqualified intermediary, a withholding
foreign partnership, a withholding foreign trust, a flow-through entity, a U.S. branch
of a foreign insurance company or foreign bank that is treated as a U.S. person, and an
authorized foreign agent. A person may be a withholding agent under U.S. law even
if there is no requirement to withhold from a payment or even if another person has
already withheld the required amount from a payment.
Withholding Foreign Partnership (WP)
or Withholding Foreign Trust (WT)
A foreign partnership or trust that has entered into a withholding or Withholding
Foreign Trust agreement with the IRS in which it agrees to assume primary
withholding responsibility for all payments that are made to it for its partners,
beneficiaries, or owners.
Sec. 17. State Abbreviations
.01The following state and U.S. territory abbreviations are to be used when developing the state code portion of address fields.
This table provides state and territory abbreviations.
StateCodeStateCodeStateCode
AlabamaALKentuckyKYNo. Mariana IslandsMP
AlaskaAKLouisianaLAOhioOH
American SamoaASMaineMEOklahomaOK
ArizonaAZMarshal
lIslands
MHOregonOR
ArkansasARMarylandMDPennsylvaniaPA
CaliforniaCAMassachusettsMAPuerto RicoPR
ColoradoCOMichiganMIRhode IslandRI
ConnecticutCTMinnesotaMNSouth CarolinaSC
DelawareDEMississippiMSSouth DakotaSD
Distr
ict of Columbia
DCMisso
uri
MOTenne
ssee
TN
Federated States of Micronesia FMMontanaMTTexasTX
FloridaFLNebraskaNEUtahUT
GeorgiaGANevadaNVVermontVT
GuamGUNew HampshireNHVirginiaVA
HawaiiHINew JerseyNJU.S. Virgin IslandsVI
Ida
ho
IDNew
Mexico
NMWas
hington
WA
IllinoisILNew YorkNYWest VirginiaWV
IndianaINNorth CarolinaNCWisconsinWI
IowaIANorth DakotaNDWyomingWY
KansasKS
.02When reporting APO/FPO addresses use the following format:
EXAMPLE:
Recipient NamePVT Willard J. Doe
MailingAddressCompanyF,PSCBox100
167InfantryREGT
Recipient CityAPO (or FPO)
Recipient StateAE, AA, or AP*
September 18, 20064752006–38 I.R.B.

EXAMPLE:
Recipient ZIP Code098010100
*AE is the designation for ZIPs beginning with 090–098, AA for ZIP 340, and AP for ZIPs 962–966.
Part B. Electr
onic Filing Specifications
Note: The FIRE
System is now on the Internet at h
ttp://fire.irs.gov.It is no longer a dial-up connection.
Sec. 1. Genera
l
.01Electroni
c filing of Form 1042–S (originals, amended and replacement files) is offeredas an alternative to tape cartridge or
paper filing.
Filing electronically will fulfill the magnetic media requirements for those payers who are required to file magnetically.
Payers who are
under the filing threshold requirement, are encouraged to file electronically. If the original file was sent magnetically,
but IRS/ECC-
MTB has requested a replacement file, the replacement may be transmitted electronically. Also, if the original file was
submitted vi
a tape cartridge, amended returns or replacement files may be transmitted electronically.
.02All elect
ronic filing of informationreturns are received at IRS/ECC-MTB via the FIRE (Filing Information Returns Electron-
ically) Syst
em. To connect to the FIRE System, point your browser toh
ttp://fire.irs.gov.The system is designed to support the
electronic f
iling of information returns only.
.03For files
submitted on the FIRE System, it is the responsibility of the filer to check the status of your file within 5 business days
to verify the
results of your transmission. ECC-MTB will no longer mail error reports to filers for files that are bad. Information about
the errors i
ncluding the number of errors, a description and the first occurrence will be provided on the FIRE System. If additional
informatio
n is needed to understand the errors, the filer can call toll-free 1–866–455–7438.
.04The elec
tronic filing of information returns is not affiliated with any other IRS electronic filing programs. Filers must obtain
separate ap
proval to participate in each of them. Only inquiries concerning electronic filingof information returns should be directed
to IRS/ECC-
MTB.
.05Files su
bmitted to IRS/ECC-MTB electronicallymust be in standard ASCII code. Do not send tape cartridges or paper forms
with the sam
e information as electronically submitted files. This would create duplicate reporting resulting in penalty notices.
.06The reco
rd formats of the “T”, “W”, “Q”, “C”, and “F” records arethe same for both electronically or magnetically filed
records. Se
e Part D, Record Format Specifications and Record Layouts.
Sec. 2. Adva
ntages of Filing Electronically
Some of the a
dvantages of filing electronically are:
(1)Paperless,
no Form 4804 requirements.
(2)Security — S
ecure Socket Layer (SSL) 128-bit encryption.
(3)Results ava
ilable within 5 business days regarding the acceptability ofthe data transmitted. It is the filer’s responsibility to
logintothe
system and check the results.
(4)Better cust
omer service due to on-line availability of transmitter’s files for research purposes.
Sec. 3. Elec
tronic Filing Approval Procedure
.01Filers m
ust obtain, or already have, a Transmitter Control Code (TCC) assigned prior to submitting their files electronically.
(Filers wh
o currently have a TCC for magnetic media filing of Form 1042–S, beginning with “22”, will not be assigned a second TCC
for electr
onic filing.) Refer to Part A, Sec. 6, for information on how to obtain a TCC.
.02OnceaT
CC is obtained, electronic filers assign their own user ID, password and PIN (Personal Identification Number) and do
not need pr
ior or special approval. See Part B, Sec. 6, for more information on the PIN.
.03If a fil
er is submitting files for more than one TCC, it is not necessary to create a separate logon and password for each TCC.
.04For all
passwords, it is the user’s responsibility to remember the password and not allow the password to be compromised.
Passwords
are user assigned at first logon and must be 8 alpha/numerics containing at least 1 uppercase, 1 lowercase, and 1 numeric.
However, f
ilers who forget their password or PIN, can call attoll-free 1–866–455–7438 or outside the U.S. at 304–263–8700for
assistanc
e. The FIRE System may require users to change their passwords on a yearly basis.
2006–38 I.R.B.476September 18, 2006

Sec. 4. Test Files
.01Filers are not required to submit a test file; however, the submission of a test file is encouraged for all new electronic filers to
test hardware and software. If filers wish to submit an electronic test file for Tax Year2006(returns to be filed in2007), itmustbe
submitted to IRS/ECC-MTBno earlier thanNovember 1, 2006, andno later thanFebruary 15, 2007.
.02Filers who encounter problems while transmitting the electronic test file can contact IRS/ECC-MTBtoll-free at
1–866–455–7438 or outside the U.S. at 304–263–8700for assistance.
.03Filers must verify the status of the transmitted test data by going to h
ttp://fire.irs.govand verifying the status of their file by
clicking on CHECK FILE STATUS. This information will be available within 5 business days after the transmission is received by
IRS/ECC-MTB.
.04Form 4804 is not required for test files submitted electronically. See Part B, Sec. 6.
Sec. 5. Electronic Submissions
.01Electronically filed information may be submitted to IRS/ECC-MTB 24 hours a day, 7 days a week. Technical assistance will
be available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Standard Time by callingtoll-free at 1–866–455–7438
or outside the U.S. at 304–263–8700.
.02 The FIRE System will be down from December 22, 2006, through January 2, 2007.This allows IRS/ECC-MTB to update
its system to reflect current year changes.
.03If you are sending files larger than 10,000 records electronically, data compression is encouraged. If you are considering
sending files larger than 5 million records, please contact IRS/ECC-MTB for specifics. WinZip and PKZip are the only acceptable
compression packages. IRS/ECC-MTB cannot accept self-extracting zip files or compressed files containing multiple files. The time
required to transmit information returns electronically will vary depending upon the type of connection to the internet and if data
compression is used.The time required to transmit a file can be reduced by as much as 95 percent by using compression.
.04Transmitters may create files using self assigned files name(s). Files submitted electronically will be assigned a new unique
file name by the FIRE System. The filename assigned by the FIRE System will consist of submission type (TEST, ORIG [original],
AMEN [amended return], and REPL [replacement]), the filer’s TCC and a four-digit number sequence. The sequence number will
be incremented for every file sent. For example, if it is your first original file for the calendar year and your TCC is 22000, the IRS
assigned filename would be ORIG.22000.0001.Record the file name. This information will be needed by ECC-MTB to identify the
file, if assistance is required.
.05If a file was submitted timely and is bad, the filer will have up to 60 days from the day the file was transmitted to transmit an
acceptable file. If an acceptable file is not received within 60 days, the payer could be subject to late filingpenalties. This only applies
to files originally submitted electronically.
.06The following definitions have beenprovided to help distinguish between a amended return and a replacement:
•Anamended returnis an information return submitted by the transmitter to correct an information return that was previously
submitted to and processed by IRS/ECC-MTB, but contained erroneous information.(See Note.)
Note: Amended return should only be submitted for records that have been submitted incorrectly, not the entire file.
•Areplacementis an information return file sent by the filer because the CHECK FILE STATUS option on the FIRE System
indicated the original/amended file was bad. After the necessary changes have been made, the file must be transmi
tted through
the FIRE System.(See Note.)
Note: Filers should never transmit anything to IRS/ECC-MTB as a “Replacement” file unless the CHECK FILE STATUS
option on the FIRE System indicates the file is bad.
.07The TCC in the Transmitter “T” Record must be the TCC used to transmit the file; otherwise, the file will be consi
dered an
error.
Sec. 6. PIN Requirements
.01Form 4804 is not required for electronic files. Instead, the user will be prompted to create a PIN consisting of 10 numerics
when establishing their initial logon name and password.
.02The PIN is required each time an ORIGINAL, AMENDED, or REPLACEMENT file is sent electronically and is permission
to release the file. It is not needed for a TEST file. An authorized agent may enter their PIN, however, the payer is responsible for the
accuracy of the returns. The payer will be liable for penalties for failure to comply with filing requirements. If you forget your PIN,
please calltoll-free at 1–866–455–7438 ext. 3 or outside the U.S. at 304–263–8700 ext. 3for assistance.
September 18, 20064772006–38 I.R.B.

Sec. 7. Electronic Filing Specifications
.01The FIRE System is designed exclusively for the filing of Forms 1042–S, 1098, 1099, 5498, 8027, and W–2G.
.02A transmitter must have a TCC (see Part A, Sec. 6) before a file can be transmitted. A TCC assigned for 1042–S magnetic
media filing should also be used for electronic filing.
.03The results of the electronic transmission will be available in the CHECK FILE STATUS area of the FIRE System within 5
business days. It is the filer’s responsibility to verify the acceptability of files submitted by selecting the CHECK FILE STATUS
option.
Sec. 8. Connecting to the FIRE System
.01Point your browser to http://fire.irs.govto connect to the FIRE System.
.02Before connecting, have your TCC and EIN available.
.03Your browser must support SSL 128-bit encryption.
.04Your browser must be set to receive “cookies”. Cookies are used to preserve your User ID status.
F
irsttimeconnectiontoTheFIRESystem(If you have logged on previously, skip to Subsequent Connections to the FIRE
System.)
Click“Create New Account”.
Fill out the r
egistration form and click“Submit”.
Enter yourUser ID(most users logon with their first and last name).
Enter and verify yourpassword(the password is user assigned and must be 8 alpha/numerics,
containing at least 1 uppercase, 1 lowercase and1numeric).FIREmayrequireyoutochange
the password once a year.
Click“Create”.
If you receive the message“Account Created”,click“OK”.
Enter and verify your 10-digit self-assigned PIN (Personal Identification Number).
Click“Sub
mit”.
If you receive the message“Your PIN has been successfully created!”,click“OK”.
Read the bulletin(s) and/or click“Click here to continue”.
S
ubsequentConnectionstoTheFIRESystem
Click“Log On”.
Enter yourUser ID(most users logon with their first and last name).
Enter y
ourpassword(the password is user assigned and is case sensitive).
U
ploadingyourfiletotheFIRESystem
At Menu Options:
Click“Send Information Returns”
Enter yourTCC:
Enter yourEIN:
Click“Submit”.
2006–38 I.R.B.478September 18, 2006

UploadingyourfiletotheFIRESystem
The system will then display the company name, address, city, state, ZIP code, phone number,
contact and email address. This information will be used to contact or send correspondence (if
necessary) regarding this transmission. Please verify your email address is correct as this will be
increasingly used to contact filers in the future. Update as appropriate and/or Click“Accept”.
Click one of the following:
Original File
Amended File
Test File(T
his option will only be available 11/1/2006 - 02/15/2007.)
Replacement File(if you select this option, select one of the following):
Electronic Replacement(file was originally transmitted on this system)
Click the file to be replaced
Magnetic Media Replacement
Enter the alpha character from Form9267, Media Tracking Slip, that was
sent with the request for replacement file. Click“Submit”.
Enter your 10-digit PIN.
Click“Submit”.
Click“Browse”to locate the file and open it.
Click“U
pload”.
When the upload is complete, the screenwill display the total bytes received and tell you the name of the file you just
uploaded. Record this information.
If you have more files to upload for that TCC:
Click“File Another?”;otherwise,
Click“Main Menu”.
It is your responsibility to check the acceptability of your file; therefore, besure to check back into the system in 5
business days using the CHECK FILE STATUS option.
CheckingyourFILESTATUS
At the Main Menu:
Click“Check File Status”.
Enter yourTCC:
Enter yourEIN:
Click“Search”.
If “Results” indicate:
“Good”— File has been released to our mainline processing.
“Bad”— Correct the errors and timely resubmit the file as a “replacement”.
“Not yet processed”— File has been received, but we do not have results
available yet. Please check back in a few days.
Click on the desired file for a detailed report of your transmission.
When you are finished, click onMain Menu.
September 18, 20064792006–38 I.R.B.

