Internal Revenue Bulletin 1996-46 (PDF rendition): IRS Announcements

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.

INCOME TAX
P.L. 104–193, page 4.
An Act to provide for reconciliation pursuant to section
201(a)(1) of the concurrent resolution on the budget for
fiscal year 1997.
EXEMPT ORGANIZATIONS
Announcement 96–118, page 12.
A list is given of organizations now classified as private
foundations.
ADMINISTRATIVE
Announcement 96–116, page 12.
Under section 51 of the Code, the Service will allow
employers to leave blank the date of birth entry on Form
8850, Work Opportunity Credit Pre-Screening Notice and
Certification Request, for job applicants who are age 25
and older.
Announcement 96–117, page 12.
Corporations electing to apply the temporary regulations
in T.D. 8678 retroactively, which relate to the operation
of sections 382 and 383 of the Code with respect to
consolidated groups, must file such amended returns
before March 26, 1997.
Announcement 96–119, page 13.
Form 1099–MISC has been revised for reporting excess
golden parachute payments.
Finding Lists begin on page 17.
Announcements of Disbarments and Suspensions begin on page 14.
Bulletin No. 1996–46
November 12, 1996
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.

Mission of the Service
The purpose of the Internal Revenue Service is to
collect the proper amount of tax revenue at the least
cost; serve the public by continually improving the
quality of our products and services; and perform in a
manner warranting the highest degree of public
confidence in our integrity, efficiency and fairness.
Statement of Principles
of Internal Revenue
Tax Administration
The function of the Internal Revenue Service is to
administer the Internal Revenue Code. Tax policy
for raising revenue is determined by Congress.
With this in mind, it is the duty of the Service to
carry out that policy by correctly applying the laws
enacted by Congress; to determine the reasonable
meaning of various Code provisions in light of the
Congressional purpose in enacting them; and to
perform this work in a fair and impartial manner,
with neither a government nor a taxpayer point of view.
At the heart of administration is interpretation of the
Code. It is the responsibility of each person in the
Service, charged with the duty of interpreting the
law, to try to find the true meaning of the statutory
provision and not to adopt a strained construction in
the belief that he or she is ‘‘protecting the revenue.’’
The revenue is properly protected only when we as-
certain and apply the true meaning of the statute.
The Service also has the responsibility of applying
and administering the law in a reasonable,
practical manner. Issues should only be raised by
examining officers when they have merit, never
arbitrarily or for trading purposes. At the same
time, the examining officer should never hesitate
to raise a meritorious issue. It is also important
that care be exercised not to raise an issue or to
ask a court to adopt a position inconsistent with
an established Service position.
Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great courtesy and
considerateness. It should never try to overreach,
and should be reasonable within the bounds of law
and sound administration. It should, however, be
vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax
devices and fraud.
2

Introduction
The Internal Revenue Bulletin is the authoritative instru-
ment of the Commissioner of Internal Revenue for
announcing official rulings and procedures of the Inter-
nal Revenue Service and for publishing Treasury Deci-
sions, Executive Orders, Tax Conventions, legislation,
court decisions, and other items of general interest. It is
published weekly and may be obtained from the Superin-
tendent of Documents on a subscription basis. Bulletin
contents of a permanent nature are consolidated semi-
annually into Cumulative Bulletins, which are sold on a
single-copy basis.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform
application of the tax laws, including all rulings that
supersede, revoke, modify, or amend any of those
previously published in the Bulletin. All published rulings
apply retroactively unless otherwise indicated. Proce-
dures relating solely to matters of internal management
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 Ser-
vice 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 unwar-
ranted 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 proce-
dures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be consid-
ered, and Service personnel and others concerned are
cautioned against reaching the same conclusions in
other cases unless the facts and circumstances are
substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on
provisions of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows:
Subpart A, Tax Conventions, and Subpart B, Legislation
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 Rulings. Bank Secrecy Act Administra-
tive Rulings are issued by the Department of the
Treasury’s Office of the Assistant Secretary (Enforce-
ment).
Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemak-
ing and the disbarment and suspension list included in
this part, none of these announcements are consoli-
dated in the Cumulative Bulletins.
The first Bulletin for each month includes an index for
the matters published during the preceding month.
These monthly indexes are cumulated on a quarterly and
semiannual basis, and are published in the first Bulletin
of the succeeding quarterly and semi-annual period,
respectively.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, D.C. 20402.
3

Part II. Treaties and Tax Legislation
Subpart B.—Legislation and
Related Committee Reports
Public Law 104–193
104th Congress, H.R. 3734
1
August 22, 1996
An Act to provide for reconciliation
pursuant to section 201(a)(1) of the
concurrent resolution on the budget for
fiscal year 1997.
Be it enacted by the Senate and
House of Representatives of the United
States of America in Congress as-
sembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Per-
sonal Responsibility and Work Opportu-
nity Reconciliation Act of 1996”.
* * * * *
TITLE I—BLOCK GRANTS FOR
TEMPORARY ASSISTANCE FOR
NEEDY FAMILIES
* * * * *
SEC. 110. CONFORMING
AMENDMENTS TO OTHER LAWS.
* * * * *
(l) The Internal Revenue Code of
1986 (26 U.S.C. 1 et seq.) is amended—
(1) in section 51(d)(9) (26
U.S.C. 51(d)(9)), by striking all
that follows “agency as” and insert-
ing “being eligible for financial
assistance under part A of title IV
of the Social Security Act and as
having continually received such
financial assistance during the 90-
day period which immediately pre-
cedes the date on which such indi-
vidual is hired by the employer.”;
(2) in section 3304(a)(16) (26
U.S.C. 3304(a)(16)), by striking
“eligibility for aid or services,” and
all that follows through “children
approved” and inserting “eligibility
for assistance, or the amount of
such assistance, under a State pro-
gram funded”;
(3) in section 6103(l)(7)(D)(i)
(26 U.S.C. 6103(l)(7)(D)(i)), by
striking “aid to families with de-
pendent children provided under a
State plan approved” and inserting
“a State program funded”;
(4) in section 6103(l)(10) (26
U.S.C. 6103(l)(10))—
(A) by striking “(c) or (d)”
each place it appears and insert-
ing “(c), (d), or (e)”; and
(B) by adding at the end of
subparagraph (B) the following
new sentence: “Any return infor-
mation disclosed with respect to
section 6402(e) shall only be
disclosed to officers and employ-
ees of the State agency request-
ing such information.”;
(5) in section 6103(p)(4) (26
U.S.C. 6103(p)(4)), in the matter
preceding subparagraph (A)—
(A) by striking “(5), (10)” and
inserting “(5)”; and
(B) by striking “(9), or (12)”
and inserting “(9), (10), or (12)”;
(6) in section 6334(a)(11)(A) (26
U.S.C. 6334(a)(11)(A)), by striking
“(relating to aid to families with
dependent children)”;
(7) in section 6402 (26 U.S.C.
6402)—
(A) in subsection (a), by strik-
ing “(c) and (d)” and inserting
“(c), (d), and (e)”;
(B) by redesignating subsec-
tions (e) through (i) as subsec-
tions (f) through (j), respectively;
and
(C) by inserting after subsec-
tion (d) the following:
“(e) C
OLLECTION OFOVERPAYMENTS
UNDERTITLEIV–AOF THESOCIALSE-
CURITY
ACT.—The amount of any over-
payment to be refunded to the person
making the overpayment shall be reduced
(after reductions pursuant to subsections
(c) and (d), but before a credit against
future liability for an internal revenue
tax) in accordance with section 405(e) of
the Social Security Act (concering recov-
ery of overpayments to individuals under
State plans approved under part A of title
IV of such Act).”; and
(8) in section 7523(b)(3)(C) (26
U.S.C. 7523(b)(3)(C)), by striking
“aid to families with dependent
children” and inserting “assistance
under a State program funded un-
der part A of title IV of the Social
Security Act”.
(m) Section 3(b) of the Wagner-
Peyser Act (29 U.S.C. 49b(b)) is
amended by striking “State plan ap-
proved under part A of title IV” and
inserting “State program funded under
part A of title IV”.
* * * * *
TITLE III—CHILD SUPPORT
* * * * *
Subtitle B—Locate and Case Tracking
* * * * *
SEC. 316. EXPANSION OF THE
FEDERAL PARENT LOCATOR SERVICE.
* * * * *
(g) CONFORMINGAMENDMENTS.—
* * * * *
(2) TO FEDERAL UNEMPLOYMENT
TAX ACT
.—Section 3304(a)(16) of
the Internal Revenue Code of 1986
is amended—
(A) by striking “Secretary of
Health, Education, and Welfare”
each place such term appears and
inserting “Secretary of Health
and Human Services”;
(B) in subparagraph (B), by
striking “such information” and
all that follows and inserting “in-
formation furnished under sub-
paragraph (A) or (B) is used
only for the purposes authorized
under such subparagraph;”;
(C) by striking “and” at the
end of subparagraph (A);
(D) by redesignating subpara-
graph (B) as subparagraph (C);
and
E) by inserting after subpara-
graph (A) the following new
subparagraph:
“(B)
wage and unemployment
compensation information contained
in the records of such agency shall
be furnished to the Secretary of
Health and Human Services (in ac-
cordance with regulations promul-
gated by such Secretary) as neces-
sary for the purposes of the
National Directory of New Hires
established under section 453(i) of
the Social Security Act, and”.
* * * * *
(4) DISCLOSURE OF CERTAIN IN-
FORMATION TO AGENTS OF CHILD
SUPPORT ENFORCEMENT AGEN-
CIES
.—
(A) I
N GENERAL.—Paragraph
(6) of section 6103(l) of the
Internal Revenue Code of 1986
(relating to disclosure of return
information to Federal, State, and
local child support enforcement
agencies) is amended by redesig-
nating subparagraph (B) as sub-
paragraph (C) and by inserting
1
This publication of the law is restricted to
excerpts involving tax matters.
4

