Internal Revenue Bulletin 2012-22 (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. 201
2-22
May 29, 2012
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
T.D. 9587, page 953.
Final regulations under section 42 of the Code provide guid-
ance concerning taxpayers’ request to housing credit agencies
to obtain a qualified contract for the acquisition of a low-income
housing credit building.
EMPLOYEE PLANS
REG–117645–12, page 965.
This document requests public comments regarding the use of
stop loss insurance under section 9815 of the Code by group
health plans and their plan sponsors.
Notice 2012–36, page 962.
Weighted average interest rate update; corporate bond
indices; 30-year Treasury securities; segment rates.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in May 2012;
the 24-month average segment rates; the funding transitional
segment rates applicable for May 2012; and the minimum
present value transitional rates for April 2012.
EXCISE TAX
REG–117645–12, page 965.
This document requests public comments regarding the use of
stop loss insurance under section 9815 of the Code by group
health plans and their plan sponsors.
ADMINISTRATIVE
T.D. 9586, page 960.
Final regulations remove the regulations under section 3402(t)
of the Code, which related to 3% withholding by government
entities on payments for property or services, and make con-
forming amendments to other regulations. The 3% Withhold-
ing Repeal and Job Creation Act, Public Law 112–56, repealed
section 3402(t) before section 3402(t) became effective.
Announcement 2012–23, page 967.
This announcement withdraws a notice of proposed rulemaking
(REG–151687–10, 2011–23 I.R.B. 867) under section 3402(t)
oftheCodebecausethe3%WithholdingRepealandJobCre-
ation Act, Public Law 112–56, repealed section 3402(t).
Fi
nding Lists begin on page ii.
Index for January through May begins on page v.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
May 29, 20122012–22 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 42.—L
ow-Income
Housing Credi
t
26 CFR 1.42–18: Qualified contracts.
T.D. 9587
DEPARTMENT O
FTHE
TREASURY
Internal Re
venue Service
26 CFR Part
s1and602
Section 42 Qualified Contract
Provisions
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION:
Final Regulations.
SUMMARY: This document contains fi-
nal regulations that provide guidance con-
cerning taxpayers’ (that is, owners’) re-
quests to housing credit agencies to obtain
a qualified contract (as defined in section
42(h)(6)(F) of the Internal Revenue Code)
for the acquisition of a low-income hous-
ing credit building. Section 42(h)(6)(F) re-
quires the Secretary to prescribe such reg-
ulations as may be necessary or appro-
priate to carry out the provisions of sec-
tion 42(h)(6)(F), including regulations to
prevent the manipulation of the qualified
contract amount. The regulations will af-
fect owners requesting aqualified contract,
potential buyers, and low-income housing
credit agencies responsible for the admin-
istration of the low-income housing credit
program.
DATES:Effective Date:These regulations
are effective May 3, 2012.
Applicability Date:For the applicabil-
ity date, see §1.42–18(e).
FOR
FURTHER INFORMATION
CON
TACT: David Selig at (202)
62
2–3040 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
Th
e collection of information con-
ta
ined in these final regulations has been
reviewed and a
pproved by the Office of
Management an
d Budget in accordance
with the Paper
work Reduction Act of
1995 (44 U.S.
C. 3507(d)) under control
number 1545–
2088. The collection of
information
is required for an owner to
provideawri
tten request to a housing
credit agen
cy to obtain a qualified contract
(as defined
in section 42(h)(6)(F) of the
Internal Re
venue Code) for the acquisition
of a low-inc
ome housing credit building.
The collect
ing of information is voluntary
to obtain a
benefit.
An agency m
ay not conduct or sponsor,
and a perso
n is not required to respond to, a
collectio
n of information unless it displays
a valid con
trol number assigned by the Of-
fice of Man
agement and Budget.
Books or re
cords relating to a collection
of inform
ation must be retained as long
as their c
ontents might become material in
the admin
istration of any internal revenue
law. Gene
rally, tax returns and tax return
informat
ion are confidential, as required
by 26 U.S.
C. 6103.
Backgro
und
This doc
ument contains final regula-
tions th
at amend the Income Tax Regula-
tions (2
6 CFR part 1) relating to the low-
income h
ousing credit under section 42 of
the Inte
rnal Revenue Code (Code). On
June 19
, 2007, a notice of proposed rule-
making
(REG–114084–04, 2007–2 C.B.
359) an
d notice of public hearing relating
to the q
ualified contract provisions under
sectio
n 42(h)(6)(F) was published in the
Feder
al Register
(72 FR 33706). Written
and el
ectronic comments responding to the
propo
sed regulations were received and a
publi
c hearing was held on the proposed
regul
ations on October 15, 2007. After
consi
deration of all the comments, the pro-
pose
d regulations are adopted as amended
by th
is Treasury decision.
Gene
ral Overview
Sect
ion 42 provides a tax credit for in-
vest
ment in low-income housing buildings
plac
ed in service after December 31, 1986.
The s
ection 42 credit is a general business
cre
dit subject to the provisions of section
38.
Section 42(h)
(6)(A) provides that no
credit will be
allowed with respect to any
building for t
he taxable year unless an
extended low
-income housing commit-
ment (commit
ment) (as defined in section
42(h)(6)(B)
) is in effect as of the end of
the taxable y
ear.
Section 42(h
)(6)(B) provides in part
that the term
commitment means any
agreement b
etween the owner and the
housing cre
dit agency (Agency) that re-
quires that
the applicable fraction (as
definedins
ection 42(c)(1)(B)) for the
building f
or each taxable year in the ex-
tended use
period will not be less than the
applicabl
e fraction specified in the com-
mitment. S
ection 42(h)(6)(E)(ii) prohibits
the evicti
on or termination of tenancy
(other th
an for good cause) of an existing
tenant of
any low-income unit or any in-
crease in
the gross rent with respect to such
unit not o
therwise permitted under section
42 until t
hree years after the termination
of such a
n agreement.
Section 4
2(h)(6)(D) defines the term
extende
d use period as the period begin-
ning on t
he first day in the compliance
period (
as defined in section 42(i)(1)) on
which th
e building is part of a qualified
low-in
come housing project and ending on
the lat
er of: (1) the date specified by the
Agency
in the commitment, or (2) the date
which i
s 15 years after the close of the
compli
ance period.
Sectio
n 42(h)(6)(E)(i)(II) provides for
the ter
mination of the extended use period
if the
Agency is unable to present within
aspec
ified period of time a qualified con-
tract
for the acquisition of the low-income
porti
on of the building by any person who
will c
ontinue to operate such portion as a
qual
ified low-income building.
Secti
on 42(h)(6)(F) defines the term
qual
ified contract as abona fidecontract
to ac
quire (within a reasonable period of
time
after the contract is entered into) the
non l
ow-income portion of the building
for f
air market value and the low-income
port
ion of the building for an amount not
les
s than the applicable fraction (specified
in t
he commitment) of the sum of: (I)
the
outstanding indebtedness secured by,
or w
ith respect to the building, (II) the
adj
usted investor equity in the building,
2012–22 I.R.B.953May 29, 2012

plus (III) other capital contributions not
reflected in these amounts; reduced by
cash distributions from (or available for
distribution from) the project.
Section 42(h)(6)(F) also provides that
the Secretary shall prescribe regulations as
may be necessary or appropriate to carry
out that paragraph, including regulations
to prevent the manipulation of the amount
determined under section 42(h)(6)(F).
Section 42(h)(6)(I) provides that the
Agency must present the qualified con-
tract within the 1-year period beginning
on the date (after the 14th year of the
compliance period) the owner submits a
written request to the Agency to find a
person to acquire the owner’s interest in
the low-income portion of the building.
The proposed regulations addressed the
application of the qualified contract provi-
sions of section 42. Section 1.42–18(c)(1)
of the proposed regulations defined the
qualified contract formula used to compute
the purchase price amount of the low-in-
come housing building generally as: (1)
the non low-income portion of the building
for fair market value; plus (2) the low-in-
come portion of the building for the low-
income portion amount.
Section 1.42–18(c)(2) of the proposed
regulations defined the low-income por-
tion amount as an amount not less than
the applicable fraction (as specified in the
commitment) of the total of: (a) outstand-
ing indebtedness secured by, or with re-
spect to the building; plus (b) the adjusted
investor equity in the building; plus (c)
other capital contributions, not including
amounts described in (a) and (b); minus
(d) cash distributions from (or available for
distribution from) the building.
Summary of Comments
Fair-Market-Value Cap
Prior to the issuance of the proposed
regulations, comments were received
recommending the inclusion of a fair-mar-
ket-value cap for the low-income portion
of the qualified contract amount as defined
in section 42(h)(6)(F). These comments
noted that the qualified contract price may,
in some cases, exceed the fair market value
of a project. One reason given to explain
why the qualified contract price might
exceed the fair market value of a project
is the formula component for adjusted
investor equity, which includes the Con-
sumer-Price-Index-based cost of living
adjustments. As explained in the preamble
to the proposed regulations, this recom-
mendation was not adopted as a proposed
rule because section 42(h)(6)(F) defines
a qualified contract, in part, as a contract
to acquire the low-income portion of the
building for an amount “not less than” the
applicable fraction of the statutorily pro-
vided formula. Similar comments were
received after publication of the proposed
regulations. The IRS and the Treasury
Department continue to believe that they
do not have the authority under section
42(h)(6)(F) to adopt a fair-market-value
cap. Accordingly, the final regulations do
not provide a rule providing a fair-mar-
ket-value cap under section 42(h)(6)(F).
The IRS and the Treasury Department
in the preamble to the proposed regula-
tions requested comments on the extent
of Agency and State authority to provide
more stringent requirements than those
contained in section 42(h)(6)(F). The pre-
amble referenced the flush language of
section 42(h)(6)(E)(i), which provides
that the qualified contract exception to
the termination of an extended use pe-
riod shall not apply to the extent more
stringent requirements are provided in the
agreement or in State law. Specifically,
the IRS and the Treasury Department
requested comments on the authority of
Agency or State regulators to require in
agreements a fair-market-value cap that
would restrict any qualified contract price
to fair market value. In response, two
comments were received, both opining
that an Agency did not possess authority
under section 42(h)(6)(E) to set a fair mar-
ket value limitation. The commentators
reasoned that the language “more strin-
gent requirements” relates to the date the
extended use period will terminate, rather
than to the qualified contract formula. The
IRS and Treasury Department received no
comment asserting the view that section
42(h)(6)(E)(i) authorizes an Agency or
State regulators to require in agreements a
fair-market-value cap that would restrict
a qualified contract price to fair market
value. The IRS and Treasury Department
do not believe that section 42(h)(6)(E)(i)
was intended to authorize a fair-mar-
ket-value cap on the low-income portion
of the building, and,accordingly, the final
regulations do not provide for such a cap.
Adjustments to Fair Market Value of the
Non-Low-Income Portion of the Building
Some commentators questioned the
provision in the proposed regulations that
would allow Agencies to adjust the fair
market value of a building, if, after a rea-
sonable period of time within the one-year
offer-of-sale period, no buyer has made
an offer or market values have adjusted
downward. One commentator noted that,
as a result of this provision, in order to
secure a more favorable price for the build-
ing, prospective buyers might wait out the
qualified contract process until an Agency
reduces the qualified contract price. An-
other commentator noted the unfairness
of granting Agencies the unilateral right
to reduce the fair market value of the non
low-income portion of the building, par-
ticularly when the proposed regulations
provide no limitation on how much the
Agency may reduce the fair market value.
The IRS and the Treasury Department
believe these concerns are valid. Accord-
ingly, the final regulations revise this pro-
vision to provide that the Agency may ad-
just the fair market value of the non low-
income portion of the building after the
Agency’s offer of sale of the building to
the general public and before the close of
the one-year offer of sale period only with
the consent of the owner. If no agreement
between the Agency and owner is reached,
the fair market value of the non low-in-
come portion of the building determined at
thetimeoftheAgency’sofferofsaleofthe
building to the general public remains un-
changed.
Land
The proposed regulations provide that
the fair market value of the non low-in-
come portion of a building is determined at
the time of an Agency’s offer of sale of the
building to the general public. This val-
uation must take into account the existing
and continuing requirements contained in
the commitment for the building. The non
low-income portion also includes the fair
market value of the land underlying the en-
tire building, including the land underlying
the low-income portion of the building.
Commentators questioned the statu-
tory authority of the IRS under sec-
tion 42(h)(6)(F) to include land value in
the qualified contract amount. Specifi-
May 29, 20129542012–22 I.R.B.