CheckingyourFILESTATUS
Click“Log Out”
Close your Web Browser.
Sec. 9. Common
Problems and Questions Associated with Electronic Filing
.01Refer to Pa
rt A, For Major Problems Encountered withForm 1042–S electronic/magnetic files.
.02The follow
ing are the major errors associated with electronic filing:
N
ON-FORMATER
RORS
1. Transmitte
r does not check the FIRE System to determine file acceptability.
The results of your file transfer are posted to the FIRE System within 5 business days. It is your responsibility to verify file
acceptability and, if the file contains errors, you can get an online listing of theerrors. Date received and number of recipient
records are also displayed.
2. Transmitter uses the TCC assigned for filing 1098, 1099, 5498 or W–2G Forms.
Use your 1042–S TCC which begins with ‘22’ to transmit your 1042–S file, otherwise, it will be automatically considered an error.
3. Incorrect file is not replaced timely.
If we have advised you your file is bad, correct the file and timely resubmit as a replacement.
4. Transmitter compresses several files into one.
Only compr
ess one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and
send 10 se
parate compressed files.
5. Transmitter sends a file and CHECK FILE STATUS indicates that the file is good, but the transmitter wants to send a
replacement or amended file to replace the original/amended/replacement file.
Once a file has been transmitted, you cannot send a replacement file unless CHECK FILE STATUS indicates the file is bad
(5 business days after file was transmitted). If you do not want us to process the file, you must first contact ustoll-free at
1–866–455–7438 or outside the U.S. at 304–263–8700to see if this is a possibility.
6. Trans
mitter sends an original file that is good, and then sends an amended file for the entire file even though there are
onlyafe
w changes.
The amended file, containing the proper coding, should only contain the records needing correction, not the entire file.
7. File is formatted as EBCDIC.
All fil
es submitted electronically must be in standard ASCII code.
8. Transmitter has one TCC number, but is filing for multiple companies, which EIN should be used when logging
into the system to send the file?
When sending the file electronically, you will need to enter theEIN of the company assigned to the TCC. When you upload the
file, it will contain the EINs for the other companies that you are filing for. This is the information that will be passed forward.
9. Tra
nsmitter sent the wrong file, what should be done?
Call us as soon as possibletoll-free at 1–866–455–7438 or outside the U.S. at 304–263–8700.Wemaybeabletostopthefile
before it has been processed.Please do not send a replacement for a file that is marked as a good file.
Part C. Tape Cartridge Filing Specifications
Sec. 1. General
.01The specifications contained in this part of the Revenue Procedure define therequiredformat and contentof the records to be
included in the electronic/tape cartridge file. Do not deviate from this format.
2006–38 I.R.B.480September 18, 2006

.02Transmitters must be consistent in the use of recording modes and density on files. If the media does not meet these specifica-
tions, IRS/ECC-MTB will request a replacement file. Filers are encouraged to submit a test prior to submitting the actual file. Contact
IRS/ECC-MTB for further informationtoll-free at 1–866–455–7438 or outside the U.S. at 304–263–8700.
.03Regardless of the type of media used or if returns are filed electronically, the recordlength must be 780 positions.
Sec. 2. Tape Cartridge Filing Specifications
.01In most instances, IRS/ECC-MTB can process tape cartridges that meet the following specifications:
(a)Must be IBM 3480, 3490, 3490E, 3590, or 3590E compatible.
(b)Must meet American National Standard Institute (ANSI)standards and have the following characteristics:
(1)Tape cartridges will be
1
/2-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by
1-inch in dimension.
(2)Magnetic tape will be chromium dioxide particle based
1
/2-inch tape.
(3)Cartridges must be 18-track, 36-track, 128-track, or 256-track parallel (SeeNote).
(4)Cartridges will contain 37,871 CPIor 75,742 CPI (characters per inch).
(5)Mode will be full function.
(6)The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(7)Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information
Interchange) may be used.
.02The tape cartridge records definedin this Revenue Procedure may be blocked subject to the following:
(a)Ablockmust notexceed 23,400 tape positions.
(b)All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields which describe the length of theblock or the logical records within the block. The number of
logical records within a block (the blocking factor) must be constant in every block with the exception of the last block
which may be shorter (see item (b) above). Theblock length must be evenly divisible by 780.
(c) Records may not span blocks.
.03Tape cartridges may be labeled or unlabeled.
.04For the purposes of this Revenue Procedure, the following must be used:
Tape Mark:
(a)Signifies the physical end of the recording on tape.
(b)For even parity, use BCD configuration 001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
Note: Filers should indicate on the external media label whether the cartridge is 18-track, 36-track, 128-track or 256-track.
Part D. Record Format Specifications and Record Layouts
Sec. 1. Transmitter “T” Record
.01This record identifies the entity preparing and transmitting the file. The transmitter and the withholding agent may be the same,
but they need not be.
.02ThefirstrecordofafileMUSTbe a Transmitter “T” Record (preceded only byheader labels). The “T” Record must appear
on each electronic file and cartridge; otherwise, a replacement file may be requested.
.03The “T” Record is a fixed length of 780 positions.
.04All alpha characters entered in the “T” Record must be upper case.
Note 1: For all fields marked “Required”, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions,IRS will contact you to request a replace-
ment file. For those fields not marked Required, a transmittermust allow for the field, but may be instructed to enter blanks
or zeroes in the indicated media position(s) and for the indicated length. All records have a fixed length of 780 positions.
Note 2: A copy of the current Instructions for Form 1042–S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The
instructions are updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most
current instructions.
September 18, 20064812006–38 I.R.B.

Note 3: Valid characters for all name and address fields are alpha, numeric, blank, ampersand (&), hyphen (-), comma (,), apos-
trophe (’ ), forward slash (/), pound sign (#), period (.), and thepercent (%). The percent [% (used as “in care of”)] is valid in the
first position only.
Record Name: Transmitter “T” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“T.”
2–5Tax Year4Required.Enter year for which income and withholding are being reported.
6–14Transmitter’s
Taxpayer
Identification
Number (TIN)
9Required.Enter the Taxpayer Identification Number of the Transmitter. This can
be a Social Security Number (SSN), Individual Taxpayer Identification Number
(ITIN), Employer Identification Number (EIN) or Qualified Intermediary Number
(QI-EIN).DO NOT ENTER blanks, hyphens or alpha characters.ATIN
consisting of all the same digits (e.g., 111111111) is not acceptable.
15–54Transmitter Name 40Required.Enter name of transmitter of file. Abbreviate if necessary to fit
40-character limit. Omit punctuation ifpossible. Left-justify and blank fill.
Note: Do not use special characters in names or addresses that are unique to a language other than English. For example:
å=A,æ=A,ü=U,Ø=O,ň=N,etc.
55–94Transmitter’s
Address
40Required.Enter full mailing address of the transmitter. This will include number,
street, and apartment or suite number (P.O. Box can be used if mail is not delivered
to street address). Abbreviate as needed tofit 40-character limit. Omit punctuation
if possible. Left-justify and blank fill.
95–114City20Required.Enter the city or town (or other locality name) of transmitter. If
applicable, enter APO or FPO only. Left-justify and blank fill.
115–116 State Code2Required if U.S. Transmitter.Enter only the two-alpha State Code. DO NOT
spell out the state name. See State Code Table, Part A, Sec. 17.
117–118 Province Code2Required if Foreign CountryCodeis“CA”(Canada).Enter only the two-alpha
character Province Code as shown in the Province Code table.DO NOT spell out
the Province Name. If foreign country other than Canada, blank fill.
Province CodeProvince
ABAlberta
BCBritish Columbia
LBLabrador
MBManitoba
NBNew Brunswick
NFNewfoundland
NSNova Scotia
NTNorthwest Territories
NUNunavut
ONOntario
PEPrince Edward Island
QC or PQQuebec
SKSaskatchewan
YKYukon Territory
119–120 Country Code2Required if Foreign Transmitter. If Country Code is present, State Code field
MUST be blank.Enter only the two-alpha Country Code from the Country Code
table.DO NOT spell out the Country Name.
No
te 1: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042–S includes all
in
ternationally recognized country codes and must be used to ensure the proper coding of the Country Code field. This list
i
s updated each year as required. Do not enter U.S. in the Country Code field.
2006–38 I.R.B.482September 18, 2006

Record Name: Transmitter “T” Record
Field
Positions Field TitleLength Description and Remarks
121–129 Postal or ZIP Code 9Required if U.S. address. Enter up to nine numeric characters for all U.S.
addresses (including territories, possessions and APO/FPO).
Conditional for foreign addresses.Enter the alpha/numeric foreign postal code.
Left-justify and blank fill the remaining positions. DO NOT use hyphens.
130–169 Contact Name40Required.Enter the name of the person to contact if any questions should arise
with the transmission.
170–189 Contact Telephone
Number
20Required.Enter the contact person’s telephone number, and extension, if
applicable. If foreign, provide appropriate codes for overseas calls. Left-justify.
190–194 Transmitter Control
Code (TCC)
5Required.Enter the five-character alpha/numeric TCC assigned ONLY for Form
1042–S reporting. (The first two numbers will always be22).
195–198 Test Indicator4Requiredifthisisatestfile.Enter the word “TEST”. Otherwise enter blanks.
199Prior Year Indicator 1Required.Enter a “P” only if reporting prior year data; otherwise, enter blank. Do
not enter a “P” for current year information.
200–770 Reserved571Blank fill.
771–778 Record Sequence
Number
8Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by onein ascending numerical sequence, i.e., 2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
Transmitter “T” Record Layout
Record
Type
Tax
Year
Transmitter’s
TIN
Transmitter
Name
Transmitter
Address
CityState Code Province
Code
12–56–1415–5455–9495–114115–116117–118
Country
Code
Postal
or
ZIP
Code
Contact
Name
Contact
Telephone
Number
TCCTest
Indicator
Prior Year
Indicator
Reserved Record
Sequence
Number
Blank or
Carriage
Return
Line Feed
119–120 121–129 130–169170–189190–194 195–198199200–770 771–778 779–780
Sec. 2. Withholding Agent “W” Record
.01The “W” Record identifies the Withholding Agent.
.02Enter a “W” Record after the initial “T” Record on the file, followed by the Recipient “Q” Records, and a Reconciliation “C”
Record.Donotreport for a withholding agent if there are no corresponding Recipient “Q” records.
September 18, 20064832006–38 I.R.B.

