Internal Revenue Bulletin 2007-49 (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.

Bulletin No. 200
7-49
December 3, 2007
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2007–69, page 1083.
This ruling provides that payments made by the U.S. Depart-
ment of Veterans Affairs under the compensated work therapy
program are exempt from federal income tax as veterans’ ben-
efits. Rev. Rul. 65–18 revoked, Rev. Rul. 72–605 amplified.
Notice 200
7–95, page 1091.
This notic
e addresses regulations under section 901 of the
Code relat
ing to the foreign tax credit. It announces revised
effective
dates for regulations amending the “legal liability”
or “techn
ical taxpayer” rule and the noncompulsory payment
rules.
Rev. Proc. 2007–68, page 1093.
Substitute tax forms and schedules.Requirements are set
forth for privately designed and printed federal tax forms and
conditions under which the Service will accept computer pre-
pared and computer-generated tax forms and schedules. Rev.
Proc. 2007–24 superseded.
Rev. Proc. 2007–69, page 1137.
This procedure informs small business refiners how to obtain
the certification required under section 45H(f) of the Code.
EMPLOYEE PLANS
REG–133300–07, page 1140.
Proposed regulations under section 401 of the Code provide
guidance relating to certain automatic contribution arrange-
ments; section 402(c) relating to eligible rollover distributions;
section 411(a) relating to forfeitures; and section 4979(f) relat-
ing to excise tax on certain excess contributions and excess
aggregate contributions.
EXEMPT ORGANIZATIONS
Announcement 2007–111, page 1153.
The IRS has revoked its determination that First Step Consumer
Credit Counseling, Inc., of Macunle, PA; Sterling Debt Manage-
ment, Inc., of Los Angeles, CA; Community Partners Corpo-
ration of Las Vegas, NV; The Senior Citizens Counseling and
Delivery Service of Washington, DC; Elaine R. Shepard Can-
cer Research Foundation of Coronado, CA; The Dowd Founda-
tion of Wilkes-Barre, PA; Western Arkansas Housing Fdn. of Ft.
Smith, AR; Pythons Drill Team of Kansas City, MO; Buddy and
Rita Gregory Charitable Supporting Organization of Lehi, UT;
Down Payment Assistance Foundation, Inc., of Glendora, CA;
Market 5 Gallery of Washington, DC; IJM Foundation of Syos-
set, NY; International Charities of Nevada of Las Vegas, NV;
First Bingo Cooperative Association of Austin, TX; One Amer-
ica Foundation, Inc., of Baltimore, MD; Future Homes Assis-
tance Programs, Inc., of Stockbridge, GA; Sweet Home Foun-
dation of Caldwell, ID; and Housing Opportunities of Houston
Inc., of Houston, TX, qualify as organizations described in sec-
tion 501(c)(3) and 170(c)(2) of the Code.
EXCISE TAX
Notice 2007–97, page 1092.
This notice defines liquid hydrocarbons derived from biomass
for purposes of the credits and payments provided for alterna-
tive fuel and alternative fuel mixtures under sections 34, 6426,
and 6427 of the Code.
(Continued on the next page)
Fi
nding Lists begin on page ii.

ADMINISTRATIVE
T.D. 9363, page 1084.
Final regulations under section 6011 of the Code update and
clarify the rules and procedures for filing corporate income
tax returns and returns of organizations required to file re-
turns under section 6033 on magnetic media pursuant to sec-
tion 6011(e). These regulations affect corporations, includ-
ing S corporations, with assets of $10 million or more that
file Form 1120,U.S. Corporation Income Tax Return,or Form
1120S,U.S. Income Tax Return for an S Corporation;exempt
organizations with assets of $10 million or more that are re-
quired to file returns under section 6033, and private founda-
tions or section 4947(a)(1) trusts that are required to file re-
turns under section 6033.
Notice 2007
–96, page 1091.
This notice
announces that the Department of the Treasury will
change the p
rocedures for making payments from the Pres-
idential Pr
imary Matching Payment Account and will modify
the regulat
ions under section 9037 of the Code to reflect the
changed pr
ocedures. Notice 96–13 superseded.
December 3, 20072007–49 I.R.B.

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.
2007–49 I.R.B.December 3, 2007

December 3, 20072007–49 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 61.—Gross Income
Defined
26 CFR 1.61–1: Gross income.
(Also §§ 134, 140; § 1.6041–1.)
This ruling provides that payments
made by the U.S. Department of Veter-
ans Affairs under the compensated work
therapy program are exempt from federal
income tax as veterans’ benefits. Rev.
Rul. 65–18 revoked, Rev. Rul. 72–605
amplified.
Rev. Rul. 2007–69
ISSUES
(1) Are payments made by the U.S. De-
partment of Veterans Affairs (VA) under
the compensated work therapy program
described in 38 U.S.C. § 1718 (CWT pro-
gram) exempt from federal income tax as
veterans’ benefits?
(2) Are payments made by the VA under
the CWT program required to be reported
on an information return?
FACTS
The CWT program administered by the
VA provides assistance to veterans unable
to work and support themselves. Many of
the veterans in the program have histories
of one or more conditions such as psychi-
atric illness, substance abuse, and home-
lessness. Under the program, the VA pro-
vides a range of vocational rehabilitation
services, with the degree of structure and
level of support provided to the participat-
ing veteran geared to his or her needs. The
goal of the program is to assist in restoring,
to the maximum extent possible, the phys-
ical and psychological functioning of ill or
disabled veterans.See38 U.S.C. § 1701.
Title 38 of the United States Code ad-
dresses veterans’ benefits. Section 1718,
entitled “Therapeuticand Rehabilitative
Activities,” provides that the VA may enter
into contracts with third parties to provide
therapeutic work for patients in VA health
care facilities. Section 1718(c)(1) estab-
lishes the “Department of Veterans Affairs
Special Therapeutic and Rehabilitation
Activities Fund” (Fund), from which dis-
tributions are to be made to patients for
therapeutic work. Fund payments are
intended to furnish veterans with work
skills training, employment support, and
job development and placement services,
although the primary objective of the pro-
gram is therapy and rehabilitation.See38
U.S.C. § 1718(a) and (d).
With respect to the taxation of veterans’
benefits, 38 U.S.C. § 5301(a)(1) provides
that payments of benefits due or to become
due under any law administered by the VA
made to, or on account of, a beneficiary
shall be exempt from taxation.
LAW AND ANALYSIS
Section 61 of the Internal Revenue
Code provides that gross income includes
all income from whatever source derived,
unless specifically excluded by law.
Section 134(a) provides that gross in-
come does not include any qualified mil-
itary benefit. The term “qualified military
benefit” means any allowance or in-kind
benefit (other than personal use of a vehi-
cle) which—
(A) is received by any member or for-
mer member of the uniformed services of
the United States or any dependent of such
member by reason of such member’s status
or service as a member of such uniformed
services, and
(B) was excludable from gross income
on September 9, 1986, under any provi-
sion of law, regulation, or administrative
practice that was in effect on such date
(other than a provision of Title 26). Sec-
tion 134(b)(1).
The legislative history to § 134 indi-
cates that the allowances that were autho-
rized on September 9, 1986, and exclud-
able from gross income on that date, in-
clude veterans’ benefits authorized under
38 U.S.C. § 3101 (now 38 U.S.C. § 5301).
SeeH.R. Conf. Rep. No. 841 (Vol. II),
99
th
Cong. 2d Sess. 548 (1986).See also
§ 140(a)(3) (cross-referencing 38 U.S.C.
§ 5301 for the exemption from taxation
of benefits under laws administered by the
VA).
Rev. Rul. 72–605, 1972–2 C.B. 35,
holds that payments of benefits under any
law administered by the VA are excludible
from the gross income of a recipient.
Rev. Rul. 65–18, 1965–1 C.B. 32,
holds that certain payments made by
the VA under the CWT program in 38
U.S.C. § 618 (the predecessor to 38 U.S.C.
§ 1718) are includible in a recipient’s gross
income as compensation for services, even
though intended for therapeutic or reha-
bilitative purposes. Rev. Rul. 65–18 also
requires information reporting on Form
1099 with respect to these payments. See
§ 1.6041–1(i) (requiring information re-
turns on Form 1099 of certain payments
made by any agency of the United States).
InWallace v. Commissioner,128T.C.
132 (2007),acq.,2007–44 I.R.B.
,the
Tax Court disagreed with Rev. Rul. 65–18
and held that payments made by the VA
for work performed under CWT programs
are exempt from federal income tax as vet-
erans’ benefits within the meaning of 38
U.S.C. § 5301.
The Service agrees with theWallacede-
cision that payments made by the VA under
the CWT program are veterans’ benefits
within the meaning of 38 U.S.C. § 5301.
Accordingly, the payments are qualified
military benefits under § 134 and are ex-
empt from federal income tax.
HOLDINGS
(1) Payments made by the VA under
the CWT program are exempt from federal
income tax as veterans’ benefits.
(2) Because payments made by the VA
under the CWT program are exempt from
federal income tax, the payments are not
requiredtobereportedonaninformation
return.
EFFECT ON OTHER REVENUE
RULINGS
Rev. Rul. 65–18 is revoked. Rev. Rul.
72–605 is amplified.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Michael F. Schmit of the Office
of the Associate Chief Counsel (Income
Tax & Accounting). For further informa-
tion regarding this revenue ruling, con-
tact Mr. Schmit at (202) 622–4960 (not a
toll-free call).
2007–49 I.R.B.1083December 3, 2007

Section 134.—Certain
Military Benefits
A revenue ruling provides that payments made by
the U.S. Department of Veterans Affairs under the
compensated work therapy program are exempt from
federal income tax as veterans’ benefits. See Rev.
Rul. 2007-69, page 1083.
Section 140.—Cross
References to Other Acts
A revenue ruling provides that payments made by
the Department of Veterans Affairs under the com-
pensated work therapy program are exempt from fed-
eral income tax as veterans’ benefits. See Rev. Rul.
2007-69, page 1083.
Section 6011.—General
Requirement of Return,
Statement, or List
26 CFR 1.6011–5: Required use of magnetic media
for corporate income tax returns.
T.D. 9363
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 301
Returns Required on Magnetic
Media
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains final
regulations relating to the requirements for
filing corporate income tax returns and re-
turns of organizations required to file re-
turns under section 6033 on magnetic me-
dia pursuant to section 6011(e) of the Inter-
nal Revenue Code (Code). The term mag-
netic media includes any magnetic me-
dia permitted under applicable regulations,
revenue procedures, or publications, in-
cluding electronic filing. The final regu-
lations are necessary to update and clarify
the rules and procedures for corporations
and organizations that are required to file
their returns electronically. The final regu-
lations affect corporations, including elect-
ing small business corporations (S corpo-
rations), with assets of $10 million or more
that file Form 1120,U.S. Corporation In-
come Tax Return, or Form 1120S,U.S. In-
come Tax Return for an S Corporation;ex-
empt organizations with assets of $10 mil-
lion or more that are required to file re-
turns under section 6033, and private foun-
dations or section 4947(a)(1) trusts that are
required to file returns under section 6033.
DATES:Effective Date:These regulations
are effective November 13, 2007.
Applicability Date:These regulations
are applicable November 13, 2007.
FOR FURTHER INFORMATION
CONTACT: Michael E. Hara, (202)
622–4910 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
On January 12, 2005, the IRS pub-
lished a notice of proposed rulemaking
(by cross reference to temporary regu-
lations) and a notice of public hearing,
(REG–130671–04, 2005–1 C.B. 694)
(70 FR 2075). The proposed regulations
require certain large corporations, includ-
ing S corporations, to file their corporate
income tax returns electronically. The
proposed regulations also require certain
large exempt organizations, nonexempt
charitable trusts, and exempt and nonex-
empt private foundations to electronically
file those returns required to be filed under
section 6033.
A public hearing was held on March
16, 2005. After consideration of all the
comments, the proposed regulations are
adopted as revised by this Treasury de-
cision. The temporary regulations under
sections 6011, 6033, and 6037 are re-
moved.
Summary of Comments and
Explanation of Revisions
1.Returns Covered.
The proposed regulations required elec-
tronic filing of Forms 1120 and 1120S by
corporations required to file at least 250
returns during the calendar year, required
to file corporate income tax returns, and
that had total assets of $50 million or more
as shown on Schedule L of their Form
1120 or 1120S for taxable years ending
on or after December 31, 2005. The pro-
posed regulations also required electronic
filing of Forms 1120 and 1120S by cor-
porations required to file at least 250 re-
turns during the calendar year, required to
file corporate income tax returns, and that
had total assets of $10 million or more as
shown on Schedule L of their Form 1120
or 1120S for taxable years ending on or
after December 31, 2006. The proposed
regulations also required electronic filing
of Form 990,Return of Organization Ex-
empt From Income Tax, by organizations
required to file at least 250 returns during
the calendar year, required to file Form 990
and that had, for a taxable year ending on
or after December 31, 2005, total assets as
of the end of the taxable year of $100 mil-
lion or more or that, for a taxable year end-
ing on or after December 31, 2006, had
total assets as of the end of the taxable
year of $10 million or more. The pro-
posed regulations alsorequired electronic
filing of Form 990–PF,Return of Private
Foundation or Section 4947(a)(1) Nonex-
empt Charitable Trust Treated as a Pri-
vate Foundation, regardless of total assets,
by organizations required to file at least
250 returns during the calendar year that
were required to file Form 990–PF for tax-
able years ending on or after December 31,
2006.
Except as described in the preamble, the
final regulations clarify that the electronic
filing requirement applies to all members
of the Form 1120 and Form 1120S series of
returns, including amended and supersed-
ing returns, and to all members of the Form
990 series of returns, including amended
and superseding returns. A member of the
Form 1120 series includes, for example,
the Form 1120–F,U.S. Income Tax Return
of a Foreign Corporation.
The IRS currently does not have the ca-
pability to accept electronic filing of cer-
tain types of Form 1120, Form 1120S, and
Form 990 series of returns, such as a Form
1120 for a taxpayer that has changed its ac-
counting period, or a Form 990 or Form
990–PF for an organization not recognized
as exempt or one that has an application
for exempt status pending. These regula-
tions thus exclude those returns from the
electronic filing requirement. The IRS will
announce the returns in the Form 1120,
Form 1120S, and Form 990 series that are
required to be filed electronically and the
returns that are excluded from electronic
filing under these regulations in its publi-
cations, forms and instructions, including
December 3, 200710842007–49 I.R.B.

those instructions and Frequently Asked
Questions (FAQs) posted electronically to
the IRS.gov website. The Treasury De-
partment and the IRS intend to require
electronic filing of additional corporate in-
come tax returns, excise tax returns and
returns required to be filed under section
6033 in the Form 1120, Form 1120S, and
Form 990 series as the IRS increases its
capability to receive these forms electron-
ically, provided that the Treasury Depart-
ment and the IRS determine that filers are
able to comply with the electronic filing re-
quirements at a reasonable cost.
2.First Year and Last Year Exclusions.
The proposed regulations provided
exclusions from the requirement to file
electronically for certain corporations and
organizations that had not had a longstand-
ing filing obligation. Under the proposed
regulations, corporations and organiza-
tions were not required to file their returns
electronically if they were not required to
file a Form 1120, Form 1120S, Form 990,
or Form 990–PF for the preceding taxable
year or had not been in existence for at
least one calendar year prior to the due
date (not including extensions) of their
Form 1120, Form 1120S, Form 990, or
Form 990–PF. These transition rules were
designed to relieve taxpayer burden dur-
ing the first year of implementation of the
mandatory electronic filing regulations,
but caused unnecessary complexity in de-
termining whether a corporation or other
organization was entitled to the first year
exclusion when the corporation or organi-
zation was a part of a reorganization. The
Treasury Department and the IRS have
determined that these transition rules are
no longer necessary and that corporations
and other organizations should be able
to comply at a reasonable cost with the
requirement to file returns electronically.
3.250 Return Requirement.
Under the proposed regulations, the
determination of whether an entity is re-
quired to file at least 250 returns is made
by aggregating all returns, regardless of
type, that the entity is required to file over
the calendar year, including, for exam-
ple, income tax returns, returns required
under section 6033, information returns,
excise tax returns, and employment tax
returns. The final regulations clarify that
in the case of a short year return, an entity
is required to file electronically if, dur-
ing the calendar year which includes the
short taxable year of the entity, the entity
is required to file at least 250 returns of
any type, including, for example, income
tax returns, returns required under section
6033, information returns, excise tax re-
turns, and employment tax returns.
4.Hardship Waiver.
Three commentators requested that
the IRS institute procedures allowing the
Service to waive the requirement to file
returns electronically. One commenta-
tor recommended that the final guidance
on waivers include a clear definition of
what constitutes justification for a waiver,
and a flexible standard on when a filer
would qualify for a waiver. One com-
mentator contended that cost to the filer
should be a principal factor in obtaining
a hardship waiver. On November 28,
2005, the IRS issued Notice 2005–88,
2005–2 C.B. 1060, which provides pro-
cedures for filers to request a waiver of
the requirement to electronically file their
returns. Notice 2005–88 provides that in
determining whether to approve or deny
a waiver request, the IRS will consider
the filer’s ability to timely file its return
electronically without incurring an undue
economic hardship. The notice provides
that the IRS will generally grant waivers
for filing returns electronically where the
filer can demonstrate the undue hardship
that would result by complying with the
electronic filing requirement, including
any incremental costs to the filer.
Another commentator contended that
technological failures beyond the control
of the filer should also not result in the as-
sertion of penalties. For this reason, the
commentator recommended that waivers
be granted, especially during the first year
or two during which a taxpayer is required
to file electronically, in the following cir-
cumstances:
1. Where the software vendor used
by the filer is unable to produce the soft-
ware needed to e-file any return or sched-
ule within a reasonable time period, per-
haps six months before the end of the year
for which the return is to be filed.
2. Where the filer discovers signifi-
cant flaws in either the developer’s soft-
ware program or its own self-developed
software during the first three months of
the year in which the return is to be filed.
3. Where the filer after significant test-
ing determines the need to switch software
vendors in order to comply with the e-fil-
ing mandate.
4. Where the filer attempts to timely
file the return electronically by the statu-
tory deadline (including extensions), but
transmission errors (such as Internet traf-
fic, misrouting of information packets, or
disconnects in the transmission) prevent
the filing of the return.
Although Notice 2005–88 does not re-
fer to these specific situations, the notice
provides that the IRS will generally grant
waivers for filing returns electronically
where technology issues prevent the filer
from filing its return electronically. The
Treasury Department and the IRS believe,
however, that it is the responsibility of the
filer to review the capabilities and efficacy
of the software they use to file their re-
turns, to ensure that the software used will
meet their specific filing requirements.
One commentator stated that there
might be circumstances when an entity
otherwise subject to the electronic filing
requirements should be eligible for an
automatic waiver as opposed to being
required to file a formal waiver request.
Another commentator recommended that
the purchase and use of software devel-
oped by an approved vendor be sufficient
evidence that a filer has made a good faith
effort to comply with the regulations. The
Treasury Department and the IRS believe
that waiver requests should be considered
on a case-by-case basis, based on each
filer’s particular facts and circumstances.
Additional guidance on situations in
which returns are excluded from the
electronic filing mandate is available in
IRS Publication 4163,Modernized e-file
(MeF) Information for Authorized IRS
e-file Providers Tax Year 2006; and on the
IRS.gov Internet site.
5.Date of Filing.
One commentator supported the con-
cept and use of an electronic postmark,
but requested clear and concise guidance
as to when an electronically submitted re-
turn is deemed filed when such a return
is rejected either because of transmission
issues or IRS acceptance criteria. Notice
2005–88 provides that if the portion of a
2007–49 I.R.B.1085December 3, 2007

return required to be filed electronically is
transmitted on or before the due date (in-
cluding extensions) and is ultimately re-
jected, but the electronic return originator
and the filer comply with the specific re-
quirements for timely submission of the re-
turn, the return will be considered timely
filed and any elections attached to the re-
turn will be considered valid. The notice
also provides that for taxable years end-
ing on or after December 31, 2005, the IRS
will allow the filer 20 calendar days from
the date of first transmission to perfect the
return for electronic resubmission.
6.Effective Dates.
Three commentators recommended
that the IRS delay implementation of the
requirement to file returns electronically.
Both Treasury and the IRS believe that the
vendor software is available, that the IRS’
systems can accommodate the electronic
filing requirement and that implementa-
tion of the electronic filing mandate can
be accomplished successfully without
undue burden by filers. Through Octo-
ber 2006, over 500,000 corporations of
all sizes successfully electronically filed
their Forms 1120 or 1120S for 2005, of
which over 18,000 were corporations with
assets exceeding $10 million. In addi-
tion, through December 2006, over 15,300
organizations of all sizes successfully elec-
tronically filed their Forms 990, 990–EZ
or 990–PF for 2005. Accordingly, the
recommendation to delay implementation
has not been adopted.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
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.
When an Agency issues a rulemaking
proposal, the Regulatory Flexibility Act,
5 U.S.C. chapter 6 (RFA), requires the
agency to “prepare and make available for
public comment an initial regulatory flex-
ibility analysis” which will “describe the
impact of the proposed rule on small enti-
ties.” (5 U.S.C. §603(a)). Section 605 of
the RFA allows an agency to certify a rule,
in lieu of preparing an analysis, if the pro-
posed rulemaking is not expected to have a
significant economic impact on a substan-
tial number of small entities.
The Treasury decision affects corpora-
tions required to file corporate income tax
returns that are required to file at least 250
returns during the calendar year and have
total assets of $10 million or more for tax-
able years ending on or after December
31, 2006. Section 601(3) of the RFA de-
fines a small business as having the same
meaning as “small business concern” un-
der section 3 of the Small Business Act, 15
U.S.C. 632. The IRS estimates that of the
6,294,000 entities required to file Forms
1120 or 1120S, 22,000 entities are required
to electronically file these Forms. The IRS
estimates that of the 22,000 entities re-
quired to electronically file Forms 1120 or
1120S, there are 9,500 organizations that
will be required to file the Forms 1120 or
1120S electronicallythat qualify as small
businesses. The 9,500 corporation esti-
mate is based on Large and Mid-Size Busi-
ness Division’s estimates of the number of
corporations that have assets between $10
million and $50 million as shown on their
Schedule L of their Form 1120 or 1120S
for taxable years ending on or after De-
cember 31, 2006, and that may have at
least 250 employees based on the number
of returns the corporation has filed, includ-
ing Forms W–2. Therefore, the IRS has
determined that this Treasury decision will
have an impact on a substantial number of
small businesses.
The Treasury decision also affects those
organizations required to file Form 990
that are required to file at least 250 re-
turns during the calendar year and have to-
tal assets of $10 million or more for tax-
able years ending on or after December
31, 2006. The Treasury decision also af-
fects those organizations that are required
to file Form 990–PF,Return of Private
Foundation or Section 4947(a)(1) Nonex-
empt Charitable Trust Treated as a Private
Foundation, regardless of total assets. Sec-
tion 601(4) of the RFA defines a small or-
ganization as any not-for-profit enterprise
that is independently owned and operated
and not dominant in its field (for exam-
ple, private hospitals and educational in-
stitutions). The IRS estimates that of the
263,000 entities that are required to file
the Form 990, there are 6,000 organiza-
tions that will be required to file the Form
990 electronically that qualify as small or-
ganizations. The 6,000 organization esti-
mate is based on Tax Exempt and Govern-
ment Entities Division’s estimates of the
number of entities that have assets between
$10 million and $100 million as shown
on their Schedule L of their Form 990 for
taxable years ending on or after Decem-
ber 31, 2006 and that may have at least
250employeesbasedonthenumberre-
turns the corporation has filed, including
Forms W–2. The IRS also estimates that of
the 85,000 entities that are required to file
the Form 990–PF, there are 50 organiza-
tions that will be required to file the Form
990–PF electronically that qualify as small
organizations. The 50 organizations esti-
mate is based on Tax Exempt and Govern-
ment Entities Division’s estimates of the
number of entities that may have at least
250employeesbasedonthenumberre-
turns the corporation has filed, including
Forms W–2. Therefore, the IRS has deter-
mined that this Treasury decision will have
an impact on a substantial number of small
organizations.
The IRS has also determined, however,
that the impact on entities affected by
the proposed rule will not be significant.
The IRS and Treasury Department note
that these regulations only prescribe the
method of filing returns that are already
required to be filed. Further, these regula-
tions are consistent with the requirements
imposed by statute. The burden on small
entities to purchase the software to file
its returns electronically is minimal as
the software is widely available. Pricing
for electronic filing software varies con-
siderably. In many instances, the price
for electronic filing is bundled with other
services and products. Some software
providers offer volume discounts, or un-
limited filing for a fixed price. Some
software providers offer free electronic
filing if the taxpayer purchases a suite of
other products or services. And in many
cases, taxpayers will use the services of a
tax practitioner to prepare and electroni-
cally file their return.Accordingly, direct
comparison of the cost for electronic filing
is difficult. The cost for the software to
file returns electronically for small enti-
ties from software providers starts from
$12.50 per return for on-line electronic
filing of Forms 1120, and is free for Form
990 filers with less than $100,000 in gross
revenue.
December 3, 200710862007–49 I.R.B.

Finally, the IRS has provided proce-
dures for filers to request a waiver of the
requirement to electronically file their re-
turns. Notice 2005–88 provides that in de-
termining whether to approve or deny a
waiver request, the IRS will consider the
filer’s ability to timely file its return elec-
tronically without incurring an undue eco-
nomic hardship.
Accordingly, the IRS hereby certifies
that the collection of information con-
tained in these regulations will not have a
significant economic impact on a substan-
tial number of small entities. Therefore, a
Regulatory Flexibility Analysis under the
Regulatory Flexibility Act is not required.
Pursuant to section 7805(f) of the Code,
the notice of proposed rulemaking preced-
ing these final regulations was submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small businesses.
Drafting Information
The principal author of these final reg-
ulations is Michael E. Hara, Office of the
Associate Chief Counsel (Procedure and
Administration).
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 301
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.6011–5 is added to
read as follows:
§1.6011–5 Required use of magnetic
media for corporate income tax returns.
The return of a corporation that is
required to be filed on magnetic media
under §301.6011–5 of this chapter must be
filed in accordance with Internal Revenue
Service revenue procedures, publications,
forms, or instructions, including those
posted electronically. (See §601.601(d)(2)
of this chapter).
§1.6011–5T [Removed]
Par. 3. Section 1.6011–5T is removed.
Par. 4. Section 1.6033–4 is added to
read as follows:
§1.6033–4 Required use of magnetic
media for returns by organizations
required to file returns under section
6033.
The return of an organization that is
requiredtobefiledonmagneticmediaun-
der §301.6033–4 of this chapter must be
filed in accordance with Internal Revenue
Service revenue procedures, publications,
forms, or instructions, including those
posted electronically. (See §601.601(d)(2)
of this chapter).
§1.6033–4T [Removed]
Par. 5. Section 1.6033–4T is removed.
Par. 6. Section 1.6037–2 is added to
read as follows:
§1.6037–2 Required use of magnetic
media for income tax returns of electing
small business corporations.
The return of an electing small business
corporationthatisrequiredtobefiledon
magnetic media under §301.6037–2 of this
chapter must be filed in accordance with
Internal Revenue Service revenue proce-
dures, publications, forms, or instructions,
including those posted electronically. (See
§601.601(d)(2) of this chapter).
§1.6037–2T [Removed]
Par. 7. Section 1.6037–2T is removed.
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 8. The authority citation for
part 301 is amended by removing the
entries for “Section 301.6011–5T”,
“Section 301–6033–4T”, and “Section
301.6037–2T” and adding entries, in nu-
merical order, to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 301.6011–5 also issued under
26 U.S.C. 6011. * * *
Section 301.6033–4 also issued under
26 U.S.C. 6033. * * *
Section 301.6037–2 also issued under
26 U.S.C. 6037. * * *
Par. 9. Section 301.6011–5 is added to
read as follows:
§301.6011–5 Required use of magnetic
media for corporate income tax returns.
(a)Corporate income tax returns re-
quired on magnetic media—(1) A corpora-
tion required to file a corporate income tax
return on Form 1120,“U.S. Corporation
Income Tax Return,” under §1.6012–2 of
this chapter must file its corporate income
tax return on magnetic media if the cor-
poration is required by the Internal Rev-
enue Code or regulations to file at least 250
returns during the calendar year. Returns
filed on magnetic media must be made in
accordance with applicable revenue proce-
dures, publications, forms, or instructions.
In prescribing revenue procedures, publi-
cations, forms, or instructions, the Com-
missioner may direct the type of magnetic
media filing. (See §601.601(d)(2) of this
chapter).
(2) All members of a controlled group
of corporations must file their corporate in-
come tax returns on magnetic media if the
aggregate number of returns required to be
filed by the controlled group of corpora-
tions is at least 250.
(b)Waiver. The Commissioner may
grant waivers of the requirements of this
section in cases of undue hardship. A re-
quest for waiver must be made in accor-
dance with applicable revenue procedures
or publications. The waiver also will be
subject to the terms and conditions regard-
ing the method of filing as may be pre-
scribed by the Commissioner.
(c)Failure to file. If a corporation fails
to file a corporate income tax return on
magnetic media when required to do so by
this section, the corporation is deemed to
have failed to file the return. (See section
6651 for the addition to tax for failure to
file a return). In determining whether there
is reasonable cause for failure to file the re-
turn, §301.6651–1(c) and rules similar to
the rules in §301.6724–1(c)(3) (undue eco-
nomic hardship related to filing informa-
tion returns on magnetic media) will apply.
(d)Meaning of terms. The following
definitions apply for purposes of this sec-
tion:
(1)Magnetic media.Thetermmagnetic
mediameans any magnetic media permit-
ted under applicable regulations, revenue
procedures, or publications. These gener-
ally include magnetic tape, tape cartridge,
and diskette, as well as other media, such
as electronic filing, specifically permitted
2007–49 I.R.B.1087December 3, 2007