after subparagraph (A) the fol-
lowing new subparagraph:
“(B) D
ISCLOSURE TO CERTAIN
AGENTS
.—The following infor-
mation disclosed to any child
support enforcement agency un-
der subparagraph (A) with re-
spect to any individual with re-
spect to whom child support
obligations are sought to be es-
tablished or enforced may be
disclosed by such agency to any
agent of such agency which is
under contract with such agency
to carry out the purposes de-
scribed in subparagraph (C):
“(i) The address and social
security account number (or
numbers) of such individual.
“(ii) The amount of any re-
duction under section 6402(c)
(relating to offset of past-due
support against overpayments)
in any overpayment otherwise
payable to such individual.”.
(B) C
ONFORMING AMEND-
MENTS.—
(i) Paragraph (3) of section
6103(a) of such Code is
amended by striking “(l)(12)”
and inserting “paragraph (6) or
(12) of subsection (l)”.
(ii) Subparagraph (C) of
section 6103(l)(6) of such
Code, as redesignated by sub-
section (a), is amended to read
as follows:
“(C) R
ESTRICTION ON DISCLO-
SURE
.—Information may be dis-
closed under this paragraph only
for purposes of, and to the extent
necessary in, establishing and
collecting child support obliga-
tions from, and locating, indi-
viduals owing such obligations.”.
(iii) The material following
subparagraph (F) of section
6103(p)(4) of such Code is
amended by striking “subsec-
tion (l)(12)(B)” and inserting
“paragraph (6)(A or (12)(B) of
subsection (l)”.
* * * * *
Subtitle G—Enforcement of Support
Orders
SEC. 361. INTERNAL REVENUE
SERVICE COLLECTION OF
ARREARAGES.
(a) COLLECTION OFFEES.—Section
6305(a) of the Internal Revenue Code of
1986 (relating to collection of certain
liability) is amended—
(1) by striking “and” at the end
of paragraph (3);
(2) by striking the period at the
end of paragraph (4) and inserting
“, and”;
(3) by adding at the end the
following new paragraph:
“(5) no additional fee may be
assessed for adjustments to an
amount previously certified pursu-
ant to such section 452(b) with
respect to the same obligor.”; and
(4) by striking “Secretary of
Health, Education, and Welfare”
each place it appears and inserting
“Secretary of Health and Human
Services”.
(b) E
FFECTIVEDATE.—The amend-
ments made by this section shall be-
come effective October 1, 1997.
* * * * *
TITLE IV—RESTRICTING
WELFARE AND PUBLIC
BENEFITS FOR ALIENS
* * * * *
Subtitle F—Earned Income Credit
Denied to Unauthorized Employees
SEC. 451. EARNED INCOME CREDIT
DENIED TO INDIVIDUALS NOT
AUTHORIZED TO BE EMPLOYED IN THE
UNITED STATES.
INGENERAL.—Section 32(c)(1) of the
Internal Revenue Code of 1986 (relating
to individuals eligible to claim the
earned income credit) is amended by
adding at the end the following new
subparagraph:
“(F) I
DENTIFICATION NUMBER
REQUIREMENT
.—The term ‘eli-
gible individual’ does not include
any individual who does not in-
clude on the return of tax for the
taxable year—
“(i) such individual’s tax-
payer identification number,
and
“(ii) if the individual is
married (within the meaning
of section 7703), the taxpayer
identification number of such
individual’s spouse.”.
(b) S
PECIALIDENTIFICATIONNUM-
BER
.—Section 32 of such Code is
amended by adding at the end the
following new subsection:
“(l) I
DENTIFICATIONNUMBERS.—
Solely for purposes of subsections
(c)(1)(F) and (c)(3)(D), a taxpayer iden-
tification number means a social secu-
rity number issued to an individual by
the Social Security Administration (other
than a social security number issued
pursant to clause (II) (or that portion of
clause (III) that relates to clause (II)) of
section 205(c)(2)(B)(i) of the Social Se-
curity Act).”.
(c) E
XTENSION OFPROCEDURESAP-
PLICABLE TO
MATHEMATICAL ORCLERI-
CAL
ERRORS.—Section 6213(g)(2) of
such Code (relating to the definition of
mathematical or clerical errors) is
amended by striking “and” at the end of
subparagraph (D), by striking the period
at the end of subparagraph (E) and
inserting a comma, and by inserting
after subparagraph (E) the following
new subparagraphs:
“(F) an omission of a correct
taxpayer identification number
required under section 32 (relat-
ing to the earned income credit)
to be included on a return, and
“(G) an entry on a return
claiming the credit under section
32 with respect to net earnings
from self-employment described
in section 32(c)(2)(A) to the ex-
tent the tax imposed by section
1401 (relating to self-employ-
ment tax) on such net earnings
has not been paid.”.
(d) E
FFECTIVEDATE.—The amend-
ments made by this section shall apply
with respect to returns the due date for
which (without regard to extensions) is
more than 30 days after the date of the
enactment of this Act.
* * * * *
TITLE IX—MISCELLANEOUS
* * * * *
SEC. 909. RULES RELATING TO DENIAL
OF EARNED INCOME CREDIT ON BASIS
OF DISQUALIFIED INCOME.
(a) REDUCTION INDISQUALIFIEDIN-
COME
THRESHOLD.—
(1) IN GENERAL.—Paragraph (1)
of section 32(i) of the Internal
Revenue Code of 1986 (relating to
denial of credit for individuals hav-
ing excessive investment income) is
amended by striking “$2,350” and
inserting “$2,200”.
(2) A
DJUSTMENT FOR INFLA-
TION
.—Subsection (j) of section 32
of such Code is amended to read as
follows:
“(j) I
NFLATIONADJUSTMENTS.—
5