.03Several “W” Records for different Withholding Agents may appear on the same Transmitter’s File.
.04Each “W” Record is a fixed length of 780 positions.
.05All alpha characters entered in the “W” Record must be upper case.
Note 1: For all fields marked “Required”, the transmitter m
ustprovide the information described under Description and
Remarks. If required fields are not completed in accordance withthese instructions, your file may not process correctly. For
those fields not marked “Required”, a transmitter must allow for the field, but may be instructed to enter blanks or zeroes in
the indicated media position(s) and for the indicated length. All records have a fixed length of 780 positions.
Note 2: A copy of the current Instructions for Form 1042–S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The list
of country codes in the instructions includes all recognized country codes andMUST be used for coding. The instructions are
updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most current instructions.
Note 3: Valid characters for all name and address fields are alpha, numeric, blank, ampersand (&), hyphen (-), comma (,), apos-
trophe (’ ), forward slash (/), pound sign (#), period (.), and thepercent (%). The percent [% (used as “in care of”)] is valid in the
first position only.
Record Name: Withholding Agent “W” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“W”.
2ReturnType
Indicator
1Required.Enter the one position value below to identify whether the record is
Original or Amended. Do not enter a blank or alpha character.
Acceptable Values are:
• 0 (Zero) = Original
•1=Amended
3ProRataBasis
Reporting
1Required.Enter the one position value below to identify if reporting on a Pro
Rata Basis.
Acceptable Values are:
• 0 (Zero) = Not Pro Rata
• 1= Pro Rata Basis Reporting
4–12Withholding
Agent’s EIN
9Required.Enter the nine-digit Employer Identification Number of the Withholding
Agent. DoNOTenter blanks, hyphens or alpha characters. An EIN consisting of
all the same digits (e.g., 111111111) is not acceptable. DoNOTenter the recipient’s
TIN in this field.
Note: See current Instructions for Form 1042–S to determine when a Qualified Intermediary, Withholding Foreign
Partnership, or Withholding Foreign Trust must provide its QI-EIN, WP-EIN or WT-EIN in this field.
13Withholding
Agent’s EIN
Indicator
1Required.Enter the Withholding Agent’s EIN indicator from the following values:
•0=EIN
• 1= QI-EIN, WP-EIN, WT-EIN
• 2= NQI-EIN
Note: Use EIN indicator 1 only if the Withholding Agent’s EIN begins with “98” A
NDthe Withholding Agent’s City, State
and Country Code fields indicate that the Withholding Agent is n
ota U.S. withholding agent.
14–53Withholding
Agent’s Name
Line-1
40Required.Enter the Withholding Agent’s Name as established when filing for the
EIN or QI-EIN which appears in positions4–12 of the “W” Record. Left-justify
and blank fill.
Note: Do not use special characters in names or addresses that are unique to a language other than English. For example:
å=A,æ=A,ü=U,Ø=O,ň=N,etc.
2006–38 I.R.B.484September 18, 2006

Record Name: Withholding Agent “W” Record
Field
Positions Field TitleLength Description and Remarks
54–93Withholding
Agent’s Name
Line-2
40Enter supplementary withholding agent’s name information; otherwise, enter
blanks. Use this line for additional names (e.g., partners or joint owners), for trade
names, stage names, aliases or titles. Also use this line for “care of” or “via”.See
Note 3 at the beginning of the “W” Record.
94–133Withholding
Agent’s Name
Line-3
40See above.
134–173 Withholding
Agent’s Street
Line-1
40Required.Enter the mailing address of the withholding agent. Street address
should include number, street, and apartment or suite number (or P.O. Box if mail is
not delivered to street address). Abbreviate as needed. Left-justify and blank fill.
174–213 Withholding
Agent’s Street
Line-2
40Enter supplementary withholding agentstreet address information. Otherwise,
blank fill.
214–253 Withholding
Agent’s City
40Required.Enter the city or town (or other locality name). Enter APO or FPO
only if applicable.Do notenter a foreign postal code in the city field. Left-justify
and blank fill.
254–255 Withholding
Agent’s State Code
2Required if Withholding Agent has a U.S. address.Enter the two-character State
Code abbreviation. If not a U.S. state, territory or APO/FPO identifiers, blank fill.
Do not use any of the two character Country Codes in the State Code Field.
Note: If the withholding agent has a U.S. address, leave the country code in positions 258–259 blank.
256–257 Withholding
Agent’s Province
Code
2Required if Foreign CountryCodeis“CA”(Canada).Enter only the two-alpha
character Province Code as shown in the Province Code Table. See “T” record
positions 117–118 for Province Code Table.DO NOT spell out the Province
Name. If foreign country other than Canada, blank fill.
258–259 Withholding
Agent’s Country
Code
2Required if QI or NQI or other foreign withholding agent.Enter only the
two-alpha Country Code from the Country Code Table.DO NOT spell out the
Country Name.
Note: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042–S includes all
internationally recognized country codes and MUST be used to ensure the proper coding of the Country Code field. This
list is updated each year as required. Do not enter U.S. in the Country Code field.
260–268 Postal or ZIP Code 9Required if U.S. address.Enter up to nine numeric characters for all U.S.
addresses (including territories, possessions and APO/FPO).
Conditional for foreign addresses.Enter the alpha/numeric foreign postal code.
DO NOT use hyphens or blanks within the Postal Code. Left-justify and blank fill
the remaining positions.
269–272 Tax Year4Required.Enter the four-digit year of the current tax year unless you entered a
“P” in the Prior Year Indicator Field of the“T” Record. All recipient “Q” Records
must report payments for this year only. Different tax years may not appear on
the same file.
273–317 Withholding Agent
Contact Name
45
Required.Enter the name of the person IRS can contact if questions arise
concerning this filing. Left-justify and blank fill the remaining positions.
318–362 Withholding
Agent’s Department
Title
45
Required.Enter the title of the contact person or the dept. which can handle
inquiries concerning this filing. Left-justify and blank fill the remaining positions.
September 18, 20064852006–38 I.R.B.

Record Name: Withholding Agent “W” Record
Field
Positions Field TitleLength Description and Remarks
363–382 Contact Phone
Number and
Extension
20
Required.Enter the telephone number of a person to contact regarding electronic
or magnetic files. Omit hyphens. If no extension is available, left-justify and fill
unused positions with blanks. If foreign, provide appropriate codes for overseas
call.
383Final Return
Indicator
1
Required.Enter the one position value below to indicate whether you will be filing
Forms 1042–S in the future.
•0(Zero)=will be filing
•1=will not be filing
384–770 Reserved387Blank fill.
771–778 Record Sequence
Number
8Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence,i.e.,2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
Withholding Agent “W” Record Layout
Record
Type
Return
Type
Indicator
Pro Rata
Basis
Reporting
Withholding
Agent’s EIN
Withholding
Agent’s EIN
Indicator
Withholding
Agent’s Name
Line-1
Withholding
Agent’s Name
Line-2
1234–121314–5354–93
Withholding
Agent’s
Name
Line-3
Withholding
Agent’s
Street
Line-1
Withholding
Agent’s
Street
Line-2
Withholding
Agent’s City
Withholding
Agent’s State
Code
Withholding
Agent’s
Province Code
Withholding
Agent’s
Country Code
94–133134–173174–213214–253254–255256–257258–259
Postal or ZIP
Code
Tax YearWithholding Agent
Contact Name
Withholding
Agent’s
Department Title
Contact Phone
Number and
Extension
Final Return
Indicator
260–268269–272273–317318–362363–382383
ReservedRecord Sequence NumberBlank or Carriage Return Line Feed
384–770771–778779–780
2006–38 I.R.B.486September 18, 2006

Sec. 3. Recipient “Q” Record
.01The “Q” Record contains name and address information for the Recipient of Income, Non-Qualified Intermediary or Flow-
Through Entity if appropriate, Payer, and all data concerning the income paid and tax withheld that is required to be reported under
U.S. law. Each Recipient “Q” Record is treated as if it were a separate Form 1042–S.
.02Since the “Q” Record is restricted to one type of income and onetax rate, under certain circumstances it may be necessary to
submit more than one “Q” Record for the same recipient. Failure to provide multiple Recipient “Q” Records when necessary may
generate math computation errors during processing. This will result in IRS contacting you for correct information.
.03Following are some of the circumstances when more than one “Q” Record for a recipient would be required:
(a)Different types of income. For example, Recipient X derived income from Capital Gains (Income Code 09) and Industrial
Royalties (Income Code 10). A separate “Q” Record must be reported for each Income Code, providing Gross Income Paid
and U.S. Federal Tax Withheld pertaining to that Income Code.
(b)Change in Country Code during the year. For example, the Withholding Agent received notification via Form W–8BEN that
the recipient’s country of residence for tax purposes changed from country X to country Y.A separate “Q” Record must be
reported for each Country Code providing Gross Income Paid, Tax Rate, U.S. Federal Tax Withheld and Exemption Code,
if any. The amounts reported must be based on each country.
(c)Change in a country’s tax treaty rate during the year. For example, effective April1, country X changes its tax treaty rate
from 10% to 20%. A separate “Q” Record must be reported foreach of the tax rates. Provide the Gross Income Paid, Tax
Rate, and U.S. Federal Tax Withheld under each tax rate.
.04All recipient “Q” Records for a particular Withholding Agent must be written after the corresponding Withholding Agent “W”
Record, followed by a Reconciliation“C” Record, and before the “W” Record for another Withholding Agent begins.
.05All alpha characters entered inthe “Q” Record must be upper case.
.06Report income and tax withheld in whole dollars only. Round up or down as appropriate.DO NOTenter cents.
Note 1: For all fields marked “Required”, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions,IRS will contact you to request a replace-
ment file. For those fields not marked “Required”, a transmitter must allow for the field, but may be instructed to enter blanks
or zeroes in the indicated media position(s) and for the indicated length. All records have a fixed length of 780 positions.
Note 2: A copy of the current Instructions for Form 1042–S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The list
of country codes in the instructions includes all recognized country codes andMUST be used for coding. The instructions are
updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most current instructions.
Note 3: Valid characters for all name and address fields are alpha, numeric, blank, ampersand (&), hyphen (-), comma (,), apos-
trophe (’ ), forward slash (/), pound sign (#), period (.), and thepercent (%). The percent [% (used as “in care of”)] is valid in the
first position only.
Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“Q”.
2ReturnType
Indicator
1Required.Enter the one position value below to identify whether the record is
Original or Amended. Must be the same value as in the “W” Record. Values are:
• 0 (Zero) = Original
•1=Amended
3ProRataBasis
Reporting
1Required.Enter the one position value below to identify whether reporting Pro
Rata Basis. Must be the same value as in the “W” Record. Values are:
• 0 (Zero) = Not Pro Rata
• 1= Pro Rata Basis Reporting
September 18, 20064872006–38 I.R.B.

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
4–5Income Code2Required.Enter the two-position value EXACTLY as it appears from the income
code table. The Income Code must accurately reflect the type of income paid.
DO NOTenter blanks or 00 (zeroes).
Note: Refer to the current Instructions for Form 1042–S for more information.
6–17Gross Income12Required.Enter the gross income amount in whole dollars only, rounding to the
nearest dollar (do not enter cents). For example report $600.75 as 000000000601.
An income amount of zero cannot be shown. Numeric only, right-justify and
zero fill.
Note: Do not report negative amounts in any amount field.
18–29Withholding
Allowance
12
Used with Income Codes 15 through 19 ONLY.Enter the withholding allowance
amount in whole dollars only, rounding to the nearest dollar (do not enter cents).
Numeric only, right-justify and zero fill. Otherwise, enter blanks.
30–41Net Income12Required i
f Dollar Amount is Entered in Withholding Allowance Field.Enter
the net inc
ome in whole dollars only, rounding to the nearest dollar (do not enter
cents). An
amount other than zeromustbe shown. Numeric only, right-justify
and zero fi
ll. Otherwise, enter blanks.
42–45Tax Rate4Required.Enter the correct Tax Rate applicable to the income in gross income
field or net income field, as appropriate. Enter the Tax Rate as a 2-digit whole
number and 2-digit decimal (e.g., enter 39.6% as 3960, 15% as 1500 or 6% as
0600). See Note below.
Note: The correct Tax Rate must be entered, even if withholding was at a lesser rate. See the current Instructions
for Form 1042–S.
46–47Exempti
on Code
2Require
d. Read Carefully.
•Ifthet
ax rate entered is 0%, enter the appropriate exemption code “01” through
“09” fro
m the current Instructions for Form 1042–S.
•Ifthet
ax rate entered is 1% through 30%, enter “00”.
•Ifthet
ax rate entered is 33% or higher, blank fill.DO NOTenter “00”.
See the c
urrent Instructions for Form 1042–S for circumstances under which
Exempti
on Code “99” must be used.
Note: If an incorrect amount of tax was withheld, report the amount that was actually withheld and use the correct
tax rate in field positions 42–45.
48–59U.S. Tax Withheld 12Required.Enter the U.S. Federal tax withheld amount in whole dollars, rounding
to the nearest dollar (do not enter cents). For example, report $600.25 as
000000000600). Numeric only, right-justify and zero fill.
Note: I
f the U. S. tax withheld was either under or over reported, see Field Position 761 of the “Q” Record.
60–71Amount Repaid12This field should be completed only if:
• you repaid a recipient an amount that was over-withheld and you are going to
reimburse yourself by reducing, by the amount of tax actually repaid, the amount of
any deposit made for a payment period in the calendar year following calendar year
of withholding. Otherwise, enter blanks.
72–91Recipient’s
Account Number
20Enter the account number assigned by the withholding agent to the recipient.
Do notenter the recipient’s U.S. or foreign TIN. If account numbers are NOT
assigned, then blank fill. This field may contain numeric, alpha characters, blanks
or hyphens. Left-justify and blank fill.
92–9
3
Reci
pient Code
2Requ
ired.Enter the appropriate Recipient Code. Refer to the list of appropriate
code
s in the current Instructions for Form 1042–S. No other codes or values are
vali
d.
2006–38 I.R.B.488September 18, 2006