under the applicable regulations, proce-
dures, publications, forms, or instructions.
(See §601.601(d)(2) of this chapter).
(2)Corporation.Thetermcorporation
means a corporation as defined in section
7701(a)(3).
(3)Controlled group of corporations.
The termcontrolled group of corporations
means a group of corporations as defined
in section 1563(a).
(4)Corporate income tax return.The
termcorporate income tax returnmeans a
Form 1120, “U.S. Corporation Income Tax
Return,” along with all other related forms,
schedules, and statements that are required
to be attached to the Form 1120, and all
members of the Form 1120 series of re-
turns, including amended and superseding
returns.
(5)Determination of 250 returns.For
purposes of this section, a corporation
or controlled group of corporations is
required to file at least 250 returns if,
during the calendar year ending with or
within the taxable year of the corporation
or the controlled group, the corporation
or the controlled group is required to file
at least 250 returns of any type, including
information returns (for example, Forms
W–2, Forms 1099), income tax returns,
employment tax returns, and excise tax
returns. In the case of a short year return, a
corporation is required to file at least 250
returns if, during the calendar year which
includes the short taxable year of the cor-
poration, the corporation is required to file
at least 250 returns of any type, including
information returns (for example, Forms
W–2, Forms 1099), income tax returns,
employment tax returns, and excise tax
returns. If the corporation is a member of
a controlled group, the determination of
the number of returns includes all returns
required to be filed by all members of the
controlled group during the calendar year
ending with or within the taxable year of
the controlled group.
(e)Example. The following example il-
lustrates the provisions of paragraph (d)(5)
of this section:
Example. The taxable year of Corporation X,
a fiscal year taxpayer with assets in excess of $10
million, ends on September 30. During the calen-
dar year ending December 31, 2007, X was required
to file one Form 1120, “U.S. Corporation Income
Tax Return,” 100 Forms W–2, “Wage and Tax State-
ment,” 146 Forms 1099–DIV, “Dividends and Distri-
butions,” one Form 940,“Employer’s Annual Fed-
eral Unemployment (FUTA) Tax Return,” and four
Forms 941, “Employer’s QUARTERLY Federal Tax
Return.” Because X is required to file 252 returns
during the calendar year that ended within its taxable
year ending September 30, 2008, X is required to file
its Form 1120 electronically for its taxable year end-
ing September 30, 2008.
(f)Effective/applicability dates.This
section applies to corporate income tax re-
turns for corporations that report total as-
sets at the end of the corporation’s tax-
able year that equal or exceed $10 mil-
lion on Schedule L of their Form 1120, for
taxable years ending on or after Decem-
ber 31, 2006, except for the application of
the short year rules in paragraph (d)(5) of
this section, which is applicable for tax-
able years ending on or after November 13,
2007.
§301.6011–5T [Removed]
Par. 10. Section 301.6011–5T is re-
moved.
Par. 11. Section 301.6033–4 is added
to read as follows:
§301.6033–4 Required use of magnetic
media for returns by organizations
required to file returns under section
6033.
(a)Returns by organizations required
to file returns under section 6033 on mag-
netic media. An organization required
tofileareturnundersection6033on
Form 990, “Return of Organization Ex-
empt From Income Tax,” or Form 990–PF,
“Return of Private Foundation or Section
4947(a)(1) Nonexempt Charitable Trust
Treated as a Private Foundation,” must
file its Form 990 or 990–PF on magnetic
media if the organization is required by
the Internal Revenue Code or regulations
to file at least 250 returns during the calen-
dar year ending with or within its taxable
year. Returns filedonmagneticmedia
must be made in accordance with appli-
cable revenue procedures, publications,
forms, or instructions. In prescribing rev-
enue procedures, publications, forms, or
instructions, the Commissioner may direct
the type of magnetic media filing. (See
§601.601(d)(2) of this chapter).
(b)Waiver. The Commissioner may
grant waivers of the requirements of this
section in cases of undue hardship. A re-
quest for waiver must be made in accor-
dance with applicable revenue procedures
or publications. The waiver also will be
subject to the terms and conditions regard-
ing the method of filing as may be pre-
scribed by the Commissioner.
(c)Failure to file. If an organization re-
quired to file a return under section 6033
fails to file an information return on mag-
netic media when required to do so by this
section, the organization is deemed to have
failed to file the return. (See section 6652
for the addition to tax for failure to file a
return.) In determining whether there is
reasonable cause for failure to file the re-
turn, §301.6652–2(f) and rules similar to
the rules in §301.6724–1(c)(3) (undue eco-
nomic hardship related to filing informa-
tion returns on magnetic media) will apply.
(d)Meaning of terms. The following
definitions apply for purposes of this sec-
tion:
(1)Magnetic media.Thetermmagnetic
mediameans any magnetic media permit-
ted under applicable regulations, revenue
procedures, or publications. These gener-
ally include magnetic tape, tape cartridge,
and diskette, as well as other media, such
as electronic filing, specifically permitted
under the applicable regulations, proce-
dures, publications, forms or instructions.
(See §601.601(d)(2) of this chapter).
(2)Return required under section 6033.
The termreturn required under section
6033means a Form 990, “Return of Or-
ganization Exempt From Income Tax,” and
Form 990–PF, “Return of Private Foun-
dation or Section 4947(a)(1) Nonexempt
Charitable Trust Treated as a Private
Foundation,” along with all other related
forms, schedules, and statements that are
required to be attached to the Form 990
or Form 990–PF, and all members of the
Form 990 series of returns, including
amended and superseding returns.
(3)Determination of 250 returns.For
purposes of this section, an organization is
required to file at least 250 returns if, dur-
ing the calendar year ending with or within
the taxable year of the organization, the or-
ganization is required to file at least 250
returns of any type, including information
returns (for example, Forms W–2, Forms
1099), income tax returns, employment tax
returns, and excise tax returns. In the case
of a short year return, an organization is
required to file at least 250 returns if, dur-
ing the calendar year which includes the
short taxable year of the organization, the
organization is required to file at least 250
returns of any type, including information
December 3, 200710882007–49 I.R.B.

returns (for example, Forms W–2, Forms
1099), income tax returns, employment tax
returns, and excise tax returns.
(e)Example. The following example il-
lustrates the provisions of paragraph (d)(3)
of this section. In the example, the organ-
ization is a calendar year taxpayer:
Example. In 2006, Organization T, with total as-
sets in excess of $10 million, is required to file one
Form 990, “Return of Organization Exempt From In-
come Tax,” 200 Forms W–2, “Wage and Tax State-
ment,” one Form 940, “Employer’s Annual Federal
Unemployment (FUTA) Tax Return,” four Forms 941,
“Employer’s QUARTERLY Federal Tax Return,” and
60 Forms 1099–MISC, “Miscellaneous Income.” Be-
cause T is required to file 266 returns during the cal-
endar year, T must file its 2006 Form 990 electroni-
cally.
(f)Effective/applicability dates.This
section applies to any organization re-
quired to file Form 990 for a taxable year
ending on or after December 31, 2006, that
has total assets as of the end of the taxable
year of $10 million or more. This section
applies to any organization required to file
Form 990–PF for taxable years ending on
or after December 31, 2006, except for
the application of the short year rules in
paragraph (d)(3) of this section, which is
applicable for taxable years ending on or
after November 13, 2007.
§301.6033–4T [Removed]
Par. 12. Section 301.6033–4T is re-
moved.
Par. 13. Section 301.6037–2 is added
to read as follows:
§301.6037–2 Required use of magnetic
media for returns of electing small
business corporation.
(a)Returns of electing small business
corporation required on magnetic media.
An electing small business corporation
required to file an electing small busi-
ness return on Form 1120S, “U.S. Income
Tax Return for an S Corporation,” un-
der §1.6037–1 of this chapter must file
its Form 1120S on magnetic media if the
small business corporation is required by
the Internal Revenue Code and regulations
to file at least 250 returns during the calen-
dar year ending with or within its taxable
year. Returns filed on magnetic media
must be made in accordance with appli-
cable revenue procedures, publications,
forms, or instructions. In prescribing rev-
enue procedures, publications, forms, or
instructions, the Commissioner may direct
the type of magnetic media filing. (See
§601.601(d)(2) of this chapter).
(b)Waiver. The Commissioner may
grant waivers of the requirements of this
section in cases of undue hardship. A re-
quest for waiver must be made in accor-
dance with applicable revenue procedures
or publications. The waiver also will be
subject to the terms and conditions regard-
ing the method of filing as may be pre-
scribed by the Commissioner.
(c)Failure to file. Ifanelectingsmall
business corporation fails to file a return
on magnetic media when required to do so
by this section, the corporation is deemed
to have failed to file the return. (See sec-
tion 6651 for the addition to tax for failure
to file a return.) In determining whether
there is reasonable cause for failure to file
the return, §301.6651–1(c) and rules sim-
ilar to the rules in §301.6724–1(c)(3) (un-
due economic hardship related to filing in-
formation returns on magnetic media) will
apply.
(d)Meaning of terms. The following
definitions apply for purposes of this sec-
tion:
(1)Magnetic media.Thetermmagnetic
mediameans any magnetic media permit-
ted under applicableregulations, revenue
procedures, or publications. These gener-
ally include magnetic tape, tape cartridge,
and diskette, as well as other media, such
as electronic filing, specifically permitted
under the applicable regulations, proce-
dures, publications, forms, or instructions.
(See §601.601(d)(2) of this chapter).
(2)Corporation.Thetermcorporation
means a corporation as defined in section
7701(a)(3).
(3)Electing small business corporation
return.Thetermelecting small business
corporation returnmeans a Form 1120S,
“U.S. Income Tax Return for an S Corpo-
ration,” along with all other related forms,
schedules, and statements that are required
to be attached to the Form 1120S, and all
members of the Form 1120S series of re-
turns, including amended and superseding
returns.
(4)Electing small business corpora-
tion.Thetermelecting small business
corporationmeans an S corporation as
definedinsection1361(a)(1).
(5)Determination of 250 returns.For
purposes of this section, a corporation is
required to file at least 250 returns if, dur-
ing the calendar year ending with or within
the taxable year of the corporation, the cor-
poration is required to file at least 250 re-
turns of any type, including information
returns (for example, Forms W–2, Forms
1099), income tax returns, employment tax
returns, and excise tax returns. In the case
of a short year return, a corporation is re-
quired to file at least 250 returns if, dur-
ing the calendar year which includes the
short taxable year of the corporation, the
corporation is requiredtofileatleast250
returns of any type, including information
returns (for example, Forms W–2, Forms
1099), income tax returns, employment tax
returns, and excise tax returns.
(e)Example. The following example il-
lustrates the provisions of paragraph (d)(5)
of this section. In the example, the corpo-
ration is a calendar year taxpayer:
Example. In 2007, Corporation S, an electing
small business corporation with assets in excess of
$10 million, is required to file one Form 1120S,
“U.S. Income Tax Return for an S Corporation,” 100
Forms W–2, “Wage and Tax Statement,” 146 Forms
1099–DIV, “Dividends and Distributions,” one Form
940, “Employer’s Annual Federal Unemployment
(FUTA) Tax Return,” and four Forms 941, “Em-
ployer’s QUARTERLY Federal Tax Return.” Because
S is required to file 252 returns during the calendar
year, S is required to file its 2007 Form 1120S elec-
tronically.
(f)Effective/applicability dates.This
section applies to returns of electing small
business corporations that report total as-
sets at the end of the corporation’s tax-
able year that equal or exceed $10 mil-
lion on Schedule L of Form 1120S for
taxable years ending on or after Decem-
ber 31, 2006, except for the application of
the short year rules in paragraph (d)(5) of
this section, which is applicable for tax-
able years ending on or after November 13,
2007.
§301.6037–2T [Removed]
Par. 14. Section 301.6037–2T is re-
moved.
Kevin M. Brown,
Deputy Commissioner for
Services and Enforcement.
Approved November 6, 2007.
Eric Solomon,
Assistant Secretary
of the Treasury.
2007–49 I.R.B.1089December 3, 2007

(Filed by the Office of the Federal Register on November 9,
2007, 8:45 a.m., and published in the issue of the Federal
Register for November 13, 2007, 72 F.R. 63807)
Section 6041.—Information
at Source
26 CFR 1.6041–1: Return of information as to pay-
ments of $600 or more.
A revenue rulilng provides that payments made by
the U.S. Department of Veterans Affairs under the
compensated work therapy program are exempt from
federal income tax as veterans’ benefits, and are not
required to be reported on an information return. See
Rev. Rul. 2007-69, page 1083.
Section 9037.—Payments
to Eligible Candidates
A notice announces that the Department of Trea-
sury will change the procedures for making payments
from the Presidential Primary Matching Account, and
will modify the regulations under section 9037 to re-
flect the changed procedures. See Notice 2007-96,
page 1091.
December 3, 200710902007–49 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Effective Dates of Regulations
Under Section 901
Notice 2007–95
PURPOSE
The purpose of this notice is to provide
guidance relating to the effective dates of
final regulations to be issued under section
901.
BACKGROUND
On August 3, 2006, the Internal Rev-
enue Service (IRS) and Treasury Depart-
ment issued proposed regulations that
would provide guidance relating to the
determination of who is considered to pay
a foreign tax for purposes of section 901
and section 903. In particular, the pro-
posed regulations would provide guidance
under section 1.901–2(f) relating to the
person on whom foreign law imposes le-
gal liability for tax, including in the case
of taxes imposed on the income of for-
eign consolidated groups and entities that
have different classifications for U.S. and
foreign tax law purposes. The proposed
regulations provide that the final regula-
tions will be effective for foreign taxes
paid or accrued during taxable years of the
taxpayer beginning on or after January 1,
2007. The IRS and Treasury Department
have received written comments on the
proposed regulations and held a hearing
on the proposed regulations on October
13, 2006.
On March 29, 2007, the IRS and Trea-
sury Department issued proposed reg-
ulations that would provide guidance
under section 1.901–2(e)(5) relating to
the amount of taxes paid for purposes of
section 901. The proposed regulations
would revise section 1.901–2(e)(5) in two
ways. First, for purposes of determining
compliance with section 1.901–2(e)(5),
the proposed regulations would treat as
a single taxpayer all foreign entities in
which the same U.S. person has a direct or
indirect interest of 80 percent or more (a
“U.S.-owned foreign group”). Second, the
proposed regulations would treat amounts
paid to a foreign taxing authority as non-
compulsory payments if those amounts are
attributable to certain structured passive
investments. The proposed regulations
provide that the final regulations will be
effective for foreign taxes paid or ac-
crued during taxable years of the taxpayer
ending on or after the date on which the
regulations are finalized. The IRS and
Treasury Department have received writ-
ten comments on the proposed regulations
and held a hearing on the proposed regu-
lations on July 30, 2007.
DISCUSSION
The IRS and Treasury Department are
considering the comments received on the
two proposed regulations.
The IRS and Treasury Department in-
tended to finalize the proposed section
1.901–2(f) regulations in 2007. However,
the IRS and Treasury Department are still
in the process of considering comments
received on the proposed regulations and
no longer expect to finalize these proposed
regulations in 2007. Because the proposed
regulations will not be finalized in 2007,
the IRS and Treasury Department believe
it is appropriate to revise the effective date
for the regulations. Accordingly, the final
regulations relating to the determination of
who is considered to pay a foreign tax will
be effective for taxable years beginning
after the final regulations are published in
the Federal Register.
In reviewing comments received, the
IRS and Treasury Department have deter-
mined that the proposed change to section
1.901–2(e)(5) relatingtoU.S.-ownedfor-
eign groups may lead to inappropriate re-
sults in certain cases. The IRS and Trea-
sury Department have therefore decided
to sever the proposed rule for U.S.-owned
foreign groups from the portion of the pro-
posed section 1.901–2(e)(5) regulation ad-
dressing the treatment of foreign payments
attributable to certain structured passive
investment arrangements while continuing
to study the appropriate treatment of U.S.-
owned foreign groups. The IRS and Trea-
sury Department also believe it is appro-
priate to revise the proposed effective date
for the rules addressing the treatment of
U.S.-owned foreign groups. Therefore, fi-
nal regulations addressing U.S.-owned for-
eign groups will be effective for taxable
years beginning after the final regulations
are published in the Federal Register. For
taxable years ending on or after March
29, 2007, and beginning on or before the
date on which the final regulations are
published, taxpayers may rely on the por-
tion of the proposed regulations address-
ing U.S.-owned foreign groups. No infer-
ence is intended as to whether an amount
paid by a foreign entity that is not a mem-
ber of a U.S.-owned foreign group is a
compulsory payment under existing sec-
tion 1.901–2(e)(5).
The principal author of this notice is
Bethany A. Ingwalson of the Office of As-
sociate Chief Counsel (International). For
further information regarding this notice,
contact Bethany A. Ingwalson at (202)
622–3850 (not a toll-free call).
Payments From the
Presidential Election
Campaign Fund
Notice 2007–96
This notice supersedes Notice 96–13,
1996–1 C.B. 366, and announces that the
Department of the Treasury (the Treasury)
will change the procedures for making
payments from the Presidential Primary
Matching Payment Account (the Ac-
count). This notice also announces that
the Treasury intends to modify the regula-
tions under § 9037 of the Internal Revenue
Code (26 U.S.C. § 9037 (2000)) to reflect
the changed procedures.
Section 9006(a) established the Pres-
idential Election Campaign Fund (the
Fund) on the books of the U.S. Treasury.
Section 9006(a) requires the Secretary to
transfer to the Fund, from time to time, an
amount equal to the individual taxpayer
designations for the Fund under § 6096.
See § 701.9006–1(a) of the Financing of
Presidential Election Campaigns Regula-
tions (26 C.F.R. § 701.9006–1(a) (2007)).
Section 701.9006–1(a) requires the
Secretary to determine the amounts desig-
nated by individuals for the Fund at least
once a month.
Section 9037(a) requires the Secretary
to maintain within the Fund a separate ac-
count known as the Presidential Primary
Matching Payment Account. The Secre-
tary is required to deposit into the Account
2007–49 I.R.B.1091December 3, 2007

amounts from the Fund after determining
that there are amounts available and set
aside in the Fund to make the payments
described in § 9006 (payments for the gen-
eral election) and § 9008 (payments for the
presidential nominating conventions). The
amounts in the Account are for presiden-
tial primary candidates who are certified
for payments by the Federal Election Com-
mission (the Commission).
Section 702.9037–2(a) provides that,
except in the case of a shortfall described
in § 702.9037–2(c), promptly after the end
of each calendar month, but not before the
beginning of the calendar year of a pres-
idential election, the Secretary shall pay
the amounts certified by the Commission
in the preceding calendar month from the
Account to the primary candidates.
Section 702.9037–2(c) provides that if
the amount certified by the Commission
for primary candidates in a calendar month
exceeds the balance in the Account on the
last day of the calendar month, the amount
paid to a candidate for that month from the
Account is determined by multiplying the
amount certified by the Commission for
the candidate during that month by the ra-
tio of the balance in the Account on the
last day of the calendar month over the to-
tal amount certified by the Commission for
all the candidates during that month. Any
amount certified by the Commission, but
not paid to a candidate because of the op-
eration of this shortfall rule, is treated as
an amount certified by the Commission for
that candidate during the succeeding cal-
endar month. Section 702.9037–2(d) pro-
vides an example illustrating the shortfall
rule of § 702.9037–2(c).
Notice 96–13 announced a change
in the payment procedures contained in
§ 702.9037–2(c). The notice states that
when the Account is in a shortfall posi-
tion, the Secretary may make an additional
payment between regular payment dates
promptly after funds are available. Such
payment is determined by multiplying the
amount certified by the Commission for
the candidate in month 1 by the ratio of the
balance in the Account (but not to exceed
the shortfall) on the 15th day of month 2
(or the first business day thereafter if the
15th is not a business day) over the total
amount certified by the Commission for
all the candidates in month 1.
Section 9037(b) contemplates that
the Secretary should pay certified primary
candidates as promptly as possible. There-
fore, the Treasury will change the proce-
dures, currently described in § 702.9037–2
and Notice 96–13, for making payments
from the Account. Under the changed
procedures, the Secretary may make pay-
ments as soon as funds become available
in the Account rather than monthly (or, in
the event of a shortfall, with an additional
payment on the 15
th
of the next month, as
required by Notice 96–13).
The Treasury intends to amend the reg-
ulations in § 702.9037–2 accordingly. As
provided in Notice 96–13, the effective
date of these amendments to the regula-
tions will be February 2, 1996.
EFFECT ON OTHER DOCUMENTS
Notice 96–13 is superseded.
DRAFTING INFORMATION
The principal authors of this notice are
Karla M. Meola and John Roman Faron
of the Office of Associate Chief Coun-
sel (Income Tax & Accounting). For fur-
ther information regarding this notice, con-
tact Ms. Meola or Mr. Faron at (202)
622–4930 (not a toll-free call).
Alternative Fuel; Definition of
Liquid Hydrocarbon
Notice 2007–97
SECTION 1. PURPOSE
This notice definesliquid hydrocarbons
derived from biomassforpurposesofthe
credits and payments provided for alterna-
tive fuel and alternative fuel mixtures un-
der §§ 34, 6426, and 6427 of the Internal
Revenue Code (the Code).
SECTION 2. BACKGROUND
(a) The credits and payments for alter-
native fuel and alternative fuel mixtures
were added to the Code by § 11113(b) of
the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for
Users (Pub. L. 109–59). The credits and
payment are allowed beginning October 1,
2006. Notice 2006–92, 2006–43 I.R.B.
774, provides general guidance on these
credits and payments.
(b) Section 6426(d)(2) of the Code pro-
vides that the termalternative fuelmeans
several specified products including (in
§ 6426(d)(2)(F)) liquid hydrocarbons de-
rived from biomass (as defined in section
45K(c)(3)). Section 6426(d)(2) also pro-
vides that the termalternative fueldoes not
include ethanol, methanol, or biodiesel.
Biodieselis defined in section 40A(d)(1).
Ethanol and methanol are included in the
definition of alcohol in section 40(d)(1).
(c) Although the termhydrocarbon
is not defined in the Code, the term is
commonly defined as an organic com-
pound containing only hydrogen and car-
bon. Treasury and the IRS have received
numerous inquiries asking whether, for
purposes of § 6426(d)(2)(F), the termliq-
uid hydrocarbons derived from biomass
can include liquids that contain oxygen, as
well as hydrogen and carbon. Examples of
liquids containing hydrogen, carbon, and
oxygen include fish oil, liquids derived
from other rendered fats, biodiesel, and
alcohols such as ethanol and methanol.
(d) The fact that Congress specifically
excluded ethanol, methanol, and biodiesel
(all of which contain oxygen) from the
definition ofliquid hydrocarbons derived
from biomassindicates that, for purposes
of section 6426(d)(2)(F),hydrocarbonsin-
clude substances that contain oxygen.
(e) The Senate Finance Committee has
approved a technical correction that would
clarify that any liquid fuel derived from
biomass qualifies as an alternative fuel.
The technical correction would also clar-
ify that any fuel qualifying for an alco-
hol, biodiesel, or renewable diesel credit
or payment does not qualify for the alter-
native fuel credit or payment.
SECTION 3. DEFINITION
(a) Except as provided in paragraph
(b)ofthissection,liquid hydrocarbons
derived from biomassare chemical com-
pounds that are liquid when eligibility for
the credit or payment is determined and
are derived from any organic material,
including oceanic and terrestrial crops and
crop residues, and organic waste products
that have a market value. For this pur-
pose—
(1) Eligibility for the credit or payment
for alternative fuel mixtures is determined
when the alternative fuel mixture is pro-
duced; and
December 3, 200710922007–49 I.R.B.

(2) Eligibility for the credit or payment
for alternative fuel is determined when—
(i) Tax is imposed on the fuel by
§ 4041(a)(2); or
(ii)Taxwouldbeimposedonthefuel
but for the exemptions provided by § 4041
(b), (f), (g), or (h).
(b)Liquid hydrocarbons derived from
biomassdo not include—
(1) Ethanol, methanol, or biodiesel; or
(2) Oil, natural gas, coal (including lig-
nite) or any product of oil, natural gas, or
coal.
SECTION 4. EFFECT OF EXPECTED
TECHNICAL CORRECTION
Under current law, ethanol and
methanol are excluded from the defini-
tion of alternative fuels qualifying for the
alternative fuel credit or payment. The
technical correction approved by the Sen-
ate Finance Committee would provide,
in addition, that no other alcohol fuel is
eligible for an alternative fuel credit or
payment. If this technical correction is
enacted it will be retroactive to October 1,
2006. Accordingly, ifthe technical correc-
tion is enacted and a taxpayer was allowed
an alternative fuel credit or payment with
respect to any alcohol fuel before the date
of enactment, the taxpayer will be required
to repay the amount of such credit or pay-
ment with interest.
SECTION 5. EFFECTIVE DATE
This notice is effective October 1, 2006.
SECTION 6. DRAFTING
INFORMATION
The principal author of this notice
is DeAnn Malone of the Office of As-
sociate Chief Counsel (Passthroughs &
Special Industries).For further informa-
tion regarding this notice, please contact
DeAnn Malone at (202) 622–3130 (not a
toll-free call).
Note.This revenue procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifications for
Substitute Forms and Schedules.
Rev. Proc. 2007-68
TABLE OF CONTENTS
PART 1 – INTRODUCTION TO SUBSTITUTE FORMS
SECTION 1.1 – OVERVIEW OF REVENUE PROCEDURE 2007-68...................................................... 1095
SECTION 1.2 – IRS CONTACTS.................................................................................... 1096
SECTION 1.3 – WHAT’S NEW..................................................................................... 1096
SECTION 1.4 – DEFINITIONS..................................................................................... 1097
SECTION 1.5 – AGREEMENT..................................................................................... 1099
PART 2 – GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS
SECTION 2.1 – GENERAL SPECIFICATIONS FOR APPROVAL....................................................... 1100
SECTION 2.2 – HIGHLIGHTS OF PERMITTED CHANGES AND REQUIREMENTS..................................... 1101
SECTION 2.3 – VOUCHERS....................................................................................... 1102
SECTION 2.4 – RESTRICTIONS ON CHANGES..................................................................... 1104
SECTION 2.5 – GUIDELINES FOR OBTAINING IRS APPROVAL...................................................... 1104
SECTION 2.6 – OFFICE OF MANAGEMENT AND BUDGET (OMB) REQUIREMENTS FOR ALL
SUBSTITUTE FORMS
................................................................................ 1107
PART 3 – PHYSICAL ASPECTS AND REQUIREMENTS
SECTION 3.1 – GENERAL GUIDELINES FOR SUBSTITUTE FORMS.................................................. 1108
SECTION 3.2 – PAPER............................................................................................ 1110
SECTION 3.3 – PRINTING........................................................................................ 1111
2007–49 I.R.B.1093December 3, 2007

SECTION 3.4 – MARGINS......................................................................................... 1112
SECTION 3.5 – EXAMPLES OF APPROVED FORMATS.............................................................. 1113
SECTION 3.6 – MISCELLANEOUS INFORMATION FOR SUBSTITUTE FORMS........................................ 1113
PART 4 – ADDITIONAL RESOURCES
SECTION 4.1 – GUIDANCE FROM OTHER REVENUE PROCEDURES................................................. 1114
SECTION 4.2 – ELECTRONIC TAX PRODUCTS..................................................................... 1115
SECTION 4.3 – FEDERAL TAX FORMS ON CD...................................................................... 1115
PART 5 – REQUIREMENTS FOR SPECIFIC TAX RETURNS
SECTION 5.1 – TAX RETURNS (FORMS 1040, 1040A, 1120, ETC.)...................................................... 1116
SECTION 5.2 – CHANGES PERMITTED TO GRAPHICS (FORMS 1040A AND 1040)..................................... 1117
SECTION 5.3 – CHANGES PERMITTED TO FORM 1040A GRAPHICS................................................. 1118
SECTION 5.4 – CHANGES PERMITTED TO FORM 1040 GRAPHICS.................................................. 1119
PART 6 – FORMAT AND CONTENT OF SUBSTITUTE RETURNS
SECTION 6.1 – ACCEPTABLE FORMATS FOR SUBSTITUTE FORMS AND SCHEDULES................................ 1120
SECTION 6.2 – ADDITIONAL INSTRUCTIONS FOR ALL FORMS..................................................... 1121
PART 7 – MISCELLANEOUS FORMS AND PROGRAMS
SECTION 7.1 – SPECIFICATIONS FOR SUBSTITUTE SCHEDULES K-1................................................ 1122
SECTION 7.2 – PROCEDURES FOR PRINTING IRS ENVELOPES..................................................... 1127
SECTION 7.3 – GUIDELINES FOR SUBSTITUTE FORMS 8655........................................................ 1128
PART 8 – ALTERNATIVE METHODS OF FILING
SECTION 8.1 – FORMS FOR ELECTRONICALLY FILED RETURNS................................................... 1129
SECTION 8.2 – EFFECT ON OTHER DOCUMENTS.................................................................. 1130
EXHIBITS
Exhibit A-1 – Schedule A (Preferred Format).......................................................................... 1131
Exhibit A-2 – Schedule A (Acceptable Format)......................................................................... 1132
Exhibit B-1 – Form 2106-EZ (Preferred Format)....................................................................... 1133
Exhibit B-2 – Form 2106-EZ (Acceptable Format)...................................................................... 1134
Exhibit C – Software Developers Voucher............................................................................. 1135
Exhibit D – Sample Check Sheet..................................................................................... 1136
December 3, 200710942007–49 I.R.B.