cally, commentators noted that the lan-
guage under section 42(h)(6)(F) refers to
the fair market value of the non low-in-
come portion of the building without ad-
dressing the issue of land valuation. Other
commentators asserted that adopting a fair
market value approach for land underlying
the entire building may decrease the like-
lihood of finding a qualified buyer willing
to pay the qualified contract price while
continuing to operate the building as a low
income building.
The IRS and the Treasury Department
believe that land is inherently part of the
cost underlying the acquisition or con-
struction of a building and should not be
ignored in determining the qualified con-
tract amount. Applying fair market value
to land is consistent with industry practice
regarding land valuation and provides an
equitable means for arriving at a contract
price between buyers and owners. By
valuing land underlying the entire building
at fair market value, taking into account
the existing and continuing requirements
contained in the commitment for the build-
ing, the proposed regulations provided an
approach that maintains industry practice
for valuing land and provided an objec-
tive and equitable solution that favors
neither the buyer nor the owner. Accord-
ingly, the final regulations provide that the
land underlying the entire building (both
low-income and non low-income units) is
valued at fair market value subject to the
existing and continuing restrictions con-
tained in the commitment for the building.
Responsibility to Adjust the Qualified
Contract Price to Reflect the Changing
Amount of Outstanding Indebtedness
One commentator expressed concern
that the proposed regulations would im-
posetoomuchburdenonAgenciesby
requiring them to adjust the qualified con-
tract amount between the date on which
the sales price under a qualified contract
is first determined and the sale’s actual
closing date. (For example, an adjustment
is needed to reflect mortgage payments
that reduce outstanding indebtedness.)
The IRS and the Treasury Department
concur with this comment, and the final
regulations provide that the buyer and
owner, and not the Agency, must adjust
the amount of the low-income portion of
the qualified contract formula to reflect
changes in the components of the quali-
fied contract formula, such as mortgage
payments that reduce outstanding indebt-
edness between the time the Agency first
offers the property for sale and the actual
sale closing date.
Cash Distributions
One commentator recommended that
the final regulations clarify that the rule
in the proposed regulations providing that
cash available for distribution includes
reserve funds should apply only to the ex-
tent that the reserve funds are not legally
required to remain with the project after
the sale. Other commentators noted the
potential for double-counting if cash avail-
able for distribution includes the proceeds
from refinancing indebtedness or addi-
tional mortgages, while simultaneously
any refinancing indebtedness or additional
mortgages in excess of qualifying building
costs are not outstanding indebtedness for
purposes of section 42(h)(6)(F).
The IRS and the Treasury Department
agree with these comments. Accordingly,
the final regulations provide that cash
available for distribution includes reserve
funds that are not legally required by mort-
gage restrictions, regulatory agreements,
or third party contractual agreements to
remain with the building following the
sale of the building. The final regula-
tions further providethat proceeds from
refinancing indebtedness or additional
mortgages that are in excess of qualify-
ing building costs are not considered cash
available for distribution. The text of the
final regulations also adopts the rule dis-
cussed in the preamble to the proposed
regulations, but not stated in the text of the
proposed regulations,that any refinancing
indebtedness or additional mortgages in
excess of qualifying building costs do not
qualify as outstanding indebtedness for
purposes of section 42(h)(6)(F).
Discounting Indebtedness Removed
Some commentators questioned the ra-
tionale for the requirement in the proposed
regulations that would discount outstand-
ing indebtedness having an interest rate
below the applicable Federal rate (AFR)
under section 1274 of the Code. In re-
sponse, the final regulations remove the
provision of discounting indebtedness al-
together. Instead, the final regulations de-
fine outstanding indebtedness to include
only those amounts secured by, or with re-
spect to, the building that (1) do not exceed
qualifying building costs, (2) are indebt-
edness under general principles of Federal
income tax law, and (3) upon the sale of
the building, are actually paid to the lender
or are assumed by the buyer as part of the
sale.
Appraiser Standards
Several commentators noted the ab-
sence of any uniform standards for ap-
praisal methodology and qualifications for
appraisers. Rather than adopt appraisal
standards, the final regulations provide
that Agencies shall not utilize any individ-
ual or organization as an appraiser if that
individual or organization is currently on
any list for active suspension or revoca-
tion for performing appraisals in any State
or is listed on the Excluded Parties Lists
System (EPLS) maintained by the General
Services Administration for the United
States Government. The final regulations
also provide the Agencies with the discre-
tion to select the appraisers involved in the
qualified contract process and to require
all appraisers to be State-certified general
appraisers.
Actual Offer of Sale
The proposed regulations provide that
in order to satisfy the qualified contract re-
quirements under section 42(h)(6)(F), the
Agency must offer the building for sale to
the general public at the determined qual-
ified contract price upon receipt of a writ-
ten request by the owner to find a buyer
to acquire the building. In addressing the
issue of how Agencies should advertise
the availability of a building to the general
public, the final regulations provide a rea-
sonable efforts standard for guiding Agen-
cies in their efforts to find a qualified buyer
during the one year offer period. If the
determined qualified contract price is not
a multiple of $1,000, the final regulations
permit the Agency to round up the offer-
ing price of the building to the next highest
multiple of $1,000.
Definition of Bona Fide Contract and
Resolution of Disputes
Some commentators suggested the in-
clusion of a specific definition of abona
2012–22 I.R.B.955May 29, 2012

fidecontract under section 42(h)(6)(F), ad-
dressing issues such as whether the terms
and conditions of any offered contract
are unreasonable or impractical. Further,
commentators suggested the creation of a
mechanism for resolving disputes among
the parties concerning the meaning of a
bona fidecontract. The IRS and the Trea-
sury Department believe that because of
variations under State laws concerning the
terms of abona fidecontract and methods
for resolving disputes, the final regulations
should not explicitly address these issues.
Instead, the final regulations provide that
an Agency has the administrative discre-
tion to specify other conditions applicable
to the qualified contract consistent with
section 42 of the Code and the final regu-
lations.
Adjusted Investor Equity
To avoid ambiguity in the determina-
tion of the qualified contract amount, the
final regulations require adjusted investor
equity to be calculated in a manner that is
consistent with inflation adjustments made
under section 1(f). Thus, as was required
in the proposed regulations, the calcu-
lations must use not seasonally adjusted
values of the Consumer Price Index for
all urban consumers (the data series that
the Bureau of Labor Statistics refers to as
“CPI–U”). The final regulations provide
a computational process that is mathemat-
ically equivalent to the process described
in the proposed regulations but that will be
simpler to implement. Because of the un-
certainty that can be introduced when one
number is divided by another and because
different people might choose to retain
in the answer different numbers of digits,
the regulations require the quotient in this
process to be carried out to 10 decimal
places. (If standard, off-the-shelf spread-
sheet software is used to compute the
adjusted investor equity, the computations
will generally have at least this degree
of accuracy by default.) In addition, the
example in the final regulations has been
updated to use more recent data. Finally,
the final regulations make it possible for
the Commissioner to reduce the computa-
tional burden by, for example, providing
the possible adjustment factors in annual
publications or creating a calculator on the
IRS website.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It also has been de-
termined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. It is
hereby certified that the collection of infor-
mation in these regulations will not have a
significant economic impact on a substan-
tial number of small entities. The infor-
mation required to be provided by a tax-
payer (that is, by the owner of a low-in-
come building) to a State agency to deter-
mine the qualified contract amount is al-
ready maintained by the taxpayer for other
purposes of the low-income tax credit un-
der section 42. Because only a minimal
amount of additional time is required for
a taxpayer to access and provide the infor-
mation, this collection of information does
not impose a significant burden on the tax-
payer. Accordingly, a Regulatory Flexi-
bility Analysis under the provisions of the
Regulatory Flexibility Act (5 U.S.C. chap-
ter 6) is not required. Pursuant to section
7805(f) of the Code, the notice of proposed
regulations preceding these final regula-
tions was submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on their impact
on small business, and no comments were
received.
Drafting Information
The principal author of these regu-
lations is David Selig of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries).However,
other personnel from the IRS and
Treasury Department participated in their
development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR Parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.42–18 also issued under
26 U.S.C. 42(h)(6)(F) and 42(h)(6)(K); *
**
Par. 2. Section 1.42–18 is added to read
as follows:
§1.42–18 Qualified contracts.
(a)Extended low-income housing com-
mitment—(1)In general. No credit un-
der section 42(a) is allowed by reason of
section 42 with respect to any building for
the taxable year unless an extended low-in-
come housing commitment (commitment)
(as defined in section 42(h)(6)(B)) is in
effect as of the end of such taxable year.
A commitment must be in effect for the
extended use period (as defined in para-
graph (a)(1)(i) of this section).
(i)Extended use period.Thetermex-
tended use periodmeans the period be-
ginning on the first day in the compliance
period (as defined in section 42(i)(1)) on
which the building is part of a qualified
low-income housing project (as defined in
section 42(g)(1)) and ending on the later
of—
(A) The date specified by the low-in-
come housing credit agency (Agency) in
the commitment; or
(B) The date that is 15 years after the
close of the compliance period.
(ii)Termination of extended use period.
The extended use period for any building
will terminate—
(A) On the date the building is acquired
by foreclosure (or instrument in lieu of
foreclosure) unless the Commissioner de-
termines that such acquisition is part of
an arrangement with the taxpayer (“the
owner”) a purpose of which is to terminate
such period; or
(B) On the last day of the one-year pe-
riod beginning on the date (after the 14th
year of the compliance period) on which
the owner submits a written request to the
Agency to find a person to acquire the
owner’s interest in the low-income portion
of the building if the Agency is unable to
present during such period a qualified con-
tract for the acquisition of the low-income
portion of the building by any person who
May 29, 20129562012–22 I.R.B.