“(1) IN GENERAL.—In the case
of any taxable year beginning after
1996, each of the dolar amounts in
subsections (b)(2) and (i)(1) shall
be increased by an amount equal
to—
“(A) such dollar amount, mul-
tiplied by
“(B) the cost-of-living adjust-
ment determined under section
1(f)(3) for the calendar year in
which the taxable year begins,
determined by substituting ‘cal-
endar year 1995’ for ‘calendar
year 1992’ in subparagraph (B)
thereof.
“(2) R
OUNDING.—
“(A) IN GENERAL.—If any
dollar amount in subsection
(b)(2), after being increased un-
der paragraph (1), is not a mul-
tiple of $10, such dollar amount
shall be rounded to the nearest
multiple of $10.
“(B) D
ISQUALIFIED INCOME
THRESHOLD AMOUNT
.—If the
dollar amount in subsection
(i)(1), after being increased under
paragraph (1), is not a multiple
of $50, such amount shall be
rounded to the next lowest mul-
tiple of $50.”.
(3) C
ONFORMINGAMEND-
MENT
.—Paragraph (2) of section
32(b) of such Code is amended to
read as follows:
‘‘(2) A
MOUNTS.—The earned in-
come amount and the phase-out
amount shall be determined as fol-
lows:
In the case of an
eligible individual
with:
The
earned
income
amount
is:
The
phaseout
amount
is:
1 qualifying child $6,330 $11,610
2 or more qualify-
ing children
$8,890 $11,610
No qualifying chil-
dren
$4,220 $ 5,280’’.
(b) D
EFINITION OFDISQUALIFIED
INCOME.—Paragraph (2) of section
32(i) of such Code (defining disquali-
fied income) is amended by striking
‘‘and’’ at the end of subparagraph (B),
by striking the period at the end of
subparagraph (C) and inserting a
comma, and by adding at the end the
following new subparagraphs:
‘‘(D) the capital gain net in-
come (as defined in section
1222) of the taxpayer for such
taxable year, and
‘‘(E) the excess (if any) of—
‘‘(i) the aggregate income
from all passive activities for
the taxable year (determined
without regard to any amount
included in earned income un-
der subsection (c)(2) or de-
scribed in a preceding sub-
paragraph), over
‘‘(ii) the aggregate losses
from all passive activities for
the taxable year (as so deter-
mined).
For purposes of subparagraph (E),
the term ‘passive activity’ has the
meaning given such term by sec-
tion 469.’’.
(c) E
FFECTIVEDATES.—
(1) IN GENERAL.—Except as
provided in paragraph (2), the
amendments made by this section
shall apply to taxable years begin-
ning after December 31, 1995.
(2) A
DVANCE PAYMENT INDI-
VIDUALS.—In the case of any indi-
vidual who on or before June 26,
1996, has in effect an earned in-
come eligibility certificate for the
individual’s taxable year beginning
in 1996, the amendments made by
this section shall apply to taxable
years beginning after December 31,
1996.
SEC. 910. MODIFICATION OF
ADJUSTED GROSS INCOME
DEFINITION FOR EARNED
INCOME CREDIT.
(a) I
NGENERAL.—Subsections
(a)(2)(B), (c)(1)(C), and (f)(2)(B) of
section 32 of the Internal Revenue
Code of 1986 are each amended by
striking ‘‘adjusted gross income’’ each
place it appears and isnerting ‘‘modi-
fied adjusted gross income’’.
(b) M
ODIFIEDADJUSTEDGROSSIN-
COMEDEFINED.—Section 32(c) of
such Code (relating to definitions and
special rules) is amended by adding at
the end the following new paragraph:
‘‘(5) M
ODIFIED ADJUSTED GROSS
INCOME.—
‘‘(A) IN GENERAL.—The term
‘modified adjusted gross income’
means adjusted gross income de-
termined without regard to the
amounts described in subpara-
graph (B).
‘‘(B) C
ERTAIN AMOUNTS DIS-
REGARDED
.—An amount is de-
scribed in this subparagraph if it
is—
‘‘(i) the amount of losses
from sales or exchanges of
capital assets in excess of
gains from such sales or ex-
changes to the extent such
amount does not exceed the
amount under section
1211(b)(1),
‘‘(ii) the net loss from es-
tates and trusts,
‘‘(iii) the excess (if any) of
amounts described in subsec-
tion (i)(2)(C)(ii) over the
amounts described in subsec-
tion (i)(2)(C)(i) (relating to
nonbusiness rents and royal-
ties), and
‘‘(iv) 50 percent of the net
loss from the carrying on of
trades or businesses, computed
separately with respect to—
‘‘(I) trades or businesses
(other than farming) con-
ducted as sole proprietor-
ships,
‘‘(II) trades or businesses
of farming conducted as
sole proprietorships, and
‘‘(III) other trades or
businesses.
For purposes of clause (iv), there
shall not be taken into account
items which are attributable to a
trade or business which consists of
the performance of services by the
taxpayer as an employee.’’.
(c) E
FFECTIVEDATES.—
(1) I
N GENERAL.—Except as pro-
vided in paragraph (2), the amendments
made by this section shall apply to
taxable years beginning after December
31, 1995.
(2) A
DVANCE PAYMENT INDIVIDU-
ALS
.—In the case of any individual who
on or before June 26, 1996, has in effect
an earned income eligibility certificate
for the individual’s taxable year begin-
ning in 1996, the amendments made by
this section shall apply to taxable years
beginning after December 31, 1996.
* * * * *
Approved August 22, 1996.
6

Conference Report No. 104-725
1
2nd Session
[Bracketed numerals indicate official report
page numbers]
PERSONAL RESPONSIBILITY AND
WORK OPPORTUNITY
RECONCILIATION ACT OF 1996
August 1, 1996
Mr. KASICH, from the committee of
conference, submitted the following con-
ference report to accompany H.R. 3734
* * * * *
TITLE 1—BLOCK GRANTS FOR
TEMPORARY ASSISTANCE FOR
NEEDY FAMILIES
* * * * *
[319] 99. CONFORMING
AMENDMENTS TO OTHER LAWS
Present Law
No provision.
House bill
This section makes a series of amend-
ments that conform provisions of the
proposal to the Unemployment Compen-
sation Amendments of 1976, the Omni-
bus Budget Reconciliation Act of 1987,
the Housing and Urban-Rural Recovery
Act of 1983, the Tax Equity and Fiscal
Responsibility Act of 1982, the Social
Security Amendments of 1967, the
Stewart B. McKinney Homeless Assis-
tance Amendments Act of 1988, the
Higher Education Act of 1965, the Carl
D. Perkins Vocational and Applied Tech-
nology Education Act, the Elementary
and Secondary Education Act of 1965,
Public Law 99-88, the Internal Revenue
Code of 1986, the Wagner-Peyser Act,
the Job Training Partnership Act, the
Low-Income Home Energy Assistance
Act of 1981, the Family Support Act of
1988, the Balanced Budget and Emer-
gency Deficit Control Act of 1985, the
Immigration and Nationality Act, the
Head Start Act, and the School-to-Work
Opportunities Act of 1994.
Senate anendment
Same.
Conference agreement
The conference agreement follows the
House bill and the Senate amendment.
* * * * *
TITLE III—CHILD SUPPORT
ENFORCEMENT
* * * * *
[347] 11. EXPANSION OF THE
FEDERAL PARENT LOCATOR
SERVICE
Present law
The law requires that the Federal
Parent Locator Service (FPLS) be used
to obtain and transmit information about
the location of any absent parent when
that information is to be used for the
purpose of enforcing child support. Fed-
eral law also requires departments or
agencies of the United States to be
reimbursed for costs incurred in provid-
ing requested information to the FPLS.
Information Comparisons and Other
Disclosures. Upon request, the Secretary
must provide to an ‘‘authorized person’’
(i.e., an employee or attorney of a child
support agency, a court with jurisdiction
over the parties involved, the custodial
parent, the legal guardian, or the child’s
attorney) the most recent address and
place of employment of any nonresident
parent if the information is contained in
the records of the Department of Health
and Human Services or can be obtained
from any other department or agency of
the United States or of any State. The
FPLS also can be used in connection
with the enforcement or determination
of child custody, visitation, and parental
kidnapping. Federal law requires the
Secretary of Labor and the Secretary of
Health and Human Services to enter into
an agreement to give the FPLS prompt
access to wage and unemployment com-
pensation claims information useful in
locating a noncustodial parent or his
employer.
Fees. ‘‘Authorized persons’’ who re-
quest information from FPLS must be
charged a fee.
Restriction on Disclosure and Use.
Federal law stipulates that no informa-
tion shall be disclosed if the disclosure
would contravene the national policy or
security interests of the United States or
the confidentiality of Census data.
Quarterly Wage Reporting. The Secre-
tary of Labor must provide prompt
access by the Secretary of HHS to wage
and unemployment compensation claims
information and data maintained by the
Labor Department or State employment
security agencies.
House bill
The purposes of the Federal Parent
Locator Service are expanded. For the
purposes of establishing parentage, es-
tablishing support orders or modifying
them, or enforcing support orders, the
Federal Parent Locator Service will pro-
vide information to locate individuals
who owe child support or against whom
an obligation is sought or to whom such
an obligation is owed. Information in the
FPLS includes Social Security number,
address, name and address of employer,
wages and employee benefits (including
information about health care coverage),
and information about assets and debts.
The provision also clarifies the statute so
that parents with orders providing child
custody or visitation rights are given
access to information from the FPLS
unless the State has notified the Secre-
tary that there is reasonable evidence of
domestic violence or child abuse or that
the information could be harmful to the
custodial parent or child.
The Secretary is authorized to set
reasonable rates for reimbursing Federal
and State agencies for the costs of pro-
viding information to the FPLS and to
set reimbursement rates that State and
Federal agencies that use information
from the FPLS must pay to the Secretary.
Federal Case Registry of Child Support
Orders. Establishes within the FPLS an
automated registry known as the Federal
Case Registry of Child Support Orders.
The Federal Case Registry contains ab-
stracts of child support orders and other
information specified by the Secretary
(such as names, Social Security numbers
or other uniform identification numbers,
and State case identification numbers) to
identify individuals who owe or are owed
support, or for or against whom support
is sought to be established, and the State
which has the case. States must begin
reporting this information in accord with
regulations issued by the Secretary by
October 1, 1998.
National Directory of New Hires.
This provision establishes within the
FPLS a National Directory of New
Hires containing information supplied
by State Directories of New Hires.
When fully implemented, the Federal
Directory of New Hires will contain
identifying information on virtually ev-
ery person who is hired in the United
States. In addition, the FPLS will con-
tain quarterly data supplied by the State
Directory of New Hires on wages and
Unemployment Compensation paid. The
Secretary of the Treasury must have
access to information in the Federal
Directory of New Hires for the purpose
of administering section 32 of the Inter-
nal Revenue Code and the Earned In-
come Credit. The information for the
National Directory of New Hires must
be entered within 2 days of receipt, and
requires the Secretary to maintain within
the National Directory of New Hires a
1
This publication of the Conference Report is
restricted to excerpts involving tax matters. Public
Law 104-193, page 4, this Bulletin.
7