Part 1
Introduction to Substitute Forms
Section 1.1 – Overview of Revenue Procedure 2007-68
1.1.1
Purpose
The purpose of this revenue procedure is to provide guidelines and general requirements
for the development, printing, and approval of substitute tax forms. Approval will be based on
these guidelines. After review and approval,submitted forms will beaccepted as substitutes
for official IRS forms.
1.1.2
Unique Forms
Certain unique specialized forms require the use of other additional publications to supple-
ment this publication. See Part 4.
1.1.3
Scope
The IRS accepts quality substitute tax forms that are consistent with the official forms and
have no adverse impact on our processing. The IRS Substitute Forms Unit administers the for-
mal acceptance and processing of these forms nationwide. While this program deals primarily
with paper documents, it also reviews for approval other processing and filing forms such as
those used in electronic filing.
Only those substitute forms that comply fully with the requirements are acceptable. This
revenue procedure is updated as required to reflect pertinent tax year form changes and to meet
processing and/or legislative requirements.
1.1.4
Forms Covered by This Revenue
Procedure
The following types of forms are covered by this revenue procedure:
•IRS tax forms and their related schedules,
•Worksheets as they appear in instruction packages,
•Applications for permission to file returnselectronically and forms used as required docu-
mentation for electronically filed returns,
•Powers of Attorney,
•Over-the-counter estimated tax payment vouchers, and
•Forms and schedules relating to partnerships, exempt organizations, and employee plans.
1.1.5
Forms Not Covered by
This Revenue Procedure
The following types of forms are not covered by this revenue procedure:
•W-2 and W-3 (see Publication 1141 for information on these forms),
•W-2c and W-3c (see Publication 1223 for information on these forms),
•941andScheduleB(Form941)(seePublication4436forinformationontheseforms),
•1096, 1098 series, 1099 series, 5498 series, W-2G, and 1042-S (see Publication 1179 for
information on these forms),
•Federal Tax Deposit (FTD) coupons, which may not be reproduced,
•Forms 1040-ES (OCR) and 1041-ES (OCR), which may not be reproduced,
•Forms 5500, 5500-EZ, and associated schedules (see the Department of Labor website at
w
ww.dol.govfor information on these forms),
•Forms 8717 and 8905, bar-coded forms requiring separate approval,
•FinCEN forms, TD F 90-22 forms, and Form 8300,
•Requests for information or documentation initiated by the IRS,
•Forms used internally by the IRS,
•State tax forms,
2007–49 I.R.B.1095December 3, 2007

•Forms developed outside the IRS, and
•General Instructions and Specific Instructions (not reviewed by the Substitute Forms Pro-
gram Unit).
Section 1.2 – IRS Contacts
1.2.1
Where To Send
Substitute Forms
Send your substitute forms for approval to the following offices (do not send forms with
taxpayer data):
FormOffice and Address
All FinCEN family of forms, TD F 90-22
family of forms, and Form 8300
Enterprise Computing Center -
Detroit (ECC-D)
BSA Compliance Branch
P.O. Box 32063
Detroit, MI 48232-0063
5500, 5500-EZ, and Schedules A through E,
G, H, I, R, and SSA for Form 5500
Check EFAST information at the
Department of Labor’s website at
w
ww.efast.dol.gov
8717 and 8905Joanna.H.Weber@irs.gov
Software developer vouchers (See Sections
2.3.7 - 2.3.9)
Internal Revenue Service
Attn: Doris Bethea, C5-163
5000 Ellin Rd.
Lanham, MD 20706
D
oris.E.Bethea@irs.gov
All others (except W-2, W-2c, W-3, W-3c,
941, Schedule B (Form 941), 1096, 1098,
1099, 5498, W-2G, and 1042-S) covered by
this publication
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6526
Washington, DC 20224
In addition, the Substitute Forms Program Unit can be contacted via email at
S
ubstituteforms@irs.gov. Please include “PDF Submissions” on the subject line.
For questions about Forms W-2 and W-3, refer to IRS Publication 1141, General Rules and
Specifications for Substitute Forms W-2 and W-3. For Forms W-2c and W-3c, refer to IRS
Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c. For
Forms 941 and Schedule B (Form 941), refer to IRS Publication 4436, General Rules and Spec-
ifications for Substitute Form 941 and Schedule B (Form 941). For Forms 1096, 1098, 1099,
5498, W-2G, and 1042-S, refer toIRS Publication 1179, General Rules and Specifications for
Substitute Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S.
Section1.3–What’sNew
1.3.1
What’s New
The following changes have been made to the Revenue Procedure for tax year 2007.
•We have implemented a new policy that lets you assume that your email substitute form
submission has been approved if you do not hear from us within 20 business days. Starting
September 4, 2007, we began acknowledging each email submission with a return email
outlining the policy. This policy does not apply to forms submitted by paper or fax. Also
December 3, 200710962007–49 I.R.B.

this policy does not apply to new forms issued by the IRS that you have submitted for the
first time, nor does it apply to forms that the IRS has substantially changed during the year.
See Section 1.5.2 for more details.
•New email address.Due to the new policy, please submit your email form submissions to
S
ubstituteforms@irs.govinstead of*taxforms@irs.gov.
•You can now send 25 instead of 50 sample substitute forms for approval of software vendor
vouchers. See Section 2.3.9.
•The room number in the address of the Substitute Forms Unit has changed to Room 6526.
•We have revised Section 7.1, which deals with substitute Schedules K-1.
•We have revised Section 8.1, which deals with electronic filing.
•We have slightly revised the sample check sheet in Exhibit D.
•The Exhibits section has been changed and updated.
•We made editorial changes as needed.
Section 1.4 – Definitions
1.4.1
Substitute Form
A tax form (or related schedule) that differsinanywayfromtheofficialversionandis
intended to replace the form that is printed and distributed by the IRS. This term also covers
those approved substitute forms exhibited in this revenue procedure.
1.4.2
Printed/Preprinted
Form
A form produced using conventional printing processes, or a printed form which has been
reproduced by photocopying or a similar process.
1.4.3
Preprinted Pin-Fed
Form
A printed form that has marginal perforations for use with automated and high-speed print-
ing equipment.
1.4.4
Computer Prepared
Substitute Form
A preprinted form in which the taxpayer’s tax entry information has been inserted by a
computer, computer printer, or other computer-type equipment.
1.4.5
Computer Generated Substitute
Tax Return or Form
A tax return or form that is entirely designed and printed using a computer printer such as a
laser printer, etc., on plain white paper. This return or form must conform to the physical layout
of the corresponding IRS form, although the typeface may differ. The text should match the
text on the officially printed form as closely aspossible. Condensed text and abbreviations will
be considered on a case-by-case basis.
Exception.All jurats (perjury statements) must be reproduced verbatim.
1.4.6
Manually Prepared
Form
A preprinted reproduced form in which the taxpayer’s tax entry information is entered by
an individual using a pen, pencil, typewriter, or other non-automated equipment.
2007–49 I.R.B.1097December 3, 2007

1.4.7
Graphics
Parts of a printed tax form that are not tax amount entries or required text. Examples of
graphics are line numbers, captions, shadings,special indicators, borders, rules, and strokes
created by typesetting, photographics, photocomposition, etc.
1.4.8
Acceptable Reproduced
Form
A legible photocopy of an original form.
1.4.9
Supporting Statement
(Supplemental Schedule)
A document providing detailed information to support a line entry on an official or approved
substitute form and filed with (attached to) a tax return.
Note.A supporting statement is not a tax form and does not take the place of an official
form.
1.4.10
Specific Form Terms
The following specific terms are used throughout this revenue procedure in reference to all
substitute forms: format, sequence, line reference, item caption, and data entry field.
1.4.11
Format
The overall physical arrangement and general layout of a substitute form.
1.4.12
Sequence
Sequence is an integral part of the total format requirement. The substitute form should
show the same numeric and logical placement order of data, as shown on the official form.
1.4.13
Line Reference
The line numbers, letters, or alphanumericsused to identify each captioned line on an offi-
cial form. These line references are printedto the immediate left of each caption and/or data
entry field.
1.4.14
Item Caption
The text on each line of a form, which identifies the data required.
1.4.15
Data Entry Field
Designated areas for the entry of data such as dollar amounts, quantities, responses and
checkboxes.
1.4.16
Advance Draft
A draft version of a new or revised form may be posted to the IRS website for information
purposes. Substitute forms may be submitted based on these advance drafts, but any submit-
ter that receives forms approval based on these early drafts is responsible for monitoring and
revising forms to mirror any revisions in the final forms provided by the IRS.
December 3, 200710982007–49 I.R.B.

1.4.17
Approval
Generally, approval could be in writing or assumed after 20 business days from our receipt
for forms that have not been substantially changed by the IRS. Also, this does not apply to
newly created or substantially revised IRS forms.
Section 1.5 – Agreement
1.5.1
Important Stipulation
of This Revenue Procedure
Any person or company who uses substitute forms and makes all or part of the changes
specified in this revenue procedure agrees to the following stipulations.
•The IRS presumes that any required changes are made in accordance with these procedures
and will not be disruptive to the processing of the tax return.
•Should any of the changes be disruptive to the IRS’s processing of the tax return, the person
or company agrees to accept the determination of the IRS as to whether the form may
continue to be filed.
•The person or company agrees to work with the IRS in correcting noted deficiencies. No-
tification of deficiencies may be made by any combination of fax, letter, email, or phone
contact and may include the request for there-submission of unacceptable forms.
1.5.2
Response Policy
and Stipulations
We will inform you when the Substitute Forms Unit has received your form submission.
You can consider your submission approved ifyou do not receive a response from us within 20
business days. If we anticipate a problem reviewing your submission within the 20 business
day period, we will send an interim email notifying you of an extended period of approval.
Once the substitute forms have been approved by the IRS, you can release them after the
final versions of the forms have been issued bythe IRS. Before releasing the forms, you are
responsible for updating forms approved as draft and for making form changes we requested.
The policy has the following stipulations.
•This 20-day policy applies to electronic submissions only. It does not apply to substitute
forms submitted by paper or fax.
•The policy applies to submissions of 15 or fewer items. Submissions of more than 15 may
delay processing.
•If we receive a large number of your submissions within a short period of time, processing
may be delayed.
•There could be delays in processing if we find significant errors in your submission. We
will send you an interim email in that case.
•If we anticipate any problems in processing your submission within the 20-day period, we
will send you an interim email on or about the 15th business day.
•If subsequent to the 20-day period we discover a significant inaccuracy, we reserve the
right to inform you and will require thatchanges be made to correct the error.
•It does not apply to substantially revised forms nor to new forms created by the IRS for
which you have made your first submission.
2007–49 I.R.B.1099December 3, 2007

Part 2
General Guidelines for Submissions and Approvals
Section 2.1 – General Specifications for Approval
2.1.1
Overview
If you produce any tax forms using IRS guidelines on permitted changes, you can generate
your own substitutes without further approval. If your changes are more extensive, you must
get IRS approval before using substitute forms. More extensive changes can include the use
of typefaces and sizes other than those found onthe official form and the condensing of line
item descriptions to save space.
Note.The 20-day turnaround policy may not apply to extensive changes.
2.1.2
Email Submissions
The Substitute Forms Program accepts substitute forms submissions via email. The email
address isS
ubstituteforms@irs.gov. Please include the term “PDF Submissions” on the subject
line.
Follow these guidelines.
•Your submission should include all the forms you wish to submit in one attached pdf file.
Do not email each form individually.
•An approval check sheet listing the forms you are submitting should always be included in
the pdf file along with the forms. See a sample check sheet in Exhibit D.
•Small (fewer than 15 forms), rather than large, submissions should expedite processing.
The maximum submission should contain 15 forms.
•Emailing pdf submissions will not expedite review and approval. The pdf submissions will
be assigned a control number and put in queuealong with mailed-in paper submissions.
•Optimize pdf files before submitting.
•The maximum allowable email attachment is 2.5 megabytes.
•The Substitute Forms Unit accepts zip files.
•To alleviate delays during the peak time of September through December, submit advance
draft forms as early as possible.
If the guidelines are not followed, you may need to resubmit.
In addition to submitting forms via email,you may continue to send your submissions to:
Internal Revenue Service
SE:W:CAR:MP:T:T:SP
Attn: Substitute Forms Program
1111 Constitution Avenue, NW
Room 6526
Washington, DC 20224
2.1.3
Expediting the Process
Follow these basic guidelines for expediting the process.
•Always include a check sheet for the Substitute Forms Unit’s response.
•Follow Publication 1167 for general substitute form guidelines. Follow the specialized
publications produced by the Substitute Forms Unit for other specific forms.
December 3, 200711002007–49 I.R.B.

•To spread out the workload, send in draft versions of substitute forms when they are posted.
Note.Be sure to make any changes to approved drafts before releasing final versions.
2.1.4
Schedules
Schedules are considered to be an integral part of a complete tax return. A schedule may be
included as part of a form or printed separately.
2.1.5
Examples of Schedules
That Must Be Submitted
with the Return
Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an ex-
ample of this situation. Its Schedules A through U have pages numbered as part of the basic
return. For Form 706 to be considered for approval, the entire form including Schedules A
through U must be submitted.
2.1.6
Examples of Schedules
That Can Be Submitted
Separately
However, Schedules 1, 2, and 3 of Form 1040A are examples of schedules that can be sub-
mitted separately. Although printed by the IRS as a supplement to Form 1040A, none of these
schedules are required to be filed with Form 1040A. These schedules may be separated from
Form 1040A and submitted as substitute forms.
2.1.7
Use and Distribution of
Unapproved Forms
The IRS is continuing a program to identify and contact tax return preparers, forms devel-
opers, and software publishers who use or distribute unapproved forms that do not conform to
this revenue procedure. The use of unapproved forms hinders the processing of the returns.
Section 2.2 – Highlights of Permitted Changes and Requirements
2.2.1
Methods of
Reproducing Internal
Revenue Service Forms
Official IRS tax forms are supplied by the IRS. These forms may be provided in the tax-
payer’s tax package or over-the-counter. Forms can also be picked up at many IRS offices,
post offices, or libraries, and are available on CD and online atw
ww.irs.gov.
There are methods of reproducing IRS printed tax forms suitable for use as substitutes with-
out prior approval.
•You can photocopy most tax forms and use them instead of the official ones. The entire
substitute form, including entries, must be legible.
•You can reproduce any current tax form as cutsheets, snap sets, and marginally punched,
pin-fed forms as long as you use an official IRS version as the master copy.
•You can reproduce a form that requires a signature as a valid substitute form. Many tax
forms (including returns) have a taxpayer signature requirement as part of the form layout.
The jurat/perjury statement/signature line areas must be retained and worded exactly as on
the official form. The requirement for a signature, by itself, does not prohibit a tax form
from being properly computer-generated.
2007–49 I.R.B.1101December 3, 2007

Section 2.3 – Vouchers
2.3.1
Overview
All payment vouchers (Forms 940-V, 940-EZ(V), 941-V, 943-V, 945-V, 1040-V, and
2290-V) must be reproduced in conjunction with their forms. Substitute vouchers must be the
same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser
printer may include a scan line.
2.3.2
Scan Line
Specifications
NNNNNNNNN AAXXXX NNN NNNNNNNNN
Item:AB CDEF G
A.Social Security Number/Employer Identification Number (SSN/EIN) has 9 numeric
(N) spaces.
B.Check Digits have 2 alpha (A) spaces.
C.Name Control has 4 alphanumeric (X) spaces.
D.Master File Tax (MFT) Code has 2 numeric (N) spaces (see below).
E.Taxpayer Identification Number (TIN) Type has 1 numeric (N) space (see below).
F.Tax Period has 6 numeric (N) spaces in year/month format (YYYYMM).
G.Transaction Code has 3 numeric (N) spaces.
2.3.3
MFT Code
Code Number for Forms:
•1040 (family) – 30,
•940/940-EZ – 10,
•941 – 01,
•943 – 11,
•945 – 16, and
•2290 – 60.
2.3.4
TIN Type
Type Number for:
•Form 1040 (family) – 0, and
•Forms 940, 940-EZ, 941, 943, 945, and 2290 – 2.
2.3.5
Voucher Size
The voucher size must be exactly 8.0′′x3.25′′(Forms 1040-ES and 1041-ES must be 7.625′′
x3.0′′). The document scan line must be vertically positioned 0.25 inches from the bottom of
the scan line to the bottom of the voucher. The last character on the right of the scan line must
be placed 3.5 inches from the right leading edge of the document. The minimum required
horizontal clear space betweencharacters is .014 inches. The line to be scanned must have a
clear band 0.25 inches in height from top to bottom of the scan line, and from border to border
of the document. “Clear band” means no printing except for dropout ink.
December 3, 200711022007–49 I.R.B.

2.3.6
Print and Paper Weight
Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts
may not be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred
paper weight is 20 to 24 pound OCR bond.
2.3.7
Specifications for Software
Developers
Certain vouchers may be reproduced for usein the IRS lockbox system. These include
the 1040-V, 1040-ES, the 940 family, and 2290 vouchers. Software developers must follow
these specific guidelines to produce scannable vouchers strictly for lockbox purposes. Also
see Exhibit C.
•The total depth must be 3.25 inches.
•The scan line must be .5 inches from the bottom edge and 1.75 inches from the left edge
of the voucher and left-justified.
•Software developers vouchers must be 8.5 inches wide (instead of 8 inches with a cut line).
Therefore, no vertical cut line is required.
•Scan line positioning must be exact.
•Do not use the over-the-counter format voucher and add the scan line to it.
•All scanned data must be in 12-point OCR A font.
•The 4-digit NACTP ID code should be placed under the payment indicator arrow.
•Windowed envelopes must not display the scanline in order to avoid disclosure and privacy
issues.
Note.All software developers must ensure that their software uses OCR A font so taxpayers
will be able to print the vouchers in the correct font.
2.3.8
SpecificLinePositions
Follow these line specifications for entering taxpayer data in the lockbox vouchers.
Start Row Start ColumnWidthEnd Column
Line Specifications for
Taxpayer Data:
Taxpayer Name5663641
Taxpayer Address, Apt.5763641
Taxpayer City, State, ZIP5863641
Line Specifications for Mail
To Data:
MailAddress57433880
Mail City, State, ZIP58433880
Line Specifications for:
Scan Line6326n/an/a
2007–49 I.R.B.1103December 3, 2007

2.3.9
How to Get Approval
To receive approval, please send 25 vouchersamples yearly, by December 10, for testing to
the following address.
Internal Revenue Service
Attn: Doris Bethea, C5-163
5000 Ellin Rd.
Lanham, MD 20706
For further information, contact either Doris Bethea,D
oris.E.Bethea@irs.gov,at
202-283-0218.
Section 2.4 – Restrictions on Changes
2.4.1
What You Cannot
Do to Forms Suitable
for Substitute
Tax Forms
You cannot, without prior IRS approval, change any IRS tax form or use your own (non-
approved) versions including graphics, unless specifically permitted by this revenue procedure.
See Sections 2.5.7 to 2.5.11.
You cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those
areas specified in Part 5 of this revenue procedure) without prior approval from the IRS Sub-
stitute Forms Unit.
You cannot use your own preprinted label on tax returns filed with the IRS unless you fully
comply with the criteria specified in Section 3.6.3 on the use of pre-addressed IRS labels.
Note.The 20-day turnaround policy may not apply to extensive changes.
Section 2.5 – Guidelines for Obtaining IRS Approval
2.5.1
Basic Requirements
Preparers who submit substitute privately designed, privately printed, computer generated,
or computer prepared tax forms must develop these substitutes using the guidelines established
in this part. These forms, unless there is an exception outlined by the revenue procedure, must
be approved by the IRS before being filed.
2.5.2
Conditional Approval Based on
Advanced Drafts
The IRS cannot grant final approval of your substitute form until the official form has been
published. However, the IRS posts advance draft forms in the “Tax Professionals” area of its
website at:
w
ww.irs.gov/taxpros/lists/0,,id=97782,00.html
December 3, 200711042007–49 I.R.B.

We encourage submission of proposed substitutes of these advance draft forms and will
grant conditional approval based solely on these early drafts. These advance drafts are subject
to significant change before forms are finalized. If these advance drafts are used as the basis
for your substitute forms, you will be responsible for subsequently updating your final forms
to agree with the final officialversion. These revisions need not be resubmitted for further
approval.
Note.Approval of forms based on advance drafts will not be granted after the final version
of an official form is published.
2.5.3
Submission Procedures
Follow these general guidelines when submitting substitute forms for approval.
•Any alteration of forms must bewithin the limits acceptable to the IRS. It is possible that,
from one filing period to another, a change in law or a change in internal need (processing,
audit, compliance, etc.) may change the allowable limits for the alteration of the official
form.
•When approval of any substitute form (other than those exceptions specified in Part 1,
Section 1.2 – IRS Contacts) is requested, a sample of the proposed substitute form should
be forwarded for consideration via email or by letter to the Substitute Forms Unit at the
address shown in Section 1.2.1.
•Schedules and forms (for example, Forms 3468, 4136, etc.) that can be used with more
than one type of return (for example, 1040, 1041, 1120, etc.) should be submitted only
once for approval, regardless of the number of different tax returns with which they may
be associated. Also, all pages of multi-page forms or returns should be submitted in the
same package.
2.5.4
Approving Offices
Because only the Substitute Forms Unit is authorized to approve substitute forms, unneces-
sary delays may occur if forms are sent to the wrong office. You may receive an interim letter
about the delay. The Substitute Forms Unit may then coordinate the response with the origina-
tor responsible for revising that particular form. Such coordination may include allowing the
originator to officially approve the form. No IRS office is authorized to allow deviations from
this revenue procedure.
2.5.5
IRS Review of
Software Programs, etc.
The IRS does not review or approve the logic of specific software programs, nor does the
IRS confirm the calculations on the forms produced by these programs. The accuracy of the
program remains the responsibility of the software package developer, distributor, or user.
The Substitute Forms Unit is primarily concerned with the pre-filing quality review of the
final forms that are expected tobe processed by IRS field offices. For this purpose, you should
submit forms without including any taxpayer information such as names, addresses, monetary
amounts, etc.
2.5.6
When To Send
Proposed Substitutes
Proposed substitutes, which are required to be submitted per this revenue procedure, should
be sent as much in advance of the filing period as possible. This is to allow adequate time for
analysis and response.
2.5.7
Accompanying
Statement
When submitting sample substitutes, you should include an accompanying statement that
lists each form number and its changes from the official form (position, arrangement, appear-
ance, line numbers, additions, deletions, etc.). With eachof the items you should include a
detailed reason for the change.
2007–49 I.R.B.1105December 3, 2007

When requesting approval, please include a check sheet. Check sheets expedite the approval
process. The check sheet may look like the example in Exhibit D displayed in the back of this
procedure or may be one of your own design. Please include your fax number on the check
sheet.
2.5.8
Approval/Non-
Approval Notice
The Substitute Forms Unit will fax the check sheet or an approval letter to the originator if
a fax number has been provided, unless:
•The requester has asked for an email response or for a formal letter, or
•Significant corrections to the submitted forms are required.
Notice of approval may impose qualificationsbefore using the substitutes. Notices of un-
approved forms may specify the changes required for approval and require re-submission of
the form(s) in question. When appropriate, you will be contacted by telephone.
2.5.9
Duration of
Approval
Most signature tax returns and many of their schedules and related forms have the tax (li-
ability) year printed in the upper right corner. Approvals for these annual forms are usually
good for one calendar year (January through December of the year of filing). Quarterly tax
forms in the 940 series and Form 720 require approval for any quarter in which the form has
been revised.
Because changes are usually made to an annual form every year, each new filing season
generally requires a new submission of a substitute form. Very rarely is updating the preprinted
year the only change made to an annual form.
2.5.10
Limited
Continued Use of an
Approved Change
Limited changes approved for one tax year may be allowed for the same form in the follow-
ing tax year. Examples are the use of abbreviated words, revised form spacing, compressed
text lines, and shortened captions, etc., which do not change the integrity of lines or text on th
e
official forms.
If substantial changes are made to the form, new substitutes must be submitted for approval.
If only minor editorial changes are made to the form, it is not subject to review. It is the re-
sponsibility of each vendor who has been granted permission to use substitute forms to monitor
and revise forms to mirror any revisions to official forms made by the Service. If there are any
questions, please contact the Substitute Forms Unit.
2.5.11
When Approval
Is Not Required
If you received approval for a specific change on a form last year, you may make the same
change this year if the item is still present on the official form.
•The new substitute form does not have to be submitted to the IRS and approval based on
that change is not required.
•However, the new substitute form must conform to the official current year IRS form in
other respects: date, Office of Management and Budget (OMB) approval number, attach-
ment sequence number, Paperwork Reduction Act Notice statement, arrangement, item
caption, line number, line reference, data sequence, etc.
•The new substitute form must also comply with changes to the guidelines in this revenue
procedure. The procedure may have eliminated, added to, or otherwise changed the guide-
line(s) that affected the change approved in the prior year.
•An approved change is authorized only for the period from a prior tax year substitute form
to a current tax year substitute form.
December 3, 200711062007–49 I.R.B.

Exception.Forms with temporary, limited, or interim approvals (or with approvals that
state a change is not allowed in any other tax year) are subject to review in subsequent years.
2.5.12
Continuous-
Use Forms
Forms without preprinted tax years are called “continuous-use” forms. Continuous-use
forms are revised when a legislative change affects the form or a change will facilitate pro-
cessing. These forms frequently have revision dates that are valid for longer than one year.
2.5.13
IRS Website
Posting Schedule
A schedule of print dates (for annual and quarterly forms) and most current revision dates
(for continuous-use forms) are maintained on the IRS website. The Tax Products Posting
Schedule can be found atw
ww.irs.gov/formspubs/article/0,,id=103641,00.html. See Section
4.2.2.
2.5.14
Required Copies
Generally, you must send us one copy of each form being submitted for approval. However,
if you are producing forms for different computer systems (for example, IBM compatible vs.
Macintosh) or different types of printers (for example, laser vs. inkjet), and these forms differ
significantlyin appearance, submit one copy for each type of system or printer.
2.5.15
Requestor’s
Responsibility
Following receipt of an initial approval for a substitute forms package or a software output
program to print substitute forms, it is the responsibility of the originator (designer or distrib-
utor) to provide client firms or individuals with forms that meet the IRS’s requirements for
continuing acceptability.Examples of this responsibility include:
•Using the prescribed print paper, font size, legibility, state tax data deletion, etc., and
•Informing all users of substitute forms of thelegal requirements of the Paperwork Reduc-
tion Act Notice, which is generally found in the instructions for the official IRS forms.
2.5.16
Source Code
The Substitute Forms Unit will assign a unique source code to each firm that submits sub-
stitute paper forms for approval. This source code will be a permanent identifier that must be
used on every submission by a particular firm.
The source code consists of three alpha characters and should generally be printed at the
bottom left margin area on the first page of every approved substitute form.
Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms
2.6.1
OMB Requirements
for All Substitute Forms
There are legal requirements of the Paperwork Reduction Act of 1995 (The Act). Public
Law 104-13 requires the following.
•OMB approves all IRS tax forms that are subject to the Act.
•Each IRS form contains (in the upper right corner) the OMB number, if assigned.
•Each IRS form (or its instructions) states why the IRS needs the information, how it will
be used, and whether or not the information is required to be furnished to the IRS.
2007–49 I.R.B.1107December 3, 2007

This information must be provided to every user of official or substitute IRS forms or in-
structions.
2.6.2
Application of the Paperwork
Reduction Act
On forms that have been assigned OMB numbers:
•All substitute forms must contain in the upper right corner the OMB number that is on the
official form, and
•The required format is: OMB No. 1545-XXXX (Preferred) or OMB # 1545-XXXX (Ac-
ceptable).
2.6.3
Required
Explanation to Users
You must inform the users of your substitute forms of the IRS use and collection require-
ments stated in the instructions for official IRS forms.
•If you provide your users or customers with the official IRS instructions, each form must
retain either the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Pa-
perwork Reduction Act Notice), or a reference to it as the IRS does on the official forms
(usually in the lower left corner of the forms).
•This notice reads, in part, “We ask for the information on this form to carry out the Internal
Revenue laws of the United States....”
Note.If no IRS instructions are provided to users of your forms, the exact text of the Paper-
work Reduction Act Notice (or Disclosure, Privacy Act, and PaperworkReduction Act Notice)
must be furnished separately or on the form.
2.6.4
Finding the OMB
Number and Paperwork
Reduction Act Notice
The OMB number and the Paperwork Reduction Act Notice, or references to it, may be
found printed on an official form (or its instructions). The number and the notice are included
on the official paper format and in other formats produced by the IRS (for example, compact
disc (CD) or Internet download).
Part 3
Physical Aspects and Requirements
Section 3.1 – General Guidelines for Substitute Forms
3.1.1
General Information
The official form is the standard. Because a substitute form is a variation from the official
form, you should know the requirements of the official form for the year of use before you
modify it to meet your needs. The IRS provides several means of obtaining the most frequently
used tax forms. These include the Internet and CD (see Part 4).
3.1.2
Design
Each form must follow the design of the official form as to format arrangement, item cap-
tion, line numbers, line references, and sequence.
December 3, 200711082007–49 I.R.B.