will continue to operate such portion as a
qualified low-income building (as defined
in section 42(c)(2)).
(iii)Owner non-acceptance.Ifthe
Agency provides a qualified contract
within the one-year period and the owner
rejects or fails to act upon the contract, the
building remains subject to the existing
commitment.
(iv)Eviction, gross rent increase con-
cerning existing low-income tenants not
permitted. Prior to the close of the three
year period following the termination of
a commitment, no owner shall be permit-
ted to evict or terminate the tenancy (other
than for good cause) of an existing ten-
ant of any low-income unit, or increase
the gross rent for such unit in a manner or
amount not otherwise permitted by section
42.
(2)Exception. Paragraph (a)(1)(ii)(B)
of this section shall not apply to the extent
more stringent requirements are provided
in the commitment or under State law.
(b)Definitions. For purposes of this
section, the following terms are defined:
(1) As provided by sec-
tion 42(h)(6)(G)(iii),base calendar year
means the calendar year with or within
which the first taxable year of the credit
period ends.
(2) Thelow-income portionof a build-
ing is the portion of the building equal to
the applicable fraction (as defined in sec-
tion 42(c)(1)(B)) specified in the commit-
ment for the building.
(3) Thefair market value of the non-
low-income portionof the building is de-
termined at the time of the Agency’s offer
of sale of the building to the general public.
The fair market valueof the non-low-in-
come portion also includes the fair mar-
ket value of the land underlying the entire
building (both the non-low-income portion
and the low-income portion). This valu-
ation must take into account the existing
and continuing requirements contained in
the commitment for the building. The fair
market value of the non-low-income por-
tion also includes the fair market value of
items of personal property not included in
eligible basis under section 42(d) that con-
vey under the contract with the building.
(4)Qualifying building costs include—
(i) Costs that are included in eligible ba-
sis of a low-income housing building un-
der section 42(d) and that are included in
the adjusted basis of depreciable property
that is subject to section 168 and that is res-
idential rental property for purposes of sec-
tion 142(d) and §1.103–8(b);
(ii) Costs that are included in eligible
basis of a low-income housing building
under section 42(d) and that are included
in the adjusted basis of depreciable prop-
erty that is subject to section 168 and that
is used in a common area or is provided
as a comparable amenity to all residential
rental units in the building; and
(iii) Costs of the type described in para-
graph (b)(4)(i) and (ii) of this section in-
curred after the first year of the low-in-
come housing building’s credit period un-
der section 42(f).
(5) Thequalified contract amountis
the sum of the fair market value of the
non-low-income portion of the building
(within the meaning of section 42(h)(6)(F)
and paragraph (b)(3) of this section) and
the price for the low-income portion of
the building (within the meaning of sec-
tion 42(h)(6)(F) and paragraph (b)(2) of
this section) as calculated in paragraph
(c)(2) of this section. If this sum is not a
multiple of $1,000, then when the Agency
offers the building for sale to the general
public, the Agency may round up the of-
fering price to the next highest multiple of
$1,000.
(c)Qualified contract purchase price
formula—(1)In general. For purposes
of this section,qualified contractmeans a
bona fidecontract to acquire the building
(within a reasonable period after the con-
tract is entered into) for the qualified con-
tract amount.
(i)Initial determination. The qualified
contract amount is determined at the time
of the Agency’s offer of sale of the building
to the general public.
(ii)Mandatory adjustment by the buyer
and owner. The buyer and owner under a
qualified contract must adjust the amount
of the low-income portion of the quali-
fied contract formula to reflect changes in
the components of the qualified contract
formula such as mortgage payments that
reduce outstanding indebtedness between
thetimeoftheAgency’sofferofsaleto
the general public and the building’s actual
sale closing date.
(iii)Optional adjustment by the Agency
and owner. The Agency and owner may
agree to adjust the fair market value of
the non low-income portion of the build-
ing after the Agency’s offer of sale of the
building to the general public and before
the close of the one-year period described
in paragraph (a)(1)(ii)(B) of this section.
If no agreement between the Agency and
owner is reached, the fair market value of
the non-low-income portion of the build-
ing determined at the time of the Agency’s
offer of sale of the building to the general
public remains unchanged.
(2)Low-income portion amount.The
low-income portion amount is an amount
not less than the applicable fraction speci-
fied in the commitment, as defined in sec-
tion 42(h)(6)(B)(i), multiplied by the total
of—
(i) The outstanding indebtedness for the
building (as defined in paragraph (c)(3) of
this section); plus
(ii) The adjusted investor equity in the
building for the calendar year (as defined
in paragraph (c)(4) of this section); plus
(iii) Other capital contributions (as de-
fined in paragraph (c)(5) of this section),
not including any amounts described in
paragraphs (c)(2)(i) and (ii) of this section;
minus
(iv) Cash distributions from (or avail-
able for distribution from) the building (as
defined in paragraph (c)(6) of this section).
(3)
Outstanding indebtedness.Forpur-
poses of paragraph (c)(2)(i) of this section,
outstanding indebtednessmeans the re-
maining stated principal balance (which
is initially determined at the time of the
Agency’s offer of sale of the building
to the general public) of any indebted-
ness secured by, or with respect to, the
building that does not exceed the amount
of qualifying building costs described in
paragraph (b)(4) of this section. Thus,
any refinancing indebtedness or additional
mortgages in excess of such qualifying
building costs are not outstanding indebt-
edness for purposes of section 42(h)(6)(F)
and this section. Examples of outstanding
indebtedness include certain mortgages
and developer fee notes (excluding devel-
oper service costs not included in eligible
basis). Outstanding indebtedness does
not include debt used to finance nonde-
preciable land costs,syndication costs,
legal and accounting costs, and operating
deficit payments. Outstanding indebted-
ness includes only obligations that are
indebtedness under general principles of
Federal income tax law and that are actu-
ally paid to the lender upon the sale of the
2012–22 I.R.B.957May 29, 2012