list of multistate employers that choose
to send their report to one State and the
name of the State so elected. The Secre-
tary must establish a National Directory
of New Hires by October 1, 1997.
Information Comparisons and Other
Disclosures. The Secretary must verify
the accuracy of the name, Social Secu-
rity number, birth date, and employer
identification number of individuals in
the Federal Parent Locator Service with
the Social Security Administration. The
Secretary is required to match data in
the National Directory of New Hires
against the child support order abstracts
in the Federal Case Registry at least
every 2 working days and to report
information obtained from matches to
the State child support agency respon-
sible for the case within 2 days. The
information is to be used for purposes
of locating individuals to establish pater-
nity, and to establish, modify, or enforce
child support orders. The Secretary may
also compare information across all
components of the FPLS to the extent
and with the frequency that the Secre-
tary determines will be effective. The
Secretary will share information from
the FPLS with several potential users
including State agencies administering
the Temporary Assistance for Needy
Families program, the Commissioner of
Social Security (to determine the accu-
racy of Social Security and Supplemen-
tal Security Income), and researchers
under some circumstances.
Fees. The Secretary must reimburse
the Commissioner of Social Security for
costs incurred in performing verification
of Social Security information and
States for submitting information on
New Hires. States or Federal agencies
that use information from FPLS must
pay fees established by the Secretary.
Restriction on Disclosure and Use.
Information from the FPLS cannot be
used for purposes other than those pro-
vided in this section, subject to section
6103 of the Internal Revenue Code
(confidentiality and disclosure of returns
and return information).
Information Integrity and Security.
The Secretary must establish and use
safeguards to ensure the accuracy and
completeness of information from the
FPLS and restrict access to confidential
information in the FPLS to authorized
persons and purposes.
Federal Government Reporting. Each
department of the U.S. must submit the
name, Social Security number, and
wages paid the employee on a quarterly
basis to the FPLS. Quarterly wage re-
porting must not be filed for a Federal
or State employee performing intelli-
gence or counter-intelligence functions
if it is determined that filing such a
report could endanger the employee or
compromise an ongoing investigation.
Conforming Amendments. This section
makes several conforming amendments
to Titles III and IV of the Social Security
Act, to the Federal Unemployment Tax
Act, and to the Internal Revenue Code.
Among the more important are that:
State employment security agencies are
required to report quarterly wage infor-
mation to the Secretary of HHS or suffer
financial penalties and that private agen-
cies working under contract to State
child support agencies can have access to
certain specified information from IRS
records under some circumstances.
Requirement for Cooperation. The
Secretaries of HHS and Labor must
work together to develop cost-effective
and efficient methods of accessing infor-
mation in the various directories required
by this title; they must also consider the
need to ensure the proper and authorized
use of wage record information.
Senate amendment
Same, except under ‘‘Information
Comparisons and Other Disclosures’’ the
Senate amendment drops the require-
ment that the Social Security Adminis-
tration must determine the accuracy of
payments under the Social Security and
SSI programs.
Conference agreement
The conference agreement follows the
House bill and the Senate amendment
with the modification that the agreement
follows the Senate provision dropping
the requirement that the Social Security
Administration determine the accuracy
of Social Security and SSI payments.
* * * * *
[366] Subtitle G—Enforcement
of Support Orders
31. INTERNAL REVENUE SERVICE
COLLECTION OF ARREARAGES
Present law
If the amount of overdue child sup-
port is at least $750, the Internal Rev-
enue Service (IRS) can enforce the child
support obligation through its regular
collection process, which may include
seizure of property, freezing accounts, or
use of other procedures if child support
agencies request assistance according to
prescribed rules (e.g., certifying that the
delinquency is at least $750, etc.)
House bill
The Internal Revenue Code is
amended so that no additional fees can
be assessed for adjustment to previously
certified amounts for the same obligor.
Senate amendment
Same.
Conference agreement
The conference agreement follows the
House bill and the Senate amendment.
* * * * *
TITLE IV—RESTRICTING WELFARE
AND PUBLIC BENEFITS FOR
ALIENS
[392] Subtitle F—Earned Income
Credit Denied to Unauthorized
Employees
17. EARNED INCOME CREDIT DENIED
TO INDIVIDUALS NOT AUTHORIZED TO
BE EMPLOYED IN THE UNITED STATES
[NOTE.—For further description of
this and additional earned income credit
provisions, see Title IX: Miscellaneous,
page 9.]
Present law
Certain eligible low-income workers
are entitled to claim a refundable credit
of up to $3,556 in 1996 on their income
tax return. The amount of the credit an
eligible individual may claim depends
upon whether the individual has one,
more than one, or no qualifying children
and is determined by multiplying the
credit rate by the taxpayer’s earned
income up to an earned income amount.
The maximum amount of the credit is
the product of the credit rate and the
earned income amount. For taxpayers
with earned income (or adjusted gross
income (AGI), if greater) in excess of
the beginning of the phaseout range, the
maximum credit amount is reduced by
the phaseout rate multiplied by the
amount of earned income (or AGI, if
greater) in excess of the beginning of
the phaseout range. For taxpayers with
earned income (or AGI, if greater) in
excess of the end of the phaseout range,
no credit is allowed.
In order to claim the credit, an indi-
vidual must either have a qualifying
child or meet other requirements. A
qualifying child must meet a relation-
ship test, an age test, an identification
test, and a residence test. In order to
claim the credit without a qualifying
8