3.1.3
State Tax
Information Prohibited
Generally, state tax information must not appearon the federal tax return, associated form,
or schedule that is filed with the IRS. Exceptions occur when amounts are claimed on, or re-
quired by, the federal return (for example, state and local income taxes, on Schedule A of Form
1040).
3.1.4
Vertical Alignment
of Amount Fields
IF a form is to be...THEN...
1.The entry column must have a vertical line or some
type of indicator in the amount field to separate dollars
from cents.
Manually prepared
2.The cents column must be at least 3/10′′wide.
1.Vertically align the amountentry fields where possible.
2.Use one of the following amount formats:
a) 0,000,000, or
Computer generated
b) 0,000,000.00.
1.You may remove the vertical line in the amount field
that separates dollars from cents.
2.Use one of the following amount formats:
a) 0,000,000, or
Computer prepared
b) 0,000,000.00.
3.1.5
Attachment
Sequence Number
Many individual income tax forms have a required “attachment sequence number” located
just below the year designation in the upper right corner of the form. The IRS uses this number
to indicate the order in which forms are to be attached to the tax return for processing. Some
of the attachment sequence numbers may change from year to year.
The following applies to computer prepared forms.
•The sequence number may be printed in no less than 12-point boldface type and centered
below the form’s year designation.
•The sequence number may alsobe placed following the year designation for the tax form
and separated with an asterisk.
•The actual number may be printed without labeling it the “Attachment Sequence Number.”
3.1.6
Assembly of Forms
When developing software or forms for use by others, please inform your customers/clients
that the order in which the forms are arranged may affect the processing of the package. A
return must be arranged inthe order indicated below.
IF the form is...THEN the sequence is...
1040• Form 1040, and
• Schedules and forms in attachment sequence number order.
Anyothertaxreturn
(Form 1120, 1120S,
1065, 1041, etc.)
• The tax returns,
• Directly associated schedules (Schedule D, etc.),
• Directly associated forms,
• Additional schedules in alphabetical order, and
• Additional forms in numerical order.
2007–49 I.R.B.1109December 3, 2007

Supporting statements should then follow in the same sequence as the forms they support.
Additional information required should be attached last.
In this way, the forms are received in the order in which they must be processed. If you do
not send returns to us in order, processing may be delayed.
3.1.7
Paid Preparer’s
Information and
Signature Area
On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer’s Use Only” area may
not be rearranged or relocated. You may, however,add three extra lines to the paid preparer’s
address area without prior approval. This applies to other tax forms as well.
3.1.8
Some Common Reasons
for Requiring Changes to
Substitute Forms
Some reasons that substitute form submissions may require changes include the following.
•Failing to preprint certain amounts in entry spaces.
•Shading areas incorrectly.
•Failing to include a reference to the location of the Paperwork Reduction Act Notice.
•Not including parentheses for losses.
•Not including “Attach Statement” when appropriate.
•Including line references or entry spacesthat don’t match the official form.
•Printing text that is different from the official form.
•Altering the jurat.
Section 3.2 – Paper
3.2.1
Paper Content
The paper must be:
•Chemical wood writing paper that is equal to or better than the quality used for the official
form,
•At least 18 pound (17′′x22′′, 500 sheets), or
•At least 50 pound offset book (25′′x38′′, 500 sheets).
3.2.2
Paper with
Chemical Transfer
Properties
There are several kinds of paper prohibited for substitute forms. These are:
1. Carbon-bonded paper, and
2. Chemical transfer paper except when the following specifications are met:
a. Each ply within the chemical transfer set of forms must be labeled, and
b. Only the top ply (ply one and white in color), the one that contains chemical
on the back only (coated back), may be filed with the IRS.
3.2.3
Example
A set containing three plies would be constructed as follows:ply one (coated back), “Fed-
eral Return, File with IRS”; ply two (coated front and back), “Taxpayer’s copy”; and ply three
(coated front), “Preparer’s copy.”
The file designation, “Federal Return, File with IRS” for ply one, must be printed in the
bottom right margin (just below the last line of the form) in 12-point boldface type.
It is not mandatory, but recommended, that the file designation “Federal Return, File with
IRS” be printed in a contrasting ink for visual emphasis.
December 3, 200711102007–49 I.R.B.

3.2.4
Carbon Paper
Do not attach any carbon paper to any return you file with the IRS.
3.2.5
Paper and Ink
Color
We prefer that the color and opacity of paper substantially duplicatesthat of the original
form. This means that your substitute must be printed in black ink and may be on white or on
the colored paper the IRS form is printed on. Forms 1040A and 1040 substitute reproductions
may be in black ink without the colored shading. The only exception to this rule is Form
1041-ES, which should always be printed with a very light gray shading in the color screened
area. This is necessary to assist us in expeditiously separating this form from the very similar
Form 1040-ES.
3.2.6
Page Size
Substitute or reproduced forms and computer prepared/generated substitutes may be the
same size as the official form or they may be the standard commercial size (8
1
/2′′x11′′). The
thickness of the stock cannot be less than .003 inches.
Section 3.3 – Printing
3.3.1
Printing Medium
The private printing of all substitute tax forms must be by conventional printing processes,
photocopying, computer graphics, or similar reproduction processes.
3.3.2
Legibility
All forms must have a high standard of legibility as to printing, reproduction, and fill-in
matter. Entries of taxpayer data may be no smaller than eight points. The IRS reserves the
right to reject those with poor legibility. The ink and printing method used must ensure that no
part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quality
deterioration. This standard must be followedfor any subsequent copies or reproductions made
from an approved master substitute form, either during preparation or during IRS processing.
3.3.3
Type Font
Many federal tax forms are printed using “Helvetica” as the basic type font. We request that
you use this type font when composing substitute forms.
3.3.4
Print Spacing
Substitute forms should be printed using a 6 lines/inch vertical print option. They should
also be printed horizontally in 10 pitch pica (that is, 10 print characters per inch) or 12 pitch
elite (that is, 12 print positions per inch).
3.3.5
Image Size
The image size of a printed substitute form should be as close as possible to that of the
official form. You may omit any text on both computer prepared and computer generated forms
that is solely instructional.
2007–49 I.R.B.1111December 3, 2007

3.3.6
Title Area Changes
To allow a large top margin for marginal printing and more lines per page, the title line(s)
for all substitute forms (not including the form’s year designation and sequence number, when
present), may be photographically reduced by40 percent or reset as one line of type. When
reset as one line, the type size may be no smaller than 14-point. You may omit “Department
of the Treasury, Internal Revenue Service” and all reference to instructions in the form’s title
area.
3.3.7
Remove
Government Printing
Office Symbol and IRS
Catalog Number
When privately printing substitute tax forms, the Government Printing Office (GPO) sym-
bol and/or jacket number must be removed. In the same place using the same type size, print
the Employer Identification Number (EIN) of the printer or designer or the IRS assigned source
code. (We prefer this last number be printed in the lower left area of the first page of each form.)
Also, remove the IRS CatalogNumber (Cat. No.) and the recycle symbol if the substitute is
not produced on recycled paper.
3.3.8
Printing on One
Side of Paper
While it is preferred that both sides of the paper be used for substitutes and reproduced
forms, resulting in the same page arrangement as that of the official form or schedule, the IRS
will accept your forms if only one side of the paper is used.
3.3.9
Photocopy
Equipment
The IRS does not undertake to approve or disapprove the specific equipment or process
used in reproducing official forms. Photocopies of forms must be entirely legible and satisfy
the conditions stated in this and other revenue procedures.
3.3.10
Reproductions
Reproductions of official forms and substitute forms that do not meet the requirements of
this revenue procedure may not be filed instead of the official forms. Illegible photocopies are
subject to being returned to the filer for re-submission of legible copies.
3.3.11
Removal of
Instructions
Generally, you may remove references to instructions. No prior approval is needed. How-
ever in some instances, you may be requestedto include references to instructions.
Exception.The words “For Paperwork Reduction Act Notice, see instructions” must be
retained or a similar statement indicating the location of the Notice must be provided on each
form.
Section 3.4 – Margins
3.4.1
Margin Size
The format of a reproduced tax form when printed on the page must have margins on all
sides at least as large as the margins on the official form. This allows room for IRS employees
to make necessary entries on the form during processing.
December 3, 200711122007–49 I.R.B.

•A
1
/2-inch to
1
/4-inch margin must be maintained across the top, bottom, and both sides of
all substitute forms.
•The marginal, perforated strips containing pin-fed holes must be removed from all forms
priortofilingwiththeIRS.
3.4.2
Marginal Printing
Prior approval is not required for the marginal printing allowed when printed on an official
form or on a photocopy of an official form.
•With the exception of the actual tax forms (for example, Forms 1040, 1040A, 1040EZ,
1120, 940, 941, etc.), you may print in the left vertical margin and in the left half of the
bottom margin.
•Printing is never allowed in the top right margin of the tax form (for example, Forms 1040,
1040A, 1040EZ, 1120, 940, 941, etc.). The Service uses this area to imprint a Document
Locator Number for each return. There are no exceptions to this requirement.
Section 3.5 – Examples of Approved Formats
3.5.1
Examples of
Approved Formats From
the Exhibits
Two sets of exhibits (Exhibits A-1 and 2; B-1 and 2) at the end of this revenue procedure
are examples of how these guidelines may be used. Vertical spacing is six (6) lines to the inch.
A combination of upper-case and lower-case print font is acceptable in producing substitute
forms.
ThesamelogicmaybeappliedtoanyIRSformthat is normally reproducible as a substitute
form, with the exception of the tax return forms as discussed elsewhere.
Note.These exhibits may be from a prior year and are not to be used as current substitute
forms.
Section 3.6 – Miscellaneous Information for Substitute Forms
3.6.1
Filing Substitute
Forms
To be acceptable for filing, a substitute form must print out in a format that will allow the
filer to follow the same instructions as for filing official forms. These instructions are in the
taxpayer’s tax package or in the related form instructions. The form must be legible, must be
on the appropriately sized paper, and must include a jurat where one appears on the published
form.
3.6.2
Caution to Software
Publishers
The IRS has received returns produced by software packages with approved output where
either the form heading was altered or the lines were spaced irregularly. This produces an
illegible or unrecognizable return or a return with the wrong number of pages. We realize
that many of these problems are caused by individual printer differences but they may delay
input of return data and, in some cases, generate correspondence to the taxpayer. Therefore,
in the instructions to the purchasers of your product, both individual and professional, please
stress that their returns will beprocessed more efficiently if they are properly formatted. This
includes:
•Having the correct form numbers and titles at the top of the return, and
•Submitting the same number of pages as if the form were an official IRS form with the line
items on the proper pages.
2007–49 I.R.B.1113December 3, 2007

3.6.3
Use Pre-Addressed
IRS Label
If you are a practitioner filling out a return for a client or a software publisher who prints
instruction manuals, stress the use of the pre-addressed label provided in the tax package the
IRS sent to the taxpayer, when available. The use of this label (or its precisely duplicated label
information) is extremely important for the efficient, accurate, and economical processing of
a taxpayer’s return. Labeled returns indicate that a taxpayer is an established filer and permits
the IRS to automatically accelerate processing of those returns. This results in quicker refunds,
less manual review by IRS functions, and greater accuracy in names, addresses, and postal
deliveries.
3.6.4
Caution to
Producers of
Software Packages
If you are producing a software package that generates name and address data onto the tax
return, do not under any circumstances program either the IRS preprinted check digits or a
practitioner derived name control to appear on any return prepared and filed with the IRS.
3.6.5
Programming
to Print Forms
Whenever applicable:
•Use only the following label information format for single filers:
JOHN Q. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
•Use only the following information for joint filers:
JOHN Q. PUBLIC
MARY I. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
Part 4
Additional Resources
Section 4.1 – Guidance From Other Revenue Procedures
4.1.1
General
The IRS publications listed below provide guidance for substitute tax forms not covered
in this revenue procedure. These publicationsare available on the IRS website. Identify the
requested document by the IRS publication number.
•Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3.
•Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099,
5498, W-2G, and 1042-S.
•Publication 1187, Specifications for FilingForms 1042-S, Foreign Person’s U.S. Source
Income Subject to Withholding,Electronically or Magnetically.
•Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W-2G Electroni-
cally or Magnetically.
•Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.
•Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information
Return of Tip Income and Allocated Tips, Electronically or Magnetically.
•Publication 1345, Handbook for Authorized IRSe-fileProviders of Individual Income Tax
Returns.
December 3, 200711142007–49 I.R.B.

•Publication 1345-A, Filing SeasonSupplement for Authorized IRSe-fileProviders.
•Publication 4436, General Rules and Specifications for Substitute Form 941 and Schedule
B (Form 941).
Section 4.2 – Electronic Tax Products
4.2.1
The IRS Website
Copies of tax forms with instructions, publications, draft forms, fillable forms, prior year
forms and publications, and other tax-related information may be found on the IRS website at
w
ww.irs.gov.
4.2.2
Tax Products
Posting Schedule
The IRS website provides a Tax Products Posting Schedule for the official forms released
for use by taxpayers. The schedule has three parts.
•Anticipated print dates of annual returns.
•Anticipated print dates of quarterly returns.
•Last revision dates and target print dates for continuous-use forms.
Thesiteaddressisw
ww.irs.gov/formspubs/article/0,,id=103641,00.html. The site will be
updated weekly during peak printing periodsand as necessary at other times. The planned
dates are subject to change.
Section 4.3 – Federal Tax Forms on CD
4.3.1
Information
About Federal
Tax Forms CD
The CD contains over 3,000 tax forms and publications for small businesses, return prepar-
ers, and others who frequently need current or prior year tax products. Most current tax forms
on the CD may be filled in electronically, then printed out for submission and saved for record-
keeping. Other products on the CD include the Internal Revenue Bulletins, Tax Supplements,
and Internet resources for the tax professional with links to the World Wide Web.
4.3.2
System
Requirements and
How To Order the Federal Tax
Forms CD
For system requirements, contact the National Technical Information Service (NTIS) at
h
ttp://www.ntis.gov. Prices are subject to change.
The cost of the CD if purchased via the Internet ath
ttp://www.irs.gov/cdordersfrom NTIS,
is $35 (with no handling fee).
If purchased using the following methods,the cost for each CD is $35 (plus a $5 handling
fee). These methods are:
•By phone – 1-877-CDFORMS (1-877-233-6767),
•By fax – 703-605-6900,
•By mail using the order form contained in IRS Publication 1045
(Tax Professionals Guide), and
•By mail to:
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
2007–49 I.R.B.1115December 3, 2007

Part 5
Requirements for Specific Tax Returns
Section 5.1 – Tax Returns (Forms 1040, 1040A, 1120, etc.)
5.1.1
Acceptable Forms
Tax forms (such as Forms 1040, 1040A, and 1120) require a signature and establish tax
liability. Computer generated versions are acceptable under the following conditions.
•These substitute forms must be printed on plain white paper.
•Substitute forms must conform to the physical layout of the corresponding IRS form al-
though the typeface may differ. The text should match the text on the officially published
form as closely as possible. Condensed textand abbreviations will be considered on a
case-by-case basis.
Caution.All jurats (perjury statements) mustbe reproduced verbatim. No text can be
added, deleted, or changed in meaning.
•Various computer graphic print media such as laser printing, inkjet printing, etc., may be
used to produce the substitute forms.
•The substitute form must be the same number of pages and contain the same line text as
the official form.
•All substitute forms must be submitted for approval prior to their original use. You do not
need approval for a substitute form if its only change is the preprinted year and you had
received a prior year approval letter.
Exception.If the approval letter specifies a one time exception for your form, the next
year’s form must be approved.
5.1.2
Prohibited Forms
The following are prohibited.
•Computer generated tax forms (for example, Form 1040, etc.) on lined or color barred
paper.
•Tax forms that differ from the official IRS forms in a manner that makes them non-standard
or unable to process.
5.1.3
Changes
Permitted to Forms
1040 and 1040A
Certain changes (listed in Sections 5.2 through 5.4) are permitted to the graphics of the form
without prior approval, but these changes apply to only acceptable preprinted forms. Changes
not requiring prior approval are good only for the annual filing period, which is the current tax
year. Such changes are valid in subsequent years only if the official form does not change.
5.1.4
Other Changes
Not Listed
All changes not listed in Sections 5.2 through 5.4 require approval from the IRS before the
form can be filed.
December 3, 200711162007–49 I.R.B.

Section 5.2 – Changes Permitted to Graphics (Forms 1040A and 1040)
5.2.1
Adjustments
You may make minor vertical and horizontal spacing adjustments to allow for computer or
word processing printing. This includes widening the amount columns or tax entry areas if the
adjustments comply with other provisions stated in revenue procedures. No prior approval is
needed for these changes.
5.2.2
Name and Address Area
The horizontal rules and instructions within the name and address area may be removed and
the entire area left blank. No line or instruction can remain in the area. However, the statement
regarding use of the IRS label should be retained. The heavy ruled border (when present) that
outlines the name, address area, and social security number must not be removed, relocated,
expanded, or contracted.
5.2.3
Required Format
When the name and address area is left blank, the following format must be used when
printing the taxpayer’s name and address. Otherwise, unless the taxpayer’s preprinted label is
affixed over the information entered in this area, the lines must be filled in as shown below.
•1st name line (35 characters maximum).
•2nd name line (35 characters maximum).
•In-care-of name line (35 characters maximum).
•City, state (25 characters maximum), one blank character, and ZIP code.
5.2.4
Conventional
Name and
Address Data
When there is no in-care-of name line, the name and address will consist of only three lines
(singlefiler)orfourlines(jointfiler).Nameand address (joint filer) with no in-care-of name
line:
JOHN Z. JONES
MARY I. JONES
1234 ANYWHERE ST., APT. 111
ANYTOWN, STATE 12321
5.2.5
Example of
In-Care-Of
Name Line
Name and address (single filer) with in-care-of name line:
JOHN Z. JONES
C/O THOMAS A. JONES
4311 SOMEWHERE AVE.
SAMETOWN, STATE 54345
5.2.6
SSN and
Employer Identification
Number (EIN) Area
The vertical lines separating the format arrangement of the SSN/EIN may be removed.
When the vertical lines are removed, the SSNand EIN formats must be 000-00-0000 or
00-0000000, respectively.
5.2.7
Cents Column
•You may remove the vertical rule that separates the dollars from the cents.
•All entries in the amount column should have a decimal point following the whole dollar
amounts whether or not the vertical line that separates the dollars from the cents is present.
2007–49 I.R.B.1117December 3, 2007

•You may omit printing the cents, but all amounts entered on the form must follow a con-
sistent format. You are strongly urged to round off the figures to whole dollar amounts,
following the official form instructions.
•When several amounts are summed together, the total should be rounded off after addition
(that is, individual amounts should not be rounded off for computation purposes).
•When printing money amounts, you must use one of the following formats:
(a) 0,000,000.;
(b) 0,000,000.00.
•When there is no entry for aline, leave the line blank.
5.2.8
“Paid Preparer’s
Use Only” Area
On all forms, the paid preparer’s information area may not be rearranged or relocated. You
may add three lines and remove the horizontal rules in the preparer’s address area.
Section 5.3 – Changes Permitted to Form 1040A Graphics
5.3.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only).
5.3.2
Line 4 of
Form 1040A
This line may be compressed horizontally (to allow for same line entry for the name of the
qualifying child) by using the following caption: “Head of household; child’s name” (name
field).
5.3.3
Other Lines
Any line with text that takes up two or more vertical lines may be compressed to one line
by using contractions, etc., and by removing instructional references.
5.3.4
Page 2 of
Form 1040A
All lines must be present and numbered in the order shown on the official form. These lines
mayalsobecompressed.
5.3.5
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040A may be printed in black and white only with no color screening.
5.3.6
Other Changes
Prohibited
No other changes to the Form 1040A graphics are allowed without prior approval except
for the removal of instructions and references to instructions.
December 3, 200711182007–49 I.R.B.

Section 5.4 – Changes Permitted to Form 1040 Graphics
5.4.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only). Specific line numbers in the following headings may have changed due to tax law
changes.
5.4.2
Line 4 of
Form 1040
This line may be compressed horizontally (to allow for a larger entry area for the name of the
qualifying child) by using the following caption: “Head of household; child’s name” (name
field).
5.4.3
Line 6c of
Form 1040
The vertical lines separatingcolumns (1) through (4) may be removed. The captions may
be shortened to allow a one line caption for each column.
5.4.4
Other Lines
Any other line with text that takes up two or more vertical lines may be compressed to one
line by using contractions, etc., and by removing instructional references.
5.4.5
Line 21 – Other Income
The fill-in portion of this line may be expanded vertically to three lines. The amount entry
box must remain a single entry.
5.4.6
Line 44 of
Form 1040 – Tax
You may change the line caption to read “Tax” and computer print the words “Total includes
tax from” and either “Form(s) 8814,” “Form 4972,” or “Form(s) 8889.” If all forms are used,
print all form numbers. This specific line number may have changed.
5.4.7
Line 55 of
Form 1040 –
Other Credits
You may change the caption to read: “Other credits from Form” and computer print only
the form(s) that apply.
5.4.8
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040 may be printed in black and white only with no color screening.
5.4.9
Other Changes
Prohibited
No other changes to the Form 1040 graphics arepermitted without prior approval except
for the removal of instructions and references to instructions.
2007–49 I.R.B.1119December 3, 2007

Part 6
Format and Content of Substitute Returns
Section 6.1 – Acceptable Formats for Substitute Forms and Schedules
6.1.1
Exhibits and Use of Acceptable
Formats
Exhibits of acceptable formats for Schedule A, usually attached tothe Form 1040, and Form
2106-EZ are shown in the exhibits section of this revenue procedure.
•If your computer generated forms appear exactly like the exhibits, no prior authorization
is needed.
•You may computer generate forms not shown here, but you must design them by following
the manner and style of those in the exhibits section.
•Take care to observe other requirements and conditions in this revenue procedure. The IRS
encourages the submission of all proposed forms covered by this revenue procedure.
6.1.2
Instructions
The format of each substitute form or schedule must follow the format of the official form
or schedule as to item captions, line references, line numbers, sequence, form arrangement
and format, etc. Basically, try to make the form look like the official one, with readability and
consistency being primary factors. You may use periods and/or other similar special characters
to separate the various parts and sections of the form. Do not use alpha or numeric characters
for these purposes. All line numbers and items must be printed even though an amount is not
enteredontheline.
6.1.3
Line Numbers
When a line on an official form is designated by a number or a letter, that designation (ref-
erence code) must be used on a substitute form. The reference code must be printed to the left
of the text of each line and immediately preceding the data entry field, even if no reference
code precedes the data entry field on the officialform. If an entry field contains multiple lines
and shows the line references once on the left and right side of the form, use the same number
of line references on the substitute form.
In addition, the reference code that is immediately before the data field must either be fol-
lowed by a period or enclosed in parentheses. There also must be at least two blank spaces
between the period or the right parenthesis and the first digit of the data field. (See example
below.)
6.1.4
Decimal Points
A decimal point (that is, a period) should be used for each money amount regardless of
whether the amount is reported in dollars and cents or in whole dollars, or whether or not the
vertical line that separates the dollars from the cents is present. The decimal points must be
vertically aligned when possible.
Example:
5 STATE & LOCAL INC. TAXES...............5.495.00
6 REAL ESTATE TAXES............................6.
7 PERSONAL PROPERTY TAXES............7.198.00
or
5 STATE & LOCAL INC. TAXES...............(5)495.00
6 REAL ESTATE TAXES.............................(6)
7 PERSONAL PROPERTY TAXES.............(7)198.00
December 3, 200711202007–49 I.R.B.

6.1.5
Multi-Page Forms
When submitting a multi-page form, send all its pages in the same package.
Exception.If you will not be producing certain pages, please note that in your cover letter.
Section 6.2 – Additional Instructions for All Forms
6.2.1
Use of Your
Own Internal Control
Numbers and
Identifying Symbols
You may show the computer prepared internal control numbers and identifying symbols on
the substitute if using such numbers or symbols is acceptable to the taxpayer and the taxpayer’s
representative. Such information must not be printed in the top
1
/2inch clear area of any form
or schedule requiring a signature. Except for the actual tax return form (Forms 1040, 1120,
940, 941, etc.), you may print in the left vertical and bottom left margins. The bottom left
margin you may use extends 3
1
/2inches from the left edge of the form.
6.2.2
Descriptions for
Captions, Lines, etc.
Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one
print line by using abbreviations and contractions, and by omitting articles, prepositions, etc.
However, sufficient key words must be retained to permit ready identification of the caption,
line, or item.
6.2.3
Determining
Final Totals
Explanatory detail and/or intermediate calculations for determining final line totals may
be included on the substitute. We prefer that such calculations be submitted in the form of a
supporting statement. If intermediate calculations are included on the substitute, the line on
which they appear may not be numbered or lettered. Intermediate calculations may not be
printed in the right column. This column is reserved only for official numbered and lettered
lines that correspond to the ones on the official form. Generally, you may choose the format
for intermediate calculations or subtotalson supporting statements to be submitted.
6.2.4
Instructional
Text on the Official Form
Text on the official form, which is solely instructional (for example, “See instructions,”
etc.), may generally be omitted from the substitute form.
6.2.5
Mixing Forms
ontheSamePageProhibited
You may not show more than one form or schedule on the same printout page. Both sides
of the paper may be printed for multi-page official forms, butit is unacceptable to intermix
single page schedules of forms except for Schedules A and B (Form 1040), which are printed
back to back by the IRS.
For instance, Schedule E can be printed on both sides of the paper because the official form
is multi-page, with page 2 continued on the back. However, do not print Schedule E on the
front page and Schedule SE on the back, or Schedule A on the front and Form 8615 on the
back, etc. Both pages of a substitute form must match the official form. The back page may
be left blank if the back page of the official form contains only the instructions.
2007–49 I.R.B.1121December 3, 2007

6.2.6
Identifying
Substitutes
Identify all computer prepared substitutes clearly. Print the form designation
1
/2inch from
the top margin and 1
1
/2inches from the left margin. Print thetitle centered on the first line of
print. Print the taxable year and, where applicable, the sequence number on the same line
1
/2
inch to 1 inch from the right margin. Include the taxpayer’s name and SSN on all forms and
attachments. Also, print the OMB number as reflected on the official form.
6.2.7
Negative Amounts
Negative (or loss) amount entries should be enclosed in brackets or parentheses or include
a minus sign. This assists in accurate computation and input of form data. The IRS pre-prints
parentheses in negative data fields on many official forms. These parentheses should be re-
tained or inserted on printouts of affected substitute forms.
Part 7
Miscellaneous Forms and Programs
Section 7.1 – Specifications for Substitute Schedules K-1
7.1.1
Requirements
for Schedules K-1
That Accompany
Forms 1041, 1065, 1065-B,
and 1120S
Because of significant changes to improve processing, prior approval is now required for
substitute Schedules K-1 that accompany Form1041 (for estates and trusts), Form 1065 (for
partnerships), Form 1065-B (for electing large partnerships), or Form 1120S (for S corpora-
tions). Substitute Schedules K-1 should be as close as possible to exact replicas of copies of
the official IRS schedules and follow the same process for submitting other substitute forms
and schedules. Before releasing their substitute forms, software vendors are responsible for
making any subsequent changes that have been made to the final official IRS forms after the
draft forms have been posted.
You must include all information on the form. Submit Schedules K-1 to the IRS at
S
ubstituteforms@irs.govwith “Attn: PDF Submissions” on the subject line or at:
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6526
Washington, D.C. 20224
Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S.
•661107 for Form 1041,
•651107 for Form 1065, and
•671107 for Form 1120S.
Please allow white space around the 6-digit code.
Schedules K-1 that accompany Forms 1041, 1065, 1065-B, or 1120S must meet all specifi-
cations. The specifications include, but are not limited to, the following requirements.
•You will no longer be able to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are required to use. All lines must be included.
•The words “*See attached statement for additional information.” must be preprinted in the
lower right hand side on Schedules K-1 of Forms 1041, 1065, and 1120S.
•All K-1s that are filed with the IRS should be printed on standard 8.5” x 11” paper (the
international standard (A4) of 8.27” x 11.69” may be substituted).
December 3, 200711222007–49 I.R.B.

•Each recipient’s information must be on a separate sheet of paper. Therefore, you must
separate all continuously printed substitutes, by recipient, before filing with the IRS.
•No carbon copies or pressure-sensitive copies will be accepted.
•The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity (es-
tate, trust, partnership, or S corporation) and the recipient (beneficiary, partner, or share-
holder).
•The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1),
the related form number (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the same position and format as shown on the official IRS schedule.
•The Schedule K-1 must contain all the line items as shown on the official form, except for
the instructions, if any are printed on the back of the official Schedule K-1.
•The line items or boxes must be in the same order and arrangement as those on the official
form.
•The amount of each recipient’s share of eachitem must be shown. Furnishing a total
amount of each item and a percentage (or decimal equivalent) to be applied to such to-
tal amount by the recipient does not satisfy the law and the specifications of this revenue
procedure.
•State or local tax-related information maynot be included on the Schedules K-1 filed with
the IRS.
•The entity may have to pay a penalty if substitute Schedules K-1 are filed that do not con-
form to specifications.
•Additionally, the IRS may consider the Schedules K-1 that do not conform to specifications
as not being able to be processed and may return Forms 1041, 1065, 1065-B, or 1120S to
the filer to be filed correctly.
Schedules K-1 that are 2-D bar-coded will continue to require prior approval from the IRS
(see Sections 7.1.3 through 7.1.5).
7.1.2
Special Requirements
for Recipient Copies of
Schedules K-1
Standardization for reporting informationis required for recipient copies of substitute
Schedules K-1 of Forms 1041, 1065, 1065-B, and 1120S. Uniform visual standards are
provided to increase compliance by allowing recipients and practitioners to more easily
recognize a substitute Schedule K-1. The entity must furnish to each recipient a copy of
Schedule K-1 that meets the following requirements.
•Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S.
•661107 for Form 1041,
•651107 for Form 1065, and
•671107 for Form 1120S.
Please allow white space around the 6-digit code.
•You will no longer be able to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are required to use. All lines must be included.
•Both pages 1 and 2 of Schedules K-1 of Forms 1065 and 1120S must be provided to each
recipient.
•The words “*See attached statement for additional information.” must be preprinted in the
lower right hand side on Schedules K-1 of Forms 1041, 1065, and 1120S.
•The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity and
recipient.
•The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1),
the related form number (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the same position and format as shown on the official IRS schedule.
•All applicable amounts and information required to be reported must be titled and numbered
in the same manner as shown on the officialIRS schedule. The line items or boxes must
be in the same order and arrangement and must be numbered like those on the official IRS
schedule.
2007–49 I.R.B.1123December 3, 2007

•The Schedule K-1 must contain all items required for use by the recipient. The instructions
to the schedule must identify the line orbox number and code, if any, for each item as
shown in the official IRS schedule.
•The amount of each recipient’s share of eachitem must be shown. Furnishing a total
amount of each line item and a percentage (or decimal equivalent) to be applied to such
total amount by the recipient does not satisfy the law and the specifications of this revenue
procedure.
•Instructions to the recipient that are substantially similar to those on or accompanying the
official IRS schedule must be provided to aid in the proper reporting of the items on the
recipient’s income tax return. Where items are not reported to a recipient because they do
not apply, the related instructions may be omitted.
•The quality of the ink or other material used to generate recipients’ schedules must produce
clearly legible documents. In general, black chemical transfer inks are preferred.
•In order to assure uniformity of substitute Schedules K-1, the paper size should be standard
8.5” x 11” (the international standard (A4) of 8.27” x 11.69” may be substituted.)
•The paper weight, paper color, font type, font size, font color, and page layout must be such
that the average recipient can easily decipher the information on each page.
•State or local tax-related information may be included on recipient copies of substitute
Schedules K-1. All non-tax-related information should be separated from the tax informa-
tion on the substitute schedule to avoid confusion for the recipient.
•The legend “Important Tax Return Document Enclosed” must appear in a bold and con-
spicuous manner on the outside of the envelope that contains the substitute recipient copy
of Schedule K-1.
•The entity may have to pay a penalty if a substitute Schedule K-1 furnished to any recipient
does not conform to the specifications of this revenue procedure and results in impeding
processing.
7.1.3
Requirements
for Schedules K-1
with Two-Dimensional
(2-D) Bar Codes
In an effort to reduce the burden of manually transcribing tax documents, improve qual-
ity, and increase government efficiency, theIRS is pleased to providespecifications for 2-D
bar-coded substitute Schedules K-1 for Forms 1041, 1065, and 1120S. The IRS encourages
voluntary participation in adding 2-D barcoding.
Note.If software vendors do not want to produce bar-coded Schedules K-1, they may
produce the official IRS Schedules K-1 but cannot use the expedited process for approving
bar-coded K-1s and their parent returns as outlined in Section 7.1.6.
In addition to the requirements in Sections 7.1.1 and 7.1.2, the bar-coded Schedules K-1
must meet the following specifications.
•The bar code should print in the space labeled “For IRS Use Only” on each Schedule K-1.
The entire bar code must print within the “For IRS Use Only” box surrounded by a white
space of at least
1
/4inch.
•Bar codes must print in PDF 417 format.
•The bar codes must always be in the specifiedformat with every field represented by at
least a field delimiter (carriage return). Leaving out a field in a bar code will cause every
subsequent field to be misread.
•Be sure to include the 6-digit form ID code in the upper right of Schedules K-1 of Forms
1041, 1065, and 1120S.
•661107 for Form 1041,
•651107 for Form 1065, and
•671107 for Form 1120S.
Please allow white space around the 6-digit code.
December 3, 200711242007–49 I.R.B.