building or are assumed by the buyer as
part of the sale of the building.
(4)Adjusted investor equity—(i)Ap-
plication of cost-of-living factor.For
purposes of paragraph (c)(2)(ii) of this
section, theadjusted investor equityfor
any calendar year equals the unadjusted
investor equity, as described in para-
graph (c)(4)(ii) of this section, multiplied
by the qualified-contract cost-of-living
adjustment for that year, as defined in
paragraph (c)(4)(iii) of this section.
(ii)Unadjusted investor equity.For
purposes of this paragraph (c)(4),unad-
justed investor equitymeans the aggregate
amount of cash invested by owners for
qualifying buildingcosts described in
paragraph (b)(4)(i) and (ii) of this section.
Thus, equity paid for land, credit adjuster
payments, Agency low-income housing
credit application and allocation fees, op-
erating deficit contributions, and legal,
syndication, and accounting costs all are
examples of cost payments that do not
qualify as unadjusted investor equity. Un-
adjusted investor equity takes an amount
into account only to the extent that, as of
the beginning of the low-income build-
ing’s credit period (as defined in section
42(f)(1)), there existed an obligation to
invest the amount. Unadjusted investor
equity does not include amounts included
in the calculation of outstanding indebted-
ness as defined in paragraph (c)(3) of this
section.
(iii)Qualified-contract cost-of-liv-
ing adjustment. For purposes of this
paragraph (c)(4), thequalified-contract
cost-of-living adjustment for a calendar
yearis the number that is computed under
the general rule in paragraph (c)(4)(iv) of
this section or a number that may be pro-
vided by the Commissioner as described
in paragraph (c)(4)(v) of this section.
(iv)General rule. Except as provided
in paragraph (c)(4)(v) of this section, the
qualified-contract cost-of-living adjust-
mentis the quotient of—
(A) The sum of the 12 monthly Con-
sumer Price Index (CPI) values whose av-
erage is the CPI for the calendar year that
precedes the calendar year in which the
Agency offers the building for sale to the
generalpublic(Theterm“CPIforacal-
endar year” has the meaning given to it
by section 1(f)(4) for purposes of comput-
ing annual inflation adjustments to the rate
brackets.); divided by
(B) The sum of the 12 monthly CPI
values whose average is the CPI for the
base calendar year (within the meaning of
section 1(f)(4)), unless that sum has been
increased under paragraph (c)(4)(iii)(D) of
this section.
(v)Provision by the Commissioner
of the qualified-contract cost-of-living
adjustment.The Commissioner may pub-
lish in the Internal Revenue Bulletin (see
§601.601(d)(2) of this chapter) a process
pursuant to which the Internal Revenue
Service will compute the qualified-con-
tract cost-of-living adjustment for a calen-
dar year and make available the results of
that computation.
(vi)Methodology. The calculations in
paragraph (c)(4)(iv) of this section are to
be made in the following manner:
(A) The CPI data to be used for pur-
poses of this paragraph (c)(4) are the not
seasonally adjustedvalues of the CPI for
all urban consumers. (The U.S. Depart-
ment of Labor’s Bureau of Labor Statistics
(BLS) sometimes refers to these values as
“CPI–U.”) The BLS publishes the CPI data
on-line (including a History Table that con-
tains monthly CPI–U values for all years
back to 1913). Seewww.BLS.gov/data.
(B) The quotient is to be carried out to
10 decimal places.
(C) The Agency may round adjusted in-
vestor equity to the nearest dollar.
(D) If the CPI for any calendar year
(within the meaning of section 1(f)(4))
during the extended use period after the
base calendar year exceeds by more than
5 percent the CPI for the preceding cal-
endar year (within the meaning of sec-
tion 1(f)(4)), then the sum described in
paragraph (c)(4)(i)(B) is to be increased so
that the excess is never taken into account
under this paragraph (c)(4).
(vii)Example. The following example
illustrates the calculations described in this
paragraph (c)(4):
Example.(i)Facts. Owner contributed
$20,000,000 in equity to a building in 1997, which
was the first year of the credit period for the building.
In 2011, Owner requested Agency to find a buyer to
purchase the building, and Agency offered the build-
ing for sale to the general public during 2011. The
CPI for 1997 (within the meaning of section 1(f)(4))
is the average of the Consumer Price Index as of the
close of the 12-month period ending on August 31,
1997. The sum of the CPI values for the twelve
months from September 1996 through August 1997
is 1913.9. The CPI for 2010 (within the meaning
of section 1(f)(4)) is the average of the Consumer
Price Index as of the close of the 12-month period
ending August 31, 2010. The sum of the CPI values
for the twelve months from September 2009 through
August 2010 is 2605.959. At no time during this
period (after the base calendar year) did the CPI for
any calendar year exceed the CPI for the preceding
calendar year by more than 5 percent.
(ii)Determination of adjusted investor equity.
The qualified-contract cost-of-living adjustment is
1.3615962171 (the quotient of 2605.959, divided by
1913.9). Owner’s adjusted investor equity, therefore,
is $27,231,924, which is $20,000,000, multiplied by
1.3615962171, rounded to the nearest dollar.
(5)Other capital contributions.For
purposes of paragraph (c)(2)(iii) of this
section, other capital contributions to a
low-income building are qualifying build-
ingcostsdescribedinparagraph(b)(4)(ii)
of this section paid or incurred by the
owner of the low-income building other
than amounts included in the calculation
of outstanding indebtedness or adjusted
investor equity as defined in this section.
For example, other capital contributions
may include amounts incurred to replace a
furnace after the first year of a low-income
housing credit building’s credit period
under section 42(f), provided any loan
used to finance the replacement of the
furnace is not secured by the furnace or
the building. Other capital contributions
do not include expenditures for land costs,
operating deficit payments, credit adjuster
payments, and payments for legal, syndi-
cation, and accounting costs.
(6)Cash distributions—(i)In general.
For purposes of paragraph (c)(2)(iv) of
this section, the termcash distributions
from (or available for distribution from)
the building include—
(A) All distributions from the building
to the owners or to persons whose rela-
tionship to the owner is described in sec-
tion 267(b) or section 707(b)(1)), includ-
ing distributions under section 301 (relat-
ing to distributions by a corporation), sec-
tion 731 (relating to distributions by a part-
nership), or section 1368 (relating to distri-
butions by an S corporation); and
(B) All cash and cash equivalents avail-
able for distribution at, or before, the time
of sale, including, for example, reserve
funds whether operating or replacement
reserves, unless the reserve funds are
legally required by mortgage restrictions,
regulatory agreements, or third party con-
tractual agreements to remain with the
building following the sale.
(ii)Excess proceeds. For purposes of
paragraph (c)(6)(i) of this section, pro-
May 29, 20129582012–22 I.R.B.

ceeds from the refinancing of indebtedness
or additional mortgages that are in excess
of qualifying building costs are not con-
sidered cash available for distribution.
(iii)Anti-abuse rule. The Commis-
sioner will interpret and apply the rules
in this paragraph (c)(6) as necessary and
appropriate to prevent manipulation of
the qualified contract amount. For exam-
ple, cash distributions include payments
to owners or persons whose relation to
owners is described in section 267(b) or
section 707(b) for any operating expenses
in excess of amounts reasonable under the
circumstances.
(d)Administrative discretion and re-
sponsibilities of the Agency—(1)In gen-
eral. An Agency may exercise adminis-
trative discretion in evaluating and acting
upon an owner’s request to find a buyer
to acquire the building. An Agency may
establish reasonable requirements for writ-
ten requests and may determine whether
failure to follow one or more applica-
ble requirements automatically prevents
a purported written request from begin-
ning the one-year period described in
section 42(h)(6)(I). If the one-year-period
has already begun, the Agency may de-
termine whether failure to follow one or
more requirements suspends the running
of that period. Examples of Agency ad-
ministrative discretion include, but are not
limited to, the following:
(i) Concluding that the owner’s request
lacks essential information and denying
the request until such information is pro-
vided.
(ii) Refusing to consider an owner’s
representations without substantiating
documentation verified with the Agency’s
records.
(iii) Determining how many, if any,
subsequent requests to find a buyer may
be submitted if the owner has previously
submitted a request for a qualified con-
tract and then rejected or failed to act
upon a qualified contract presented by the
Agency.
(iv) Assessing and charging the owner
certain administrative fees for the perfor-
mance of services in obtaining a qualified
contract (for example,real estate appraiser
costs).
(v) Requiring all appraisers involved in
the qualified contract process to be State
certified general appraisers that are accept-
able to the Agency.
(vi) Specifying other conditions appli-
cable to the qualifiedcontract consistent
with section 42 and this section.
(2)Actual offer. Upon receipt of a writ-
ten request from the owner to find a per-
son to acquire the building, the Agency
must offer the building for sale to the gen-
eral public, based on reasonable efforts, at
the determined qualified contract amount
in order for the qualified contract to sat-
isfy the requirements of this section unless
the Agency has already identified a willing
buyer who submitted a qualified contract
to purchase the project.
(3)Debarment of certain appraisers.
Agencies shall not utilize any individual
or organization as an appraiser if that indi-
vidual or organization is currently on any
list for active suspension or revocation for
performing appraisals in any State or is
listed on the Excluded Parties Lists System
(EPLS) maintained by the General Ser-
vices Administration for the United States
Government found atwww.epls.gov.
(e)Effective date/applicability date.
These regulations are applicable to owner
requests to housing credit agencies on or
after May 3, 2012 to obtain a qualified
contract for the acquisition of a low-in-
come housing credit building.
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 3. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 4. In §602.101, paragraph (b) is
amended by adding an entry to the table in
numerical order to read, in part, as follows:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
control No.
*****
1.42–18...........................................................
1545–2088
*****
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved April 24, 2012.
Emily S. McMahon,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on May 2, 2012,
8:45 a.m., and published in the issue of the Federal Register
for May 3, 2012, 77 F.R. 26175)
2012–22 I.R.B.959May 29, 2012

Section 3402.—Income Tax
Collected at Source
26 CFR 31.6011(a)–4: Returns of income tax with-
held.
T.D. 9586
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 31
Removal of Regulations
Requiring 3% Withholding by
Government Entities
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document provides a
Treasury decision that removes the final
regulations contained in T.D. 9524 relat-
ing to withholding by government entities
on payments to persons providing prop-
erty or services, and makes conforming
amendments to regulations to reflect the
removal of these regulations. The final
regulations are removed because the 3%
Withholding Repeal and Job Creation Act
repealed the provisionof the Internal Rev-
enue Code underlying the final regulations
before the provision became effective. The
guidance affects government entities that
would have been required to withhold and
report tax from payments to persons pro-
viding property or services and also affects
the persons receivingpayments for prop-
erty or services from these government en-
tities.
DATES:Effective Date:These regulations
are effective on April 25, 2012.
Applicability Date:For dates of ap-
plicability, see §§31.6011(a)–4(d) and
31.6302–1(n).
FOR FURTHER INFORMATION
CONTACT: A. G. Kelley, (202) 622–6040
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to 26 CFR Part 31 under section 3402(t) of
the Internal Revenue Code (Code), relating
to three percent withholding by govern-
ment entities on payments for property or
services. Section 3402(t) of the Code was
added by section 511 of the Tax Increase
Prevention and Reconciliation Act of
2005, Public Law 109–222 (TIPRA), 120
Stat. 345, which was enacted on May 17,
2006. The Treasury Department and the
IRS issued final regulations under sections
3402(t), 3406, 6011, 6051, 6071, and 6302
of the Code that were published in the
Federal Registeron May 9, 2011 (T.D.
9524, 2011–23 I.R.B. 843 [76 FR 26583])
(the May 2011 final regulations). Those
regulations were issued to implement
the requirements of section 3402(t) and
conform existing regulations to section
3402(t).
Section 102 of the 3% Withholding Re-
peal and Job Creation Act (Public Law
112–56, 125 Stat. 711), which was enacted
on November 21, 2011, repealed section
3402(t) of the Code. Section 3402(t) was
repealed before it became effective.
This document, therefore, removes the
regulatory provisions issued under section
3402(t) and related sections, and makes
conforming amendments to certain regula-
tions to reflect the removal of the section
3402(t) regulations.
At the same time as the issuance of the
May 2011 final regulations, the Treasury
Department and the IRS also issued pro-
posed regulations under section 3402(t),
published in theFederal Registeron
May 9, 2011 (REG–151687–10, 2011–23
I.R.B. 867 [76 FR 26678]). A related
document withdraws those proposed reg-
ulations in light of the repeal of section
3402(t). See Announcement 2012–23,
2012–22 I.R.B. 967 (REG–151687–10
[77 FR 24660]).
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It also has been deter-
mined that section 553(b) of the Adminis-
trative Procedure Act(5 U.S.C. chapter 5)
does not apply to this regulation, and be-
cause no notice of proposed rulemaking is
required for this rule, the Regulatory Flexi-
bility Act (5 U.S.C. chapter 6) does not ap-
ply.
Drafting Information
The principal author of these final
regulations is A. G. Kelley, Office of
the Division Counsel/Associate Chief
Counsel (Tax Exempt and Government
Entities). However, other personnel from
the IRS and the Treasury Department
participated in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 31 is
amended as follows:
PART 31—EMPLOYMENT TAXES
AND COLLECTION OF INCOME TAX
AT SOURCE
Paragraph 1. The authority citation for
part 31 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. The following sections and
paragraphs are removed:
1. Remove section 31.3402(t)–0.
2. Remove section 31.3402(t)–1.
3. Remove section 31.3402(t)–2.
4. Remove section 31.3402(t)–3.
5. Remove section 31.3402(t)–4.
6. Remove section 31.3402(t)–5.
7. Remove section 31.3402(t)–6.
8. Remove section 31.3402(t)–7.
9. Remove paragraphs (h) and (i) of
section 31.3406(g)–2.
Par. 3. Section 31.6011(a)–4 is
amended by:
1. Revising paragraphs (b)(4), (b)(5),
and (d).
2. Removing paragraph (b)(6).
The revisions read as follows:
§31.6011(a)–4 Returns of income tax
withheld.
*****
(b) * * *
(4) Pensions, annuities, IRAs, and cer-
tain other deferred income subject to with-
holding under section 3405; and
(5) Reportable payments subject to
backup withholding under section 3406.
*****
(d)Effective/applicability dates. Para-
graphs (a)(1) and (a)(4)(i) of this section
May 29, 20129602012–22 I.R.B.