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
Note: If recipient code “20” is used then Recipient’s Name Line–1 must be “UNKNOWN” or “UNKNOWN RECIPIENT”
and Recipient’s Name Lines 2 and 3 must be BLANK. The tax rate must be 30%.
94–133Recipient’s Name
Line-1
40Required.Provide the complete name of the recipient. If the recipient has a U.S.
TIN, enter the name as established when applying for the TIN. If recipient code
“20” is used then “UNKNOWN” or “UNKNOWN RECIPIENT” must be entered
and Recipient’s Name Lines 2 and 3 must be blank. See current Instructions for
Form 1042–S for specifics on “Unknown Recipient” and “Withholding Rate Pool”.
See Note 3 at the beginning of the “Q” Record.
Note 1: A Non-Qualified Intermediary (NQI) can NEVER be entered as the recipient.
Note 2: Do not use special characters in names or addresses that are unique to a language other than English. For
example: å = A, æ = A,ü=U,Ø=O,ň=N,etc.
134–173 Recipient’s Name
Line-2
40Enter supplementary recipient name information including titles; otherwise, enter
blanks. Use this line for additional names (e.g., partners or joint owners), for trade
names, stage names, aliases or titles. Also use this line for “care of”, “Attn.” or
“via”.See Note 3 at the beginning of the “Q” Record.
174–213 Recipient’s Name
Line-3
40See above.
214–253 Recipient’s Street
Line-1
40Required.Enter the mailing address of the recipient. Street address should include
number, street, apartment, or suite number (or P.O. Box if mail is not delivered
to street address). Abbreviate as needed. Left-justify and blank fill.SeeNote3
at the beginning of the “Q” Record.
254–293 Recipient’s Street
Line-2
40Enter supplementary recipient street address information. If a P.O. Box is used in
addition to a street address, enter it here; otherwise, blank fill.
294–333 Recipient’s City40Required.Enter the city or town (or other locality name). Enter APO or FPO
only, if applicable. Do not enter a foreign postal code in the city field. Left-justify
and blank fill.
334–335 Recipient’s State2Required if U.S. address.Enter the two-character State Code abbreviation. If no
U.S. state, territory or APO/FPO identifier is applicable then blank fill.Do not use
any of the two character CountryCodes in the State Code Field.
Note: If the recipient has a U.S. address, leave the provincecode in positions 336–337 and country code in positions
338–339 blank.
336–337 Recipient’s
Province Code
2Required if Recipient Country Code in positions 338–339 is “CA”.Enter only
the two-alpha character Province Code asshown in the Province Code Table. See
“T” record positions 117–118 for Province Code Table.DO NOT spell out the
Province Name. If foreign country other than Canada, blank fill.
338–339 Recipient’s Country
Code
2Required if the recipient has a foreign address.Enter the two-character Country
Code abbreviation.
Note 1: If the state code is entered in positions 334–335, leave this field blank.
Note 2: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042–S includes
all internationally recognized country codes and MUST be used to ensure the proper coding of the Country Code field.
This list is updated each year as required.
Note 3: Enter “UC” (unknown country) o
nlyif the payment is to an unknown recipient. If you are making a payment to a
QI or QI withholding rate pool, enter the country code of the QI.
September 18, 20064892006–38 I.R.B.

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
340–348 Postal or ZIP Code 9Enter up to nine numeric characters for all U.S. addresses (including territories,
possessions and APO/FPO). For foreign addresses, enter the alpha/numeric foreign
postal code, if applicable. Enter this codein the left most position and blank fill the
remaining positions.DO NOTuse hyphens or blanks between numbers or letters
(e.g., if the postal code is written as A6B 3C5 input as A6B3C5). Left-justify.
349–357 Recipient’s U.S.
TIN
9Enter the recipient’s nine-digit U.S. Taxpayer Identification Number (TIN).DO
NOTenter hyphens or alpha characters. If TIN is not required under regulations,
blank fill.
Note: U.S. TINs are now required for most recipients. See current Instructions for Form 1042–S.
358Recipient’s U.S.
TIN Type
1Required.Enter the recipient’s U.S. TIN type indicator from the following values:
• 0 (Zero) = No TIN required
• 1= SSN/ITIN
•2=EIN
• 3= QI-EIN, WP-EIN, WT-EIN
See current Instructions for Form 1042–S for when a TIN is not required.
359–398 Recipient’s Country
of Residence
for Tax Purposes
40Required.Enter the complete name of the recipient’s country of residence for tax
purposes in which the recipient claims residency under that country’s tax law,
whether or not you are applying a tax treaty benefit to this payment.
399–400 Recipient’s Country
of Residence
Code for Tax
Purposes
2Required.Enter the two-character Country Code for which the recipient is a
resident for tax purposes and on which the tax treaty benefits are based, whether or
not you are applying a tax treaty benefit to this payment. The rate of tax withheld is
determined by this code.
Note: Do not enter U.S. in the Country Code field. Enter “OC” (other country) onlywhen the country of residence does
not appear on the list or the payment is made to an international organization.
401–440 NQI/FLW-THR
Name
Line-1
40Provide the complete name of the NQI/FLW-THR Entity. It is very important that
thecompletenameoftheNQI/FLW-THRentity be provided. left-justify and blank
fill.SeeNote3atthebeginningofthe“Q”Record.
Note: All NQI/FLW-THR fields are REQUIRED if the NQI/FLW-THR entity is involved in the payment structure.
441–480 NQI/FLW-THR
Name
Line-2
40Enter supplementary information; otherwise, enter blanks. Use this line for
additional names (e.g., partners or joint owners), for trade names, stage names,
aliases or titles. Also use this line for “care of” or “via”.SeeNote3atthe
beginning of the “Q” Record.
481–520 NQI/FLW-THR
Name
Line-3
40See above.
521–522 Reserved2Enter blanks.
523–562 NQI/FLW-THR
Street
Line-1
40Enter the mailing address of the NQI/FLW-THR entity. Street address should
include number, street, apartment, or suite number (or P.O. Box if mail is not
delivered to street address). Abbreviate as needed. Left-justify and blank fill.
563–602 NQI/FLW-THR
Street
Line-2
40Enter supplementary NQI/FLW-THR entitystreet address information; otherwise,
blank fill.
603–642 NQI/FLW-THR
City
40Enter the city or town (or other locality name). Left-justify and blank fill.
643–644 Reserved2Enter blanks.
2006–38 I.R.B.490September 18, 2006

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
645–646 NQI/FLW-THR
Province Code
2Enter the two-alpha character Province Code abbreviation, if applicable. See “T”
record positions 117–118.
647–648 NQI/FLW-THR
Country Code
2Enter the two-character Country Code abbreviation, where the NQI/FLW-THR is
located.
649–657 NQI/FLW-THR
Postal Code
9Enter the alpha/numeric foreign postal code. Enter this code in the left most
position and blank fill the remaining positions.DO NOTuse hyphens or blanks
between numbers or letters (e.g., if the postal code written as A6B 3C5 input as
A6B3C5). Left-justify.
658–666 NQI/FLW-THR
U.S. TIN
9Enter the NQI/FLW-THR nine-digit U.S. Taxpayer Identification Number (TIN).
Do NOT enter hyphens or alpha characters.
667–706 Payer’s Name40Enter the name of the Payer of Income if different from the Withholding Agent.
Abbreviate as needed. If Withholding Agent and Payer are the same, blank fill.
707–715 Payer’s U.S. TIN9Enter the Payer’s U.S. Taxpayer Identification Number if there is an entry in the
Payer Name Field; otherwise, leave blank.
716–727 State Income Tax
Withheld
12If State Tax has been withheld, enter that amount, in whole dollars (do not enter
cents). Right-justify and zero fill. If no entry, zero fill.
728–737 Payer’s State Tax
Number
10Enter the employer’s state I.D. number assigned by the state.
738–739 State Code2Enter the two-character State Code abbreviation.
740–760 Special Data Entries 21This field may be used for the filer’s own purposes (e.g., Do Not Mail). If this
field is not used, enter blanks.
761U.S. Tax Withheld
Indicator
1
Required.Indicate if the U.S. tax withheld was correct or incorrect using the
following values:
•0=Correc
tly reported
•1=Over withheld
•2=Under withheld
Note: Please refer to U.S. Tax Withheld positions 48–59.
762–770 Reserved9Enter blanks.
771–778 Record Sequence
Number
8Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence,i.e.,2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
September 18, 20064912006–38 I.R.B.

Recipient “Q” Record Layout
Record
Type
Return
Type
Indicator
Pro Rata
Basis
Reporting
Income
Code
Gross
Income
Withholding
Allowance
Net
Income
Tax Rate Exemption
Code
1234–56–1718–2930–4142–4546–47
U.S. Tax
Withheld
Amount
Repaid
Recipient’s
Account
Number
Recipient
Code
Recipient’s
Name Line-1
Recipient’s
Name Line-2
Recipient’s
Name Line-3
Recipient’s
Street Line-1
48–5960–7172–9192–9394–133134–173174–213214–253
Recipient’s
Street Line-2
Recipient’s
City
Recipient’s
State
Recipient’s
Province
Code
Recipient’s
Country
Code
Postal or
ZIP Code
Recipient’s
U.S. TIN
Recipient’s
U.S. TIN
Type
254–293294–333334–335336–337338–339340–348349–357358
Recipient’s
Country of
Residence for
Tax Purposes
Recipient’s
Country of
Residence Code
for Tax Purposes
NQI/FLW-THR
Name Line-1
NQI/FLW-THR
Name Line-2
NQI/FLW-THR
Name Line-3
Reserved
359–398399–400401–440441–480481–520521–522
NQI/FLW-THR
Street Line-1
NQI/FLW-THR
Street Line-2
NQI/FLW-THR
City
ReservedNQI/FLW-THR
Province
Code
523–562563–602603–642643–644645–646
NQI/FLW-THR
Country Code
NQI/FLW-THR
Postal Code
NQI/FLW-THR
U.S. TIN
Payer’s
Name
Payer’s
U.S.
TIN
State Income
Tax Withheld
Payer’s State
Tax Number
647–648649–657658–666667–706707–715716–727728–737
State Code Special Data
Entries
U. S. Tax
Withheld
Indicator
ReservedRecord Sequence NumberBlank or Carriage Return
Line Feed
738–739740–760761762–770771–778779–780
Sec. 4. Reconciliation “C” Record
.01The “C” Record is a fixed record length of 780 positions and all positions listed arerequired. The “C” Record is a summary
of the number of “Q” Records for each Withholding Agent, Gross Amount Paid, and Total U.S. Tax Withheld.
.02This record will be written after the last “Q” Record filed for a given withholding agent. For each “W” Record and group of
“Q” Records on the file, there must be a corresponding “C” Record.
.03All alpha characters entered inthe “C” Record must be upper case.
2006–38 I.R.B.492September 18, 2006

Record Name: Reconciliation “C” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“C”.
2–9Total “Q” Records 8Required.Enter the total number of “Q” Records for this withholding agent.
Right-justify and zero fill.Do not enter all zeros.For example, 53 “Q” records are
entered as 00000053. See Part A, Sec. 4, Filing Requirements.
10–15Blank6Enter blanks.
16–30Total Gross Amount
Paid
15Required.Enter the total gross income amount in whole dollars(do not enter
cents). For example report $600.00 as 000000000600. An income amount other
than zero must be shown. Right-justify and zero fill.
31–45Total U.S. Tax
Withheld
15Required.Enter the total U.S. Federal tax withheld amount in whole dollars(do
not enter cents). For example report $600.00 as 000000000600. Right-justify
and zero fill.
46–770Reserved725Blank fill.
771–778 Record Sequence
Number
8Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by onein ascending numerical sequence, i.e., 2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
Reconciliation “C” Record Layout
Record
Type
Total “Q”
Records
BlankTotal Gross
Amount
Paid
Total U.S.
Tax
Withheld
ReservedRecord
Sequence
Number
Blank or
Carriage
Return Line
Feed
12–910–1516–3031–4546–770771–778779–780
Sec. 5. End of Transmission “F” Record
.01The “F” Record is a fixed record length of 780 positions and allpositions listed are required. The “F” Record is a summary of
the number of withholding agents and media count in the entire file.
.02This record will be written after the last “C” Record of the entire file. End the file with an End of Transmission “F” Record.
No data will be read after the “F” Record. Only a “C” Record may precede the “F” Record. The “F” Record may only be followed
by a tape mark, a trailer label or a combination of both.
.03All alpha characters entered in the “F” Record must be upper case.
September 18, 20064932006–38 I.R.B.