7.1.4
2-D Bar Code
Specifications for Schedules K-1
Follow these general specifications for preparing all 2-D bar-coded Schedules K-1.
•Numeric fields –
•Do not include leading zeros (except Taxpayer Identification Numbers, Zip Codes, and
percentages).
•Do not use non-numeric characters except that the literal "STMT" can be put in money
fields.
•All money fields should be rounded to the nearest whole dollar amount – If a money
amount ends in 00 to 49 cents, drop the cents; if it ends in 50 to 99 cents, truncate the
cents and increment the dollar amount by one. Use the same rounding technique for
the bar-coded and the printed K-1s.
•All numeric-only fields are right justified (except Taxpayer Identification Numbers and
Zip Codes).
•All field lengths are expressed as maximum lengths. If the value in the field has fewer
positions or the software program does not support that many positions, put in the bar code
only those positions actually used.
•Alpha fields –
•Do not include leading blanks (left justified).
•Do not include trailing blanks.
•Use uppercase alpha characters only.
•Variable fields –
•Do not include leading blanks (left justified).
•Do not include trailing blanks.
•Use uppercase alpha characters, numerics, and special characters as defined in each
field.
•Delimit each field with a carriage return.
•Express percentages as 6-digitnumbers without the percent sign. Left justify with leading
zeroes (for percentages less than 100%) and no decimal point (decimal point is assumed be-
tween 3rd and 4th positions). Examples: 25.32% expressed as "025320"; 105% expressed
as "105000"; 8.275% expressed as "008275"; 10.24674% express as "010247".
•It is vital that the print routine reinitialize the bar code prior to printing each succeeding
K-1. Failure to do this will result in each K-1 for a parent return having the same bar code
as the document before it.
7.1.5
Approval
Process for
Bar-Coded Schedules K-1
Prior to releasing commercially available tax software that creates bar-coded Schedules K-1,
the printed schedule and the bar code must both be tested. Bar code testing must be done
using the final official IRS Schedule K-1. Bar code approval requests must be resubmitted for
any subsequent changes to the official IRS form that would affect the bar code. Below are
instructions and a sequence of events that will comprise the testing process.
•The IRS has released the final Schedule K-1 bar-code specifications by publishing them
on the IRS.gov website (seeh
ttp://www.irs.gov/efile/article/0,,id=129859,00.html).
•The IRS will publish a set of test documents that will be used to test the ability of tax
preparation software to create bar codes in the correct format.
2007–49 I.R.B.1125December 3, 2007

•Software developers will submit two identical copies of the test documents – one to the
IRS and one to a contracted testing vendor.
•The IRS will use one set to ensure the printed schedules comply withstandard substitute
forms specifications.
•If the printed forms fail to meet the substitute form criteria, the IRS will inform the software
developer of the reason for noncompliance.
•The software developer must resubmit the Schedule(s) K-1 until they pass the substitute
forms criteria.
•The testing vendor will review the bar codes to ensure they meet the published bar-code
specifications.
•If the bar code(s) does not meet published specifications, the testing vendor will contact
the software developer directly informing them of the reason for noncompliance.
•Software developers must submit new bar-coded schedules until they pass the bar-code
test.
•When the bar code passes, the testing vendor will inform the IRS that the developer has
passed the bar-code test and the IRS will issue an overall approval for both the substitute
form and the bar code.
•After receiving this consolidated response, the software vendor is free to release software
for tax preparation as long as any subsequent revisions to the schedules do not change the
fields.
•Find the mailing address for the testing vendor below. Separate and simultaneous mailings
to the IRS and the vendor will reduce testing time.
7.1.6
Procedures
for Reducing Testing Time
In order to help provide incentives to the software development community to participate
in the Schedule K-1 2-D project, the IRS has committed to expediting the testing of bar-coded
Schedules K-1 and their associated parent returns. To receive this expedited service, follow
the instructions below.
•Mail the parent returns (Forms 1065, 1120S,1041) and associated bar-coded Schedule(s)
K-1 to the appropriate address below in a separate package from all other approval requests.
Internal Revenue Service
Attn: Bar-Coded K-1
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6526
Washington, D.C. 20224
•Mail one copy of the parent form(s) and Schedule(s) K-1 to the IRS and another copy to
the testing vendor at the address below.
Northrop Grumman Information Tech
Attn: Betty Ragonese, Quality Assurance Lead
1800 Alexander Bell Drive
Suite 300
Reston, VA 20191
Phone: 703-453-1200
•Include multiple email and phone contact points in the packages.
•While the IRS can expedite bar-coded Schedules K-1 and their associated parent returns,
it cannot expedite the approvalof non-associated tax returns.
December 3, 200711262007–49 I.R.B.

Section 7.2 – Procedures for Printing IRS Envelopes
7.2.1
Procedures for Printing IRS
Envelopes
Organizations are permitted to produce substitute tax return envelopes. Use of substitute
return envelopes that comply with the requirements set forth in this section will assist in de-
livery of mail by the U.S. Postal Service and facilitate internal sorting at the Internal Revenue
Service Centers.
Use the following 5-digit ZIP codes when mailing returns to the IRS Service Centers:
Service CenterZIP Code
Atlanta, GA39901
Kansas City, MO64999
Austin, TX73301
Philadelphia, PA19255
Memphis, TN37501
Andover, MA05501
Cincinnati, OH45999
Ogden, UT84201
Fresno, CA93888
7.2.2
Sorting Returns
by Form Type
Sorting returns by form type is accomplished bythe preprinted bar codes on return envelopes
included in each specific type of form or package mailed to the taxpayers. The 32-bit bar code
on the left of the address on each envelope identifies the type of form the taxpayer is filing, and
it assists in consolidating like returns for processing. Failure to use the envelopes furnished by
the IRS results in additional processing time and effort, and possibly delays the timely deposit
of funds, processing of returns,and issuance of refund checks.
7.2.3
ZIP+4 or 9-Digit
ZIP Codes
The IRS will not furnish or sell bulk quantities of preprinted tax return envelopes to tax-
payers or tax practitioners. A suitable alternative has been developed that will accommodate
the sorting needs of both the IRS and the United States Postal Service (USPS). The alternative
is based on the use of ZIP+4, or 9-digit ZIP codes, for mailing various types of tax returns to
the IRS Service Centers. The IRS uses the last four digits to identify and sort the various form
types into separate groups for processing. Thelist of 4-digit extensions with the related form
designations is provided below.
ZIP+4Package
XXXXX-00021040
XXXXX-0005941
XXXXX-0006940
XXXXX-0008943
2007–49 I.R.B.1127December 3, 2007

ZIP+4Package
XXXXX-00111065
XXXXX-00121120
XXXXX-00131120S
XXXXX-00141040EZ
XXXXX-00151040A
XXXXX-0027990
XXXXX-00312290
7.2.4
Guidelines for
Having Envelopes Preprinted
You may use the preparers’ company names, addresses, and logos as long as you do not
interfere with the clear areas. The government recommends that the envelope stocks have an
average opacity of not less than 89 percent andcontain a minimum of 50 percent waste paper.
Use of carbon based ink is essential for effective address and bar-code reading. Envelope
construction can be of side seam or diagonal seam design. The government recommends that
the size of the envelope should be 5
3
/4inches by 9 inches. Continuous pin-fed construction
is not desirable, but is permissible, if the glued edge is at the top. This requirement is firm
because mail opening equipment is designed to open the bottom edge of each envelope.
7.2.5
Envelopes/ZIP
Codes
The above procedures or guidelines are written for the user having envelopes preprinted.
Many practitioners may not wish to have large quantities of envelopes with differing ZIP
codes/form designations preprinted due to low volume, warehousing, waste, etc. In this case,
the practitioner can type or machine print the addresses with the appropriate ZIP codes to ac-
commodate sorting. If the requirements/guidelines outlined in this section cannot be met, then
use only the appropriate 5-digit service center ZIP code.
Section 7.3 – Guidelines for Substitute Forms 8655
7.3.1
Increased Standardization for
Forms 8655
Increased standardization for reporting information on substitute Forms 8655 is now re
-
quired to aid in processing and for compliance purposes. Please follow the guidelines in
Sec-
tion 7.3.2.
7.3.2
Requirements for Substitute
Forms 8655
Please follow these specific requirements when producing substitute Forms 8655.
•The first line of the title must be “Reporting Agent Authorization.”
•If you want to include a reference to “State Limited Power of Attorney,” it can be in paren-
theses under the title. “State” must be the first word within the parentheses.
•You must include “Form 8655” on the form.
•While the line numbers do not have to match the official form, the sequence of the infor-
mation must be in the same order.
•The size of any variable data must be printed in a font no smaller than 10-point.
December 3, 200711282007–49 I.R.B.

•For adequate disclosure checks, the following must be included for each taxpayer:
(a) Name,
(b) EIN, and
(c) Address.
•At this time, Form 944 will not be required if Form 941 is checked. Only those forms that
the reporting agent company supports need to be listed.
•The jurat (perjury statement) must be identical with the exception of references to line
numbers.
•A contact name and number for the reporting agent is not required.
•You must include line 17, or the equivalent line, and it must include two checkboxes.
•Any state information included should be contained in a separate section of the substitute
form. Preferably this information will be in the same area as line 19 of the official form.
•All substitute Forms 8655 must be approved by the Substitute Forms Unit as outlined in
the Form 8655 specifications in Publication 1167.
•If you have not already been assigned a 3-letter source code, you will be given one when
your substitute form is submitted for approval. This source code should be included in the
lower left corner of the form.
•The 20-day assumed approval policy does not apply to Form 8655 approvals.
Part 8
Alternative Methods of Filing
Section 8.1 – Forms for Electronically Filed Returns
8.1.1
Electronic Filing
Program
Electronic filing is a method by which authorized providers transmit tax return information
to an IRS Service Center in the format of the official IRS forms. The IRS accepts both refund
and balance due Form 1040, 1040A, 1040EZ, or 1040SS (PR) tax returns that are filed elec-
tronically.
8.1.2
Applying to
Participate in IRSe-file
Anyone wishing to participate in IRSe-fileof tax returns must submit ane-fileapplica-
tion. The application can be completed and submitted electronically on the IRS website at
w
ww.irs.govafter first registering fore-services on the website.
8.1.3
Obtaining the
Taxpayer Signature / Submission
of Required Paper Documents
Beginning with the 2008 filing season, tax practitioners can e-file individual income tax
returns only if the returns are signed electronically using a Personal Identification Number
(PIN). A newly designed Form 8453, U.S. Individual Income Tax Transmittal for an IRSe-file
Return, will serve as a transmittal for association of required paper documents such as Forms
3115, 5713, 8283, and 8332. Form 8453 is a one-page form and can only be approved through
the Substitute Forms Program in that format.
Form 8453-OL, U.S. Individual Income Tax Declaration for an IRSe-fileOnline Return,
is the paper signature document for an electronically filed individual tax return not filed with
an electronic PIN signature. The Form 8453-OL also serves as atransmittal for association of
required paper documents for taxpayers filing through an online provider.
2007–49 I.R.B.1129December 3, 2007

For specific information about electronic filing, refer to Publication 1345, Handbook for
Authorized IRSe-fileProviders of Individual Income Tax Returns.
8.1.4
Guidelines for
Preparing Substitute Forms in the
Electronic Filing Program
A participant in the electronic filing program, who wants to develop a substitute form should
follow the guidelines throughout this publication and send a sample form for approval to the
Substitute Forms Unit at the address in Part 1. If you do not prepare Substitute Form 8453
using a font in which all IRS wording fitson a single page, the form will not be accepted.
Note.Use of unapproved forms could result in suspension of the participant from the elec-
tronic filing program.
Section 8.2 – Effect on Other Documents
8.2.1
Effect on Other
Documents
This revenue procedure supersedes Revenue Procedure 2007-24, 2007-11 I.R.B. 692.
December 3, 200711302007–49 I.R.B.

2007–49 I.R.B.1131December 3, 2007

December 3, 200711322007–49 I.R.B.

2007–49 I.R.B.1133December 3, 2007

December 3, 200711342007–49 I.R.B.

2007–49 I.R.B.1135December 3, 2007

December 3, 200711362007–49 I.R.B.

Section 45H. —Credit for
Production of Low Sulfur
Diesel Fuel
Rev. Proc. 2007–69
SECTION 1. PURPOSE
This revenue procedure provides the
procedure under which small business
refiners may obtain from the Internal Rev-
enue Service a certification that satisfies
the requirements of § 45H(f)(1) of the
Internal Revenue Code, relating to certifi-
cations that costs with respect to a facility
will result in compliance with the Highway
Diesel Fuel Sulfur Control Requirements
of the Environmental Protection Agency
(EPA).
SECTION 2. BACKGROUND AND
DEFINITIONS
.01 Section 45H, which was added to
the Code by § 339(a) of the American
Jobs Creation Act of 2004 (Public Law No.
108–357), provides a low sulfur diesel fuel
production credit for low sulfur diesel fuel
produced by a small business refiner. Sec-
tion 45H(a) provides that the amount of the
credit is 5 cents per gallon of low sulfur
diesel fuel produced by a small business
refiner.
.02 Section 45H(b)(1) provides that
the aggregate credit determined under
§ 45H(a) for any taxable year with respect
to any facility shall not exceed—
(1) 25 percent of the qualified capital
costs incurred by the small business refiner
with respect to the facility, reduced by
(2) The aggregate credits determined
under § 45H for all prior taxable years with
respect to the facility.
.03 Under § 45H(b)(2), in the case
of a small business refiner with aver-
age daily domestic refinery runs for the
1-year period ending on December 31,
2002, in excess of 155,000 barrels, the
number of percentage points described in
§ 45H(b)(1) (25 percentage points) shall
be reduced (not below zero) by the product
of such number (before the application of
§ 45H(b)(2)) and the ratio of the excess to
50,000 barrels.
.04 Section 45H(c)(1) defines the term
“small business refiner” to mean, with re-
spect to any taxable year, a refiner of crude
oil that meets the following requirements:
(1) Not more than 1,500 individuals are
engaged in the refinery operations of the
business on any day during the taxable
year; and
(2) The average daily domestic refinery
run or average retained production for all
facilities of the taxpayer for the 1-year pe-
riod ending on December 31, 2002, did not
exceed 205,000 barrels.
.05 Section 45H(c)(2) defines the term
“qualified capital costs.” The qualified
capital costs with respect to any facility are
those costs that are paid or incurred dur-
ing the applicable period for compliance
with the applicable EPA regulations with
respect to the facility, including expendi-
tures for the construction of new process
operations units or the dismantling and
reconstruction of existing process units to
be used in the production of low sulfur
diesel fuel, associated adjacent or offsite
equipment (including tankage, catalyst,
and power supply), engineering, construc-
tion period interest, and sitework.
.06 Section 45H(c)(3) defines the term
“applicable EPA regulations” as the High-
way Diesel Fuel Sulfur Control Require-
ments of the EPA (applicable EPA regula-
tions). Heavy-duty highway vehicles for
the 2007 and later model years must be fu-
eled with highway diesel fuel that meets a
maximum sulfur standard of 15 parts per
million (ppm). The applicable EPA regu-
lations generally require petroleum refin-
ers that produce diesel fuel for heavy-duty
highway vehicles to produce this low sul-
fur diesel fuel beginning June 1, 2006.
However, the applicable EPA regulations
provide additional time to comply with the
15 ppm sulfur standard under certain cir-
cumstances.
.07 Section 45H(c)(4) defines the term
“applicable period.” The applicable period
with respect to any facility is the period
beginning on January 1, 2003, and end-
ing on the earlier of the date that is one
year after the date on which the taxpayer
must comply with the applicable EPA reg-
ulations with respect to that facility, or De-
cember 31, 2009.
.08 Section 45H(c)(5) defines the term
“low sulfur diesel fuel” as diesel fuel with
a sulfur content of 15 ppm or less.
.09 Section 45H(f)(1) provides that no
credit for the production of low sulfur
diesel fuel under § 45H shall be allowed
unless, not later than the date that is 30
months after the first day of the first tax-
able year in which the low sulfur diesel
fuel production credit is determined with
respect to a facility, the small business
refiner obtains certification from the Sec-
retary, after consultation with the Admin-
istrator of the EPA, that the taxpayer’s
qualified costs with respect to the facility
will result in compliance with the applica-
ble EPA regulations.
.10 Section 45H(f)(2) provides that
an application for certification shall in-
clude relevant information regarding unit
capacities and operating characteristics
sufficient for the Secretary, after consulta-
tion with the Administrator of the EPA, to
determine that the qualified capital costs
are necessary for compliance with the ap-
plicable EPA regulations.
.11 Under § 45H(f)(3), any application
shall be reviewed and notice of certifica-
tion, if applicable, shall be made within
60 days of receipt of the application. In
the event the Secretary does not notify the
taxpayer of the results of the certification
within this time period, the taxpayer may
presume the certification to be issued until
so notified.
.12 Section 45H(f)(4) provides that,
with respect to the credit allowed under
§45H—
(1) The statutory period for assessment
of any deficiency attributable to the credit
shall not expire before the end of the 3-year
period ending on the date that the review
period described in § 45H(f)(3) ends with
respect to the taxpayer; and
(2) The deficiency may be assessed
before the expiration of the 3-year pe-
riod notwithstanding the provisions of any
other law or rule of law that would other-
wise prevent the assessment.
.13 Section 45H is effective for ex-
penses paid or incurred after December
31, 2002, in taxable years ending after that
date.
SECTION 3. SCOPE
This revenue procedure applies to small
business refiners that pay or incur qualified
capital costs after December 31, 2002, in
taxable years ending after that date.
2007–49 I.R.B.1137December 3, 2007

SECTION 4. PROCEDURE FOR
OBTAINING CERTIFICATION
.01 The certification required under
§ 45H(f)(1) (relating to certifications by
the Secretary that the taxpayer’s qualified
costs with respect to the facility will result
in compliance with the applicable EPA
regulations) is issued by the Internal Rev-
enue Service after consultation with the
EPA. A taxpayer seeking to obtain such a
certification must submit one paper copy
and one electronic version on a floppy
disc or CD of the application for certifi-
cation under section 45H(f) to the Internal
Revenue Service and one paper copy and
one electronic version of the application
to the EPA. Applications for certification
under section 45H(f) should be marked:
SECTION 45H(f) APPLICATION FOR
CERTIFICATION. There is no user fee for
these applications. The application for a
certification with respect to a facility must
contain the following information:
(1) The taxpayer’s name, address, and
taxpayer identification number;
(2) A description of the facility;
(3) The unit capacities and operating
characteristics of the facility;
(4) Whether the facility is currently pro-
ducing low sulfur diesel fuel; and
(5) A description of the qualified capital
costs with respect to the facility.
.02 The electronic version of the appli-
cation MUST be formatted in one of the
following software applications:
Microsoft Word™ 2002 or later edition
Microsoft Excel™ 2002 or later edition
Adobe Acrobat™ PDF 6.0 or later edi-
tion
Information submitted using the Excel™
spreadsheet must include calculation for-
mulas and assumptions.
.03 A separate application is required
for each facility for which qualified capital
costs are paid or incurred.
.04 The following declaration must ac-
company an application: “Under penalties
of perjury, I declare that I have examined
this application, including accompanying
documents, and to the best of my knowl-
edge and belief, the facts presented are
true, correct, and complete.” The declara-
tion must be signed by a person authorized
to submit the application on behalf of the
taxpayer.
.05 The applications should be sent to
the following addresses:
(1) Applications to the Internal Rev-
enue Service:
(a) Applications submitted by U.S. mail
must be sent to:
Internal Revenue Service
Industry Director, Natural Resources
and Construction
Attn: Executive Assistant
1919 Smith Street
Stop HOU 1000
Houston, TX 77002
(b) Applications submitted by a private
delivery service must be sent to:
Internal Revenue Service
Industry Director, Natural Resources
and Construction
Attn: Executive Assistant
1919 Smith Street, Floor P2
Stop HOU 1000
Houston, TX 77002
(c) Applications may also be hand de-
livered Monday through Friday between
the hours of 8 a.m. and 4 p.m. Central time
to:
Internal Revenue Service
Industry Director, Natural Resources
and Construction
Attn: Executive Assistant
1919 Smith Street, Floor P2
Stop HOU 1000
Houston, TX 77002
(2) Applications to the Environmental
Protection Agency:
(a) Applications submitted by U.S. mail
must be sent to:
Environmental Protection Agency
Director, Compliance and Innovative
Strategies Division
1200 Pennsylvania Ave, NW (6403J)
Washington, DC 20460
(b) Applications submitted by a private
delivery service must be sent to:
Environmental Protection Agency
Director, Compliance and Innovative
Strategies Division
1310 L Street, NW — 6th Floor Mail
Code 6403J
Washington, DC 20005
(c) Applications may also be hand de-
livered Monday through Friday between
the hours of 8 a.m. and 4 p.m. Eastern
time to:
Environmental Protection Agency
Director, Compliance and Innovative
Strategies Division
1310 L Street, NW — 6th Floor Mail
Code 6403J
Washington, DC 20005
.06 The 60-day review period under
§ 45H(f)(3) does not begin until the Ser-
vice receives a complete application. An
application will not be considered com-
plete if the Service, after the consultation
with the EPA, determines that the applica-
tion does not contain all of the informa-
tion necessary to determine whether the
taxpayer’s costs with respect to the facil-
ity result in compliance with the applica-
ble EPA regulations. If the Service does
not notify the taxpayer that the application
is incomplete within 60 days of receipt of
the taxpayer’s application, a taxpayer may
presume the application to be complete.
.07 The certification will ordinarily be
granted with respect to a facility if the ap-
plication is complete, nothing in the appli-
cation is inconsistent with a finding that
the taxpayer’s qualified capital costs with
respect to the facility will result in compli-
ance with the applicable EPA regulations,
and the taxpayer has not been subject to a
penalty under the applicable EPA regula-
tions for a violation relating to that facil-
ity. If the taxpayer has been subject to a
penalty under the applicable EPA regula-
tions for a violation relating to the facil-
ity, the Service, after consultation with the
EPA, will take all relevant information into
account in determining whether certifica-
tion will be granted or denied.
.08 The Service will notify the taxpayer
whether certification has been granted or
denied. If the Service does not notify
the taxpayer whethercertification has been
granted or denied within 60 days of receipt
of the taxpayer’s complete application (or
within 60 days of receipt of an applica-
tion that is presumed to be complete under
section 4.06), the taxpayer may presume
that the certification has been granted dur-
ing the period that begins 60 days after the
receipt of the complete (or presumptively
complete) application and ends on the date
the taxpayer is notified that the applica-
tion is denied or incomplete. If the tax-
payer is permitted under this section 4.08
December 3, 200711382007–49 I.R.B.

to presume for any period that the certifi-
cation with respect to a facility has been
granted—
(1) The taxpayer will be treated as satis-
fying the certification requirement of sec-
tion 45H(f)(1) in determining whether the
credit under section 45H is allowable with
respect to fuel produced at the facility dur-
ing that period; and
(2) The running of the 30-month pe-
riod applicable to the facility under section
45H(f)(1) will be suspended for the period
during which the taxpayer is permitted to
presume the certification with respect to
the facility has been granted.
.09 All inquiries regarding the status of
a certification request should be sent to
the Service at the address listed in sec-
tion 4.05(1) (or the taxpayer may call (713)
209–3615 (not a toll-free call)).
SECTION 5. EFFECT OF
CERTIFICATION
.01 Granting the certification estab-
lishes only that the taxpayer has satisfied
the requirement of section 45H(f) and does
not preclude the Service from examining
a taxpayer’s return with respect to the low
sulfur diesel fuel production credit. The
certification does not establish that the
taxpayer is a small business refiner, that
fuel produced by the taxpayer is low sul-
fur diesel fuel, or that any expenditure is a
qualified capital cost. Thus, the certifica-
tion is not a determination by the Service
that the costs the taxpayer identifies as
qualified capital costs on the application
for certification are, in fact, qualified cap-
ital costs.
.02 Only one certification is required
with respect to a facility. Thus, a tax-
payer that incurs additional qualified capi-
tal costs with respect to a facility after ob-
taining a certification with respect to the
facility is not required to obtain a new cer-
tification with respect to that facility.
SECTION 6. EFFECTIVE DATE AND
TRANSITION RULE
.01 This revenue procedure is effective
for applications filed after November 9,
2007.
.02 Any certification issued before June
30, 2008, will be treated as issued before
the end of the 30-month period described
in section 45H(f)(1).
SECTION 7. PAPERWORK
REDUCTION ACT
The collection of information con-
tained in this revenue procedure has been
reviewed and approved by the Office
of Management and Budget in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545–2074.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collection of information in this
revenue procedure is in section 4. This in-
formation will be used to determine if the
qualified capital costs of a small business
refiner are necessary for compliance with
the applicable EPA regulations. This infor-
mation collection is voluntary.
The likely respondents are small busi-
ness refiners within the meaning of
§ 45H(c)(1). The estimated total an-
nual reporting burden is 75 hours. The
estimated annual burden per respondent
varies from 1 hour to 2 hours, depending
on individual circumstances, with an esti-
mated average of 1.5 hours. The estimated
total number of respondents is 50. The
estimated frequency of responses is once
per respondent.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this revenue
procedure is David Selig of the Of-
fice of the Associate Chief Counsel
(Passthroughs and Special Industries).
For further information regarding this rev-
enue procedure, contact Nicole Cimino at
(202) 622–3110 (not a toll-free call).
2007–49 I.R.B.1139December 3, 2007

Part IV. Items of General Interest
Notice of Proposed
Rulemaking
Automatic Contribution
Arrangements
REG–133300–07
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Notice of Proposed Rulemaking
SUMMARY: This document contains p
ro-
posed regulations under sections
401(k),
401(m), 402(c), 411(a), 414(w),
and
4979(f) of the Internal Revenue C
ode
relating to automatic contribut
ion arrange-
ments. These proposed regulatio
ns will
affect administrators of, emplo
yers main-
taining, participants in, and b
eneficiaries
of eligible plans that include a
n automatic
contribution arrangement und
er section
401(k)(13), 401(m)(12), or 41
4(w).
DATES: Written or electronic comments
and requests for a public hearing must be
received by February 6, 2008.
ADDRESSES: Send submissions to
CC:PA:LPD:PR (REG–133300–07), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washing-
ton D.C. 20044. Submissions may be
hand-delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m.
to CC:PA:LPD:PR (REG–133300–07),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, N.W.,
Washington, D.C. 20224, or sent elec-
tronically via the Federal erulemak-
ing Portal atwww.regulations.gov(IRS
REG–133300–07).
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
R. Lisa Mojiri-Azad, Dana Barry or
William D. Gibbs at (202) 622–6060;
concerning the submission of com-
ments or to request a public hearing,
Richard.A.Hurst@irscounsel.treas.gov,
(202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Manage-
ment and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the
collection of information should be sent to
theOffice of Management and Budget,
Attn: Desk Officer for the Department
of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC
20503, with copies to theInternal Rev-
enue Service, Attn: IRS Reports Clear-
ance Officer, SE:W:CAR:MP:T:T:SP;
Washington, DC 20224. Comments on
the collection of information should be
received by January 7, 2008. Comments
are specifically requested concerning:
Whether the proposed collection of in-
formation is necessary for the proper per-
formance of the functions of the Internal
Revenue Service, including whether the
information will have practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information;
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collections of information may
be minimized, including through the appli-
cation of automated collection techniques
or other forms of information technology;
and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of service to provide information.
The collection of information in these
proposed regulations is in §§1.401(k)–3
and 1.414(w)–1. The collection of infor-
mation in §1.401(k)–3 is required to com-
ply with the statutory notice requirements
of sections 401(k)(13) and 401(m)(12),
and is expected to be included in the no-
tices currently provided to employees that
inform them of their rights and benefits
under the plan. The collection of infor-
mation under §1.414(w)–1 is required to
comply with the statutory notice require-
ments of section 414(w), and is expected
to be included in the notices currently
provided to employees that inform them
of their rights and benefits under the plan.
The likely recordkeepers are businesses
or other for-profit institutions, nonprofit
institutions, organizations, and state or
local governments.
Estimated total average annual record-
keeping burden: 30,000 hours.
Estimated average annual burden hours
per recordkeeper: 1 hour.
Estimated number of recordkeepers:
30,000.
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Of-
fice of Management and Budget.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Background
This document contains proposed
amendments to regulations under sections
401(k), 401(m), 402(c), 411(a), and 4979
of the Internal Revenue Code (Code) and
new proposed regulations under section
414(w) in order to reflect the provisions of
section 902 of the Pension Protection Act
of 2006, Public Law 109–280 (PPA ’06).
Section 902 of PPA ’06 added sections
401(k)(13), 401(m)(12), and 414(w) to the
Code to facilitate automatic contribution
arrangements (sometimes referred to as
automatic enrollment) in qualified cash
or deferred arrangements under section
401(k), as well as in similar arrangements
under sections 403(b) and 457(b). An au-
tomatic contribution arrangement is a cash
or deferred arrangement that provides that,
in the absence of an affirmative election
by an eligible employee, a default elec-
tion applies under which the employee is
December 3, 200711402007–49 I.R.B.