apply to taxable years beginning on or after
December 30, 2008. Paragraph (a)(4)(ii)
of this section applies to taxable years
beginning on or after January 1, 2010.
The rules of paragraph (a)(1) of this sec-
tion that apply to taxable years beginning
before December 30, 2008, are contained
in §31.6011(a)–4 as in effect prior to De-
cember 30, 2008. The rules of paragraph
(a)(4)(ii)ofthissectionthatapplytotax-
able years beginning before January 1,
2010, but on or after December 30, 2008,
are contained in §31.6011(a)–4T as in
effect on or after December 30, 2008. The
rules of paragraph (a)(4) of this section
that apply to taxable years beginning
before December 30, 2008, are contained
in §31.6011(a)–4T as in effect prior to
December 30, 2008.
Par. 4. Section 31.6051–5 is removed.
Par. 5. Section 31.6071(a)–1 is
amended by:
1. Revising paragraph (a)(3)(i).
2. Removing paragraph (g).
The revision reads as follows:
§31.6071(a)–1 Time for filing returns and
other documents.
(a) * * *
(3)Information returns—(i) General
rule. Each information return in respect
of wages as defined in Federal Insur-
ance Contributions Act or of income tax
withheld from wages as required under
§31.6051–2 must be filed on or before the
lastdayofFebruary(March31iffiled
electronically) of theyear following the
calendar year for which it is made, except
that, if a tax return under §31.6011(a)–5(a)
is filed as a final return for a period ending
prior to December 31, the information re-
turn must be filed on or before the last day
of the second calendar month following
theperiodforwhichthetaxreturnisfiled.
*****
Par. 6. Section 31.6302–1 is amended
by:
1. Revising paragraph (e)(1)(iii)(C).
2. Removing paragraph (e)(1)(iii)(E).
3. Revising paragraph (n).
The revisions read as follows:
§31.6302–1 Deposit rules for taxes under
the Federal Insurance Contributions Act
(FICA) and withheld income taxes.
*****
(e) * * *
(1) * * *
(iii) * * *
(C) Certain annuities described in sec-
tion 3402(o)(1)(B); and
*****
(n)Effective/applicability dates. Sec-
tions 31.6302–1 through 31.6302–3 apply
with respect to the deposit of employ-
ment taxes attributable to payments made
after December 31, 1992. To the ex-
tent that the provisions of §§31.6302–1
through 31.6302–3 are inconsistent with
the provisions of §§31.6302(c)–1 and
31.6302(c)–2, a taxpayer will be consid-
ered to be in compliance with §§31.6302–1
through 31.6302–3 if the taxpayer makes
timely deposits during 1993 in accordance
with §§31.6302(c)–1 and 31.6302(c)–2.
Paragraphs (b)(4), (c)(5), (c)(6), (d)Ex-
ample 6, (e)(2), (f)(4)(i), (f)(4)(iii), (f)(5)
Example 3, and (g)(1) of this section ap-
ply to taxable years beginning on or after
December 30, 2008. Paragraph (f)(4)(ii)
of this section applies to taxable years
beginning on or after January 1, 2010.
The rules of paragraphs (e)(2) and (g)(1)
of this section that apply to taxable years
beginning before December 30, 2008, are
contained in §31.6302–1 as in effect prior
to December 30, 2008. The rules of para-
graphs (b)(4), (c)(5), (c)(6), (d)Example
6, (f)(4)(i), (f)(4)(iii), and (f)(5)Exam-
ple 3of this section that apply to taxable
years beginning on or after January 1,
2006, and before December 30, 2008,
are contained in §31.6302–1T as in effect
prior to December 30, 2008. The rules of
paragraphs (b)(4) and (f)(4) of this section
that apply to taxable years beginning
before January 1, 2006, are contained in
§31.6302–1 as in effect prior to January 1,
2006. The rules of paragraph (g) of this
section eliminating use of Federal tax
deposit coupons apply to deposits and
payments made after December 31, 2010.
Par. 7. Section 31.6302–4 is amended
by:
1. Revising paragraphs (b)(4) and
(b)(5).
2. Removing paragraph (b)(6).
3. Revising paragraph (e).
The revisions read as follows:
§31.6302–4 Deposit rules for withheld
income taxes attributable to nonpayroll
payments.
*****
(b) * * *
(4) Annuities withheld under section
3405, relating to withholding on pensions,
annuities, IRAs, and certain other deferred
income; and
(5) Amounts withheld under section
3406, relating to backup withholding with
respect to reportable payments.
*****
(e)Effective/applicability date. Section
31.6302–4(d) applies to deposits and pay-
ments made after December 31, 2010.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
Approved April 17, 2012.
Emily S. McMahon,
Acting Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on April 24, 2012,
8:45 a.m., and published in the issue of the Federal Register
for April 25, 2012, 77 F.R. 24611)
2012–22 I.R.B.961May 29, 2012

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2012–36
This notice provides guidance as to the
corporate bond weighted average interest
rate and the permissible range of interest
rates specified under § 412(b)(5)(B)(ii)(II)
of the Internal Revenue Code as in ef-
fect for plan years beginning before 2008.
It also provides guidance on the cor-
porate bond monthly yield curve (and
the corresponding spot segment rates),
and the 24-month average segment rates
under § 430(h)(2). In addition, this no-
tice provides guidance as to the interest
rate on 30-year Treasury securities un-
der § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008, the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I), and the min-
imum present value segment rates under
§ 417(e)(3)(D) as in effect for plan years
beginning after 2007.
CORPORATE BOND WEIGHTED
AVERAGE INTEREST RATE
Sections412(b)(5)(B)(ii)and
412(l)(7)(C)(i), as amended by the Pen-
sion Funding Equity Act of 2004 and by
the Pension Protection Act of 2006 (PPA),
provide that the interest rates used to cal-
culate current liability and to determine
the required contribution under § 412(l)
for plan years beginning in 2004 through
2007 must be within a permissible range
based on the weighted average of the rates
of interest on amounts invested conser-
vatively in long term investment grade
corporate bonds during the 4-year period
ending on the last day before the beginning
of the plan year.
Notice 2004–34, 2004–1 C.B. 848, pro-
vides guidelines for determining the cor-
porate bond weighted average interest rate
and the resulting permissible range of in-
terest rates used to calculate current liabil-
ity. That notice establishes that the corpo-
rate bond weighted average is based on the
monthly composite corporate bond rate de-
rived from designated corporate bond in-
dices. The methodology for determining
the monthly composite corporate bond rate
as set forth in Notice 2004–34 continues to
apply in determining that rate. See Notice
2006–75, 2006–2 C.B. 366.
The composite corporate bond rate for
April 2012 is 4.54 percent. Pursuant to No-
tice 2004–34, the Service has determined
this rate as the average of the monthly
yields for the included corporate bond in-
dices for that month.
The following corporate bond weighted
average interest rate was determined for
plan years beginning in the month shown
below.
For Plan Years
Beginning inPermissible Range
MonthYear
Corporate
Bond Weighted
Average90%to100%
May2012
5.504.955.50
YIELD CURVE AND SEGMENT
RATES
Generally for plan years beginning
after 2007 (except for delayed effective
dates for certain plans under sections 104,
105, and 106 of PPA), § 430 of the Code
specifies the minimum funding require-
ments that apply to single employer plans
pursuant to § 412. Section 430(h)(2) spec-
ifies the interest rates that must be used
to determine a plan’s target normal cost
and funding target. Under this provision,
present value is generally determined us-
ing three 24-month average interest rates
(“segment rates”), each of which applies
to cash flows during specified periods.
However, an election may be made under
§ 430(h)(2)(D)(ii) to use the monthly yield
curve in place of the segment rates. Sec-
tion 430(h)(2)G) set forth a transitional
rule applicable to plan years beginning in
2008 and 2009 under which the segment
rates were blended with the corporate bond
weighted average described above, includ-
ing an election under § 430(h)(2)(G)(iv)
foranemployertousethesegmentrates
without the transitional rule.
Notice 2007–81, 2007–2 C.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
April 2012 data is in Table I at the end
of this notice. The spot first, second, and
third segment rates for the month of April
2012 are, respectively, 1.54, 4.30, and
5.14. The three 24-month average cor-
porate bond segment rates applicable for
May 2012 are as follows:
First
Segment
Second
Segment
Third
Segment
1.874.84
5.96
The transitional rule of § 430(h)(2)(G)
does not apply to plan years beginning af-
ter December 31, 2009. Therefore, for a
plan year beginning after 2009 with a look-
back month to May 2012,thefundingseg-
ment rates are the three 24-month average
corporate bond segment rates applicable
for May 2012, listed above without blend-
ing for any transitional period.
May 29, 20129622012–22 I.R.B.