Record Name: End of Transmission “F” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“F”.
2–4Withholding Agent
Count
3Required.Enter the total number of withholding agents on this file. This count
must be the same as the total number of “W” records. Right-justify and zero fill.
5–7Media Count3Required.Enter the total number of media for this transmission. Right-justify
and zero fill.
8–770Reserved763Blank fill.
771–778 Record Sequence
Number
8Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by onein ascending numerical sequence, i.e., 2,
3, 4, etc. Right-justify numbers with leading zeroes in the field. For example, the
“T” record sequence number would appear as “00000001” in the field, the first
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
End of Transmission “F” Record Layout
Record TypeWithholding Agent
Count
Media CountReservedRecord
Sequence
Number
Blank or Carriage
Return
Line Feed
12–45–78–770771–778779–780
Part E. Extensions of Time and Waivers
Sec. 1. General — Extensions
.01An extension of time to file may be requested for Form 1042–S.
.02Submit Form 8809, Application for Extension of Time To File Information Returns, to IRS/ECC-MTB at the address listed in
.08 of this section. This form may be used to request an extension of time to file Form 1042–S submitted on paper, electronically, or
magnetically to the IRS. Use a separate Form 8809 for each method of filing information returns you intend to use, i.e., electronically
and/or magnetically.
.03To be considered, an extension request must be postmarked or transmitted by the due date of the returns; otherwise, the request
will be denied. (See Part A, Sec. 9.) If requesting an extension of time to file several types of forms, use one Form 8809; however,
Form 8809 or file must be postmarked no later than the earliest duedate. For example, if requesting an extension of time to file both
Forms 1099–INT and 1042–S, submit Form 8809 on or before February 28, 2007.
.04Assoonasitisapparentthat a 30-day extension of time to file is needed, an extension request should be submitted. It will take
a minimum of 30 days for IRS/ECC-MTB to respond to an extension request. Generally, IRS/ECC-MTB does not begin processing
extension requests until January. Extension requests received prior to January are input on a first come, first served basis.
.05Under certain circumstances, a request for an extension of time may be denied. When a denial letter is received, any additional
or necessary information may be resubmitted within 20 days.
.06Requesting an extension of time for multiple withholding agents (50 or less) may be done by submitting Form 8809 and attach-
ing a list of the withholding agents names and associated TINs.The listing must be attached toensure an extension is recorded
for all withholding agents.Form 8809 may be computer-generated or photocopied. Be sure to use the most recently updated version
and include all the pertinent information.
2006–38 I.R.B.494September 18, 2006

.07Requests for an extension of time to file for more than 50 withholding agents arerequiredto be submitted electronically or
magnetically. IRS encourages requests for 10 to 50 withholding agents to be filed electronically or magnetically. (See Sec. 3, for the
record layout.) The request may be filed electronically or on tape cartridges.
.08All requests for an extension of time filed on Form 8809 or tape cartridge should be sent using the following address:
IRS-Enterprise Computing Center at Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
Note: Due to the large volume of mail received by IRS/ECC-MTB and the time factor involved in processing Extension of
Time (EOT) requests, it is imperative that the attention line be present on all envelopes or packages containing Form 8809.
.09Requests for extensions of time to file postmarked by the United States Postal Service on or before the due date of the returns,
and delivered by United States mail to IRS/ECC-MTB after the due date, are treated astimely under the “timely mailing as timely
filing” rule. A similar rule applies to designated private delivery services (PDSs). See Part A, Sec. 9, for more information on PDSs.
For requests delivered by a designated PDS, but through a non-designated service, the actual date of receipt by IRS/ECC-MTB will
be used as the filing date.
.10Transmitters requesting an extension of time for multiple withholding agents will receive one approval letter, accompanied by
a list of withholding agents covered under that approval.
.11If an additional extension of time is needed, a second Form 8809 or file must be filed by the initial extended due date. Check
line 7 on the form to indicate that an additional extension is being requested. A second 30-day extension will be approved only in
cases of extreme hardship or catastrophic event.If requesting a second 30-day extension of time, submit the information return
filesassoonasprepared.DonotwaitforECC-MTB’s response to your second extension request.
.12If an extension request is approved, the approval letter should be kept on file.DO NOTsend the approval letter or copy of the
approval letter to IRS/ECC-MTB with the tape cartridge file or to theOgden Service Centerwhere the paper Forms 1042–S are filed.
.13Request an extension for only one tax year.
.14A signature is not required when requesting a 30-day extension. If a second 30-day extension is requested, the Form 8809must
be signed.
.15Failure to properly complete and sign Form 8809 may cause delays in processing the request or result in a denial. Carefully
read and follow the instructions on the back of Form 8809.
.16Form 8809 may be obtained by calling1–800–TAX–FORM (1–800–829–3676).The form is also available on theIRS Website
at www.irs.gov.
Sec. 2. Specifications for Electronic/Magnetic Filing of Extensions of Time
.01The specifications in Sec. 3 include the required 200-byte record layout for extensions of time to file requests submitted elec-
tronically or magnetically. Also included are the instructions for the information that is to be entered in the record.Filers are advised
to read this section in its entirety to ensure proper filing.
.02If a filer does not have an IRS/ECC-MTB assigned Transmitter Control Code (TCC), Form 4419, Application for Filing Infor-
mation Returns Electronically/Magnetically,mustbe submitted to obtain a TCC. This numbermustbe used to submit an extension
request electronically/magnetically. (See Part A, Sec. 6.)
.03For extension requests filed on tape cartridge, the transmitter must mail the completed, signed Form 8809, Application for
Extension of Time To File Information Returns, in the same package as the corresponding media or fax it to 304–264–5602. For
extension requests filed electronically, the transmitter must fax Form 8809the same day the transmission is made.
.04 Transmitters submitting an extension of time electronically or magnetically should not submit a list of withholding agent
names and TINs with Form 8809 since this information is included on the electronic or magnetic file. However, Line 6 of Form
8809 must be completed with the total number of records included on the electronic file or tape cartridge.
.05Do not submit extension requestsfiled on tape cartridge beforeJanuary 1, or electronically beforeJanuary 3.
.06Each tape cartridgemusthave an external media label containing the following information:
(a)Transmitter name
(b)Transmitter Control Code (TCC)
(c)Tax year
(d)The words “Extension of Time”
(e)Record count
September 18, 20064952006–38 I.R.B.

.07Electronic filing, and tape cartridge specifications for extensions are the same as the specifications for filing of information
returns. (See Part B, or C for specific technical information.)
Sec. 3. Record Layout — Extension of Time
.01Positions 6 through 188 of the following record should contain information about the withholding agent for whom the extension
of time to file is being requested. Do not enter transmitter information in these fields.OnlyoneTCCmaybepresentinafile.
Record Layout for Extension of Time
Field
Positions Field TitleLength Description and Remarks
1–5Transmitter
Control Code
5Required.Enter the five-digit Transmitter Control Code (TCC) issued by IRS.
Only one TCC per file is acceptable.
6–14Withholding
Agent’s TIN
9Required.Must be the valid nine-digit TIN assigned to the withholding agent.
Do not enter blanks, hyphens or alpha characters.All zeros, ones, twos, etc.,
will have the effect of an incorrect TIN. For foreign entities that are not required
to have a TIN, this field may be blank; however, the Foreign Entity Indicator,
position 187,mustbe set to “X.”
15–54Withholding
Agent’s Name
40Required.Enter the name of the withholding agent whose TIN appears in positions
6–14. Left-justify information and fill unused positions with blanks.
55–94Second
Withholding
Agent’s Name
40If additional space is needed, this field may be used to continue name line
information (e.g., c/o First National Bank); otherwise, enter blanks.
95–134Withholding
Agent’s Address
40Required.Enter the withholding agent’s address. Street address should include
number, street, apartment or suite number (or P.O. Box if mail is not delivered to
a street address).
135–174 Withholding
Agent’s City
40Required.Enter withholding agent’s city, town, or post office.
Note: For foreign addresses, filers may use the payer city, state, and ZIP Code as a continuous 51-position field. Enter
information in the following order: city, province or state, postal code, and the name of the country.
175–176 Withholding
Agent’s State
2Required.Enter the withholding agent’s valid U.S. Postal Service state
abbreviation. (Refer to Part A, Sec. 16.)
177–185 Withholding
Agent’s
ZIP Code
9Required.Enter withholding agent’s ZIP Code. If using a five-digit ZIP Code,
left-justify information and fill unused positions with blanks.
186Document
Indicator
1Required.Enter the appropriate document code that indicates the form for which
you are requesting an extension of time.
CodeDocument
41042–S
187Foreign Entity
Indicator
1Enter “X” if the withholding agent is a foreign entity.
Note: A foreign entity is not required to have a TIN.
188Recipient Request
Indicator
1Enter “X” if the extension request is to furnish statements to the recipients of the
information return.
Note: A separate file is required for this type of extension request. A file must either contain all blanks or all X’s in this field.
189–198 Blank10Enter blanks.
199–200 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
2006–38 I.R.B.496September 18, 2006

Extension of Time Record Layout
Transmitter
Control Code
Withholding
Agent’s TIN
Withholding
Agent’s Name
Second
Withholding
Agent’s Name
Withholding
Agent’s
Address
Withholding
Agent’s City
1–56–1415–5455–9495–134135–174
Withholding
Agent’s State
Withholding
Agent’s ZIP
Code
Document
Indicator
Foreign
Entity
Indicator
Recipient
Request
Indicator
BlankBlank or
CR/LF
175–176177–185186187188189–198199–200
Sec. 4. Extension of Time for Recipient Copies of Information Returns
.01Request anextension of time to furnish the statements to recipientsof Form1042–S by submitting a letter to IRS/ECC-MTB
at the address listed in Part D, Sec. 1.08. The letter should contain the following information:
(a)Withholding Agent’s name
(b)TIN
(c)Address
(d)Type of return
(e)Specify that the extension request isto provide statements to recipients
(f)Reason for delay
(g)Signature of withholding agent or duly authorized person.
.02Requests for an extension of time to furnish statements to recipients of Form 1042–S are not automatically approved; however,
if approved, generally an extension will allow a maximum of 30 additional days from the due date. The request must be postmarked
bythedateonwhichthestatements are due to the recipients.
.03Generally, only the withholding agent may sign the letter requesting the extension for recipient copies. A transmitter must
have a contractual agreement with the withholding agents to submit extension requests on their behalf. This should be stated in your
letter of request for recipient copy extensions. If you are requesting an extension for multiple withholding agents electronically or
magnetically, you must use theformat specifications in Sec. 3.
.04Requests for a recipient extension of time to file for more than 50 withholding agents are required to be submitted electronically
or magnetically. IRS encourages requests for 10 to 50 withholding agents to be filed electronically or magnetically (See Sec. 3, for
record layout.) The request may be filed electronically, or on tape cartridges.
Sec. 5. Form 8508, Request for Waiver From Filing Information Returns
Electronically/Magnetically
.01If a withholding agent is required to file on magnetic media but failstodoso(orfailstofileelectronicallyinlieuofmagnetic
media filing) and does not have an approved waiver on record, the withholding agent will be subjectto a penalty of $50 per return in
excess of 250 unless reasonable cause is established. (Forpenalty information, refer to the Penalty Section of theGeneral Instructions
for Form 1042–S.)
.02If withholding agents are required to file original or amended returns on magnetic media, but such filing would create an
undue hardship, they may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing
Information Returns Electronically/Magnetically, to IRS/ECC-MTB. Form 8508 can be obtained on the IRS Website atw
ww.irs.gov
or by calling toll-free 1–800–829–3676.
.03Even though a withholding agent may submit as many as 249 amended returns on paper, IRS encourages electronic or magnetic
filing of amended returns. Once the 250 threshold has been met, filers are required to submit any returns of 250 or more electronically
or magnetically. However, if a waiver for original documents isapproved, any amended returns for the same type of returns will be
covered under this waiver.
.04Generally, only the withholding agent may sign Form 8508. A transmitter may sign if given power of attorney; however, a
letter signed by the payer stating this fact must be attached to Form 8508.
.05A transmitter must submit a separate Form 8508 for each withholding agent. Do not submit a list of withholding agents.
.06All information requested on Form 8508 must beprovided to IRS for the request to be processed.
September 18, 20064972006–38 I.R.B.