treated as having made an election to have
a specified contribution made on his or her
behalf under the plan. These regulations
would also amend the comprehensive reg-
ulations under sections 401(k) and 401(m)
(published in 2004) and regulations under
section 4979 to reflect other changes made
by section 902 of PPA ’06.
Section 401(k)(1) provides that a
profit-sharing, stock bonus, pre-ERISA
money purchase or rural cooperative
plan will not fail to qualify under sec-
tion 401(a) merely because it contains
a qualified cash or deferred arrange-
ment. Section 1.401(k)–1(a)(2) defines
a cash or deferred arrangement (CODA)
as an arrangement under which an eligible
employee may make a cash or deferred
election with respect to contributions to, or
accruals or other benefits under, a plan that
is intended to satisfy the requirements of
section 401(a). Section 1.401(k)–1(a)(3)
defines a cash or deferred election as any
direct or indirect election (or modification
of an earlier election) by an employee to
have the employer either: (1) provide an
amount to the employee in the form of
cash (or some other taxable benefit) that
is not currently available; or (2) contribute
an amount to a trust, or provide an accrual
or other benefit, under a plan deferring the
receipt of compensation. For purposes of
determining whether an election is a cash
or deferred election, §1.401(k)–1(a)(3)
provides that it is irrelevant whether the
default that applies in the absence of
an affirmative election is cash (or some
other taxable benefit) or a contribution,
an accrual, or other benefit under a plan
deferring the receipt of compensation.
Contributions that are made pursuant to a
cash or deferred election under a qualified
CODA are commonly referred to as elec-
tive contributions.
In order for a CODA to be a qualified
CODA, it must satisfy a number of other
requirements. First, pursuant to section
401(k)(2)(A), the amount that each eligi-
ble employee under the arrangement may
defer as an elective contribution must be
available to the employee in cash. Sec-
tion 1.401(k)–1(e)(2) provides that, in or-
der for a CODA to satisfy this requirement,
the arrangement must provide each eligi-
ble employee with an effective opportu-
nity to make (or change) a cash or deferred
election at least once during each plan year.
Section 401(k)(2)(B) provides that a
qualified CODA must provide that elec-
tive contributions may only be distributed
after certain events, including hardship
and severance from employment. Similar
distribution restrictions apply under sec-
tions 403(b)(7) and 403(b)(11). Section
457(d)(1)(A) includes distribution restric-
tions for eligible governmental deferred
compensation plans.
Section 401(k)(3)(A)(ii) applies a spe-
cial nondiscrimination test to the elective
contributions of highly compensated em-
ployees, within the meaning of section
414(q) (HCEs). Under this test, called
the actual deferral percentage (ADP) test,
the average percentage of compensation
deferred for HCEs is compared annually
to the average percentage of compensation
deferred for nonhighly compensated em-
ployees (NHCEs) eligible under the plan,
and if certain limits are exceeded by the
HCEs, corrective action must be taken.
Pursuant to section 401(k)(8), one method
of correction is distribution to HCEs of
excess contributions made on their behalf.
Section 401(m) provides a parallel test
for matching contributions and employee
after-tax contributions under a defined
contribution plan, called the actual contri-
bution percentage (ACP) test. Similarly,
pursuant to section 401(m)(6), one method
of correction of the ACP test is distribution
to HCEs of excess aggregate contributions
made on their behalf.
Sections 401(k)(12) and 401(m)(11)
provide a design-based safe harbor under
which a CODA and any associated match-
ing contributions are treated as satisfying
the ADP and ACP tests if the arrange-
ment meets certain contribution and notice
requirements. Sections 1.401(k)–3 and
1.401(m)–3 provide guidance on the re-
quirements for this design-based safe
harbor.
Sections 401(k)(13) and 401(m)(12),
added by PPA ’06 and effective for plan
years beginning on or after January 1,
2008, provide an alternative design-based
safe harbor for a CODA that provides for
automatic contributions at a specified level
of contributions and meets certain contri-
bution, notice, and other requirements. A
CODA that satisfies these requirements,
referred to as a qualified automatic contri-
bution arrangement (QACA), is treated as
satisfying the ADP and ACP tests.
Section 414(w), added to the Code by
section 902(d)(1) of PPA ’06 and effec-
tive for plan years beginning on or after
January 1, 2008, further facilitates au-
tomatic enrollment by providing limited
relief from the distribution restrictions
under sections 401(k)(2)(B), 403(b)(7),
403(b)(11), or 457(d)(1)(A) for an eligi-
ble automatic contribution arrangement
(EACA).
Sections 414(w)(1) and 414(w)(2) pro-
vide that an applicable employer plan that
contains an EACA is permitted to allow
employees to elect to receive a distribu-
tion equal to the amount of elective con-
tributions (and attributable earnings) made
with respect to the employee beginning
with the first payroll period to which the el-
igible automatic contribution arrangement
applies to the employee and ending with
the effective date of the election. The
election must be made within 90 days af-
ter the date of the first elective contribu-
tion with respect to the employee under the
arrangement. Sections 414(w)(1)(A) and
414(w)(1)(B) provide that the amount of
the distribution is includible in gross in-
come for the taxable year in which the dis-
tribution is made, but is not subject to the
additional income tax under section 72(t).
Section 414(w)(3) defines an EACA as
an arrangement under which: (1) a par-
ticipant may elect to have the employer
make payments as contributions under the
plan on behalf of the participant, or to the
participant directly in cash, (2) the partic-
ipant is treated as having elected to have
the employer make such contributions in
an amount equal to a uniform percentage
of compensation provided under the plan
until the participant specifically elects
not to have such contributions made (or
specifically elects to have such contribu-
tions made at a different percentage), (3)
in the absence of an investment election
by the participant, such contributions are
invested in accordance with regulations
prescribed by the Secretary of Labor un-
der section 404(c)(5) of the Employee
Retirement Income Security Act of 1974
(ERISA), and (4) participants are provided
a notice that satisfies the requirements of
section 414(w)(4).
Section 414(w)(4) requires that, within
a reasonable period before each plan year,
each employee to whom the arrange-
ment applies for such year receive written
notice of the employee’s rights and obli-
2007–49 I.R.B.1141December 3, 2007

gations under the arrangement which is
sufficiently accurate and comprehensive
to apprise the employee of such rights
and obligations. Section 414(w)(4)(A)(ii)
requiresthatthenoticebewrittenina
manner calculated to be understood by
the average employee to whom the ar-
rangement applies. Section 414(w)(4)(B)
provides that the notice must explain:
(1) the employee’s rights under the ar-
rangement to elect not to have elective
contributions made on the employee’s
behalf or to elect to have contributions
made at a different percentage; and (2)
how contributions made under the auto-
matic contribution arrangement will be
invested in the absence of any investment
decision by the employee. In addition,
theemployeemustbegivenareasonable
period of time after receipt of the notice
and before the first elective contribution is
made to make an election with respect to
contributions. In many respects, the notice
under section 414(w)(4) is the same as the
notice required under section 401(k)(13)
for a qualified automatic contribution ar-
rangement.
Section 414(w)(5) defines an applica-
ble employer plan as an employee’s trust
described in section 401(a) that is exempt
from tax under section 501(a), a plan de-
scribed in section 403(b), or a section
457(b) eligible governmental plan.
Section 414(w)(6) provides that a with-
drawal described in section 414(w)(1) is
not to be taken into account for purposes
of the ADP test.
Section 411(a)(3)(G), as amended by
section 902(d)(2) of PPA ’06, provides
that a matching contribution shall not be
treated as forfeitable merely because the
matching contribution is forfeitable if it re-
lates to a contribution that is withdrawn
under an automatic contribution arrange-
ment that satisfies the requirements of sec-
tion 414(w).
Section 4979 provides an excise tax on
excess contributions (within the meaning
of section 401(k)(8)(B)) and excess ag-
gregate contributions (within the meaning
of section 401(m)(6)(B)) not distributed
within 2
1
/2months after the close of the
plan year for which the contributions are
made. Section 902 of PPA ’06 amended
section4979tolengthenthis2
1
/2month
correction period forexcess contributions
and excess aggregate contributions under
an EACA to 6 months. Thus, in the case of
an EACA, the section 4979 excise tax does
not apply to any excess contributions or
excess aggregate contributions which, to-
gether with income allocable to the contri-
butions, are distributed or forfeited (if for-
feitable) within six months after the close
of the plan year.
Section 902 of PPA ’06 amended sec-
tion 4979(f)(2) to provide that any distri-
butions of excess contributions and excess
aggregate contributions are includible in
the employee’s gross income for the tax-
able year in which distributed. However,
pursuant to sections 401(k)(8)(D) and
401(m)(7)(A), the distributions are not
subject to the additional income tax under
section 72(t). Section 902 of PPA ’06 also
amended sections 401(k)(8), 401(m)(6),
and 4979(f)(1) to eliminate the require-
ment that excess contributions or excess
aggregate contributions (whether or not
under an EACA) include income allocable
to the period after the end of the plan year
(gap period income).
Section 624 of PPA ’06 amended sec-
tion 404(c) of ERISA to provide that a
participant in an individual account plan
meeting the notice requirements of section
404(c)(5)(B) of ERISA is treated as exer-
cising control over the assets in the account
which, in the absence of an investment
election by the participant, are invested in
accordance with regulations prescribed by
the Secretary of Labor. The specific tim-
ing and content requirements for the no-
tice required under section 404(c)(5)(B) of
ERISA are generally the same as under
section 414(w)(4), but the Department of
Labor (DOL) has interpretative jurisdic-
tion for that notice.
Section 902 of PPA ’06 also amended
section 514 of ERISA to preempt any State
law which would directly or indirectly pro-
hibit or restrict the inclusion in any plan
of an automatic contribution arrangement.
The Secretary of Labor is authorized to
prescribe regulations which would estab-
lish minimum standards that such an ar-
rangement would be required to satisfy in
order for this preemption to apply to such
an arrangement. The definition of an auto-
matic contribution arrangement under sec-
tion 514 of ERISA is generally the same
as the definition of an EACA under section
414(w)(3), (including the requirement that
automatic contributions under the arrange-
ment must be invested in accordance with
regulations prescribed by the Secretary of
Labor under section 404(c)(5) of ERISA),
but the definition does not include a notice
requirement. However, section 514(e)(3)
of ERISA requires a notice to be provided
to each participant to whom the arrange-
ment applies. As in the case for the notice
under section 404(c)(5)(B) of ERISA, the
specific timing and content requirements
under section 514(e)(3) of ERISA are gen-
erally the same as the notice requirements
under section 414(w)(4), but the interpre-
tative jurisdiction for that notice is also
with the DOL.
Explanation of Provisions
1.Qualified Automatic Contribution
Arrangement under Section 401(k)(13)
The proposed regulations would amend
§§1.401(k)–3 and 1.401(m)–3 to reflect
the provisions of sections 401(k)(13) and
401(m)(12) for a QACA, the new de-
sign-based safe harbor for satisfying the
ADP and ACP tests. To the extent that the
requirements to be a QACA are the same
as those for the safe harbor described in
sections 401(k)(12) and 401(m)(11), these
proposed regulations would apply the
existing rules currently in §§1.401(k)–3
and 1.401(m)–3 to a QACA. Thus, for
example, because §1.401(k)–3(e) applies
to a QACA, except to the extent other-
wise provided in section 1107 of PPA ’06
or §1.401(k)–3(f) or §1.401(k)–3(g), the
plan provision implementing the QACA
for an existing qualified CODA would be
required to be adopted before the first day
of the plan year and remain in effect for
an entire 12-month plan year. Similarly
under §1.401(k)–3(c)(6), a plan would be
permitted to limit the amount of elective
contributions that may be made by an
eligible employee under the QACA, pro-
vided that each NHCE who is an eligible
employee generally is permitted to make
elective contributions in an amount that
is at least sufficient to receive the max-
imum amount of matching contributions
available under the plan for the plan year,
and the employee is permitted to elect any
lesser amount of elective contributions.
InordertobeaQACA,theplanmust
provide a specified schedule of automatic
contributions (called qualified percent-
ages) for each eligible employee begin-
ning with an initial minimum qualified
percentage of 3 percent of compensation.
December 3, 200711422007–49 I.R.B.

This minimum qualified percentage be-
gins when the employee first participates
in the automatic contribution arrangement
that is intended to be a QACA and ends
on the last day of the following plan year.
Thus, this initial period for a participant
could last as long as two full plan years.
After this initial period, the minimum
qualified percentage increases by 1 per-
cent for each of the next three plan years.
Thus, the minimum qualified percentage
for the plan year after the initial period
is 4 percent. This minimum qualified
percentage increases to 5 percent for the
next plan year, and then is 6 percent for
all plan years thereafter. These are merely
minimum qualified percentages. Thus, a
QACA can provide for higher percentages.
For example, a QACA could provide for
a qualified percentage in the initial period
of 4 percent of compensation. If a plan
did so, it could also provide a 4 percent
qualified percentage for the plan year after
the initial period (the statutory minimum
percentage for that plan year), 5 percent in
the next plan year and 6 percent thereafter.
However, the qualified percentage can at
no time exceed 10 percent of compensa-
tion.
Under section 401(k)(13)(C)(iii), the
qualified percentage must be applied uni-
formly to all eligible employees. The
proposed regulations would provide that a
plan does not fail this requirement merely
because the percentage varies for the fol-
lowing reasons: (1) the percentage varies
based on the number of years an eligible
employee has participated in the automatic
contribution arrangement intended to be
a QACA; (2) the rate of elective contri-
butions under a cash or deferred election
that is in effect on the effective date of the
default percentage under the QACA is not
reduced; or (3) the amount of elective con-
tributions is limited so as not to exceed the
limits of sections 401(a)(17), 402(g) (de-
termined with or without catch-up contri-
butions described in section 402(g)(1)(C)
or section 402(g)(7)) or 415. Further, the
proposed regulations would provide that
a cash or deferred arrangement does not
fail to satisfy the uniformity requirement
merely because an employee is not auto-
matically enrolled during a period that the
employee is not permitted to make elective
contributions because of the requirement
to suspend elective contributions for a
6-month period following a hardship dis-
tribution. In the case of an employee
whose elective contributions have been
suspended (for example, because of a
hardship distribution), the plan must pro-
vide that the employee will, at the end
of the suspension period, resume elective
contributions at the level (percentage) that
would apply if the suspension had not
occurred.
Reflecting section 401(k)(13)(C)(ii),
the proposed regulations provide that the
default election ceases to apply to any
eligible employee if the employee makes
an affirmative election that remains in
effect to not have any elective contribu-
tions made on his or her behalf or to have
elective contributions made in a specified
amount or percentage of compensation on
his or her behalf. Thus, an employee can
make an affirmative election to contribute
at a certain level and have that election
apply for all subsequent plan years. Simi-
larly, an employee can make an affirmative
election to have no elective contributions
made on his or her behalf. This latter
election is not the same as the election
to withdraw prior elective contributions
under section 414(w).
The proposed regulations also reflect
section 401(k)(13)(C)(iv), which provides
an exception from the default election for
eligible employees who were eligible to
participate in the CODA (or a predecessor
CODA) immediately before the effective
date of the QACA and who have an elec-
tion in effect on that effective date. The
proposed regulations would provide that
an election in effect means an affirmative
election that remains in effect to have the
employer make elective contributions on
his or her behalf (in a specified amount or
percentage of compensation) or to not have
the employer make elective contributions
on his or her behalf. Generally, this would
require that the employee have completed
an election form and chosen an amount or
percentage (including zero) of his compen-
sation to be deferred.
The proposed regulations reflect the
matching or nonelective contribution re-
quirement of section 401(k)(13)(D). As
with the safe harbor in section 401(k)(12),
section 401(k)(13) provides a choice for an
employer between satisfying a matching
contribution requirement or a nonelective
contribution requirement. However, while
the QACA requires the same level of em-
ployer nonelective contributions as under
section 401(k)(12), the matching contribu-
tion requirement for a QACA allows for
a lower level of matching contributions.
Specifically, a QACA using the matching
contribution alternative need only provide
for matching contributions on behalf of
each eligible NHCE equal to 100 percent
of the employee’s elective contributions
that do not exceed one percent of compen-
sation and 50 percent of the employee’s
elective contributions that exceed one
percent but do not exceed six percent of
compensation. In addition, a QACA al-
lows a slower schedule of vesting for both
matching and nonelective safe harbor con-
tributions than the safe harbor in section
401(k)(12). All QACA safe harbor contri-
butions must be fully vested after 2 years
of vesting service (within the meaning of
section 411(a)), rather than immediately
as required by section 401(k)(12). In ad-
dition, the proposed regulations would
apply the same distribution restrictions
that apply to safe harbor contributions and
nonelective contributions under section
401(k)(12) to QACA safe harbor contri-
butions.
Each eligible employee under a QACA
must receive a safe harbor notice within
a reasonable period before each plan
year. The proposed regulations reflect
the requirement that this notice must
provide the information required under
section 401(k)(12). The regulations also
reflect the additional timing and con-
tent requirements described in section
401(k)(13)(E)(i). Thus, the notice must
also explain: (1) the employee’s right
under the arrangement to elect not to
have elective contributions made on the
employee’s behalf or to elect to have con-
tributions made in a different amount or
percentage of compensation; and (2) how
contributions made under the automatic
contribution arrangement will be invested
in the absence of any investment decision
by the employee (including, in the case of
an arrangement under which the employee
may elect among two or more investment
options, how contributions made under the
automatic contribution arrangement will
be invested in the absence of an invest-
ment election by the employee). These
additional requirements cannot be satis-
fied by reference to the plan’s summary
plan description. Further, the proposed
regulations would provide that in order
to satisfy section 401(k)(13)(E)(ii)(III),
2007–49 I.R.B.1143December 3, 2007

under the QACA, the employee must be
given a reasonable period of time after
receipt of the notice and before the first
elective contribution is to be made to make
an election with respect to contributions
and investments.
The proposed regulations inter-
pret the requirement under section
401(k)(13)(E)(i) to provide a notice within
a reasonable period before each plan year
by applying the rules of §1.401(k)–3(d)(3).
Thus, the proposed regulations would pro-
vide that the general determination of
whether the timing requirement is satis-
fied is based on all of the relevant facts
and circumstances, and the deemed tim-
ing rule of §1.401(k)–3(d)(3)(ii) applies.
Under this deemed timing rule, the tim-
ing requirement is satisfied if at least 30
days (and no more than 90 days) before
the beginning of each plan year, the no-
tice is given to each eligible employee
for the plan year. The proposed regula-
tions would also provide that in the case
of an employee who does not receive the
notice within the period described in the
previous sentence because the employee
becomes eligible after the 90th day before
the beginning of the plan year, the timing
requirement is deemed to be satisfied if the
notice is provided no more than 90 days
before the employee becomes eligible
(and no later than the date the employee
becomes eligible). Thus, for example,
the preceding sentence would apply to
all eligible employees for the first plan
year under a newly established plan that
provides for elective contributions, and to
the first plan year in which an employee
becomes eligible under an existing plan
that provides for elective contributions.
In the case of a plan with immediate el-
igibility when an employee is hired, this
deemed timing rule would be satisfied if
the employee is provided the notice on the
first day of employment.
2.Eligible Automatic Contribution
Arrangement under Section 414(w)
In order to further facilitate automatic
enrollment, section 414(w) provides lim-
ited relief from the distribution restric-
tions under sections 401(k)(2), 403(b)(7),
403(b)(11), and 457(d) (as well as certain
other relief provisions) for an applica-
ble plan (that is, a section 401(k) plan, a
section 403(b) plan, or a section 457(b) el-
igible governmental plan) with an EACA.
Specifically, section 414(w)(2) provides
that, under an applicable employer plan
with an EACA, an employee can be per-
mitted to elect to receive a distribution
equal to the amount of default elective
contributions (and attributable earnings)
made with respect to the first payroll pe-
riod to which the EACA applies to the
employee and any succeeding payroll pe-
riods beginning before the effective date
of the election.
An employer is permitted, but not re-
quired, to include the section 414(w)(2)
permissible withdrawal provision in an
applicable employer plan, and an em-
ployer who does offer this option is not
required to make it available to all em-
ployees eligible under the EACA. Thus,
for example, an employer might choose
to make the withdrawal option available
only to employees for whom no elective
contributions have been made under the
CODA (or a predecessor CODA) before
the EACA is effective. However, under
a section 401(k) plan or a section 403(b)
plan, the employer may not condition
the right to take the withdrawal on the
employee making an election to have no
future elective contributions made on the
employee’s behalf because such a condi-
tion would violate the contingent benefit
rule under section 401(k)(4)(A) or the
universal availability requirement under
section 403(b)(12)(A)(ii). Nonetheless,
the employer could provide in the with-
drawal election form a default election
under which elective contributions would
cease unless the employee makes an affir-
mative election.
Under section 414(w)(2)(B), the elec-
tion to withdraw the contributions that
were made under an EACA must be made
within 90 days of the “first elective con-
tribution with respect to the employee
under the arrangement.” The proposed
regulations would define the arrangement
for this purpose as the EACA so that the
withdrawal option could apply to employ-
ees previously eligible under the CODA
(including a CODA that is an automatic
contribution arrangement but was not an
EACA). Because section 414(w) only ap-
plies to plan years beginning on or after
January 1, 2008, an automatic contribution
arrangement can only become an EACA
on or after that date. Accordingly, a with-
drawal election under section 414(w) can
only apply to elective contributions made
after that date. The proposed regulations
would provide that the 90-day window for
making the withdrawal election begins on
thedateonwhichthecompensationthat
is subject to the cash or deferred election
would otherwise have been included in
gross income. In addition, the proposed
regulations would provide that the effec-
tive date of the election must be no later
than the last day of the payroll period that
begins after the date of the election.
The proposed regulations would pro-
vide that the distribution is generally the
account balance attributable to the default
elective contributions, adjusted for gains
and losses. The distribution may be re-
duced by any generally applicable fees.
However, the proposed regulations pro-
vide that the plan may not charge a differ-
ent fee for this distribution than would ap-
ply to other distributions. Also, if the de-
fault elective contributions are not main-
tained in a separate account, the amount of
the allocable gains and losses will be de-
termined under rules similar to those pro-
vided under §1.401(k)–2(b)(2)(iv) for the
distribution of excess contributions.
The amount withdrawn under section
414(w) is includible in gross income in
the year in which it is distributed, except
amounts that are distributions of desig-
nated Roth contributions are not included
in an employee’s gross income a second
time. The proposed regulations would re-
quire that this amount be reported on Form
1099–R,Distributions From Pensions,
Annuities, Retirement or Profit-Sharing
Plans, IRAs, Insurance Contracts, etc.
However, the amount is not subject to the
additional income tax under section 72(t).
Finally, the proposed regulations would
amend §1.402(c)–2 to include these with-
drawals in the list of distributions that are
not eligible for rollover.
Any employer matching contribution
with respect to the default elective con-
tribution distributed pursuant to section
414(w) must be forfeited. The forfeited
matching contribution is not a mistaken
contribution or other erroneous contri-
bution, and, thus, it cannot be returned
to the employer (or be distributed to the
employee as is permitted for an excess
aggregate contribution). The proposed
regulations would provide that the for-
feited contribution must remain in the plan
and be treated in the same manner under
December 3, 200711442007–49 I.R.B.

the plan terms as any other forfeiture un-
der the plan.
Under section 414(w)(3)(B), an EACA
must provide that the default elective
contribution is a uniform percentage of
compensation. The proposed regulations
would provide that the permitted differ-
ences in contribution rates provided in
these proposed regulations under section
401(k)(13) for a QACA also apply to an
EACA.
Another requirement to be an EACA
under section 414(w)(3)(C) is that auto-
matic contributions are invested in accor-
dance with regulations prescribed by the
Secretary of Labor under section 404(c)(5)
of ERISA. These proposed regulations
would provide that this requirement only
applies if the plan is otherwise subject
to Title I of ERISA. Thus, for example,
this provision would not apply to a gov-
ernmental plan (within the meaning of
section 414(d)).
The proposed regulations reflect the
section 414(w) notice requirement under
which notice must be provided to each
employee to whom the EACA applies
within a “reasonable period” before each
plan year, but provide that, if an em-
ployee becomes eligible in a given year,
notice must be given within a “reasonable
period” before the employee becomes eli-
gible. The proposed regulations provide a
deemed timing requirement that is gener-
ally the same as the deemed timing rule in
§1.401(k)–3(d)(3)(ii).
3.Coordinated Notices
As noted in this preamble, PPA ’06 pro-
vides for several notices relating to auto-
matic contribution arrangements that have
similar content and timing requirements,
including the notices required by sections
404(c)(5)(B) and 514(e)(3) of ERISA. The
IRS, in coordination with DOL, anticipates
that a single document can satisfy all of
these notice requirements, so long as it has
all of the requisite information for plan par-
ticipants and satisfies the timing require-
ments for each of those notices.
4.Other Provisions of Section 902 of PPA
’06
The proposed regulations also reflect
theamendmentstosection4979madeby
section 902 of PPA ’06. First, the pro-
posed regulations reflect the substitution
of 6 months for 2
1
/2months as the time
period under section 4979(f) by which
excess contributions or excess aggregate
contributions with respect to an EACA
must be distributed to avoid the excise
tax under section 4979(a). Further, the
proposed regulations reflect the elimina-
tion of the requirement that distributions
of excess contributions or excess aggre-
gate contributions (whether or not under
an EACA) include attributable earnings
for the period after the end of the plan
year (gap period income). The proposed
regulations also reflect the change in the
tax treatment of a distribution of excess
contributions or excess aggregate contri-
butions (whether or not under an EACA)
under which the distribution of excess
contributions or excess aggregate contri-
butions (including earnings) is includible
in the participant’s gross income for the
year of the distribution (without regard
to the amount of the distribution). The
proposed regulations would also amend
§§1.401(k)–2 and 1.401(m)–2 to reflect
these provisions in the correction rules
for the ADP and ACP tests. All of these
changes are proposedto be effective Jan-
uary 1, 2008 and will impact corrective
distributions made in 2009.
In addition, the proposed regula-
tions would amend §§1.401(k)–2 and
1.401(m)–2 to reflect the provisions of
section 414(w)(6) that default elective
contributions distributed under section
414(w) are not taken into account in the
ADP test. They are also not permitted
to be taken into account in the ACP test.
The proposed regulations under section
401(m) have added a conforming change
for other elective contributions that are not
taken into account in the ADP test. The
proposed regulations would also amend
§1.411(a)–4(b)(7) to reflect the amend-
ment to section 411(a)(3)(G) made by
PPA ’06 section 902(d)(2).
Effective Date
Sections 401(k)(13), 401(m)(12), and
414(w), and the amended provisions of
sections 411(a)(3)(G) and 4979(f), are ef-
fective for plan years beginning on or af-
ter January 1, 2008. These regulations are
proposed to be effective for plan years be-
ginning on or after January 1, 2008. Tax-
payers may rely on these proposed regu-
lations for guidance pending the issuance
of final regulations. If, and to the extent,
the final regulations are more restrictive
than the guidance in these proposed regu-
lations, those provisions of the final regu-
lations will be applied without retroactive
effect.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866. Therefore, a regulatory as-
sessment is not required. It has been de-
termined that 5 U.S.C. 533(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
It is hereby certified that the collection of
information in these proposed regulations
will not have a significant economic im-
pact on a substantial number of small enti-
ties. This certification is based on the fact
that most small entities that maintain plans
that will be eligible for the safe harbor pro-
visions of sections 401(k) and 401(m) or
the distribution relief provisions of section
414(w) currently provide a similar notice
with which this notice can be combined.
Therefore, an analysis under the Regula-
tory Flexibility Act (5 U.S.C. chapter 6) is
not required. Pursuant to section 7805(f)
of the Internal Revenue Code, these reg-
ulations have been submitted to the Chief
Counsel for Advocacy of the Small Busi-
ness Administration for comments on its
impact on small business.
Comments and Requests for Public
Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written (one signed
and eight (8) copies) or electronic com-
ments that are submitted timely to the IRS.
The IRS and Treasury Department specif-
ically request comments on the clarity of
the proposed rules and how they can be
made easier to understand. All comments
will be available for public inspection and
copying. A public hearing will be sched-
uled if requested in writing by any person
who timely submits written comments. If
a public hearing is scheduled, notice of the
date, time, and place of the public hearing
will be published in theFederal Register.
2007–49 I.R.B.1145December 3, 2007

Drafting Information
The principal authors of these regu-
lations are Dana Barry, William Gibbs,
and Lisa Mojiri-Azad, Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities). How-
ever, other personnel from the IRS and
Treasury Department participated in the
development of these regulations.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is proposed
to be amended as follows:
Part 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.401(k)–3 is also issued under
26 U.S.C. 401(k)(13).
Par. 2. Section 1.401(k)–0 is amended
by:
1.The entry for §1.401(k)–2
isamendedbyaddingentries
for§§1.401(k)–2(a)(5)(vi)and
1.401(k)–2(b)(2)(iv)(D).
2.Revising the entries for
§§1.401(k)–2(b)(2)(vi)(A)and
1.401(k)–2(b)(2)(vi)(B).
3.Adding an entry for
§1.401(k)–2(b)(5)(iii).
4.Revising the entries for
§§1.401(k)–3(a)(1),1.401(k)–3(a)(2)
and 1.401(k)–3(a)(3).
5. Adding entries for §§1.401(k)–3(i),
1.401(k)–3(j) through (j)(2)(iii).
6. Adding entries for §1.401(k)–3(k)
through (k)(4)(iii).
The additions and revisions read as fol-
lows:
§1.401(k)–0 Table of Contents.
*****
§1.401(k)–2 ADP test.
(a) * * *
(5) * * *
(vi) Default elective contributions
pur-
suant to section 414(w).
*****
(b) * * *
(2) * * *
(iv) * * *
(A)***
(D) Plan years before 2008.
*****
(vi) * * *
(A) Corrective distributions for plan
years beginning on or after January 1,
2008.
(B) Corrective distributions for plan
years beginning before January 1, 2008.
*****
(5) * * *
(iii) Special rule for eligible automatic
contribution arrangements.
*****
§1.401(k)–3 Safe harbor requirements.
(a) * * *
(1) Section 401(k)(12) safe harbor.
(2) Section 401(k)(13) safe harbor.
(3) Requirements applicable to safe har-
bor contributions.
*****
(i) Reserved.
(j) Qualified automatic contribution ar-
rangement.
(1) Automatic contribution require-
ment.
(i) In general.
(ii) Automatic contribution arrange-
ment.
(iii) Exception for certain current em-
ployees.
(2) Qualified percentage.
(i) In general.
(ii) Minimum percentage requirements.
(A) Initial-period requirement.
(B) Second-year requirement.
(C) Third-year requirement.
(D) Later years requirement.
(iii) Exception to uniform percentage
requirement.
(k) Modifications to contribution re-
quirements and notice requirements for
automatic contribution safe harbor.
(1) In general.
(2) Lower matching requirement.
(3) Modified nonforfeiture require-
ment.
(4) Additional notice requirements.
(i) In general.
(ii) Additional information.
(iii) Timing requirements.
Par. 3. Section 1.401(k)–1 is amended
by:
1. Revising paragraph (b)(1)(ii)(C) and
adding new paragraph (b)(1)(ii)(D).
2. Revising paragraph (e)(7) by adding
a new sentence after the fifth sentence.
The additions and revisions to read as
follows:
§1.401(k)–1 Cer
tain cash or deferred
arrangements.
*****
(b)***(1)***(ii)***
(C) The ADP safe harbor provi-
sions of section 401(k)(13) described
in §1.401(k)–3; or
(D) The SIMPLE 401(k) provi-
sions of section 401(k)(11) described
in §1.401(k)–4.
*****
(e) * * *
(7)Plan provision requirement. ***
In addition, a plan that uses the safe harbor
method of section 401(k)(13), as described
in paragraph (b)(1)(ii)(C) of this section,
must specify the default percentages that
apply for the plan year, and whether the
safe harbor contribution will be the non-
elective safe harbor contribution or the
matching safe harbor contribution and is
not permitted to provide that ADP testing
will be used if the requirements for the
safe harbor are not satisfied. * * *
*****
Par. 4. Section 1.401(k)–2 is amended
by:
1. Adding paragraph (a)(5)(vi).
2. Revising paragraphs (b)(2)(iv)(A)
and (b)(2)(iv)(D).
3. Removing paragraph (b)(2)(iv)(E).
4. Revising paragraph (b)(2)(vi)(A).
5. Adding a new first sentence to para-
graph (b)(2)(vi)(B).
6. Removing and reserving Example
(3), Example (4), and Example (5) from
§1.401(k)–2 (b)(2)(viii).
7. Revising paragraph (b)(4)(iii) and
adding paragraph (b)(5)(iii).
The additions and revisions to read as
follows:
§1.401(k)–2 ADP test.
(a) * * *
December 3, 200711462007–49 I.R.B.