30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 417(e)(3)(A)(ii)(II) (prior to
amendment by PPA) defines the appli-
cable interest rate, which must be used
for purposes of determining the minimum
present value of a participant’s benefit
under § 417(e)(1) and (2), as the annual
rate of interest on 30-year Treasury se-
curities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
ble interest rate for a month is the annual
rate of interest on 30-year Treasury secu-
rities as specified by the Commissioner
for that month in revenue rulings, notices
or other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Trea-
sury securities for April 2012 is 3.18 per-
cent. The Service has determined this rate
as the average of the daily determinations
of yield on the 30-year Treasury bond ma-
turing in February 2042.
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B)specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates of
interest on 30-year Treasury securities dur-
ing the four-year period ending on the last
day before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The following rates
were determined for plan years beginning
in the month shown below.
For Plan Year
s
Beginning inPermissible
Range
MonthYear
30-Year
Treasury
Weighted
Average90%to105%
May20123.93
3.54
4.13
MINIMUM PRESENT VALUE
SEGMENT RATES
Generally for plan years beginning af-
ter December 31, 2007, the applicable in-
terest rates under § 417(e)(3)(D) are seg-
ment rates computed without regard to a
24-month average. For plan years be-
ginning in 2008 through 2011, the appli-
cable interest rates are the monthly spot
segment rates blended with the applicable
rate under § 417(e)(3)(A)(ii)(II) as in ef-
fect for plan years beginning in 2007. No-
tice 2007–81 provides guidelines for de-
termining the minimum present value seg-
ment rates. Pursuant to that notice, the
minimum present value transitional seg-
ment rates determined for April 2012, tak-
ing into account theApril 2012 30-year
Treasury rate of 3.18 stated above, are as
follows:
For Plan Years
Beginning in
First
Segment
Second
Segment
Third
Segment
20111.874.08
4.75
2012
1.54
4.30
5.14
DRAFTING
INFORMATION
The princi
pal author of this notice is
Tony Mont
anaro of the Employee Plans,
Tax Exemp
t and Government Entities
Division
. Mr. Montanaro may be e-mailed
atRetire
mentPlanQuestions@irs.gov.
2012–22 I.R.B.963May 29, 2012

Table I
Monthly Yield Curve for April 2012
Derived from April 2012 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.48
20.55.0040.55.1660.55.2380.55.26
1.00.7821.0
5.01
41.0
5.16
61.0
5.23
81.0
5.26
1.51.0721.55.0241.55.1761.55.2381.55.26
2.01.3122.0
5.02
42.0
5.17
62.0
5.23
82.0
5.26
2.51.5222.55.0342.55.1762.55.2382.55.26
3.01.7123.0
5.03
43.0
5.17
63.0
5.23
83.0
5.26
3.5
1.88
23.55.0443.55.1863.55.2383.55.26
4.0
2.05
24.0
5.04
44.0
5.18
64.0
5.23
84.0
5.26
4.52.2224.55.0444.55.1864.55.2484.55.26
5.0
2.40
25.05.0545.05.1865.05.2485.05.27
5.5
2.59
25.55.0545.55.1865.55.2485.55.27
6.02.7726.0
5.06
46.05.1966.0
5.24
86.0
5.27
6.5
2.96
26.55.0646.5
5.19
66.55.2486.55.27
7.0
3.15
27.0
5.07
47.05.1967.0
5.24
87.0
5.27
7.53.3327.55.0747.55.1967.55.2487.55.27
8.0
3.50
28.0
5.08
48.05.1968.0
5.24
88.0
5.27
8.5
3.66
28.55.0848.5
5.19
68.55.2488.55.27
9.0
3.82
29.0
5.08
49.0
5.20
69.0
5.24
89.0
5.27
9.5
3.96
29.55.0949.5
5.20
69.5
5.24
89.5
5.27
10.0
4.09
30.05.09
50.05.20
70.0
5.25
90.0
5.27
10.54.2130.55.1050.55.2070.55.2590.55.27
11.04.3131.0
5.1051.05.20
71.0
5.25
91.0
5.27
11.5
4.41
31.55.1151.55.2071.55.25
91.5
5.27
12.0
4.50
32.0
5.1152.05.21
72.0
5.25
92.0
5.27
12.54.5732.55.1152.55.2172.55.25
92.5
5.27
13.04.6433.0
5.1253.05.21
73.0
5.25
93.0
5.27
13.54.7033.55.1253.55.2173.55.2593.55.27
14.0
4.75
34.0
5.1354.05.21
74.0
5.25
94.0
5.27
14.5
4.79
34.55.1354.55.2174.55.25
94.5
5.27
15.0
4.83
35.05.1355.05.2175.05.25
95.0
5.28
15.5
4.86
35.55.1355.55.2275.55.25
95.5
5.28
16.0
4.89
36.0
5.1456.05.22
76.0
5.25
96.0
5.28
16.5
4.91
36.55.1456.55.2276.55.2596.55.28
17.04.9337.0
5.1457.05.22
77.0
5.26
97.0
5.28
17.5
4.95
37.55.1557.55.2277.55.26
97.5
5.28
18.0
4.96
38.0
5.1558.05.22
78.0
5.26
98.0
5.28
18.5
4.97
38.55.1558.55.2278.55.26
98.5
5.28
19.04.9839.0
5.16
59.0
5.22
79.0
5.26
99.0
5.28
19.5
4.99
39.55.1659.55.2379.55.2699.55.28
20.0
5.00
40.0
5.16
60.0
5.23
80.0
5.26
100.0
5.28
May 29, 20129642012–22 I.R.B.

Part IV. Items o
fGeneralInterest
Request for In
formation
Request for Inf
ormation
Regarding Sto
pLoss
Insurance
REG–117645–
12
AGENCIES: In
ternal Revenue Service,
Department o
f the Treasury; Employee
Benefits Sec
urity Administration, Depart-
ment of Labo
r; Centers for Medicare &
Medicaid Se
rvices, Department of Health
and Human Se
rvices.
ACTION: Req
uest for Information.
SUMMARY: T
his document is a request
for inform
ation regarding the use of stop
loss insur
ance by group health plans and
their plan
sponsors, with a focus on the
prevalenc
e and consequences of stop loss
insuranc
e at low attachment points. Given
the limit
ed nature of data available, the
Departme
nts of Labor, Health and Human
Services
(HHS), and the Treasury (collec-
tively,
the Departments) invite public com-
ments vi
a this request for information.
DATES: C
omments must be submitted on
or befor
e July 3, 2012.
ADDRESS
ES: Written comments may be
submit
ted to the Department of Labor as
specif
ied below. Any comment that is sub-
mitted
will be shared with the other De-
partme
nts. Please do not submit dupli-
cates.
All comments will be made avail-
able t
o the public.WARNING: Please do
not in
clude any personally identifiable in-
forma
tion (such as name, address, or other
conta
ct information) or confidential busi-
ness i
nformation that you do not want pub-
licly
disclosed. All comments are posted
on th
e Internet exactly as received and
can b
e retrieved by most Internet search
engi
nes. No deletions, modifications, or
reda
ctions will be made to the comments
rece
ived, as they are public records. Com-
men
ts may be submitted anonymously.
Comments may b
esubmittedbyoneof
the following
methods:
FederaleRule
makingPortal:
http://www.r
egulations.gov. Follow the
instructions
for submitting comments.
Email:
E-OHPSCA-STO
PLOSS.EBSA@dol.gov.
Mail or Hand De
livery:Officeof
Health Plan St
andards and Compliance
Assistance,
Employee Benefits Secu-
rity Adminis
tration, Room N–5653, U.S.
Department o
f Labor, 200 Constitution
Avenue, NW, W
ashington, DC 20210, At-
tention: St
op Loss Comments.
Commentsrec
eivedwill
be posted wi
thout change to
http://www
.regulations.govand
http://www
.dol.gov/ebsa, and available for
public insp
ection in the Public Disclosure
Room, N–151
3, Employee Benefits
Security A
dministration, 200 Constitution
Avenue, NW
, Washington, DC 20210,
including
any personal information
provided.
FOR FURTHE
R INFORMATION
CONTACT:
Beth Baum or Amy Turner,
Employee
Benefits Security Adminis-
tration,
Department of Labor, at (202)
693–8335
; Russ Weinheimer, Internal
Revenue S
ervice, Department of the Trea-
sury, at (
202) 622–6080; Steve Kornblit,
Centers
for Medicare & Medicaid Services
(CMS), D
epartment of Health and Human
Service
s, at (410) 786–1565.
Custome
r Service Information:In-
dividua
ls interested in obtaining infor-
mation f
rom the Department of Labor
concer
ning employment-based health cov-
erage l
aws may call the EBSA Toll-Free
Hotlin
e at 1–866–444–EBSA (3272) or
visit t
he Department of Labor’s website
(http:
//www.dol.gov/ebsa). In addition,
infor
mation from HHS on private health
insur
ance for consumers can be found on
the CM
Swebsite(www.cciio.cms.gov),
and in
formation on health reform can be
found
athttp://www.HealthCare.gov.
SUPPLEMENTAR
Y INFORMATION:
I. Background
Stop loss insu
rance protects against
health insura
nce claims that are cata-
strophic or un
predictable in nature
1
and
provides cove
rage to self-insured group
health plans
once a certain level of risk has
been absorbe
dbytheplan.
2
Stop loss pro-
tection allo
ws an employer to self-insure
for a set amou
nt of claims costs, with the
stop loss ins
urance covering most or all
of the remai
nder of the claims costs that
exceed the s
et amount, generally referred
to as the “at
tachment point.” Attachment
points can b
e either “specific” or “aggre-
gate.” Spe
cific attachment points protect
the plan ag
ainst a high claim for any one
individua
l(e.g., an employer self-insures
up to $500,
000 in claims per year for any
one enrol
lee and stop loss insurance cov-
ers claim
s amounts above the $500,000
attachme
nt point).
3
Aggregate attachment
points de
fine the maximum dollar amount
of claims
that an employer will pay, in
total, du
ring a specific period (e.g.,an
employe
r self-insures up to 125 percent
of expec
ted claims per year across all
employe
es and stop loss insurance covers
claims a
mounts above the 125 percent
attach
ment point).
4
Stop loss insurance
polici
es may be purchased by an employer
or by th
e employer’s group health plan.
The Dep
artments have little data on
the inc
idence or terms of stop loss in-
suranc
e among self-insured employers’
group h
ealth plans. Private-sector em-
ploye
r sponsored health benefit plans that
have 1
00 or more participants and smaller
plans
that hold assets in trust generally
are re
quired to file annual reports with the
Depar
tment of Labor. These reports, filed
on Fo
rm 5500, include some information
on th
e plans’ finances, including some
info
rmation on any stop loss insurance
poli
cies held by the plans. However, the
repo
rtsdonotincludeinformationonthe
atta
chment points associated with stop
los
s insurance policies or any informa-
tio
n on stop loss insurance policies held
1
See the Self-Insurance Institute of America Inc.’s definition of stop-loss insurance at:http://www.siia.org/i4a/pages/Index.cfm?pageID=4549.
2
American Medical Security Inc. v. Bartlett, 111 F.3d 358, 360, 361 (4th Cir.1997)
3
See the Self-Insurance Institute of America Inc.’s definition of stop-loss insurance at:http://www.siia.org/i4a/pages/Index.cfm?pageID=4549.
4
Id.
2012–22 I.R.B.965May 29, 2012