.07The waiver, if approved, will provide exemption from the magnetic media filing requirement for the current tax year only.
Withholding agents may not apply for a waiver for more than one tax year at a time; application must be made each year a waiver is
necessary. Waivers, after the first year, are grantedonly in cases of undue hardship or catastrophic events.
.08Form 8508 may be photocopied or computer-generated as long as itcontains all the information requested on the original form.
.09Filers are encouraged to submit Form 8508 to IRS/ECC-MTB at least 45 days before the due date of the returns. Generally,
IRS/ECC-MTB does not process waiver requests until January. Waiver requests received prior to January are processed on a first
come, first served basis.
.10All requests for a waiver should be sent using the following address:
IRS-Enterprise Computing Center — Martinsburg
Information Reporting Program
240 Murall Drive
Kearneysville, WV 25430
.11Waivers are evaluated on a case-by-case basis and are approved ordenied based on criteria set forth in the regulations under
section 6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/ECC-MTB to respond to a
waiver request.
.12If a waiver request is approved, keep the approval letter on file.DO NOTsend a copy of the approved waiver to theOgden
Service Center.
.13An approved waiver only applies to the requirement for filing Form 1042–S electronically/magnetically. The withholding agent
must timely file information returns on the official IRS paper forms or an acceptable substitute form with theOgden Service Center.
Procedures for Requesting
Special Statistical Studies and
Compilations Involving Return
Information
Rev. Proc. 2006–36
SE
CTION 1. PURPOSE
The purpose of this revenue procedure
is to set forth the Internal Revenue Ser-
vice’s procedures for other Government
agencies or members of the public to re-
quest the creation of special statistical
studies and compilations involving return
information pursuant to section 6108(b)
of the Internal Revenue Code, and to set
forth the criteria for determining reason-
able fees for costs associated with the
creation of the special statistical studies
and compilations.
SECTION 2. BACKGROUND
.01 Under section 6108(b), the IRS
may, upon written request, create and
produce special statistical studies and
compilations involving return informa-
tion (as defined by section 6103(b)(2)).
In processing requests for special statis-
tical studies and compilations, the IRS,
pursuant to section 6108(c), will not dis-
close information that could, directly or
indirectly, be associated with or identify a
particular taxpayer. The IRS may charge
a reasonable fee for the cost of work or
services associated with making special
statistical studies and compilations. The
IRS will determine the amount of the fee
as discussed below in Section 5.
.02 Definitions
(a) A “special statistical study” is an
ad hocstatistical examination or analy-
sis of return information that generally re-
quires new programming and analysis ac-
cording to specifications provided in the
request. A special statistical study might
comprise tabulations as well as accompa-
nying reports on methodology and analyt-
ical details.
(b) A statistical “compilation” is anad
hocaccumulation of existing (or readily
available) data into a data set or data file,
which generally requires new program-
ming according to specifications provided
in the request. Both special statistical
studies and compilations will be reviewed
for accuracy by IRS staff before they are
considered completed. The IRS staff,
including clerical and computer program-
ming personnel, will ensure, as reasonably
practicable, the correctness of the special
statistical study or compilation in conjunc-
tion with the original request.
(c) A special statistical study or com-
pilation isnot:
(i) statistical data contained in re-
ports or releases already made available to
the public, or
(ii) statistical data that is read-
ily reproducible. “Readily reproducible”
means, with respect to electronic format, a
record or records that can be downloaded
or transferred intact to a floppy disk, com-
pact disk (CD), tape,or other electronic
medium using equipment currently in
use by the office or offices processing
the request. Records that require ma-
nipulation of data within a database or
several databases, reprogramming one or
more databases, or analysis of the data to
produce the records, are not readily repro-
ducible.
S
ECTION 3. PROCEDURES FOR
R
EQUESTING SPECIAL STATISTICAL
S
TUDIES AND COMPILATIONS
PURSUANT TO SECTION 6108(b)
.01 In general. Requests for special sta-
tistical studies or compilations (involving
either new projects or changes in recurring
projects) must be submitted in writing with
specifications as complete and definite as
practicable. Specifications that are concise
and mutually understood by the requester
and IRS are essential for a project’s suc-
cessful completion. Specifications should
include the source and availability of data
and content, manner of presentation (e.g.,
2006–38 I.R.B.498September 18, 2006

particular medium or application) and tim-
ing of results (e.g., scheduling).
.02 All requests for special statistical
studies or compilations must be addressed
to the Director, Research, Analysis, and
Statistics, at the following address:
Internal Revenue Service
1111 Constitution Avenue
Washington, DC 20224
Attention: RAS
The Director, Research, Analysis, and Sta-
tistics, will review all requests for spe-
cial statistical studies or compilations and
make a determination whether to grant or
deny the request for such special statisti-
cal studies or compilations based on the
considerations stated in paragraph 4.01 be-
low. If a significant amount of resources
is needed to accommodate a request, such
determination will be made in consultation
with the heads of the responsible IRS of-
fices and, when Statistics of Income (SOI)
resources are involved, the Director, Of-
fice of Tax Analysis, Department of the
Treasury.
.03 If assistance is needed, IRS staff is
available to help the requester in detailing
the specifications. Consultations at initial
stages,i.e., while planning by the requester
is underway, may facilitate the undertaking
of a special study or compilation. In some
instances, initial consultation may reveal
that an existing IRS product contains all
the data necessary to fulfill the request.
In addition, there is information available
on theirs.govwebsite through the “Tax
Stats” link. SOI’s Statistical Information
Services Office may be reached by phone
at (202) 874–0410 (not a toll-free num-
ber), by fax at (202) 874–0964, by email
atSIS@IRS.GOV, or by mail at the address
given in paragraph 3.02 above.
SECTION 4. AVAILABILITY OF
SPECIAL STATISTICAL STUDIES
AND COMPILATIONS
.01 The fulfillment of requests submit-
ted pursuant to this Revenue Procedure
will be subject to: staff availability and
workload (including the potential impact
on studies required by the Office of Tax
Analysis), the complexity and/or magni-
tude of the request, the impact on tax ad-
ministration, software capabilities, data-
base configurations and equipment func-
tionalities, and disclosure considerations.
A request will be declined if the IRS de-
termines at the time of the initial request
that the special statistical study or compi-
lation could reveal return information or
other confidential information the disclo-
sure of which is not required by law and
no reconfiguration of the request can avoid
disclosure of return information or other
non-disclosable data.
.02 If the configuration of a completed
special statistical study or compilation
may result in the disclosure of return in-
formation, or produce other confidential
information the disclosure of which is not
required by law, the IRS will inform the
requester and offer to discuss with the re-
quester, to the extent practicable, possible
reconfigurations of data to avoid the pro-
hibited disclosure. If the special statistical
study or compilation cannot be reconfig-
ured, the requester will be so informed and
the special statistical study or compilation
will not be released.
.03 In general, the IRS will consider
whether to grant or deny requests for spe-
cial statistical studies and compilations in
the order of receipt.
SECTION 5. DETERMINATION OF
FEES
.01 Fees will be charged for a special
statistical study or compilation. These fees
will be determined in accordance with pre-
vailing Government standards, but in no
case will work be done before a cost esti-
mate is provided to the requester and, if ac-
cepted, a reimbursable agreement entered
into between IRS and the requester.
.02 Fees are based on the actual, full
cost of providing the product or service.
“Full cost” includes all direct and indirect
costs to any part of the IRS of providing
the special statistical study or compilation.
These costs include, but are not limited to:
(a) direct costs such as computer
costs, salaries, management and supervi-
sory costs;
(b) indirect personnel costs such as
fringe benefits,e.g., medical insurance
and retirement (generally assessed at a
percentage of direct salary costs); and
(c) physical overhead, consulting, and
other indirect costs such as material and
supply costs and utilities.
.03 The IRS may charge fees for any
costs incurred during the processing of
an accepted request for special statisti-
cal studies and compilations, even if no
special statistical study or compilation is
ultimately disclosed.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective
September 18, 2006.
SECTION 7. DRAFTING
INFORMATION
The principal drafter of this revenue
procedure is A. M. Gulas of the Office
of Chief Counsel, Procedure and Admin-
istration (Disclosure and Privacy Law
Division). For further information re-
garding this revenue procedure, contact
A. M. Gulas at (202) 622–4560 (not a
toll-free number).
26 CFR 601.204: Changes in accounting periods
and in methods of accounting.
(AlsoPart1,§§162,263,446,461,481,
1.167(a)–3(b), 1.263(a)–4, 1.263(a)–5, 1.446–1,
1.481–1.)
Rev. Proc. 2006–37
SECTION 1. PURPOSE
This revenue procedure modifies Rev.
Proc. 2006–12, 2006–3 I.R.B. 310, which
provides procedures under which a tax-
payer may obtain automatic consent to
change to a method of accounting pro-
vided in §§ 1.263(a)–4, 1.263(a)–5, or
1.167(a)–3(b) of the Income Tax Regula-
tions (the “final regulations”) for a taxable
year ending on or after December 31,
2005, and for any earlier taxable year that
is after the taxpayer’s second taxable year
ending on or after December 31, 2003.
The modifications provided by this rev-
enue procedure allow a taxpayer to utilize
the advance consent procedures of Rev.
Proc. 97–27, 1997–1 C.B. 680, as modi-
fied and amplified by Rev. Proc. 2002–19,
2002–1 C.B. 696, as amplified and clari-
fied by Rev. Proc. 2002–54, 2002–2 C.B.
432, when seeking a change to a method
of accounting provided in the final regu-
lations in conjunction with a change for
the same item to a method of accounting
utilizing the 3
1
/2month rule authorized by
§ 1.461–4(d)(6)(ii) or the recurring item
exception authorized by § 1.461–5.
September 18, 20064992006–38 I.R.B.

SECTION 2. BACKGROUND
.01 Rev. Proc. 2006–12 provides
procedures under which a taxpayer may
obtain automatic consent to change to
a method of accounting provided in the
final regulations for a taxable year end-
ing on or after December 31, 2005, and
for any earlier taxable year that is after
the taxpayer’s second taxable year end-
ing on or after December 31, 2003. Rev.
Proc. 2006–12 modified and amplified
Rev. Proc. 2002–9, 2002–1 C.B. 327, as
modified and clarified by Announcement
2002–17, 2002–1 C.B. 561, modified and
amplified by Rev. Proc. 2002–19, 2002–1
C.B. 696, and amplified, clarified and
modified by Rev. Proc. 2002–54, 2002–2
C.B. 432, to include the changes to meth-
ods of accounting provided in the final
regulations that are within the scope of
Rev. Proc. 2006–12.
.02 Section 6.02 of Rev. Proc. 2006–12
provides, in part, that if a taxpayer seeks to
change to a method of accounting utilizing
the 3
1
/2month rule or the recurring item ex-
ception for the item for which the taxpayer
also seeks to change to a method provided
in the final regulations, the taxpayer must
file two separate applications for change
in accounting method — one for a change
in method of accounting under Rev. Proc.
2006–12 to the method of accounting pro-
vided in the final regulations and the other
for a change in method of accounting un-
der Rev. Proc. 97–27 to a method of ac-
counting utilizing the 3
1
/2month rule or the
recurring item exception.
SECTION 3. CHANGES TO REV.
PROC. 2006–12
.01 The third sentence of section 2.07 of
Rev. Proc. 2006–12 is modified to read as
follows:
“Except as provided in section 3 of
this revenue procedure, for any change in
method of accounting to which this rev-
enue procedure applies, a taxpayer may
not file an application for a change in
method of accounting under Rev. Proc.
97–27, 1997–1 C.B. 680, as modified and
amplified by Rev. Proc. 2002–19, 2002–1
C.B. 696, as amplified and clarified by
Rev. Proc. 2002–54, 2002–2 C.B. 432.”
.02 Section 3 of Rev. Proc. 2006–12
is modified by adding the following two
sentences to the end:
“However, a taxpayer that seeks to
change its method of accounting to uti-
lize the 3
1
/2month rule authorized by
§ 1.461–4(d)(6)(ii) or to utilize the re-
curring item exception authorized by
§ 1.461–5 for the item for which the tax-
payer also seeks a change to a method of
accounting provided in the final regula-
tions may apply for both changes for the
same item on an application for a change
in method of accounting filed under Rev.
Proc. 97–27. The terms and conditions in
this revenue procedure apply to a request
for a change to a method of accounting
provided in the final regulations filed un-
der Rev. Proc. 97–27.”
.03 Section 6.02 of Rev. Proc. 2006–12
is modified by adding the following two
sentences to the end:
“However, instead of filing two sepa-
rate applications for a change in method
of accounting utilizing the 3
1
/2month rule
or the recurring item exception in conjunc-
tion with a change to a method provided in
the final regulations, a taxpayer may ap-
ply for both changes for the same item on
an application for a change in method of
accounting filed underRev. Proc. 97–27.
The terms and conditions in this revenue
procedure apply to a request for a change
to a method of accounting provided in the
final regulations filed under Rev. Proc.
97–27.”
SECTION 4. APPLICATIONS
PREVIOUSLY FILED UNDER
REV. PROC. 97–27
If a taxpayer has already filed a Form
3115,Application for Change in Account-
ing Method, under Rev. Proc. 97–27
to utilize the 3
1
/2month rule or the re-
curring item exception with respect to an
item under the final regulations, the tax-
payer may amend the Form 3115 filed un-
der Rev. Proc. 97–27 to include a change
to a method of accounting provided in the
final regulations for the same item.
SECTION 5. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2006–12 is modified.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective for
a taxable year ending on or after Decem-
ber 31, 2005, and for any earlier taxable
year that is after the taxpayer’s second tax-
able year ending on or after December 31,
2003.
SECTION 7. CONTACT
INFORMATION
For further information regarding this
revenue procedure, call Grace Matuszeski
of the Associate Chief Counsel (Income
Tax and Accounting) at (202) 622–7900
(not a toll-free call).
2006–38 I.R.B.500September 18, 2006

Part IV. Items of General Interest
Announcement of Disciplinary Actions Involving
Attorneys, Certified Public Accountants, Enrolled Agents,
and Enrolled Actuaries — Suspensions, Censures,
Disbarments, and Resignations
Announcement 2006-57
Under Title 31, Code of Federal Regu-
lations, Part 10, attorneys, certified public
accountants, enrolled agents, and enrolled
actuaries may not accept assistance from,
or assist, any person who is under disbar-
ment or suspension from practice before
the Internal Revenue Service if the assis-
tance relates to a matter constituting prac-
tice before the Internal Revenue Service
and may not knowingly aid or abet another
person to practice before the Internal Rev-
enue Service during a period of suspen-
sion, disbarment, or ineligibility of such
other person.
To enable attorneys, certified public
accountants, enrolled agents, and enrolled
actuaries to identify persons to whom
these restrictions apply, the Director, Of-
fice of Professional Responsibility, will
announce in the Internal Revenue Bulletin
their names, their city and state, their pro-
fessional designation, the effective date
of disciplinary action, and the period of
suspension. This announcement will ap-
pear in the weekly Bulletin at the earliest
practicable date after such action and will
continue to appear in the weekly Bulletins
for five successive weeks.
Consent Suspensions From Practice Before the Internal
Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, an attorney, certified pub-
lic accountant, enrolled agent, or enrolled
actuary, in order to avoid the institution
or conclusion of a proceeding for his or
her disbarment or suspension from prac-
tice before the Internal Revenue Service,
may offer his or her consent to suspension
from such practice. The Director, Office
of Professional Responsibility, in his dis-
cretion, may suspend an attorney, certified
public accountant, enrolled agent, or en-
rolled actuary in accordance with the con-
sent offered.
The following individuals have been
placed under consent suspension from
practice before the Internal Revenue Ser-
vice:
NameAddressDesignationDate of Suspension
Crane, StephenPalm Springs, CAEnrolled AgentMay 4, 2006
to
August 3, 2007
Cohen, Ronald J.Newburgh, NYAttorneyIndefinite
from
June 21, 2006
Layson, David A.Corydon, INAttorneyApril 7, 2006
to
October 6, 2007
Brough, Donald L.Salem, INCPAJuly 1, 2006
to
June 30, 2010
Gulian, YervantGreat Neck, NYCPAApril 17, 2006
to
December 16, 2007
September 18, 20065012006–38 I.R.B.