(5) * * *
(vi)Default elective contributions pur-
suant to section 414(w). Default elective
contributions made under an eligible au-
tomatic contribution arrangement (within
the meaning of §1.414(w)–1(b) that are
distributed pursuant to §1.414(w)–1(c) for
plan years beginning on or after January
1, 2008, are not taken into account under
paragraph (a)(4) of this section for the plan
year for which the contributions are made,
or for any other plan year.
(b) * * *
(2) * * *
(iv)Income allocable to excess contri-
butions—(A)General rule. For plan years
beginning on or after January 1, 2008, the
income allocable to excess contributions is
equal to the allocable gain or loss through
the end of the plan year. See paragraph
(b)(2)(iv)(D) of this section for rules that
apply to plan years beginning before Jan-
uary 1, 2008.
*****
(D)Plan years before 2008.For
plan years beginning before January
1, 2008, the income allocable to ex-
cess contributions is determined under
§1.401(k)–2(b)(2)(iv) (as it appeared in
the April 1, 2007, edition of 26 CFR part
1).
*****
(vi)Tax treatment of corrective distri-
butions—(A)Corrective distributions for
plan years beginning on or after January 1,
2008. Except as provided in this paragraph
(b)(2)(vi), for plan years beginning on or
after January 1, 2008, a corrective distri-
bution of excess contributions (and alloca-
ble income) is includible in the employee’s
gross income for the employee’s taxable
year in which distributed. In addition, the
corrective distribution is not subject to the
early distribution tax of section 72(t). See
also paragraph (b)(5) of this section for ad-
ditional rules relating to the employer ex-
cise tax on amounts distributed more than
2
1
/2months (6 months in the case of a plan
that includes an eligible automatic contri-
bution arrangement within the meaning of
section 414(w)) after the end of the plan
year. See also §1.402(c)–2, A–4 for re-
strictions on rolling over distributions that
are excess contributions.
(B)Corrective distributions for plan
years beginning before January 1, 2008.
The tax treatment of corrective distri-
butions for plan years beginning before
January 1, 2008, is determined under
§1.401(k)–2(b)(2)(vi) (as it appeared in
the April 1, 2007, edition of 26 CFR Part
1). ***
*****
(4) * * *
(iii)Permitted forfeiture of QMAC.Pur-
suant to section 401(k)(8)(E), a qualified
matching contribution is not treated as for-
feitable under §1.401(k)–1(c) merely be-
cause under the plan it is forfeited in ac-
cordance with paragraph (b)(4)(ii) of this
section or §1.414(w)–1(d)(2).
*****
(5) * * *
(iii)Special rule for eligible automatic
contribution arrangements. In the case of
a plan that includes an eligible automatic
contribution arrangement within the mean-
ing of section 414(w), 6 months is substi-
tuted for 2
1
/2months in paragraph (b)(5)(i)
of this section.
*****
Par. 5. Section 1.401(k)–3 is amended
by:
1. Revising paragraph (a).
2. Revising the first sentence of para-
graph (e)(1).
3. Revising the last sentence of para-
graph (h)(2).
4. Revising the first sentence of para-
graph (h)(3).
5. Reserving paragraph (i) and adding
paragraphs (j) and (k).
The additions and revisions to read as
follows:
§1.401(
k)–3 Safe harbor requirements.
(a)ADP test safe harbor—(1)Section
401(k)(12) safe harbor. A cash or deferred
arrangement satisfies the ADP safe harbor
provision of section 401(k)(12) for a plan
year if the arrangement satisfies the safe
harbor contribution requirement of para-
graph (b) or (c) of this section for the plan
year, the notice requirement of paragraph
(d) of this section, the plan year require-
ments of paragraph (e) of this section, and
the additional rules of paragraphs (f), (g),
and (h) of this section, as applicable.
(2)Section 401(k)(13) safe harbor.For
plan years beginning on or after January
1, 2008, a cash or deferred arrangement
satisfies the ADP safe harbor provision of
section 401(k)(13) for a plan year if the
arrangement is described in paragraph (j)
of this section and satisfies the safe harbor
contribution requirement of paragraph (k)
of this section for the plan year, the notice
requirement of paragraph (d) of this sec-
tion (modified to include the information
set forth in paragraph (k)(4) of this sec-
tion), the plan year requirements of para-
graph (e) of this section, and the additional
rules of paragraphs (f), (g), and (h) of this
section, as applicable. A cash or deferred
arrangement that satisfies the requirements
of this paragraph is referred to as a quali-
fied automatic contribution arrangement.
(3)Requirements applicable to safe
harbor contributions.Pursuantto
section 401(k)(12)(E)(ii) and section
401(k)(13)(D)(iv), the safe harbor con-
tribution requirement of paragraph (b),
(c), or (k) of this section must be satis-
fied without regard to section 401(l). The
contributions made under paragraph (b)
or (c) of this section (and the correspond-
ing contributions under paragraph (k) of
this section) are referred to as safe harbor
nonelective contributions and safe harbor
matching contributions, respectively.
*****
(e)***(1)General rule. Except
as provided in this paragraph (e) or in
paragraph (f) of this section, a plan will
fail to satisfy the requirements of sections
401(k)(12), 401(k)(13), and this section
unless plan provisions that satisfy the rules
of this section are adopted before the first
day of the plan year and remain in effect
for an entire 12-month plan year. * * *
*****
(h) * * *
(2)Use of safe harbor nonelective
contributions to satisfy other discrimi-
nation tests. * * * However, pursuant
to section 401(k)(12)(E)(ii) and section
401(k)(13)(D)(iv), to the extent they are
needed to satisfy the safe harbor contribu-
tion requirement of paragraph (b) of this
section, safe harbor nonelective contribu-
tions may not be taken into account under
any plan for purposes of section 401(l)
(including the imputation of permitted
disparity under §1.401(a)(4)–7).
(3)Earlyparticipation
rules.Section 401(k)(3)(F) and
§1.401(k)–2(a)(1)(iii)(A), which pro-
vide an alternative nondiscrimination rule
2007–49 I.R.B.1147December 3, 2007

for certain plans that provide for early
participation, do not apply for purposes
of section 401(k)(12), section 401(k)(13),
and this section. * * *
*****
(i) [RESERVED].
(j)Qualified automatic contribution
arrangement—(1)Automatic contribution
requirement—(i)In general. A cash or
deferred arrangement is described in this
paragraph (j) if it is an automatic contribu-
tion arrangement described in paragraph
(j)(1)(ii) of this section where the default
election under that arrangement is a con-
tribution equal to the qualified percentage
described in paragraph (j)(2) of this sec-
tion multiplied by the eligible employee’s
compensation from which elective contri-
butions are permitted to be made under the
cash or deferred arrangement.
(ii)Automatic contribution arrange-
ment. An automatic contribution arrange-
ment is a cash or deferred arrangement
within the meaning of §1.401(k)–1(a)(2)
that provides that in the absence of an
eligible employee’s affirmative election, a
default applies under which the employee
is treated as having made an election to
have a specified contribution made on his
or her behalf under the plan. The default
election ceases to apply with respect to an
eligible employee if the employee makes
an affirmative election (that remains in
effect) to—
(A) Have elective contributions made
in a different amount on his or her behalf
(in a specified amount or percentage of
compensation); or
(B) Not have any elective contributions
made on his or her behalf.
(iii)Exception for certain current em-
ployees. An automatic contribution ar-
rangement will not fail to be a qualified au-
tomatic contribution arrangement merely
because the default election provided un-
der paragraph (j)(1)(i)ofthissectionis
not applied to an employee who was an
eligible employee under the cash or de-
ferred arrangement (or a predecessor ar-
rangement) immediately prior to the effec-
tive date of the qualified automatic contri-
bution arrangement and on that effective
date had an affirmative election in effect
(that remains in effect) to—
(A) Have elective contributions made
on his or her behalf (in a specified amount
or percentage of compensation); or
(B) Not have elective contributions
made on his or her behalf.
(2)Qualified percentage—(i)In gen-
eral. A percentage is a qualified percent-
age only if it—
(A) Is uniform for all employees (ex-
cept to the extent provided in paragraph
(j)(2)(iii) of this section);
(B) Does not exceed 10 percent; and
(C) Satisfies the minimum percentage
requirements of paragraph (j)(2)(ii) of this
section.
(ii)Minimum percentage require-
ments—(A)Initial-period requirement.
The minimum percentage requirement
of this paragraph (j)(2)(ii)(A) is satisfied
only if the percentage that applies for the
period that begins when the employee first
participates in the automatic contribution
arrangement that is a qualified automatic
contribution arrangement and ends on the
last day of the following plan year is at
least 3 percent.
(B)Second-year requirement.The
minimum percentage requirement of this
paragraph (j)(2)(ii)(B) is satisfied only if
the percentage that applies for the plan
year immediately following the last day
described in paragraph (j)(2)(ii)(A) of this
section is at least 4 percent.
(C)Third-year requirement. The mini-
mum percentage requirement of this para-
graph (j)(2)(ii)(C) is satisfied only if the
percentage that applies for the plan year
immediately following the plan year de-
scribed in paragraph (j)(2)(ii)(B) of this
section is at least 5 percent.
(D)Later years requirement.Aper-
centage satisfies the minimum percentage
requirement of this paragraph (j)(2)(ii)(D)
only if the percentage that applies for all
plan years following the plan year de-
scribed in paragraph (j)(2)(ii)(C) of this
section is at least 6 percent.
(iii)Exception to uniform percentage
requirement. A plan does not fail to sat-
isfy the uniform percentage requirement
of paragraph (j)(2)(i)(A) of this section
merely because—
(A) The percentage varies based on the
number of years an eligible employee has
participated in the automatic contribution
arrangement intended to be a qualified au-
tomatic contribution arrangement;
(B) The rate of elective contributions
under a cash or deferred election that is
in effect immediately prior to the effective
date of the default percentage under the
qualified automatic contribution arrange-
ment is not reduced;
(C) The rate of elective contributions
is limited so as not to exceed the lim-
its of sections 401(a)(17), 402(g) (deter-
mined with or without catch-up contribu-
tions described in section 402(g)(1)(C) or
402(g)(7)), and 415; or
(D) The default election provided under
paragraph (j)(1)(i) of this section is not ap-
plied during the period an employee is not
permitted to make elective contributions in
order for the plan to satisfy the require-
ments of §1.401(k)–1(d)(3)(iv)(E)(2).
(k)Modifications to contribution re-
quirements and noticerequirements for
automatic contribution safe harbor—(1)
In general. A cash or deferred arrange-
ment satisfies the contribution require-
ments of this paragraph (k) only if it
satisfies the contribution requirements of
either paragraph (b) or (c) of this section,
as modified by the rules of paragraphs
(k)(2) and (k)(3) of this section. In ad-
dition, a cash or deferred arrangement
described in paragraph (j) of this section
satisfies the notice requirement of section
401(k)(13)(E) only if the notice satisfies
the additional requirements of paragraph
(k)(4) of this section.
(2)Lower matching requirement.In
applying the requirement of paragraph (c)
of this section, in the case of a cash or
deferred arrangement described in para-
graph (j) of this section, the basic match-
ing formula is modified so that each eligi-
ble NHCE must receive the sum of—
(i) 100 percent of the employee’s elec-
tive contributions that do not exceed 1 per-
cent of the employee’s safe harbor com-
pensation; and
(ii) 50 percent of the employee’s elec-
tive contributions that exceed 1 percent of
the employee’s safe harbor compensation
but that do not exceed 6 percent of the em-
ployee’s safe harbor compensation.
(3)Modified nonforfeiture requirement.
A cash or deferred arrangement described
in paragraph (j) of this section will not fail
to satisfy the requirements of paragraph (b)
or (c) of this section, as applicable, merely
because the safe harbor contributions are
not qualified nonelective contributions or
qualified matching contributions provided
that—
(i) The contributions are subject to
the withdrawal restrictions set forth in
§1.401(k)–1(d); and
December 3, 200711482007–49 I.R.B.

(ii) Any employee who has completed
2 years of service (within the meaning of
section 411(a)) has a nonforfeitable right
to the account balanceattributable to the
safe harbor contributions.
(4)Additional notice requirements—(i)
In general. A notice satisfies the require-
ments of this paragraph (k)(4) only if it
includes the additional information de-
scribed in paragraph (k)(4)(ii) of this sec-
tion and satisfies the timing requirements
of paragraph (k)(4)(iii) of this section.
(ii)Additional information. A notice
satisfies the additional information re-
quirement of this paragraph (k)(4)(ii) only
if it explains—
(A) The level of elective contributions
which will be made on the employee’s be-
half if the employee does not make an af-
firmative election;
(B) The employee’s right under the au-
tomatic contribution arrangement to elect
not to have elective contributions made
on the employee’s behalf (or to elect to
have such contributions made in a different
amount or percentage of compensation);
and
(C) How contributions under the au-
tomatic contribution arrangement will be
invested (including, in the case of an ar-
rangement under which the employee may
elect among 2 or more investment options,
how contributions made under the auto-
matic contribution arrangement will be in-
vested in the absence of an investment
election by the employee).
(iii)Timing requirements. A notice sat-
isfies the timing requirements of this para-
graph (k)(4)(iii) only if it is provided suf-
ficiently early so that the employee has a
reasonable period of time after receipt of
the notice and before the first elective con-
tribution is made under the arrangement to
make the elections described under para-
graph (k)(4)(ii)(B) and (C) of this section.
*****
Par. 6. Section 1.401(k)–6 is amended
by revising the last sentence in the defi-
nition of Qualified matching contributions
(QMACs) to read as follows:
§1.401(k)–6 Definitions.
*****
Qualifiedmatchingcontribu-
tions (QMACs).***Seealso
§1.401(k)–2(b)(4)(iii) for a rule providing
that a matching contribution does not fail
to qualify as a QMAC solely because it
is forfeitable under section 411(a)(3)(G)
as a result of being a matching contribu-
tion with respect to an excess deferral,
excess contribution, excess aggregate
contribution, or it is forfeitable under
§1.414(w)–1(d)(2).
*****
Par. 7. Section 1.401(m)–0 is amended
to read as follows:
Addinganentryfor
§1.401(m)–2(b)(4)(iii).
§1.401(m)–0 Table of Contents.
*****
§1.401(m)–2 ACP Test.
*****
(b) * * *
(2) * * *
(iv) * * *
(A)***
(D) Plan years before 2008.
*****
(4) * * *
(iii)Special rule for eligible automatic
contribution arrangements.
*****
Par. 8. Section 1.401(m)–1 is amended
by:
1. Revising paragraph (b)(1)(iii) and
adding paragraph (b)(1)(iv).
2. Revising the last sentence of para-
graph (b)(4)(iii)(B).
3. Revising the fifth sentence of para-
graph (c)(2).
The additions and revisions to read as
follows:
§1.401(m)–1 Employee contributions and
matching contributions.
*****
(b) * * *
(1) * * *
(iii) The ACP safe harbor provi-
sions of section 401(m)(12) described
in §1.401(m)–3; or
(iv) The SIMPLE 401(k) provisions of
sections 401(k)(11) and 401(m)(10) de-
scribed in §1.401(k)–4.
*****
(b) * * *
(4) * * *
(iii) * * *
(B)Arrangements with inconsistent
ACP testing methods.***Similarly,an
employer may not aggregate a plan (within
the meaning of §1.410(b)–7) that is using
the ACP safe harbor provisions of section
401(m)(11) or 401(m)(12) and another
plan that is using the ACP test of section
401(m)(2).
*****
(c) * * *
(2)Plan provision requirement.
* * * Similarly, a plan that uses the safe
harbor method of section 401(m)(11) or
401(m)(12), as described in paragraphs
(b)(1)(ii) and (b)(1)(iii) of this section,
must specify the default percentages that
apply for the plan year and whether the
safe harbor contribution will be the non-
elective safe harbor contribution or the
matching safe harbor contribution and is
not permitted to provide that ACP testing
will be used if the requirements for the
safe harbor are not satisfied. * * *
*****
Par. 9. Section 1.401(m)–2 is amended
by:
1. Revising the first and second sen-
tences of paragraph (a)(5)(iv).
2. Revising paragraph (a)(5)(v).
3. Adding a new sentence to the end of
paragraph (a)(6)(ii).
4. Revising paragraphs (b)(2)(iv)(A)
and (b)(2)(iv)(D).
5. Removing paragraph (b)(2)(iv)(E).
6. Revising paragraph (b)(2)(vi)(A).
7. Adding a new sentence to the begin-
ning of paragraph (b)(2)(vi)(B).
8. Adding paragraph (b)(4)(iii).
The additions and revisions to read as
follows:
§1.401(m)–2 ACP test.
(a)*****
(5)*****
(iv)Matching contributions taken into
account. A plan that satisfies the ACP safe
harbor requirements of section 401(m)(11)
or 401(m)(12) for a plan year but nonethe-
less must satisfy the requirements of this
section because it provides for employee
contributions for such plan year is permit-
tedtoapplythissectiondisregardingall
matching contributions with respect to all
eligible employees. In addition, a plan that
satisfies the ADP safe harbor requirements
of §1.401(k)–3 for a plan year using qual-
ified matching contributions but does not
satisfy the ACP safe harbor requirements
of section 401(m)(11) or 401(m)(12) for
2007–49 I.R.B.1149December 3, 2007

such plan year is permitted to apply this
section by excluding matching contribu-
tions with respect to all eligible employ-
ees that do not exceed 4 percent (3.5 per-
cent in the case of a plan that satisfies the
ADP safe harbor under section 401(k)(13))
of each employee’s compensation. * * *
(v)Treatment of forfeited matching
contributions. A matching contribution
that is forfeited because the contribution
to which it relates is treated as an excess
contribution, excess deferral, excess ag-
gregate contribution,or a default elective
contribution that is distributed under sec-
tion 414(w), is not taken into account for
purposes of this section.
*****
(6)*****
(ii)Elective contributions taken into ac-
count under the ACP test. * * * In addition,
for plan years ending on or after Novem-
ber 8, 2007, elective contributions which
are not permitted to be taken into account
for the ADP test for the plan year under
§1.401(k)–2(a)(5)(ii), (iii), (v), or (vi) are
not permitted to be taken into account for
the ACP test.
*****
(b)*****
(2)*****
(iv)Income allocable to excess aggre-
gate contributions—(A)General rule.For
plan years beginning on or after January 1,
2008, the income allocable to excess ag-
gregate contributions is equal to the alloca-
ble gain or loss through the end of the plan
year. See paragraph (b)(2)(iv)(D) of this
section for rules that apply to plan years
beginning before January 1, 2008.
*****
(D)Plan years before 2008.Forplan
years beginning before January 1, 2008,
the income allocable to excess aggre-
gate contributions is determined under
§1.401(m)–2(b)(2)(iv) (as it appeared in
the April 1, 2007, edition of 26 CFR part
1).
*****
(vi)Tax treatment of corrective distri-
butions—(A)Corrective distributions for
plan years beginning on or after January
1, 2008. Except as otherwise provided
in this paragraph (b)(2)(vi), for plan years
beginning on or after January 1, 2008, a
corrective distribution of excess aggregate
contributions (and allocable income) is in-
cludible in the employee’s gross income in
the taxable year of the employee in which
distributed. The portion of the distribu-
tion that is treated as an investment in the
contract and is therefore not subject to tax
under section 72 is determined without re-
gard to any plan contributions other than
those distributed as excess aggregate con-
tributions. Regardless of when the correc-
tive distribution is made, it is not subject to
the early distribution tax of section 72(t).
See paragraph (b)(4) of this section for ad-
ditional rules relating to the employer ex-
cise tax on amounts distributed more than
2
1
/2months (6 months in the case of a plan
that includes an eligible automatic contri-
bution arrangement within the meaning of
section 414(w)) after the end of the plan
year. See also §1.402(c)–2, A–4 prohibit-
ing rollover of distributions that are excess
aggregate contributions.
(B)Corrective distributions for plan
years beginning before January 1, 2008.
The tax treatment of corrective distri-
butions for plan years beginning before
January 1, 2008, is determined under
§1.401(m)–2(b)(2)(vi) (as it appeared in
the April 1, 2007, edition of 26 CFR Part
1). ***
(4) * * *
(iii)Special rule for eligible automatic
contribution arrangements. In the case
of a plan that includes an eligible auto-
matic contribution arrangement (within
the meaning of section 414(w)), 6 months
is substituted for 2
1
/2months in paragraph
(b)(4)(i) of this section.
*****
Par. 10. Section 1.401(m)–3 is
amended by:
1. Revising paragraph (a).
2. Revising the first sentences of para-
graphs (f)(1) and (j)(3).
The additions and revisions to read as
follows:
§1.401(m)–3 Safe harbor requirements.
(a)ACP test safe harbor—(1)Section
401(m)(11) safe harbor. Matching contri-
butions under a plan satisfy the ACP safe
harbor provisions of section 401(m)(11)
for a plan year if the plan satisfies the safe
harbor contribution requirement of para-
graph (b) or (c) of this section for the plan
year, the limitations on matching contribu-
tions of paragraph (d) of this section, the
notice requirement of paragraph (e) of this
section, the plan year requirements of para-
graph (f) of this section, and the additional
rules of paragraphs (g), (h) and (j) of this
section, as applicable.
(2)Section 401(m)(12) safe harbor.For
a plan year beginning on or after January 1,
2008, matching contributions under a plan
satisfy the ACP safe harbor provisions of
section 401(m)(12) for a plan year if the
matching contributions are made with re-
spect to a qualified automatic contribu-
tion arrangement described in paragraph
§1.401(k)–3(j) that satisfies the safe har-
bor requirements of §1.401(k)–3, the limi-
tations on matching contributions of para-
graph (d) of this section, the notice re-
quirement of paragraph (e) of this section,
the plan year requirements of paragraph (f)
of this section, and the additional rules of
paragraphs (g), (h) and (j) of this section,
as applicable.
(3)Requirements applicable to safe
harbor contributions. Pursuant to sections
401(k)(12)(E)(ii) and 401(k)(13)(D)(iv),
the safe harbor contribution requirement
of paragraph (b) or (c) of this section, and
§1.401(k)–3(k) must be satisfied without
regard to section 401(l). The contributions
made under paragraphs (b) and (c) of this
section, and §1.401(k)–3(k) are referred
to as safe harbor nonelective contributions
and safe harbor matching contributions.
*****
(f)Plan year requirement—(1)General
rule. Except as provided in this paragraph
(f) or in paragraph (g) of this section, a plan
will fail to satisfy the requirements of sec-
tion 401(m)(11), section 401(m)(12), and
this section unless plan provisions that sat-
isfy the rules of this section are adopted be-
fore the first day of that plan year and re-
main in effect for an entire 12-month plan
year. * * *
*****
(j) * * *
(3)Early participation rules.
Section401(m)(5)(C)and
§1.401(m)–2(a)(1)(iii)(A), which provide
an alternative nondiscrimination rule
for certain plans that provide for early
participation, do not apply for purposes of
section 401(m)(11), section 401(m)(12),
and this section. * * *
*****
Par. 11. Section 1.402(c)–2, A–4 is
amended by redesignating paragraph (i) as
December 3, 200711502007–49 I.R.B.