by plan sponsors rather than by plans.
Additionally, plans with fewer than 100
participants that employers self-insure us-
ing their general assets (and that do not
hold assets in trust) are not required to file
Form 5500 annual reports and as a result,
the Departments haveeven less informa-
tion about stop loss coverage for these
plans. The limited information on stop
loss insurance policies contained in Form
5500 is summarized in the Department of
Labor’s Group Health Plans Reports Ab-
stract of Form 5500 Annual Reports, avail-
able at:http://www.dol.gov/ebsa/publica-
tions/form5500dataresearch.html#health-
plan. The limited available information
suggests that stop loss insurance is perhaps
becoming more common among smaller
self-insured plans but information is not
available on the type of stop loss coverage
purchased by plans of various sizes. More
specifically, according to Form 5500 data,
between 2000 and 2008, the percentage of
group health plans filing a Form 5500 that
reported having stop loss insurance was
in the range of approximately 23 percent
to 27 percent for self-insured plans and
approximately 28 percent to 29 percent
for partially-insured, partially self-insured
plans.
5
Unless prohibited by State insurance
law, an insurer may offer stop loss insur-
ance policies with attachment points set
low enough such that the stop loss insurer
assumes nearly all the insurance risk. For
example, the attachment point could be set
at $5,000 per employee, or $100,000 for a
small group.
Under §514(a) of the Employee Re-
tirement Income Security Act (ERISA),
State laws that relate to “employee bene-
fit plans,” as defined by ERISA §3(3), are
generally preempted. (Although ERISA
§514(b)(2)(A) savesState insurance laws
from preemption, ERISA §514(b)(2)(B)
prohibits States from deeming employee
benefit plans to be insurance companies
in order to regulate them under insurance
laws.)
6
As a result, self-insured plans are
not subject to State insurance laws, but in-
surance policies issued to those plans or
plan sponsors, including stop loss insur-
ance policies, can be regulated by States
if the regulation is directed toward and af-
fects the business of insurance rather than
the relationship between an employee ben-
efit plan and its participants.
Employers and plans that purchase stop
loss insurance generally are not subject to
State health insurance laws including cov-
erage laws, rating policies, and other State
and Federal consumerprotections applica-
ble to health insurance, including certain
patient protections under the Patient Pro-
tection and Affordable Care Act (Afford-
able Care Act). It has been suggested that
some small employers with healthier em-
ployees may self-insure and purchase stop
loss insurance policies with relatively low
attachment points to avoid being subject to
these requirements while exposing them-
selves to little risk.
7
This practice, if wide-
spread, could worsen the risk pool and in-
crease premiums in the fully insured small
group market, including in the Small Busi-
ness Health Options Program (SHOP) Ex-
changes that begin in 2014.
8
In the mid-1990s, the National Associ-
ation of Insurance Commissioners (NAIC)
and several States expressed concern that
the purchase of stop loss insurance poli-
cies with low attachment points made the
self-insured classification a method to cir-
cumvent State insurance regulation. As
a result, the NAIC adopted a model law
(Model Act 92–1), which established stan-
dards for determining whether an insur-
ance policy should be treated as a health
insurance policy or a stop loss insurance
policy under State law. The model law cre-
ated minimum attachment points for stop
loss insurance policies.
9
If the attachment
points exceeded the minimum amount, the
policies would be treated essentially as
reinsurance of a self-insured plan. If the
attachment points were below the mini-
mum, the policies would be classified as
health insurance subject to State insurance
regulation. In addition, the model law es-
tablished distinctly different requirements
for health insurance policies as opposed to
stop loss insurance policies, including dif-
ferent licensing, reporting, policy form and
solvency requirementsfor insurers issuing
the health insurance policies.
Other interested stakeholders are also
monitoring the market for stop loss cover-
age with low attachment points.
10
II. Solicitation of Comments
The Departments are requesting com-
ments to contribute to the Departments’
understanding of the current and emerging
market for stop loss products, both gener-
ally and with respect to the following spe-
cific areas:
1. How common is the use of stop loss
insurance in connection with self-in-
sured arrangements? Does the usage
vary (and, if so, how) based on the
size of the underlying arrangement or
based on other factors? How many in-
dividuals, if known, are covered under
stop loss insurance (either nationally
or on a state-specific basis)? What are
5
See Department of Labor’s Report to Congress:Annual Report on Self-Insured Group Health Plans, issued on 04/24/2012, available at
http://www.dol.gov/ebsa/pdf/ACAReportToCongress041612.pdf.
6
Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 373 n.6 (2002) (a State law that regulates insurance — and which is otherwise saved from preemption — maynotbe applied to a
s
elf-insured ERISA plan).
7
Kathryn Linehan,Self-Insurance and the Potential Effects of Health Reform on the Small-Group Market, Issue Brief 840, National Health Policy Forum (December 21, 2010) available
athttp://www.nhpf.org/library/issue-briefs/IB840_PPACASmallGroup_12–21–10.pdf, Russell B. Korobkin,The Battle Over Self-Insured Health Plans, or ’One Good Loophole Deserves
Another’, Yale Journal of Health Policy, Law, and Ethics, Vol. 1, 89–136 (2005).
8
A recent RAND report predicts that this effect, if any, is likely to be small. Seehttp://content.healthaffairs.org/content/31/2/324.abstract?sid=412e7755–0eb9–4b79–ac32–d39e6c739d0f.
See alsoMark A. Hall, Regulating Stop-Loss Coverage May Be Needed to Deter Self-Insuring Small Employers From Undermining Market Reforms,Health Affairs, 31, no. 2 (2012):
316–323.
9
Specifically, the 1995 model law prohibited an insurer from issuing a stop loss insurance policy that had: (a) an annual attachment point for claims incurred per individual lower than $20,000;
and (b) an annual aggregate attachment point, for groups of fifty (50) or fewer, that was lower than the greater of: (i) $ 4,000 times the number of group members; (ii) 120 percent of expected
claims; or (iii) $ 20,000. For groups of fifty-one or more, it prohibited an annual aggregate attachment point thatwas lower than 110 percent of expected claims.
10
For example, Hall has cautioned that aspects of theAffordable Care Act could motivate some small businesses with younger, healthier employees to self-insure and buy relatively compre-
hensive stop loss coverage, and that this might increase premiums for small businesses that purchase insurance. See Mark A. Hall, Regulating Stop-Loss Coverage May Be Needed to Deter
Self-Insuring Small Employers From Undermining Market Reforms,Health Affairs, 31, no. 2 (2012): 316–323. Eibneret al.generally conclude that self-insurance will have little effect on
premiums for small group coverage, but suggest that this conclusion mightchange if affordable, attractive stop-loss policies become more available. See Christine Eibner, Carter C. Price,
Raffaele Vardavas, Amando Cordova and Federico Girosi, Small Firms’Actions in Two Areas, And Exchange Premium and Enrollment Impact,Health Affairs, 31, no. 2, (2012): 324–331.
May 29, 20129662012–22 I.R.B.

the trends? Are past trends expected
to be predictive of future trends? Is
the Affordable Care Act expected to
affect these trends (and, if so, how)?
2. What are common attachment points
for stop loss insurance policies, and
what factors are used to determine
these attachment points? What are
common attachment points by em-
ployer size (e.g., for plans with fewer
than 50, between 50 and 100, or be-
tween 100 and 250 employees, and
how do these compare to attachment
points used by larger plans)? What
are the lowest attachment points that
are available? What are the trends?
3. Are employee-level (“specific”) at-
tachment points more common, or are
group-level (“aggregate”) attachment
points more common? What are the
trends? What are the common attach-
ment points for employee-level and
group-level policies?
4. How do insurers work with small
employers to integrate stop loss in-
surance protection with self-insured
group health plans? What kinds of
options are generally made available?
Are policies customized to meet the
needs of different employers? How
are the attachment points for a stop
loss policy determined for an em-
ployer? Do self-insured group health
plans purchase stop loss insurance
anticipating that they will purchase it
every year?
5. For a given attachment point, what
percentage of total medical costs in-
curred by the employees is typically
paid for by the employer and what
percentage is typically paid for by
the stop loss insurance policy? How
much do the relative percentages vary
for different attachment points? What
are the loss ratios associated with stop
loss insurance policies?
6. What are the administrative costs to
employers related to stop loss insur-
ance purchased for the employers’
self-insured group health plans? How
do these costs compare to the admin-
istrative costs related to purchasing
a health insurance policy from an is-
suer?
7. Is stop loss insurance more prevalent
in certain industries or sectors? Are
there any minimum employee partic-
ipation requirements for a small em-
ployer to be offered stop loss insur-
ance?
8. What types of entities issue stop loss
insurance? How many small entities
11
issue stop loss insurance policies?
9. Do stop loss issuers increase fees for
groups below a certain size or exclude
those groups? If so, how?
10. How do stop loss insurers evaluate the
plans seeking coverage and how is this
evaluation reflected in the coverage or
premiums offered? Does the profile of
the plan have an effect on the attach-
ment points available?
11. How do States regulate stop loss in-
surance? In States that are regulating
this insurance, what are the licensing
processes and standards? Have States
proposed laws, regulations, or best
practices with regard to stop loss in-
surance? Do such proposals focus on
attachment points, size of the group,
percent of total claims paid by the stop
loss insurer, or other criteria? What
are the issues States face in regulating
stop loss insurance?
12. What effect does the availability of
stop loss insurance with various at-
tachment points and other particular
provisions have on small employers’
decisions to offer insurance to em-
ployees?
13. What impact does the use of stop loss
insurance by self-insured small em-
ployers have on the small group fully
insured market?
Signed at Washington, DC this25thday of
April, 2012.
Victoria A. Judson,
Division Counsel/
Associate Chief Counsel,
Tax Exempt and Government Entities,
Internal Revenue Service,
Department of the Treasury.
Signed at Washington, DC this25thday of
April, 2012.
George H. Bostick,
Benefits Tax Counsel,
Department of the Treasury.
Signed this23rdday ofApril, 2012.
Phyllis C. Borzi,
Assistant Secretary,
Employee Benefits
Security Administration,
Department of Labor.
Dated April 25, 2012.
Marilyn Tavenner,
Acting Administrator,
Centers for Medicare &
Medicaid Services.
Approved April 25, 2012.
Kathleen Sebelius,
Secretary,
Department of Health
and Human Services.
(Filed by the Office of the Federal Register on April 27, 2012,
11:15 a.m., and published in the issue of the Federal Register
for May 1, 2012, 77 F.R. 25788)
Withholding on Payments
by Government Entities to
Persons Providing Property or
Services; Withdrawal
Announcement 2012–23
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Withdrawal of notice of pro-
posed rulemaking.
SUMMARY: This document withdraws
a notice of proposed rulemaking relating
to withholding by government entities on
payments to persons providing property
or services. The proposed regulations are
withdrawn because Public Law 112–56,
“The 3% Withholding Repeal and Job
Creation Act,” repealed the provision of
the Internal Revenue Code underlying
the proposed rules. The guidance affects
government entities that would have been
required to withhold and report tax from
payments to persons providing property
11
For this purpose, a small entity is defined as (1) a proprietary firm meeting the size standards of the Small Business Administration or (2) a nonprofitorganization that is not dominant in
its field.
2012–22 I.R.B.967May 29, 2012