NameAddressDesignationDate of Suspension
Rivera-Smith, DawnBrick, NJCPAMay 30, 2006
to
November 29, 2008
Eckstein, MatthewWoodbury, NYCPAJune 15, 2006
to
March 14, 2007
Hecht, Jodee L.Clifton, VACPAIndefinite
from
June 19, 2006
Finch, Phillip W.Yorktown, VACPAIndefinite
from
June 22, 2006
Troese Jr., Henry A.Clarion, PAEnrolled AgentIndefinite
from
June 22, 2006
Robbins, Ronald E.Pittsford, VTCPAJune 24, 2006
to
June 23, 2008
Shapiro, Sidney C.West Palm Beach, FLCPAIndefinite
from
July 1, 2006
Martini, AnthonyStamford, CTCPAJune 18, 2006
to
December, 17, 2007
Cunningham, WilliamPhiladelphia, PACPAJuly 1, 2006
to
March 31, 2007
Simontacchi, Joseph F.Morris Plains, NJCPAIndefinite
from
July 1, 2006
Carroccio, Ronald P.Staten Island, NYCPAIndefinite
from
July 1, 2006
Miller, Walter P.Roanoke, VACPAIndefinite
from
July 1, 2006
Aneji, PatrickHouston, TXCPAIndefinite
from
June 22, 2006
Rosenbloom, Mark L.Chicago, ILAttorneyAugust 15, 2006
to
August 14, 2007
Viener, Ira S.Fort Lee, NJCPAIndefinite
from
August 1, 2006
2006–38 I.R.B.502September 18, 2006

NameAddressDesignationDate of Suspension
Ganz, Sheldon M.Great Neck, NJCPAIndefinite
from
August 1, 2006
Tomasulo, MariaWantagh, NYCPAIndefinite
from
August 7, 2006
Galpern, Joel G.North Miami, FLCPAIndefinite
from
September 1, 2006
Expedited Suspensions From Practice Before the Internal
Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, the Director, Office of Pro-
fessional Responsibility, is authorized to
immediately suspend from practice before
the Internal RevenueService any practi-
tioner who, within five years from the date
the expedited proceeding is instituted (1)
has had a license to practice as an attor-
ney, certified public accountant, or actuary
suspended or revoked for cause or (2) has
been convicted of certain crimes.
The following individuals have been
placed under suspension from practice be-
fore the Internal Revenue Service by virtue
of the expedited proceeding provisions:
NameAddressDesignationDate of Suspension
Dolan Jr., John L.Memphis, TNAttorneyIndefinite
from
April 3, 2006
St. Mary, Randall L.Snohomish, WAAttorneyIndefinite
from
April 3, 2006
Theriault, Michael J.Bel Air, MDAttorneyIndefinite
from
April 3, 2006
Smith, Bernard P.Marblehead, MAAttorneyIndefinite
from
April 3, 2006
Bradley, Phillip M.West Point, VAAttorneyIndefinite
from
April 3, 2006
Haefele, Richard J.Wayzata, MNAttorneyIndefinite
from
April 3, 2006
Decker, William E.Mandeville, LAAttorneyIndefinite
from
April 3, 2006
Arbour, John J.Monroe, LAAttorneyIndefinite
from
April 3, 2006
September 18, 20065032006–38 I.R.B.

NameAddressDesignationDate of Suspension
Keller, John S.Martin Kenner, LAAttorneyIndefinite
from
April 3, 2006
Fallon, Charles D.Neptune, NJAttorneyIndefinite
from
April 3, 2006
Agresti, Thomas J.Centennial, COAttorneyIndefinite
from
April 3, 2006
Kirsch, Craig F.Pittsburgh, PACPAIndefinite
from
April 3, 2006
Hall, Lenny G.McDowell, KYCPAIndefinite
from
April 11, 2006
Hultgren, Jerry R.Fresno, CAAttorneyIndefinite
from
April 11, 2006
Loutos, Peter A.Chicago,ILAttorneyIndefinite
from
April 11, 2006
Smith III, Frank L.Bushnell, FLAttorneyIndefinite
from
April 11, 2006
Morley, Michael J.Springfield, PACPAIndefinite
from
April 11, 2006
Waters, Richard W.Smithfield, UTCPAIndefinite
from
April 11, 2006
Hartgraves, Travis M.Abilene, TXAttorneyIndefinite
from
April 14, 2006
Dunn, George T.Lockhart, TXAttorneyIndefinite
from
April 14, 2006
Adkins, Thomas R.Houston, TXAttorneyIndefinite
from
April 14, 2006
Hairston, John W.Sugar Land, TXAttorneyIndefinite
from
April 26, 2006
Marcone, Frank J.Upper Providence, PAAttorneyIndefinite
from
May 1, 2006
2006–38 I.R.B.504September 18, 2006

NameAddressDesignationDate of Suspension
Fraley, Donald J.Minneapolis, MNAttorneyIndefinite
from
May 3, 2006
Tooke, S. JuddShreveport, LAAttorneyIndefinite
from
May 3, 2006
Reilly, Michael G.Council Bluffs, IAAttorneyIndefinite
from
May 3, 2006
Faneuil, Robert A.Newton, MAAttorneyIndefinite
from
May 3, 2006
Maignan, Peter R.Upper Marlboro, MDAttorneyIndefinite
from
May 3, 2006
Son, DavidPhoenix, AZAttorneyIndefinite
from
May 5, 2006
Susman, Warren I.New York, NYAttorneyIndefinite
from
May 8, 2006
Wurst, JeromeArlington, TXAttorneyIndefinite
from
May 8, 2006
O’Shea, Joseph G.Jackson Heights, NYAttorneyIndefinite
from
May 8, 2006
Biegelson, AlanBrooklyn, NYAttorneyIndefinite
from
May 8, 2006
Leonard, Robert K.Winston-Salem, NCAttorneyIndefinite
from
May 8, 2006
Cassidy, Michael M.Madison, WIAttorneyIndefinite
from
May 8, 2006
Dobkin, Daniel B.New Hyde Park, NYAttorneyIndefinite
from
May 8, 2006
Nealy, Joseph L.Sugarland, TXAttorneyIndefinite
from
May 16, 2006
Conmey, Edwin W.Oconomowoc, WIAttorneyIndefinite
from
May 16, 2006
Knott Jr., Robert T.Los Angeles, CAAttorneyIndefinite
from
May 16, 2006
September 18, 20065052006–38 I.R.B.

NameAddressDesignationDate of Suspension
Diamond, Howard S.Mendham, NJAttorneyIndefinite
from
May 16, 2006
Fitzgerald, Bill L.Lubbock, TXAttorneyIndefinite
from
May 16, 2006
Brubaker, Gregory A.San Francisco, CAAttorneyIndefinite
from
May 18, 2006
Dodenbier, Robert F.Lehi, UTAttorneyIndefinite
from
May 18, 2006
Young, Paul J.Taft, CAAttorneyIndefinite
from
June 8, 2006
Dahodwala, FatemaAndover, MAAttorneyIndefinite
from
June 8, 2006
Mendola, Joseph E.Monessen, PACPAIndefinite
from
June 8, 2006
Rooney, Edward F.Minneapolis, MNAttorneyIndefinite
from
June 8, 2006
Long, Rebecca L.Wichita,KSAttorneyIndefinite
from
June 8, 2006
West, Clifton C.Fayetteville, NCAttorneyIndefinite
from
June 8, 2006
Silva, Zoilo I.City Island, NYAttorneyIndefinite
from
June 8, 2006
Tyler Jr., Earle S.Bangor, MEAttorneyIndefinite
from
June 12, 2006
Horneber, Alice S.Sioux City, IAAttorneyIndefinite
from
June 12, 2006
Donnelly, Christine M.Blue Springs, MOAttorneyIndefinite
from
June 12, 2006
Driscoll Jr., PeterColumbia, MDAttorneyIndefinite
from
June 12, 2006
Souza, John C.Pocatello, IDAttorneyIndefinite
from
June 12, 2006
2006–38 I.R.B.506September 18, 2006

NameAddressDesignationDate of Suspension
Crockett, Kevin J.Midvale, UTAttorneyIndefinite
from
June 12, 2006
White, Debra M. WyattNavasota, TXCPAIndefinite
from
June 12, 2006
Wilkins, Daniel J.Chelmsford, MAAttorneyIndefinite
from
June 12, 2006
Merica, Chad L.Murray, UTCPAIndefinite
from
June 12, 2006
Wintroub, David S.Omaha,NEAttorneyIndefinite
from
June 12, 2006
Smith, Roderick E.Kansas City, MOAttorneyIndefinite
from
June 12, 2006
Guida, Joseph M.Aberdeen, MDAttorneyIndefinite
from
June 12, 2006
Sonibare, NashSt. Paul, MNCPAIndefinite
from
June 12, 2006
Braun, Marc W.St. Louis, MOAttorneyIndefinite
from
June 12, 2006
Coffey, John J.Rye, NHAttorneyIndefinite
from
June 12, 2006
Whitehead, H. AllenNew York, NYAttorneyIndefinite
from
June 12, 2006
Lansky, SidneyMattapoisett, MAAttorneyIndefinite
from
June 12, 2006
Pazniokas, Paul M.Norwood, MAAttorneyIndefinite
from
June 12, 2006
Bajgrowicz, James J.Santa Rosa, CAAttorneyIndefinite
from
June 12, 2006
Davis, Bret J.Los Angeles, CAAttorneyIndefinite
from
June 12, 2006
McAvoy, TimothyChicago, ILAttorneyIndefinite
from
June 12, 2006
September 18, 20065072006–38 I.R.B.