(j) and adding a new paragraph (i) to read
as follows:
§1.402(c)–2 Eligible rollover
distributions, questions and answers.
*****
A–4***
(i) A distribution that is a permissi-
ble withdrawal from an eligible automatic
contribution arrangement within the mean-
ingofsection414(w).
*****
Par.12.Section1.411(a)–4isamended
by revising paragraph (b)(7) to read as fol-
lows:
§1.411(a)–4 Forfeitures, suspensions, etc.
*****
(b) * * *
(7)Certain matching contributions.
A matching contribution (within the
meaning of section 401(m)(4)(A) and
§1.401(m)–1(a)(2)) is not treated as for-
feitable even if under the plan it may be
forfeited under §1.401(m)–2(b)(1) be-
cause the contribution to which it relates
is treated as an excess contribution (within
the meaning of §1.401(k)–2(b)(2)(ii) and
1.401(k)–6), excess deferral (within the
meaning of §1.402(g)–1(e)(1)(iii)), ex-
cess aggregate contribution (within the
meaning of §1.401(m)–5), or default elec-
tive contributions (within the meaning
of §1.414(w)–1(e)) that are withdrawn
in accordance with the requirements of
§1.414(w)–1(c).
Par. 13. Section 1.414(w)–1 is added to
read as follows:
§1.414(w)–1 Permissible Withdrawals
from Eligible Automatic Contribution
Arrangements.
(a)Overview. Section 414(w) provides
rules under which certain employees are
permitted to elect to make a withdrawal
from an eligible automatic contribution ar-
rangement. This section sets forth the rules
applicable to permissible withdrawals
from an eligible automatic contribution
arrangement within the meaning of sec-
tion 414(w). Paragraph (b) of this section
defines an eligible automatic contribution
arrangement. Paragraph (c) of this section
describes a permissible withdrawal and
addresses which employees are eligible to
elect a withdrawal, the timing of the with-
drawal election, and the amount of the
withdrawal. Paragraph (d) of this section
describes the tax and other consequences
of the withdrawal. Paragraph (e) of this
section includes the definitions applicable
to this section.
(b)Eligible automatic contribution ar-
rangement—(1)In general.Aneligible
automatic contribution arrangement is an
automatic contribution arrangement under
an applicable employer plan that, for the
plan year, satisfies the uniformity require-
ment under paragraph (b)(2) of this sec-
tion, the notice requirement under para-
graph (b)(3) of this section, and the de-
fault investment requirement under (b)(4)
of this section.
(2)Uniformity requirement.Aneligi-
ble automatic contribution arrangement
must provide that the default elective
contribution is a uniform percentage of
compensation. An arrangement does not
violate the uniformity requirement of
this paragraph (b)(2) merely because the
percentage varies in a manner that is per-
mitted under §1.401(k)–3(j)(2)(iii), except
that the rules of §§1.401(k)–3(j)(2)(iii)(A)
and 1.401(k)–3(j)(2)(iii)(B) are applied
without regard to whether the arrangement
is intended to be a qualified automatic
contribution arrangement.
(3)Notice requirement—(i)General
rule. The notice requirement of this para-
graph (b)(3) is satisfied for a plan year if
each eligible employee is given notice of
the employee’s rights and obligations un-
der the arrangement. The notice must be
sufficiently accurate and comprehensive
to apprise the employee of such rights and
obligations, and be written in a manner
calculated to be understood by the aver-
ageemployeetowhom the arrangement
applies. The notice must be in writing,
however, see §1.401(a)–21 for rules per-
mitting the use of electronic media to
provide applicable notices.
(ii)Content requirement.Theno-
tice must include the provisions found in
§1.401(k)–3(d)(2)(ii) to the extent those
provisions apply to the arrangement. A
notice is not considered sufficiently accu-
rate and comprehensive unless the notice
accurately describes—
(A) The level of elective contributions
which will be made on the employee’s be-
half if the employee does not make an af-
firmative election;
(B) The employee’s rights to elect not
to have default elective contributions made
to the plan on his or her behalf or to have
a different percentage of compensation or
amount of elective contributions made to
the plan on his or her behalf;
(C) How contributions made under the
arrangement will be invested in the ab-
sence of any investment election by the
employee; and
(D) The employee’s rights to make a
permissible withdrawal, if applicable, and
the procedures to elect such a withdrawal.
(iii)Timing—(A)General rule.The
timing requirement of this paragraph
(b)(3)(iii) is satisfied if the notice is pro-
vided within a reasonable period before
the beginning of each plan year (or, in
the year an employee becomes an eligi-
ble employee, within a reasonable period
before the employee becomes an eligible
employee). In addition, a notice satis-
fies the timing requirements of paragraph
(b)(3) of this section only if it is provided
sufficiently early so that the employee has
a reasonable period of time after receipt
of the notice and before the first elective
contribution is made under the arrange-
ment to make the election described under
paragraph (b)(ii)(A) of this section.
(B)Deemed satisfaction of timing re-
quirement. The timing requirement of this
paragraph (b)(3)(iii) is satisfied if at least
30 days (and no more than 90 days) before
the beginning of each plan year, the no-
tice is given to each eligible employee for
the plan year. In the case of an employee
who does not receive the notice within the
period described in the previous sentence
because the employee becomes an eligi-
ble employee after the 90th day before the
beginning of the plan year, the timing re-
quirement is deemed to be satisfied if the
notice is provided no more than 90 days
before the employee becomes an eligible
employee (and no later than the date the
employee becomes an eligible employee).
(4)Default investment requirement.To
the extent the plan is subject to Title I of
ERISA, default elective contributions un-
der an eligible automatic contribution ar-
rangement must be invested in accordance
with regulations prescribed by the Secre-
tary of Labor under section 404(c)(5) of
ERISA.
(c)Permissible withdrawal—(1)In
general. If the plan provides, any em-
ployee who has default elective contribu-
2007–49 I.R.B.1151December 3, 2007

tions made under the eligible automatic
contribution arrangement may elect to
make a withdrawal of such contributions
(and earnings attributable thereto) in ac-
cordance with the requirements of this
paragraph (c). An applicable employer
plan that includes an eligible automatic
contribution arrangement will not fail
to satisfy the prohibition on in-service
withdrawals under sections 401(k)(2)(B),
403(b)(7), 403(b)(11), or 457(d)(1) merely
because it permits withdrawals that satisfy
the timing requirement of paragraph (c)(2)
of this section and the amount requirement
of paragraph (c)(3) of this section.
(2)Timing. The election to withdraw
default elective contributions must be
made no later than 90 days after the date
of the first default elective contribution
under the eligible automatic contribution
arrangement. The date of the first default
elective contribution is the date that the
compensation that is subject to the cash
or deferred election would otherwise have
been included in gross income. The effec-
tive date of an election described in this
paragraph (c)(2) cannot be later than the
last day of the payroll period that begins
after the date the election is made.
(3)Amount of distributions—(i)In
general. A distribution satisfies the re-
quirement of this paragraph (c)(3) if the
distribution is equal to the amount of de-
fault elective contributions made under the
eligible automatic contribution arrange-
ment through the effective date of the
election described in paragraph (c)(2) of
this section (adjusted for allocable gains
and losses to the date of distribution). If
default elective contributions are sepa-
rately accounted for in the participant’s
account, the amount of the distribution
will be the total amount in that account.
However, if default elective contributions
are not separately accounted for under
the plan, the amount of the allocable
gains and losses will be determined un-
der rules similar to those provided under
§1.401(k)–2(b)(2)(iv) for the distribution
of excess contributions.
(ii)Fees. The distribution amount as
determined under this paragraph (c)(3)
may be reduced by any generally appli-
cable fees. However, the plan may not
charge a different fee for a distribution
under section 414(w) than applies to other
distributions.
(d)Consequences of the with-
drawal—(1)Income tax conse-
quences—(i)Year of inclusion.The
amount of the withdrawal is includible in
the eligible employee’s gross income for
the taxable year in which the distribution
is made. However, the portion of the
distribution consisting of designated Roth
contributions is not included in an em-
ployee’s gross income a second time. The
portion of the withdrawal that is treated as
an investment in the contract is determined
without regard to any plan contributions
other than those distributed as withdrawal
default elective contributions.
(ii)No additional tax on early distribu-
tions from qualified retirement plans.The
withdrawal is not subject to the additional
tax under section 72(t).
(iii)Reporting. The amount of the with-
drawal is reported on Form 1099–R,Dis-
tributions From Pensions, Annuities, Re-
tirement or Profit-Sharing Plans, IRAs, In-
surance Contracts, etc., as described in the
applicable instructions.
(2)Forfeiture of matching contribu-
tions. In the case of any withdrawal
made under paragraph (c) of this section,
employer matching contributions with re-
spect to the amount withdrawn must be
forfeited.
(3)Consent rules. A withdrawal made
under paragraph (c) of this section may
be made without regard to any notice or
consent otherwise required under section
401(a)(11) or 417.
(e)Definitions. Unless indicated other-
wise, the following definitions apply for
purposes of section 414(w) and this sec-
tion.
(1)Applicable employer plan.An
applicable employer plan means a plan
that—
(i) Is qualified under section 401(a);
(ii) Satisfies the requirements of section
403(b); or
(iii) Is a section 457(b) eligible govern-
mental plan described in §1.457–2(f).
(2)Automatic contribution arrange-
ment. An automatic contribution arrange-
ment means an arrangement that provides
for a cash or deferred election that pro-
vides that in the absence of an eligible
employee’s affirmative election, a default
election applies under which the employee
is treated as having elected to have de-
fault elective contributions made on his
or her behalf under theplan. This default
election ceases to apply with respect to an
employee if the employee makes an af-
firmative election (that remains in effect)
to—
(i) Not have any default elective contri-
butions made on his or her behalf; or
(ii) Have default elective contributions
made in a different amount or percentage
of compensation.
(3)Default elective contributions.De-
fault elective contributions means contri-
butions made at a specified level or amount
under an automatic contribution arrange-
ment that are—
(i) Contributions described in section
402(g)(3)(A) or 402(g)(3)(C); or
(ii) Contributionsmade pursuant to a
cash or deferred election within the mean-
ing of section 457(b)(4) where the contri-
butions are under a section 457(b) eligible
governmental plan.
(4)Eligible employee. An eligible em-
ployee means an employee who is eligible
to make a cash or deferred election under
the plan.
(f)Effective date. Section 414(w) and
this section apply to plan years beginning
on or after January 1, 2008.
*****
PART 54—EXCISE TAXES. PENSIONS,
REPORTING AND RECORDKEEPING
REQUIREMENTS
Par. 14. The authority citation for part
54 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 15. Section 54.4979–1(c)(1) is
amended by:
Revising the first and second sentences
of paragraph (c)(1) to read as follows:
§54.4979–1 Excise tax on certain excess
contributions and excess aggregate
contributions.
*****
(c)No tax when excess distributed
within 2
1
/2months of close of year or addi-
tional employer contributions made—(1)
General rule. No tax is imposed under
this section on any excess contribution
or excess aggregate contribution, as the
case may be, to the extent the contribu-
tion (together with any income allocable
thereto) is corrected before the close of
the first 2
1
/2months of the following plan
year (6 months in the case of a plan that
December 3, 200711522007–49 I.R.B.

includes an eligible automatic contri-
bution arrangement within the meaning
of section 414(w)). Qualified nonelec-
tive contributions and qualified matching
contributions taken into account under
§1.401(k)–2(a)(6) of this Chapter or qual-
ified nonelective contributions or elective
contributions taken into account under
§1.401(m)–2(a)(6) of this Chapter for a
plan year may permit a plan to avoid ex-
cess contributions or excess aggregate
contributions, respectively, even if made
after the close of the 2
1
/2month period
(6 months in the case of a plan that in-
cludes an eligible automatic contribution
arrangement within the meaning of section
414(w)). * * *
*****
Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on November 7,
2007, 8:45 a.m., and published in the issue of the Federal
Register for November 8, 2007, 72 F.R. 63144)
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2007–111
The Internal Revenue Service has re-
voked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on December 3,
2007, and would end on the date the court
first determines that the organization is
not described in section 170(c)(2) as more
particularly set forth in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
First Step Consumer
Credit Counseling, Inc.
Macunle, PA
Sterling Debt Management, Inc.
Los Angeles, CA
Community Partners Corporation
Las Vegas, NV
The Senior Citizens Counseling
and Delivery Service
Washington, DC
Elaine R. Shepard Cancer
Research Foundation
Coronado, CA
The Dowd Foundation
Wilkes-Barre, PA
Western Arkansas Housing Fdn
Ft. Smith, AR
Pythons Drill Team
Kansas City, MO
Buddy and Rita Gregory Charitable
Supporting Organization
Lehi, UT
Down Payment Assistance
Foundation, Inc.
Glendora, CA
Market 5 Gallery
Washington, DC
IJM Foundation
Syosset, NY
International Charities of Nevada
Las Vegas, NV
First Bingo Cooperative Association
Austin, TX
One America Foundation, Inc.
Baltimore, MD
Future Homes Assistance Programs, Inc.
Stockbridge, GA
Sweet Home Foundation
Caldwell, ID
Housing Opportunities of Houston Inc.
Houston, TX
2007–49 I.R.B.1153December 3, 2007

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.
December 3, 2007i2007–49 I.R.B.

Numerical Finding List
1
Bulletins 2007–27 through 2007–49
Announcements:
2007-61, 2007-28 I.R.B.84
2007-62, 2007-29 I.R.B.115
2007-63, 2007-30 I.R.B.236
2007-64, 2007-29 I.R.B.125
2007-65, 2007-30 I.R.B.236
2007-66, 2007-31 I.R.B.296
2007-67, 2007-32 I.R.B.345
2007-68, 2007-32 I.R.B.348
2007-69, 2007-33 I.R.B.371
2007-70, 2007-33 I.R.B.371
2007-71, 2007-33 I.R.B.372
2007-72, 2007-33 I.R.B.373
2007-73, 2007-34 I.R.B.435
2007-74, 2007-35 I.R.B.483
2007-75, 2007-36 I.R.B.540
2007-76, 2007-36 I.R.B.560
2007-77, 2007-38 I.R.B.662
2007-78, 2007-38 I.R.B.663
2007-79, 2007-40 I.R.B.749
2007-80, 2007-38 I.R.B.667
2007-81, 2007-38 I.R.B.667
2007-82, 2007-40 I.R.B.749
2007-83, 2007-40 I.R.B.752
2007-84, 2007-41 I.R.B.797
2007-85, 2007-39 I.R.B.719
2007-86, 2007-39 I.R.B.719
2007-87, 2007-40 I.R.B.753
2007-88, 2007-42 I.R.B.801
2007-89, 2007-41 I.R.B.798
2007-90, 2007-42 I.R.B.856
2007-91, 2007-42 I.R.B.857
2007-92, 2007-42 I.R.B.857
2007-93, 2007-42 I.R.B.858
2007-94, 2007-42 I.R.B.858
2007-95, 2007-43 I.R.B.894
2007-96, 2007-42 I.R.B.859
2007-97, 2007-43 I.R.B.895
2007-98, 2007-43 I.R.B.896
2007-99, 2007-43 I.R.B.896
2007-100, 2007-44 I.R.B.922
2007-101, 2007-43 I.R.B.898
2007-102, 2007-44 I.R.B.922
2007-103, 2007-44 I.R.B.923
2007-104, 2007-44 I.R.B.924
2007-105, 2007-45 I.R.B.984
2007-106, 2007-46 I.R.B.1021
2007-107, 2007-46 I.R.B.989
2007-108, 2007-47 I.R.B.1044
2007-109, 2007-47 I.R.B.1045
2007-110, 2007-48 I.R.B.1082
2007-111, 2007-49 I.R.B.
1153
Court Decisions:
2083, 2007-46 I.R.B.986
2084, 2007-47 I.R.B.1032
Notices:
2007-54, 2007-27 I.R.B.12
2007-55, 2007-27 I.R.B.13
2007-56, 2007-27 I.R.B.15
2007-57, 2007-29 I.R.B.87
2007-58, 2007-29 I.R.B.88
2007-59, 2007-30 I.R.B.135
2007-60, 2007-35 I.R.B.466
2007-61, 2007-30 I.R.B.140
2007-62, 2007-32 I.R.B.331
2007-63, 2007-33 I.R.B.353
2007-64, 2007-34 I.R.B.385
2007-65, 2007-34 I.R.B.386
2007-66, 2007-34 I.R.B.387
2007-67, 2007-35 I.R.B.467
2007-68, 2007-35 I.R.B.468
2007-69, 2007-35 I.R.B.468
2007-70, 2007-40 I.R.B.735
2007-71, 2007-35 I.R.B.472
2007-72, 2007-36 I.R.B.544
2007-73, 2007-36 I.R.B.545
2007-74, 2007-37 I.R.B.585
2007-75, 2007-39 I.R.B.679
2007-76, 2007-40 I.R.B.735
2007-77, 2007-40 I.R.B.735
2007-78, 2007-41 I.R.B.780
2007-79, 2007-42 I.R.B.809
2007-80, 2007-43 I.R.B.867
2007-81, 2007-44 I.R.B.899
2007-82, 2007-44 I.R.B.904
2007-83, 2007-45 I.R.B.960
2007-84, 2007-45 I.R.B.963
2007-85, 2007-45 I.R.B.965
2007-86, 2007-46 I.R.B.990
2007-87, 2007-45 I.R.B.966
2007-88, 2007-46 I.R.B.993
2007-89, 2007-46 I.R.B.998
2007-90, 2007-46 I.R.B.1003
2007-91, 2007-48 I.R.B.1069
2007-92, 2007-47 I.R.B.1036
2007-93, 2007-48 I.R.B.1072
2007-95, 2007-49 I.R.B.1091
2007-96, 2007-49 I.R.B.1091
2007-97, 2007-49 I.R.B.1092
Proposed Regulations:
REG-209020-86, 2007-48 I.R.B.1075
REG-107592-00, 2007-44 I.R.B.908
REG-121475-03, 2007-35 I.R.B.474
REG-128274-03, 2007-33 I.R.B.356
REG-114084-04, 2007-33 I.R.B.359
Proposed Regulations— Continued:
REG-149036-04, 2007-33 I.R.B.365
REG-149036-04, 2007-34 I.R.B.411
REG-101001-05, 2007-36 I.R.B.548
REG-119097-05, 2007-28 I.R.B.74
REG-128843-05, 2007-37 I.R.B.587
REG-142695-05, 2007-39 I.R.B.681
REG-143326-05, 2007-43 I.R.B.873
REG-143397-05, 2007-41 I.R.B.790
REG-147171-05, 2007-32 I.R.B.334
REG-148951-05, 2007-36 I.R.B.550
REG-163195-05, 2007-33 I.R.B.366
REG-118886-06, 2007-37 I.R.B.591
REG-128224-06, 2007-36 I.R.B.551
REG-138707-06, 2007-32 I.R.B.342
REG-139268-06, 2007-34 I.R.B.415
REG-140206-06, 2007-46 I.R.B.1006
REG-142039-06, 2007-34 I.R.B.415
REG-144540-06, 2007-31 I.R.B.296
REG-148393-06, 2007-39 I.R.B.714
REG-103842-07, 2007-28 I.R.B.79
REG-106143-07, 2007-43 I.R.B.881
REG-113891-07, 2007-42 I.R.B.821
REG-114125-07, 2007-46 I.R.B.1012
REG-116215-07, 2007-38 I.R.B.659
REG-118719-07, 2007-37 I.R.B.593
REG-129916-07, 2007-43 I.R.B.891
REG-133300-07, 2007-49 I.R.B.1140
REG-134923-07, 2007-47 I.R.B.1037
REG-138637-07, 2007-45 I.R.B.977
Revenue Procedures:
2007-42, 2007-27 I.R.B.15
2007-43, 2007-27 I.R.B.26
2007-44, 2007-28 I.R.B.54
2007-45, 2007-29 I.R.B.89
2007-46, 2007-29 I.R.B.102
2007-47, 2007-29 I.R.B.108
2007-48, 2007-29 I.R.B.110
2007-49, 2007-30 I.R.B.141
2007-50, 2007-31 I.R.B.244
2007-51, 2007-30 I.R.B.143
2007-52, 2007-30 I.R.B.222
2007-53, 2007-30 I.R.B.233
2007-54, 2007-31 I.R.B.293
2007-55, 2007-33 I.R.B.354
2007-56, 2007-34 I.R.B.388
2007-57, 2007-36 I.R.B.547
2007-58, 2007-37 I.R.B.585
2007-59, 2007-40 I.R.B.745
2007-60, 2007-39 I.R.B.679
2007-61, 2007-40 I.R.B.747
2007-62, 2007-41 I.R.B.786
2007-63, 2007-42 I.R.B.809
2007-64, 2007-42 I.R.B.818
2007-65, 2007-45 I.R.B.967
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2007–1 through 2007–26 is in Internal Revenue Bulletin
2007–26, dated June 25, 2007.
2007–49 I.R.B.iiDecember 3, 2007

Revenue Procedures— Continued:
2007-66, 2007-45 I.R.B.970
2007-67, 2007-48 I.R.B.1072
2007-68, 2007-49 I.R.B.1093
2007-69, 2007-49 I.R.B.1137
Revenue Rulings:
2007-42, 2007-28 I.R.B.44
2007-43, 2007-28 I.R.B.45
2007-44, 2007-28 I.R.B.47
2007-45, 2007-28 I.R.B.49
2007-46, 2007-30 I.R.B.126
2007-47, 2007-30 I.R.B.127
2007-48, 2007-30 I.R.B.129
2007-49, 2007-31 I.R.B.237
2007-50, 2007-32 I.R.B.311
2007-51, 2007-37 I.R.B.573
2007-52, 2007-37 I.R.B.575
2007-53, 2007-37 I.R.B.577
2007-54, 2007-38 I.R.B.604
2007-55, 2007-38 I.R.B.604
2007-56, 2007-39 I.R.B.668
2007-57, 2007-36 I.R.B.531
2007-58, 2007-37 I.R.B.562
2007-59, 2007-37 I.R.B.582
2007-60, 2007-38 I.R.B.606
2007-61, 2007-42 I.R.B.799
2007-62, 2007-41 I.R.B.767
2007-63, 2007-41 I.R.B.778
2007-64, 2007-45 I.R.B.953
2007-65, 2007-45 I.R.B.949
2007-66, 2007-45 I.R.B.956
2007-67, 2007-48 I.R.B.1047
2007-69, 2007-49 I.R.B.1083
Social Security Contribution and Benefit
Base; Domestic Employee Coverage
Threshold:
2007-92, 2007-47 I.R.B.1036
Tax Conventions:
2007-75, 2007-36 I.R.B.540
2007-88, 2007-42 I.R.B.801
2007-107, 2007-46 I.R.B.989
Treasury Decisions:
9326, 2007-31 I.R.B.242
9327, 2007-28 I.R.B.50
9328, 2007-27 I.R.B.1
9329, 2007-32 I.R.B.312
9330, 2007-31 I.R.B.239
9331, 2007-32 I.R.B.298
9332, 2007-32 I.R.B.300
9333, 2007-33 I.R.B.350
9334, 2007-34 I.R.B.382
9335, 2007-34 I.R.B.380
9336, 2007-35 I.R.B.461
9337, 2007-35 I.R.B.455
9338, 2007-35 I.R.B.463
Treasury Decisions— Continued:
9339, 2007-35 I.R.B.437
9340, 2007-36 I.R.B.487
9341, 2007-35 I.R.B.449
9342, 2007-35 I.R.B.451
9343, 2007-36 I.R.B.533
9344, 2007-36 I.R.B.535
9345, 2007-36 I.R.B.523
9346, 2007-37 I.R.B.570
9347, 2007-38 I.R.B.624
9348, 2007-37 I.R.B.563
9349, 2007-39 I.R.B.668
9350, 2007-38 I.R.B.607
9351, 2007-38 I.R.B.616
9352, 2007-38 I.R.B.621
9353, 2007-40 I.R.B.721
9354, 2007-41 I.R.B.759
9355, 2007-37 I.R.B.577
9356, 2007-39 I.R.B.675
9357, 2007-41 I.R.B.773
9358, 2007-41 I.R.B.769
9359, 2007-45 I.R.B.931
9360, 2007-43 I.R.B.860
9361, 2007-47 I.R.B.1026
9362, 2007-48 I.R.B.1050
9363, 2007-49 I.R.B.1084
December 3, 2007iii2007–49 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2007–27 through 2007–49
Announcements:
84-26
Obsoleted by
T.D. 9336, 2007-35 I.R.B.461
84-37
Obsoleted by
T.D. 9336, 2007-35 I.R.B.461
Notices:
89-110
Modified by
REG-142695-05, 2007-39 I.R.B.681
96-13
Superseded by
Notice 2007-96, 2007-49 I.R.B.1091
99-6
Obsoleted as of January 1, 2009 by
T.D. 9356, 2007-39 I.R.B.675
2002-45
Modified by
REG-142695-05, 2007-39 I.R.B.681
2003-81
Modified and supplemented by
Notice 2007-71, 2007-35 I.R.B.472
2005-1
Modified by
Notice 2007-89, 2007-46 I.R.B.998
2006-1
Modified by
Notice 2007-70, 2007-40 I.R.B.735
2006-43
Modified by
T.D. 9332, 2007-32 I.R.B.300
2006-56
Clarified by
Notice 2007-74, 2007-37 I.R.B.585
2006-79
Section 3 modified and superseded by
Notice 2007-86, 2007-46 I.R.B.990
2006-89
Modified by
Notice 2007-67, 2007-35 I.R.B.467
2007-3
Modified by
Notice 2007-69, 2007-35 I.R.B.468
2007-26
Modified by
Notice 2007-56, 2007-27 I.R.B.15
Notices— Continued:
2007-78
Modified by
Notice 2007-86, 2007-46 I.R.B.990
Proposed Regulations:
EE-16-79
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
EE-130-86
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-243025-96
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-105964-98
Withdrawn by
REG-107592-00, 2007-44 I.R.B.908
REG-117162-99
Withdrawn by
REG-142695-05, 2007-39 I.R.B.681
REG-157711-02
Corrected by
Ann. 2007-74, 2007-35 I.R.B.483
REG-119097-05
Hearing location change by
Ann. 2007-81, 2007-38 I.R.B.667
REG-142695-05
Hearing location change by
Ann. 2007-91, 2007-42 I.R.B.857
REG-148951-05
Corrected by
Ann. 2007-94, 2007-42 I.R.B.858
REG-109367-06
Hearing scheduled by
Ann. 2007-66, 2007-31 I.R.B.296
REG-128224-06
Hearing location change by
Ann. 2007-92, 2007-42 I.R.B.857
Corrected by
Ann. 2007-95, 2007-43 I.R.B.894
REG-138707-06
Corrected by
Ann. 2007-79, 2007-40 I.R.B.749
Cancellation of hearing by
Ann. 2007-101, 2007-43 I.R.B.898
REG-143601-06
Corrected by
Ann. 2007-71, 2007-33 I.R.B.372
REG-143797-06
Cancellation of hearing by
Ann. 2007-85, 2007-39 I.R.B.719
Proposed Regulations— Continued:
REG-148393-06
Corrected by
Ann. 2007-98, 2007-43 I.R.B.896
REG-103842-07
Corrected by
Ann. 2007-77, 2007-38 I.R.B.662
REG-116215-07
Corrected by
Ann. 2007-97, 2007-43 I.R.B.895
Revenue Procedures:
90-12
Modified by
Rev. Proc. 2007-66, 2007-45 I.R.B.970
90-27
Superseded by
Rev. Proc. 2007-52, 2007-30 I.R.B.222
95-28
Superseded by
Rev. Proc. 2007-54, 2007-31 I.R.B.293
97-14
Modified and superseded by
Rev. Proc. 2007-47, 2007-29 I.R.B.108
97-27
Modified by
Rev. Proc. 2007-67, 2007-48 I.R.B.1072
98-48
Modified by
T.D. 9353, 2007-40 I.R.B.721
2002-9
Modified and amplified by
Rev. Proc. 2007-48, 2007-29 I.R.B.110
Rev. Proc. 2007-53, 2007-30 I.R.B.233
2002-41
Modified by
Rev. Proc. 2007-66, 2007-45 I.R.B.970
2003-43
Supplemented by
Rev. Proc. 2007-62, 2007-41 I.R.B.786
2004-42
Superseded by
Notice 2007-59, 2007-30 I.R.B.135
2004-48
Supplemented by
Rev. Proc. 2007-62, 2007-41 I.R.B.786
2005-16
Modified by
Rev. Proc. 2007-44, 2007-28 I.R.B.54
2005-27
Superseded by
Rev. Proc. 2007-56, 2007-34 I.R.B.388
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2007–1 through 2007–26 is in Internal Revenue Bulletin 2007–26, dated June 25, 2007.
2007–49 I.R.B.ivDecember 3, 2007

Revenue Procedures— Continued:
2005-66
Clarified, modified, and superseded by
Rev. Proc. 2007-44, 2007-28 I.R.B.54
2006-25
Superseded by
Rev. Proc. 2007-42, 2007-27 I.R.B.15
2006-27
Modified by
Rev. Proc. 2007-49, 2007-30 I.R.B.141
2006-33
Superseded by
Rev. Proc. 2007-51, 2007-30 I.R.B.143
2006-41
Superseded by
Rev. Proc. 2007-63, 2007-42 I.R.B.809
2006-45
Modified and clarified by
Rev. Proc. 2007-64, 2007-42 I.R.B.818
2006-53
Modified by
Rev. Proc. 2007-60, 2007-39 I.R.B.679
2006-55
Superseded by
Rev. Proc. 2007-43, 2007-27 I.R.B.26
2007-4
Modified by
Notice 2007-69, 2007-35 I.R.B.468
2007-15
Superseded by
Rev. Proc. 2007-50, 2007-31 I.R.B.244
2007-24
Superseded by
Rev. Proc. 2007-68, 2007-49 I.R.B.1093
Revenue Rulings:
54-378
Clarified by
Rev. Rul. 2007-51, 2007-37 I.R.B.573
65-18
Revoked by
Rev. Rul. 2007-69, 2007-49 I.R.B.1083
67-93
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
69-141
Modified by
REG-142695-05, 2007-39 I.R.B.681
72-605
Amplified by
Rev. Rul. 2007-69, 2007-49 I.R.B.1083
Revenue Rulings— Continued:
74-299
Amplified by
Rev. Rul. 2007-48, 2007-30 I.R.B.129
75-425
Obsoleted by
Rev. Rul. 2007-60, 2007-38 I.R.B.606
76-278
Obsoleted by
T.D. 9354, 2007-41 I.R.B.759
76-288
Obsoleted by
T.D. 9354, 2007-41 I.R.B.759
76-450
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
78-257
Obsoleted by
T.D. 9347, 2007-38 I.R.B.624
78-369
Revoked by
Rev. Rul. 2007-53, 2007-37 I.R.B.577
89-96
Amplified by
Rev. Rul. 2007-47, 2007-30 I.R.B.127
92-17
Modified by
Rev. Rul. 2007-42, 2007-28 I.R.B.44
94-62
Supplemented by
Rev. Rul. 2007-58, 2007-37 I.R.B.562
2001-48
Modified by
T.D. 9332, 2007-32 I.R.B.300
2001-62
Modified by
Rev. Rul. 2007-67, 2007-48 I.R.B.1047
2002-41
Modified by
REG-142695-05, 2007-39 I.R.B.681
2003-102
Modified by
REG-142695-05, 2007-39 I.R.B.681
2005-24
Modified by
REG-142695-05, 2007-39 I.R.B.681
2006-36
Modified by
REG-142695-05, 2007-39 I.R.B.681
2006-57
Modified by
Notice 2007-76, 2007-40 I.R.B.735
Revenue Rulings— Continued:
2007-54
Suspended by
Rev. Rul. 2007-61, 2007-42 I.R.B.799
2007-59
Amplified by
Notice 2007-74, 2007-37 I.R.B.585
Treasury Decisions:
8073
Removed by
T.D. 9349, 2007-39 I.R.B.668
9321
Corrected by
Ann. 2007-68, 2007-32 I.R.B.348
Ann. 2007-78, 2007-38 I.R.B.663
9330
Corrected by
Ann. 2007-80, 2007-38 I.R.B.667
9332
Corrected by
Ann. 2007-83, 2007-40 I.R.B.752
Ann. 2007-84, 2007-41 I.R.B.797
9334
Corrected by
Ann. 2007-93, 2007-42 I.R.B.858
9340
Corrected by
Ann. 2007-102, 2007-44 I.R.B.922
9353
Corrected by
Ann. 2007-103, 2007-44 I.R.B.923
December 3, 2007v2007–49 I.R.B.

2007–49 I.R.B.December 3, 2007

December 3, 20072007–49 I.R.B.

INTERNAL REVENUE BULLETIN
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