child, an individual must not be a
dependent and must be over age 24 and
under age 65.
To satisfy the identification test, indi-
viduals must include on their tax return
the name and age of each qualifying
child. For returns filed with respect to
tax year 1996, individuals must provide
a taxpayer identification number (TIN)
for all qualifying children born on or
before November 30, 1996. For returns
filed with respect to tax year 1997 and
all subsequent years, individuals must
provide TINs for all qualifying children,
regardless of their age. An individual’s
TIN is generally that individual’s social
security number.
The Internal Revenue Service may
summarily assess additional tax due as a
result of a mathematical or clerical error
without sending the taxpayer a notice of
deficiency and giving the taxpayer an
opportunity to petition the Tax Court.
Where the IRS uses the summary as-
sessment procedure for mathematical or
clerical errors, the taxpayer must be
given an explanation of the asserted
error and a period of 60 days to request
that the IRS abate its assessment. The
IRS may not proceed to collect the
amount of the assessment until the tax-
payer has agreed to it or has allowed the
60-day period for objecting to expire. If
the taxpayer files a request for abate-
ment of the assessment specified in the
notice, the IRS must abate the assess-
ment. Any reassessment of the abated
amount is subject to the ordinary defi-
ciency procedures. The request for
abatement of the assessment is the only
procedure a taxpayer may use prior to
paying the assessed amount in order to
contest an assessment arising out of a
mathematical or clerical error. Once the
assessment is satisfied, however, the
taxpayer may file a claim for refund if
he or she believes the assessment was
made in error.
House bill
Individuals are not eligible for the
credit if they do not include their tax-
payer identification number (and, if mar-
ried, their spouse’s taxpayer identifica-
tion number) on their tax return. Solely
for these purposes and for purposes of
the present-law identification test for a
qualifying child, a taxpayer identifica-
tion number is defined as a social
security number issued to an individual
by the Social Security Administration
other than a number issued under sec-
tion 205(c)(2)(B)(i)(II) (or that portion
of sec. 205(c)(2)(B)(i)(III) relating to it)
of the Social Security Act (regarding the
issuance of a number to an individual
applying for or receiving Federally
funded benefits).
If an individual fails to provide a
correct taxpayer identification number,
such omission will be treated as a math-
ematical or clerical error. If an individual
who claims the credit with respect to net
earnings from self-employment fails to
pay the proper amount of self-
employment tax on such net earnings,
the failure will be treated as a math-
ematical or clerical error for purposes of
the amount of credit allowed.
Senate amendment
Similar to House bill.
Conference agreement
The conference agreement follows the
House bill and the Senate amendment.
* * * * *
TITLE IX—MISCELLANEOUS
[494]
10. EARNED INCOME CREDIT
PROVISIONS
A. Deny earned income credit to indi-
viduals not authorized to be employed in
the United States
[N
OTE.—For additional discussion of
this provision, refer to Title IV: Restrict-
ing Welfare and Public Benefits for
Aliens, page 8.]
Present law
In general. Certain eligible low-
income workers are entitled to claim a
refundable credit on their income tax
return. The amount of the credit an
eligible individual may claim depends
upon whether the individual has one,
more than one, or no qualifying children
and is determined by multiplying the
credit rate by the individual’s
1
earned
income up to an earned income amount.
The maximum amount of the credit is
the product of the credit rate and the
earned income amount. For individuals
with earned income (or adjusted gross
income (AGI), if greater) in excess of
the beginning of the phaseout range, the
maximum credit amount is reduced by
the phaseout rate multiplied by the
amount of earned income (or AGI, if
greater) in excess of the beginning of
the phaseout range. For individuals with
earned income (or AGI, if greater) in
excess of the end of the phaseout range,
no credit is allowed.
The parameters for the credit depend
upon the number of qualifying children
the individual claims. For 1996, the
parameters are given in the following
table:
Two or
more chil-
dren
One quali-
fying child
No qualify-
ing chil-
dren
Credit rate (percent). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40.0034.007.65
Earned income amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$8,890$6,330$4,220
Maximum credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$3,556$2,152$323
Phaseout begins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$11,610$11,610$5,280
Phaseout rate (percent). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21.0615.987.65
Phaseout ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$28,495$25,078$9,500
For years after 1996, the credit rates
and the phaseout rates will be the same
as in the preceding table. The earned
income amount and the beginning of the
phaseout range are indexed for inflation;
because the end of the phaseout range
depends on those amounts as well as the
phaseout rate and the credit rate, the end
of the phaseout range will also increase
if there is inflation.
In order to claim the credit, an indi-
vidual must either have a qualifying
child or meet other requirements. A
qualifying child must meet a relation-
ship test, an age test, an identification
1
In the case of a married individual who files a
joint return with his or her spouse, the income for
purposes of these tests is the combined income of
the couple.
9

test, and a residence test. In order to
claim the credit without a qualifying
child, an individual must be over age 24
and under age 65.
To satisfy the identification test, indi-
viduals must include on their tax return
the name and age of each qualifying
child. For returns filed with respect to
tax year 1996, individuals must provide
a taxpayer identification number (TIN)
for all qualifying children born on or
before November 30, 1996. For returns
filed with respect to tax year 1997 and
all subsequent years, individuals must
provide TINs for all qualifying children,
regardless of their age. An individuals
TIN is generally that individual’s social
security number.
An individual with qualifying children
may elect to receive a portion of the
credit on an advance basis by furnishing
an advance payment certificate to his or
her employer. For such an individual,
the employer makes an advance pay-
ment of the credit at the time wages are
paid. The amount of advance payment
allowable in a taxable year is limited to
60 percent of the maximum credit avail-
able to an individual with one qualifying
child.
Mathematical or clerical errors. The
Internal Revenue Service may sum-
marily assess additional tax due as a
result of a mathematical or clerical error
without sending the taxpayer a notice of
deficiency and giving the taxpayer an
opportunity to petition the Tax Court.
Where the IRS uses the summary as-
sessment procedure for mathematical or
clerical errors, the taxpayer must be
given an explanation of the asserted
error and a period of 60 days to request
that the IRS abate its assessment. The
IRS may not proceed to collect the
amount of the assessment until the tax-
payer has agreed to it or has allowed the
60-day period for objecting to expire. If
the taxpayer files a request for abate-
ment of the assessment specified in the
notice, the IRS must abate the assess-
ment. Any reassessment of the abated
amount is subject to the ordinary defi-
ciency procedures. The request for
abatement of the assessment is the only
procedure a taxpayer may use prior to
paying the assessed amount in order to
contest an assessment arising out of a
mathematical or clerical error. Once the
assessment is satisfied, however, the
taxpayer may file a claim for refund if
he or she believes the assessment was
made in error.
House bill
Individuals are not eligible for the
credit if they do not include their tax-
payer identification number (and, if mar-
ried, their spouse’s taxpayer identifica-
tion number) on their tax return. Solely
for these purposes and for purposes of
the present-law identification test for a
qualifying child, a taxpayer identifica-
tion number is defined as a social
security number issued to an individual
by the Social Security Administration
other than a number issued under sec-
tion 205(c)(2)(B)(i)(II) (or that portion
of sec. 205(c)(2)(B)(i)(III) relating to it)
of the Social Security Act (regarding the
issuance of a number to an individual
applying for or receiving Federally
funded benefits).
If an individual fails to provide a
correct taxpayer identification number,
such omission will be treated as a
mathematical or clerical error. If an
individual who claims the credit with
respect to net earnings from self-
employment fails to pay the proper
amount of self-employment tax on such
net earnings, the failure will be treated
as a mathematical or clerical error for
purposes of the amount of credit al-
lowed.
Effective date. The provision is effec-
tive for taxable years beginning after
December 31, 1995.
Senate amendment
The provision in the Senate amend-
ment is identical to that in the House
bill.
Conference agreement
The conference agreement follows the
House bill and the Senate amendment
with a modification to the effective date.
The conference agreement is effective
with respect to returns the due date for
which (without regard to extensions) is
more than 30 days after the date of
enactment of this Act.
B. Change disqualified income test for
earned income credit
Present law
For taxable years beginning after De-
cember 31, 1995, an individual is not
eligible for the earned income credit if
the aggregate amount of ‘‘disqualified
income’’ of the taxpayer for the taxable
year exceeds $2,350. This threshold is
not indexed. Disqualified income is the
sum of:
(1) interest (taxable and tax-
exempt),
(2) dividends, and
(3) net rent and royalty income (if
greater than zero).
House bill
No provision.
Senate amendment
For purposes of the disqualified in-
come test for the earned income credit,
the following items are added to the
definition of disqualified income: capital
gain net income and net passive income
(if greater than zero) that is not self-
employment income.
The threshold above which an indi-
vidual is not eligible for the credit is
reduced from $2,350 to $2,200, and the
threshold is indexed for inflation after
1996.
Effective date. The provision gener-
ally is effective for taxable years begin-
ning after December 31, 1995. For indi-
viduals who, as of June 26, 1996, had
made an election to receive the current-
year credit on an advance basis, the
provision is effective for taxable years
beginning after December 31, 1996.
Conference agreement
The conference agreement follows the
Senate amendment.
C. Modify definition of adjusted gross
income used for phasing out the earned
income credit
Present law
For taxpayers with earned income (or
AGI, if greater) in excess of the begin-
ning of the phaseout range, the maxi-
mum earned income credit amount is
reduced by the phaseout rate multiplied
by the amount of earned income (or
AGI, if greater) in excess of the begin-
ning of the phaseout range. For taxpay-
ers with earned income (or AGI, if
greater) in excess of the end of the
phaseout range, no credit is allowed.
House bill
No provision.
Senate amendment
The provision modifies the definition
of AGI used for phasing out the earned
income credit by including certain non-
taxable income and by disregarding cer-
tain losses. The nontaxable items in-
cluded are:
10