NameAddressDesignationDate of Suspension
Loffadelli, Thomas C.Studio City, CAAttorneyIndefinite
from
June 12, 2006
Emeziem, Kelechi C.Antioch, CAAttorneyIndefinite
from
June 12, 2006
Pugh, William C.Wayzata,MNAttorneyIndefinite
from
June 12, 2006
Lamanna, Eugene C.Reading, PAAttorneyIndefinite
from
June 12, 2006
Bartels, John R.St. Paul, MNAttorneyIndefinite
from
June 12, 2006
Shapiro, Kenneth S.Bala Cynwyd, PACPAIndefinite
from
June 14, 2006
Stone, Jerry W.Austin, TXAttorneyIndefinite
from
June 21, 2006
Vanriper, Philip E.Binghamton, NYAttorneyIndefinite
from
June 21, 2006
Simuro, Valerie T.Gardiner, NYAttorneyIndefinite
from
June 21, 2006
Simms, William K.Brooklyn, NYAttorneyIndefinite
from
June 21, 2006
Weaver, Terring M.Clarksburg, WVCPAIndefinite
from
July 1, 2006
Norman, ClarenceBrooklyn, NYAttorneyIndefinite
from
August 3, 2006
Knight, John G.Winston-Salem, NCAttorneyIndefinite
from
August 3, 2006
Kronegold, Sheldon H.Englewood, NJAttorneyIndefinite
from
August 3, 2006
Foushee, Wayne H.Winston-Salem, NCAttorneyIndefinite
from
August 3, 2006
2006–38 I.R.B.508September 18, 2006

Suspensions From Practice Before the Internal Revenue
Service After Notice and an Opportunity for a Proceeding
Under Title 31, Code of Federal Reg-
ulations, Part 10, after notice and an op-
portunity for a proceeding before an ad-
ministrative law judge, the following indi-
viduals have been placed under suspension
from practice before the Internal Revenue
Service:
NameAddressDesignationEffective Date
Kahn, HaroldHollis, NYCPAJune 26, 2006
to
June 25, 2010
Disbarments From Practice Before the Internal Revenue
Service After Notice and an Opportunity for a Proceeding
Under Title 31, Code of Federal Regu-
lations, Part 10, after notice and an oppor-
tunity for a proceeding before an adminis-
trative law judge, the following individu-
als have been disbarred from practice be-
fore the Internal Revenue Service:
NameAddressDesignationEffective Date
Gailey, James N.Huntersville, NCCPAJune 5, 2006
Censure Issued by Consent
Under Title 31, Code of Federal Reg-
ulations, Part 10, in lieu of a proceeding
being instituted or continued, an attorney,
certified public accountant, enrolled agent,
or enrolled actuary, may offer his or her
consent to the issuance of a censure. Cen-
sure is a public reprimand.
The following individuals have con-
sented to the issuance of a Censure:
NameAddressDesignationDate of Censure
Williams, Daniel S.Carlsbad, CAAttorneyMarch 29, 2006
Azan, Reinaldo L.Miami Beach, FLCPAJuly 24, 2006
Golub, Stephen B.Norwalk, CTCPAAugust 3, 2006
Application of Separate
Limitations to Dividends From
Noncontrolled Section 902
Corporations; Correction
Announcement 2006–67
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to temporary regula-
tions.
SUMMARY: This document contains cor-
rections to temporary regulations (T.D.
9260, 2006–23 I.R.B. 1001) that were
published in theFederal Registeron
Tuesday, April 25, 2006 (71 FR 24516)
regarding the application of separate for-
eign tax credit limitations to dividends
received from noncontrolled section 902
corporations under section 904(d)(4).
DATES: These corrections are effective
April 25, 2006.
FOR FURTHER INFORMATION
CONTACT: Ginny Chung (202) 622–3850
(not a toll-free call).
SUPPLEMENTARY INFORMATION:
Background
The temporary regulations (T.D. 9260)
that are the subject of this correction are
September 18, 20065092006–38 I.R.B.

under section 904 of the Internal Revenue
Code.
Need for Correction
As published, (T.D. 9260) contains er-
rors that may prove to be misleading and
are in need of clarification.
Correction of Publication
Accordingly, the publication of the tem-
porary regulations (T.D. 9260) which was
the subject of FR Doc. 06–3882, is cor-
rected as follows:
§ 1.904–4 [Corrected]
1.On page 24530, column 2,
§ 1.904–4, Instructional Par. 11., number
3, the language “3. In paragraph (e)(5)(iii),
remove the language “and paragraph (9)
of this section” and add the language “paid
in taxable years beginning before January
1, 2003” in its place.” is corrected to read
“3. In paragraph (e)(5)(iii), remove the
language “and paragraph (g) of this sec-
tion” and add the language “paid in taxable
years beginning before January 1, 2003”
in its place.”
Guy R. Traynor,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on August 18,
2006, 8:45 a.m., and published in the issue of the Federal
Register for August 21, 2006, 71 F.R. 48474)
REMIC Residual
Interests—Accounting for
REMIC Net Income (Including
Any Excess Inclusions)
(Foreign Holders); Correction
Announcement 2006–68
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correction to final regulations.
SUMMARY: This document contains cor-
rections to final regulations (T.D. 9272,
2006–35 I.R.B. 332) that were published
in theFederal Registeron Tuesday, Au-
gust 1, 2006 (71 FR 43363) relating to in-
come that is associated with a residual in-
terest in a Real Estate Mortgage Invest-
ment Conduit (REMIC) and that is allo-
cated through certain entities to foreign
persons who have invested in those enti-
ties.
DATES: These corrections are effective
August 1, 2006.
FOR FURTHER INFORMATION
CONTACT: Dale Collinson, (202)
622–3900 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The correction notice that is the subject
of this document is under sections 860A,
860G(b), 863, 1441, and 1442 of the Inter-
nal Revenue Code.
Need for Correction
As published, final regulations (T.D.
9272) contain errors that may prove to be
misleading and are in need of clarification.
Correction of Publication
Accordingly, the publication of the fi-
nal regulations (T.D. 9272), which was the
subject of FR Doc. E6–12363, is corrected
as follows:
1. On page 43364, column 1, in the
preamble, under the paragraph heading
“Background and Explanation of Provi-
sions”, first full paragraph of the column,
line 6, the language “furtherance of the
congressional” is corrected to read “fur-
therance of the Congressional”.
2. On page 43365, column 1, in the
preamble, under the paragraph heading
“Special Analyses”, line 5 from bottom of
the paragraph, the language “Code, these
temporary regulations will” is corrected to
read “the Code, these temporary regula-
tions will”.
LaNita Van Dyke,
Acting Chief, Publications
and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on August 23,
2006, 8:45 a.m., and published in the issue of the Federal
Register for August 24, 2006, 71 F.R. 49992)
2006–38 I.R.B.510September 18, 2006

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 rul-
ings 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.
September 18, 2006i2006–38 I.R.B.

Numerical Finding List
1
Bulletins 2006–27 through 2006–38
Announcements:
2006-42, 2006-27 I.R.B.48
2006-43, 2006-27 I.R.B.48
2006-44, 2006-27 I.R.B.49
2006-45, 2006-31 I.R.B.121
2006-46, 2006-28 I.R.B.76
2006-47, 2006-28 I.R.B.78
2006-48, 2006-31 I.R.B.135
2006-49, 2006-29 I.R.B.89
2006-50, 2006-34 I.R.B.321
2006-51, 2006-32 I.R.B.222
2006-52, 2006-33 I.R.B.254
2006-53, 2006-33 I.R.B.254
2006-54, 2006-33 I.R.B.254
2006-55, 2006-35 I.R.B.342
2006-56, 2006-35 I.R.B.342
2006-57, 2006-35 I.R.B.343
2006-58, 2006-36 I.R.B.388
2006-59, 2006-36 I.R.B.388
2006-60, 2006-36 I.R.B.389
2006-61, 2006-36 I.R.B.390
2006-62, 2006-37 I.R.B.444
2006-63, 2006-37 I.R.B.445
2006-64, 2006-37 I.R.B.447
2006-65, 2006-37 I.R.B.447
2006-66, 2006-37 I.R.B.448
2006-67, 2006-38 I.R.B.509
2006-68, 2006-38 I.R.B.510
2006-69, 2006-37 I.R.B.449
Notices:
2006-56, 2006-28 I.R.B.58
2006-57, 2006-27 I.R.B.13
2006-58, 2006-28 I.R.B.59
2006-59, 2006-28 I.R.B.60
2006-60, 2006-29 I.R.B.82
2006-61, 2006-29 I.R.B.85
2006-62, 2006-29 I.R.B.86
2006-63, 2006-29 I.R.B.87
2006-64, 2006-29 I.R.B.88
2006-65, 2006-31 I.R.B.102
2006-66, 2006-30 I.R.B.99
2006-67, 2006-33 I.R.B.248
2006-68, 2006-31 I.R.B.105
2006-69, 2006-31 I.R.B.107
2006-70, 2006-33 I.R.B.252
2006-71, 2006-34 I.R.B.316
2006-72, 2006-36 I.R.B.363
2006-73, 2006-35 I.R.B.339
2006-74, 2006-35 I.R.B.339
2006-75, 2006-36 I.R.B.366
2006-76, 2006-38 I.R.B.459
Proposed Regulations:
REG-135866-02, 2006-27 I.R.B.34
REG-146893-02, 2006-34 I.R.B.317
REG-159929-02, 2006-35 I.R.B.341
REG-148864-03, 2006-34 I.R.B.320
REG-109512-05, 2006-30 I.R.B.100
REG-112994-06, 2006-27 I.R.B.47
REG-118775-06, 2006-28 I.R.B.73
REG-118897-06, 2006-31 I.R.B.120
REG-124152-06, 2006-36 I.R.B.368
REG-125071-06, 2006-36 I.R.B.375
Revenue Procedures:
2006-29, 2006-27 I.R.B.13
2006-30, 2006-31 I.R.B.110
2006-31, 2006-27 I.R.B.32
2006-32, 2006-28 I.R.B.61
2006-33, 2006-32 I.R.B.140
2006-34, 2006-38 I.R.B.460
2006-35, 2006-37 I.R.B.434
2006-36, 2006-38 I.R.B.498
2006-37, 2006-38 I.R.B.499
Revenue Rulings:
2006-35, 2006-28 I.R.B.50
2006-36, 2006-36 I.R.B.353
2006-37, 2006-30 I.R.B.91
2006-38, 2006-29 I.R.B.80
2006-39, 2006-32 I.R.B.137
2006-40, 2006-32 I.R.B.136
2006-41, 2006-35 I.R.B.331
2006-42, 2006-35 I.R.B.337
2006-43, 2006-35 I.R.B.329
2006-44, 2006-36 I.R.B.361
2006-45, 2006-37 I.R.B.423
Treasury Decisions:
9265, 2006-27 I.R.B.1
9266, 2006-28 I.R.B.52
9267, 2006-34 I.R.B.313
9268, 2006-30 I.R.B.94
9269, 2006-30 I.R.B.92
9270, 2006-33 I.R.B.237
9271, 2006-33 I.R.B.224
9272, 2006-35 I.R.B.332
9273, 2006-37 I.R.B.394
9274, 2006-33 I.R.B.244
9275, 2006-35 I.R.B.327
9276, 2006-37 I.R.B.424
9277, 2006-33 I.R.B.226
9278, 2006-34 I.R.B.256
9279, 2006-36 I.R.B.355
9280, 2006-38 I.R.B.450
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2006–1 through 2006–26 is in Internal Revenue Bulletin
2006–26, dated June 26, 2006.
2006–38 I.R.B.iiSeptember 18, 2006

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2006–27 through 2006–38
Announcements:
2005-59
Updated and superseded by
Ann. 2006-45, 2006-31 I.R.B.121
Notices:
2002-45
Amplified by
Rev. Rul. 2006-36, 2006-36 I.R.B.353
2006-20
Supplemented and modified by
Notice 2006-56, 2006-28 I.R.B.58
2006-53
Modified by
Notice 2006-71, 2006-34 I.R.B.316
Proposed Regulations:
REG-135866-02
Corrected by
Ann. 2006-65, 2006-37 I.R.B.447
Ann. 2006-64, 2006-37 I.R.B.447
REG-134317-05
Corrected by
Ann. 2006-47, 2006-28 I.R.B.78
Revenue Procedures:
2002-9
Modified and amplified by
Notice 2006-67, 2006-33 I.R.B.248
2004-63
Superseded by
Rev. Proc. 2006-34, 2006-38 I.R.B.460
2005-41
Superseded by
Rev. Proc. 2006-29, 2006-27 I.R.B.13
2005-49
Superseded by
Rev. Proc. 2006-33, 2006-32 I.R.B.140
2006-12
Modified by
Rev. Proc. 2006-37, 2006-38 I.R.B.499
Revenue Rulings:
81-35
Amplified and modified by
Rev. Rul. 2006-43, 2006-35 I.R.B.329
81-36
Amplified and modified by
Rev. Rul. 2006-43, 2006-35 I.R.B.329
Revenue Rulings— Continued:
87-10
Amplified and modified by
Rev. Rul. 2006-43, 2006-35 I.R.B.329
2002-41
Amplified by
Rev. Rul. 2006-36, 2006-36 I.R.B.353
2003-43
Amplified by
Notice 2006-69, 2006-31 I.R.B.107
2005-24
Amplified by
Rev. Rul. 2006-36, 2006-36 I.R.B.353
Treasury Decisions:
9254
Corrected by
Ann. 2006-44, 2006-27 I.R.B.49
Ann. 2006-66, 2006-37 I.R.B.448
9258
Corrected by
Ann. 2006-46, 2006-28 I.R.B.76
9260
Corrected by
Ann. 2006-67, 2006-38 I.R.B.509
9262
Corrected by
Ann. 2006-56, 2006-35 I.R.B.342
9264
Corrected by
Ann. 2006-46, 2006-28 I.R.B.76
9272
Corrected by
Ann. 2006-68, 2006-38 I.R.B.510
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2006–1 through 2006–26 is in Internal Revenue Bulletin 2006–26, dated June 26, 2006.
September 18, 2006iii2006–38 I.R.B.

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. 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. Under information for: select Businesses. Under
related topics, select More Topics. Then select Internal Revenue Bulletins.
INTERNAL REVENUE BULLETINS ON CD-ROM
Internal Revenue Bulletins are available annually as part ofPublication 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 371954, Pittsburgh PA, 15250–7954. Please allow two to
six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE INTERNAL
REVENUE BUL
LETIN
If you have c
omments 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 e-mail us your suggestions or comments through the IRS Internet Home Page
(www.irs.g
ov) or write to the IRS Bulletin Unit, SE:W:CAR:MP:T:T:SP, Washington, DC 20224
Internal Revenue Service
W
ashington,DC20224
Official B
usiness
Penalty for
Private Use, $300