(1) tax-exempt interest, and
(2) nontaxable distributions from
pensions, annuities, and individual re-
tirement arrangements (but only if not
rolled over into similar vehicles dur-
ing the applicable rollover period).
The losses disregarded are:
(1) net capital losses (if greater
than zero),
(2) net losses from trusts and es-
tates,
(3) net losses from nonbusiness
rents and royalties, and
(4) net losses from businesses,
computed separately with respect to
sole proprietorships (other than in
farming), sole proprietorships in farm-
ing, and other businesses.
For purposes of item (4), above,
amounts attributable to a business that
consists of the performance of services
by the taxpayer as an employee are not
taken into account.
Effective date. The provision gener-
ally is effective for taxable years begin-
ning after December 31, 1995. For indi-
viduals who, as of June 26, 1996, had
made an election to receive the current-
year credit on an advance basis, the
provision is effective for taxable years
beginning after December 31, 1996.
Conference agreement
The conference agreement modifies
the definition of AGI used for phasing
out the earned income credit by disre-
garding certain losses. The losses disre-
garded are:
(1) net capital losses (if greater
than zero),
(2) net losses from trusts and es-
tates,
(3) net losses from nonbusiness
rents and royalties, and
(4) 50 percent of the net losses
from businesses, computed separately
with respect to sole proprietorships
(other than in farming), sole
proprietorships in farming, and other
businesses.
For purposes of item (4), above,
amounts attributable to a business that
consists of the performance of services
by the taxpayer as an employee are not
taken into account.
Effective date. Same as the Senate
amendment provision.
D. Suspend inflation adjustments for
earned income credit for individuals
with no qualifying children
Present law
To claim the earned income credit, an
individual must either have a qualifying
child or meet other requirements. In
order to claim a credit without a quali-
fying child, an individual must not be a
dependent and must be over age 24 and
under age 65.
The earned income amount and the
beginning of the phaseout range are
indexed for inflation; because the end of
the phaseout range depends on these
amounts as well as the phaseout rate
and the credit rate, the end of the
phaseout range will also increase if
there is inflation.
House bill
No provision.
Senate amendment
In the case of individuals with no
qualifying children there will be no
adjustment for inflation after 1996 to the
earned income amount or the beginning
of the phaseout range.
Effective date. The provision is effec-
tive for taxable years beginning after
December 31, 1996.
Conference agreement
The conference agreement follows the
House bill (no provision).
11

Part IV. Items of General Interest
Work Opportunity Tax Credit —
Supplementary Instructions for
Form 8850
Announcement 96–116
This announcement provides supple-
mentary instructions for employers per-
taining to the date-of-birth entry space
on the applicant information portion of
Form 8850, Work Opportunity Credit
Pre-Screening Notice and Certification
Request.
BACKGROUND
On September 26, 1996, the IRS
issued Form 8850 for use by employers
who wish to obtain the Work Opportu-
nity Tax Credit (WOTC) by hiring indi-
viduals who belong to one of seven
targeted groups defined in section
51(d)(11) of the Internal Revenue Code.
At the top of the Form 8850, there is
an entry for the job applicant’s date of
birth. This information is requested on
the form because of specific age re-
quirements for membership in the fol-
lowing three targeted groups: high-risk
youths (ages 18–24), qualified summer
youth employees (ages 16–17), and
qualified food stamp recipients (ages
18–24).
Some employers have expressed an
interest in limiting the extent to which
age information is collected in the pre-
screening process to those age brackets
that are determinative of eligibility in a
WOTC targeted group. To accommodate
this concern, the IRS expects to publish
a revised Form 8850.
In a notice published in the Federal
Register on October 3, 1996, the IRS
requested comments on Form 8850 as
required by the Paperwork Reduction
Act of 1995. Those comments are due
December 2, 1996. The IRS expects to
publish a revised version of Form 8850
in early 1997. Meanwhile, the following
supplementary instructions apply to the
September 1996 version of the form.
SUPPLEMENTARY INSTRUCTIONS
In the case of applicants who are age
25 or older, employers are not required
to ask for the applicant’s date of birth
and may leave the date-of-birth entry
space blank on Form 8850.
The principal author of this announce-
ment is Robert Wheeler of the Office of
the Associate Chief Counsel (Employee
Benefits and Exempt Organizations). For
further information regarding this an-
nouncement, contact Mr. Wheeler on
(202) 622–6060 (not a toll-free call).
Amended Returns Under T.D. 8678
Announcement 96–117
The date in Temp. Treas. Reg.
§ 1.1502–99T(d)(4), as reprinted in the
Internal Revenue Bulletin, 1996–31
I.R.B. at 28, dated July 29, 1996, should
be March 26, 1997, rather than Septem-
ber 24, 1996. Accordingly, to the extent
that T.D. 8678 requires amended returns
to be filed, such returns are required to
be filed before March 26, 1997. The
temporary regulations relate to the op-
eration of I.R.C. §§ 382 and 383 with
respect to consolidated groups.See
§ 1.1502–99T(d)(4), as published in the
Federal Register on June 27, 1996, 61
F.R. 33,365.
Foundations Status of Certain
Organizations
Announcement 96–118
The following organizations have
failed to establish or have been unable
to maintain their status as public chari-
ties or as operating foundations. Accord-
ingly, grantors and contributors may not,
after this date, rely on previous rulings
or designations in the Cumulative List
of Organizations (Publication 78), or on
the presumption arising from the filing
of notices under section 508(b) of the
Code. This listing doesnotindicate that
the organizations have lost their status
as organizations described in section
501(c)(3), eligible to receive deductible
contributions.
Former Public Charities. The follow-
ing organizations (which have been
treated as organizations that are not
private foundations described in section
509(a) of the Code) are now classified
as private foundations:
Access to Justice, Inc., Bronx, NY
Africa Systems Research Institute USA,
Inc., Beverly Farms, MA
Aid to Romanian Children, Inc., Quincy,
MA
Aim for Success, Inc., Mamaroneck, NY
Alliance Child Care Center, Inc., Bronx,
NY
Alliance for the Mentally Ill of Central
Middlesex Massachusetts, Littleton,
MA
Almae Matris Mid Atlantic Assoc. of
Alumni and Frds. Croatian,
Englewood Cliffs, NJ
American Friends of Genesis Jerusalem,
Inc., New York, NY
American Initiative for Croatia, Inc.,
New York, NY
Aspen Womens Forum Scholarship
Endowment Fund, Aspen, CO
Bornholm Foundation, Inc., Queen
Creek, AZ
Career Vision in Bangladesh &
International, West Newton, MA
Center for At-Risk Educational
Strategies, (CARES) Incorporated,
Houston, TX
Colorado Biomedical Research
Foundation, Denver, CO
Community Foundation of Southern
Indiana, Inc., New Albany, IN
Faith Lutheran Home Foundation Inc.,
Wolf Point, MT
Fellowship Care, Inc., Midland, TX
First Casa, Santa Fe, NM
Fort Hood Museum Commission, Fort
Hood, TX
He & Company Foundation, Scottsdale,
AZ
Houston Drum Corps Association, Inc.,
Voyagers Drum & Bugle Corps.,
Pasadena, TX
International Monovision Association,
Denver, CO
Media for International Development,
Inc., New York, NY
National Indian Monument and Institute,
Inc., Tulsa, OK
Network on Adoption Help, Cedar Falls,
IA
Quest for Alternative Resources, Inc.,
Dallas, TX
Reserve Relief Foundation of America,
Houston, TX
Shakes Alive, Actors Repertory Theater
Irving, Irving, TX
Societas Artis Illuminatorum, Wichita,
KS
Tulsa County Sheriffs Association,
Tulsa, OK
United Living Club, Inc., Wilmington,
DE
Utah OAVP Directors Association,
Provo, UT
Watertown Youth Hockey League,
Watertown, MA
Wilson Senior Center Nutrition Site,
Wilson, KS
Womens Right Foundation, Selden, NY
Youth Educational Support Society, Inc.,
Exeter, NH
If an organization listed above sub-
mits information that warrants the re-
121996–46 I.R.B.

newal of its classification as a public
charity or as a private operating founda-
tion, the Internal Revenue Service will
issue a ruling or determination letter
with the revised classification as to
foundation status. Grantors and contribu-
tors may thereafter rely upon such rul-
ing or determination letter as provided
in section 1.509(a)–7 of the Income Tax
Regulations. It is not the practice of the
Service to announce such revised classi-
fication of foundation status in the Inter-
nal Revenue Bulletin.
Reporting Excess Golden
Parachute Payments on Form
1099–MISC
Announcement 96–119
The 1997 Form 1099–MISC, Miscel-
laneous Income, which is to be filed in
1998, has been revised. Box 13 was
added for payers to report excess golden
parachute payments. Payers must label
these payments in box 13 as ‘‘EPP’’.
These payments were formerly reported
in box 7. The 1997 Form 1099–MISC
should be available during January
1997.
131996–46 I.R.B.

Announcement of the Disbarment, Suspension, or Consent to Voluntary
Suspension of Attorneys, Certified Public Accountants, Enrolled Agents, and
Enrolled Actuaries From Practice Before the Internal Revenue Service
Under 31 Code of Federal Regula-
tions, Part 10, an attorney, certified pub-
lic accountant, enrolled agent, or en-
rolled actuary, in order to avoid the
institution or conclusion of a proceeding
for his disbarment or suspension from
practice before the Internal Revenue Ser-
vice, may offer his consent to suspension
from such practice. The Director of
Practice, in his discretion, may suspend
an attorney, certified public accountant,
enrolled agent, or enrolled actuary in
accordance with the consent offered.
Attorneys, certified public accoun-
tants, enrolled agents, and enrolled actu-
aries are prohibited in any Internal Rev-
enue Service matter from directly or
indirectly employing, accepting assis-
tance from, being employed by or shar-
ing fees with, any practitioner disbarred
or suspended from practice before the
Internal Revenue Service.
To enable attorneys, certified public
accountants, enrolled agents, and en-
rolled actuaries to identify practitioners
under consent suspension from practice
before the Internal Revenue Service, the
Director of Practice will announce in the
Internal Revenue Bulletin the names and
addresses of practitioners who have
been suspended from such practice, their
designation as attorney, certified public
accountant, enrolled agent, or enrolled
actuary, and date or period of suspen-
sion. This announcement will appear in
the weekly Bulletin at the earliest practi-
cable date after such action and will
continue to appear in the weekly Bulle-
tins for five successive weeks or for as
many weeks as is practicable for each
attorney, certified public accountant, en-
rolled agent, or enrolled actuary so
suspended and will be consolidated and
published in the Cumulative Bulletin.
The following individuals have been
placed under consent suspension from
practice before the Internal Revenue
Service:
NameAddressDesignationDate of Suspension
Lamb, Gordon W.Pullman, WACPASeptember 1, 1996 to January 31, 1997
Anderson, Randall S.Arlington Hgts, ILCPASeptember 1, 1996 to February 28, 1998
Broderick, William J.Farmington Hills, MICPASeptember 1, 1996 to November 30, 1996
Ruggiero, John M.Rutland, VTAttorneySeptember 1, 1996 to October 31, 1996
Eklund, MarkPortland, ORCPASeptember 1, 1996 to February 28, 1997
Stayner, G. CraigSalt Lake City, UTCPASeptember 15, 1996 to June 14, 1997
Allen, Lehman D.Lubbock, TXCPASeptember 20, 1996 to September 19, 1998
Hardgrove, David L.Amarillo, TXCPASeptember 21, 1996 to June 20, 1997
Trader, John H.Kansas City, MOAttorneySeptember 30, 1996 to March 29, 1997
Schmertz, Carl D.Wilmette, ILCPAOctober 1, 1996 to March 31, 1999
Bengston, WesselChicago, ILCPAOctober 15, 1996 to April 14, 1997
14

Announcement of the Expedited Suspension of Attorneys, Certified Public
Accountants, Enrolled Agents, and Enrolled Actuaries From Practice Before The
Internal Revenue Service
Under title 31 of the Code of Federal
Regulations, section 10.76, the Director
of Practice is authorized to immediately
suspend from practice before the Internal
Revenue Service any practitioner who,
within five years, from the date the
expedited proceeding is instituted, (1)
has had a license to practice as an
attorney, certified public accountant, or
actuary suspended or revoked for cause;
or (2) has been convicted of any crime
under title 26 of the United States Code
or, of a felony under title 18 of the
United States Code involving dishonesty
or breach of trust.
Attorneys, certified public accoun-
tants, enrolled agents, and enrolled actu-
aries are prohibited in any Internal Rev-
enue Service matter from directly or
indirectly employing, accepting assis-
tance from, being employed by, or shar-
ing fees with, any practitioner disbarred
or suspended from practice before the
Internal Revenue Service.
To enable attorneys, certified public
accountants, enrolled agents, and en-
rolled actuaries to identify practitioners
under expedited suspension from prac-
tice before the Internal Revenue Service,
the Director of Practice will announce in
the Internal Revenue Bulletin the names
and addresses of practitioners who have
been suspended from such practice, their
designation as attorney, certified public
accountant, enrolled agent, or enrolled
actuary, and date or period of suspen-
sion. This announcement will appear in
the weekly Bulletin at the earliest practi-
cable date after such action and will
continue to appear in the weekly Bulle-
tins for five successive weeks or for as
many weeks as is practicable for each
attorney, certified public accountant, en-
rolled agent, or enrolled actuary so
suspended and will be consolidated and
published in the Cumulative Bulletin.
The following individuals have been
placed under suspension from practice
before the Internal Revenue Service by
virtue of the expedited proceeding pro-
visions of the applicable regulations:
NameAddressDesignationDate of Suspension
Alleva, DonaldMount Vernon, NYEnrolled AgentIndefinite from September 5, 1996
Rose, Robert M.Dallas, TXAttorneyIndefinite from September 5, 1996
McGrath, GregoryNew Smyrna Bch, FLCPAIndefinite from September 8, 1996
Finch, Kenneth L. Jr.Pelham, ALCPAIndefinite from September 8, 1996
15

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 de-
scribe the effect:
Amplifieddescribes a situation where
no change is being made in a prior
published position, but the prior position
is being extended to apply to a variation
of the fact situation set forth therein.
Thus, if an earlier ruling held that a
principle applied to A, and the new
ruling holds that the same principle also
applies to B, the earlier ruling is ampli-
fied. (Compare withmodified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an es-
sential 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 pub-
lished position. (Compare withamplified
andclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered de-
terminative with respect to future trans-
actions. This term is most commonly
used in a ruling that lists previously
published rulings that are obsoleted be-
cause of changes in law or regulations.
A ruling may also be obsoleted because
the substance has been included in regu-
lations subsequently adopted.
Revokeddescribes situations where
the position in the previously published
ruling is not correct and the correct
position is being stated in the new
ruling.
Supersededdescribes a situation
where the new ruling does nothing more
than restate the substance and situation
of a previously published ruling (or
rulings). Thus, the term is used to
republish under the 1986 Code and
regulations the same position published
under the 1939 Code and regulations.
The term is also used when it is desired
to republish in a single ruling a series of
situations, names, etc., that were previ-
ously published over a period of time in
separate rulings. If the new ruling does
more than restate the substance of a
prior ruling, a combination of terms is
used. For example,modifiedandsuper-
sededdescribes a situation where the
substance of a previously published rul-
ing is being changed in part and is
continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is su-
perseded.
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 ruling has been supplemented
several times, a new ruling may be
published that includes the list in the
original ruling and the additions, and
supersedes all prior rulings in the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and
formerly used will appear in material published in
the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
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—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
16

Numerical Finding List
1
Bulletins 1996–27 through 1996–45
Announcements:
96–61, 1996–27 I.R.B.72
96–62, 1996–28 I.R.B.55
96–63, 1996–29 I.R.B.18
96–64, 1996–29 I.R.B.18
96–65, 1996–29 I.R.B.18
96–66, 1996–29 I.R.B.19
96–67, 1996–30 I.R.B.27
96–68, 1996–31 I.R.B.45
96–69, 1996–32 I.R.B.38
96–70, 1996–32 I.R.B.40
96–71, 1996–33 I.R.B.16
96–72, 1996–33 I.R.B.16
96–73, 1996–33 I.R.B.18
96–74, 1996–33 I.R.B.19
96–75, 1996–34 I.R.B.29
96–76, 1996–34 I.R.B.29
96–77, 1996–35 I.R.B.15
96–78, 1996–35 I.R.B.15
96–79, 1996–35 I.R.B.15
96–80, 1996–35 I.R.B.16
96–81, 1996–36 I.R.B.13
96–82, 1996–36 I.R.B.14
96–83, 1996–36 I.R.B.14
96–84, 1996–36 I.R.B.14
96–85, 1996–37 I.R.B.20
96–86, 1996–37 I.R.B.21
96–87, 1996–37 I.R.B.21
96–88, 1996–38 I.R.B.150
96–89, 1996–37 I.R.B.22
96–90, 1996–37 I.R.B.22
96–91, 1996–37 I.R.B.23
96–92, 1996–38 I.R.B.151
96–93, 1996–38 I.R.B.151
96–94, 1996–38 I.R.B.153
96–96, 1996–39 I.R.B.41
96–97, 1996–39 I.R.B.41
96–98, 1996–39 I.R.B.42
96–99, 1996–39 I.R.B.42
96–100, 1996–40 I.R.B.10
96–101, 1996–40 I.R.B.10
96–102, 1996–40 I.R.B.11
96–103, 1996–40 I.R.B.12
96–104, 1996–41 I.R.B.10
96–105, 1996–42 I.R.B.19
96–106, 1996–42 I.R.B.23
96–107, 1996–42 I.R.B.27
96–108, 1996–44 I.R.B.15
96–109, 1996–43 I.R.B.76
96–110, 1996–43 I.R.B.77
96–111, 1996–44 I.R.B.16
96–112, 1996–45 I.R.B.7
96–113, 1996–44 I.R.B.18
96–114, 1996–45 I.R.B.7
96–115, 1996–45 I.R.B.9
Court Decisions:
2058, 1996–34 I.R.B.13
2059, 1996–34 I.R.B.10
2060, 1996–34 I.R.B.5
Delegation Orders:
155 (Rev. 4), 1996–40 I.R.B.9
Notices:
96–36, 1996–27 I.R.B.11
96–37, 1996–31 I.R.B.29
96–38, 1996–31 I.R.B.29
96–39, 1996–32 I.R.B.8
96–40, 1996–33 I.R.B.11
96–41, 1996–35 I.R.B.6
96–42, 1996–35 I.R.B.6
96–43, 1996–36 I.R.B.7
96–44, 1996–36 I.R.B.7
96–45, 1996–39 I.R.B.7
96–46, 1996–39 I.R.B.7
96–47, 1996–39 I.R.B.8
96–48, 1996–39 I.R.B.8
96–49, 1996–41 I.R.B.6
96–50, 1996–41 I.R.B.6
96–51, 1996–42 I.R.B.6
96–52, 1996–42 I.R.B. 8
96–54, 1996–44 I.R.B.13
Proposed Regulations:
CO–9–96, 1996–34 I.R.B.20
CO–24–96, 1996–30 I.R.B.22
CO–25–96, 1996–31 I.R.B.30
CO–26–96, 1996–31 I.R.B.31
FI–59–94, 1996–30 I.R.B.23
FI–32–95, 1996–34 I.R.B.21
FI–48–95, 1996–31 I.R.B.36
FI–28–96, 1996–31, I.R.B.33
GL–7–96, 1996–33 I.R.B.13
IA–292–84, 1996–28 I.R.B.38
IA–26–94, 1996–30 I.R.B.24
IA–29–96, 1996–33 I.R.B.14
INTL–4–95, 1996–36 I.R.B.8
PS–39–93, 1996–34 I.R.B.27
PS–22–96, 1996–33 I.R.B.15
REG–208215–91, 1996–38 I.R.B.145
REG–209803–95, 1996–44 I.R.B.14
REG–209826–96, 1996–42 I.R.B.10
REG–209827–96, 1996–37 I.R.B.19
REG–245562–96, 1996–41 I.R.B.8
Public Laws:
104–117, 1996–34 I.R.B.19
104–134, 1996–38 I.R.B.7
104–168, 1996–38 I.R.B.8
104–191, 1996–43 I.R.B.7
Railroad Retirement Quarterly Rate
1996–29 I.R.B.14
Revenue Procedures:
96–36, 1996–27 I.R.B.11
96–37, 1996–29 I.R.B.16
96–39, 1996–33 I.R.B.11
96–40, 1996–32 I.R.B.8
96–41, 1996–32 I.R.B.9
96–42, 1996–32 I.R.B.14
96–43, 1996–35 I.R.B.6
96–44, 1996–35 I.R.B.7
96–45, 1996–35 I.R.B.12
96–46, 1996–38 I.R.B.144
96–47, 1996–39 I.R.B.10
96–48, 1996–39 I.R.B.10
96–49, 1996–43 I.R.B.74
Revenue Rulings:
96–33, 1996–27 I.R.B.4
96–34, 1996–28 I.R.B.4
96–35, 1996–31 I.R.B.4
96–36, 1996–30 I.R.B.6
96–37, 1996–32 I.R.B.4
96–38, 1996–33 I.R.B.4
96–39, 1996–34 I.R.B.4
96–41, 1996–45 I.R.B.4
96–42, 1996–35 I.R.B.4
96–43, 1996–36 I.R.B.4
96–44, 1996–38 I.R.B.4
96–45, 1996–39 I.R.B.5
96–46, 1996–39 I.R.B.5
96–47, 1996–40 I.R.B.7
96–48, 1996–40 I.R.B.4
96–49, 1996–41 I.R.B.4
96–50, 1996–42 I.R.B.4
96–51, 1996–43 I.R.B.5
96–52, 1996–45 I.R.B.5
Tax Conventions:
1996–28 I.R.B. 36
1996–36 I.R.B.6
1996–40 I.R.B.8
Treasury Decisions:
8673, 1996–27 I.R.B.4
8674, 1996–28 I.R.B.7
8675, 1996–29 I.R.B.5
8676, 1996–30 I.R.B.4
8677, 1996–30 I.R.B.7
8678, 1996–31 I.R.B.11
8679, 1996–31 I.R.B.4
8680, 1996–33 I.R.B.5
8681, 1996–37 I.R.B.17
8682, 1996–37 I.R.B.4
8683, 1996–44 I.R.B.9
8684, 1996–44 I.R.B.4
1
A cumulative list of all Revenue Rulings, Rev-
enue Procedures, Treasury Decisions, etc., pub-
lished in Internal Revenue Bulletins 1996–1
through 1996–26 will be found in Internal Rev-
enue Bulletin 1996–27, dated July 1, 1996.
17

Finding List of Current Action on
Previously Published Items
1
Bulletins 1996–27 through 1996–45
*Denotes entry since last publication
Revenue Procedures:
80–27
Modified by
96–40, 1996–32 I.R.B.8
87–32
Modified by
TD 8680, 1996–33 I.R.B.5
92–20
Modified by
TD 8680, 1996–33 I.R.B.5
95–16
Superseded by
96–48, 1996–39 I.R.B.10
95–29
Superseded by
96–36, 1996–27 I.R.B.11
95–29A
Superseded by
96–36, 1996–27 I.R.B.11
95–30
Superseded by
96–42, 1996–32 I.R.B.14
95–46
Superseded by
96–48, 1996–39 I.R.B.10
96–41
Modified by
Notice 96–49, 1996–41 I.R.B.6
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1996–1 through 1996–26 will be found in Internal
Revenue Bulletin 1996–27, dated July 1, 1996.
18