or services and also affects the persons re-
ceiving payments for property or services
from these government entities.
FOR FURTHER INFORMATION
CONTACT: A. G. Kelley, (202) 622–6040
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
Section 3402(t) of the Internal Revenue
Code (Code) was added by section 511 of
the Tax Increase Prevention and Reconcil-
iation Act of 2005, Public Law 109–222
(TIPRA), 120 Stat. 345, which was en-
acted on May 17, 2006.
Section 102 of the 3% Withholding Re-
peal and Job Creation Act (Public Law
112–56, 125 Stat. 711), which was enacted
on November 21, 2011, repealed section
3402(t) of the Code.
The Treasury Department and the IRS
issued proposed regulations under section
3402(t), published in theFederal Regis-
teron May 9, 2011 (REG–151687–10,
2011–23 I.R.B. 867 [76 FR 26678]). This
document withdraws those proposed reg-
ulations in light of the repeal of section
3402(t).
Atthesametimeastheissuanceof
the proposed regulations, the Treasury De-
partment and the IRS issued final regula-
tions under sections 3402(t), 3406, 6011,
6051, 6071, and 6302 of the Code that
were published in theFederal Registeron
May 9, 2011 (T.D. 9524, 2011–23 I.R.B.
843 [76 FR 26583]). A related document
(T.D. 9586, 2012–22 I.R.B. 960 [77 FR
24611]) removes the final regulations un-
der section 3402(t) and makes conforming
amendments to the regulations under other
sections reflecting that removal.
*****
Withdrawal of Notice of Proposed
Rulemaking
Accordingly, under the authority of
26 U.S.C. 7805, the notice of proposed
rulemaking (REG–151687–10) that was
published in theFederal Registeron
May 9, 2011 (76 FR 26678) is withdrawn.
Steven T. Miller,
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on April 24, 2012,
8:45 a.m., and published in the issue of the Federal Register
for April 25, 2012, 77 F.R. 24660)
May 29, 20129682012–22 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2012–22 I.R.B.iMay 29, 2012

Numerical Finding List
1
Bulletins 2012–1 through 2012–22
Announcements:
2012-1, 2012-1 I.R.B.249
2012-2, 2012-2 I.R.B.285
2012-3, 2012-4 I.R.B.335
2012-4, 2012-4 I.R.B.335
2012-5, 2012-5 I.R.B.348
2012-6, 2012-6 I.R.B.366
2012-7, 2012-6 I.R.B.367
2012-8, 2012-7 I.R.B.373
2012-9, 2012-7 I.R.B.377
2012-11, 2012-13 I.R.B.611
2012-12, 2012-12 I.R.B.562
2012-13, 2012-16 I.R.B.805
2012-14, 2012-14 I.R.B.721
2012-15, 2012-15 I.R.B.794
2012-16, 2012-18 I.R.B.876
2012-17, 2012-18 I.R.B.876
2012-18, 2012-16 I.R.B.845
2012-19, 2012-20 I.R.B.934
2012-20, 2012-18 I.R.B.876
2012-21, 2012-19 I.R.B.898
2012-22, 2012-19 I.R.B.899
2012-23, 2012-22 I.R.B.967
Notices:
2012-1, 2012-2 I.R.B.260
2012-3, 2012-3 I.R.B.289
2012-4, 2012-3 I.R.B.290
2012-5, 2012-3 I.R.B.291
2012-6, 2012-3 I.R.B.293
2012-7, 2012-4 I.R.B.308
2012-8, 2012-4 I.R.B.309
2012-9, 2012-4 I.R.B.315
2012-10, 2012-5 I.R.B.343
2012-11, 2012-5 I.R.B.346
2012-12, 2012-6 I.R.B.365
2012-13, 2012-9 I.R.B.421
2012-14, 2012-8 I.R.B.411
2012-15, 2012-9 I.R.B.424
2012-16, 2012-9 I.R.B.427
2012-17, 2012-9 I.R.B.430
2012-18, 2012-10 I.R.B.438
2012-19, 2012-10 I.R.B.440
2012-20, 2012-13 I.R.B.574
2012-21, 2012-10 I.R.B.450
2012-22, 2012-13 I.R.B.576
2012-23, 2012-11 I.R.B.483
2012-24, 2012-13 I.R.B.578
2012-25, 2012-15 I.R.B.789
2012-26, 2012-17 I.R.B.847
2012-27, 2012-17 I.R.B.849
2012-28, 2012-17 I.R.B.850
Notices— Continued:
2012-29, 2012-18 I.R.B.872
2012-30, 2012-18 I.R.B.874
2012-31, 2012-20 I.R.B.906
2012-32, 2012-20 I.R.B.910
2012-33, 2012-20 I.R.B.912
2012-34, 2012-21 I.R.B.937
2012-35, 2012-21 I.R.B.937
2012-36, 2012-22 I.R.B.962
Proposed Regulations:
REG-168745-03, 2012-14 I.R.B.718
REG-137589-07, 2012-21 I.R.B.942
REG-139991-08, 2012-21 I.R.B.945
REG-109369-10, 2012-9 I.R.B.434
REG-110980-10, 2012-13 I.R.B.581
REG-113770-10, 2012-13 I.R.B.587
REG-113903-10, 2012-11 I.R.B.486
REG-120282-10, 2012-11 I.R.B.487
REG-130302-10, 2012-8 I.R.B.412
REG-135491-10, 2012-16 I.R.B.803
REG-149625-10, 2012-2 I.R.B.279
REG-102988-11, 2012-4 I.R.B.326
REG-115809-11, 2012-13 I.R.B.598
REG-124627-11, 2012-8 I.R.B.417
REG-124791-11, 2012-15 I.R.B.791
REG-130777-11, 2012-5 I.R.B.347
REG-132736-11, 2012-15 I.R.B.793
REG-135071-11, 2012-12 I.R.B.561
REG-136008-11, 2012-19 I.R.B.881
REG-141268-11, 2012-19 I.R.B.896
REG-144267-11, 2012-21 I.R.B.949
REG-145474-11, 2012-11 I.R.B.495
REG-117645-12, 2012-22 I.R.B.965
Revenue Procedures:
2012-1, 2012-1 I.R.B.1
2012-2, 2012-1 I.R.B.92
2012-3, 2012-1 I.R.B.113
2012-4, 2012-1 I.R.B.125
2012-5, 2012-1 I.R.B.169
2012-6, 2012-1 I.R.B.197
2012-7, 2012-1 I.R.B.232
2012-8, 2012-1 I.R.B.235
2012-9, 2012-2 I.R.B.261
2012-10, 2012-2 I.R.B.273
2012-11, 2012-7 I.R.B.368
2012-12, 2012-2 I.R.B.275
2012-13, 2012-3 I.R.B.295
2012-14, 2012-3 I.R.B.296
2012-15, 2012-7 I.R.B.369
2012-16, 2012-10 I.R.B.452
2012-17, 2012-10 I.R.B.453
2012-18, 2012-10 I.R.B.455
2012-19, 2012-14 I.R.B.689
2012-20, 2012-14 I.R.B.700
Revenue Procedures— Continued:
2012-21, 2012-11 I.R.B.484
2012-22, 2012-17 I.R.B.853
2012-23, 2012-14 I.R.B.712
2012-24, 2012-20 I.R.B.913
2012-25, 2012-20 I.R.B.914
2012-26, 2012-20 I.R.B.933
2012-27, 2012-21 I.R.B.940
Revenue Rulings:
2012-1, 2012-2 I.R.B.255
2012-2, 2012-3 I.R.B.286
2012-3, 2012-8 I.R.B.383
2012-4, 2012-8 I.R.B.386
2012-5, 2012-5 I.R.B.337
2012-6, 2012-6 I.R.B.349
2012-7, 2012-6 I.R.B.362
2012-8, 2012-13 I.R.B.563
2012-9, 2012-11 I.R.B.475
2012-10, 2012-14 I.R.B.614
2012-11, 2012-14 I.R.B.686
2012-12, 2012-15 I.R.B.748
2012-13, 2012-19 I.R.B.878
Treasury Decisions:
9559, 2012-2 I.R.B.252
9560, 2012-4 I.R.B.299
9561, 2012-5 I.R.B.341
9562, 2012-5 I.R.B.339
9563, 2012-6 I.R.B.354
9564, 2012-14 I.R.B.614
9565, 2012-8 I.R.B.378
9566, 2012-8 I.R.B.389
9567, 2012-8 I.R.B.395
9568, 2012-12 I.R.B.499
9569, 2012-11 I.R.B.465
9570, 2012-11 I.R.B.477
9571, 2012-11 I.R.B.468
9572, 2012-11 I.R.B.471
9573, 2012-12 I.R.B.498
9574, 2012-12 I.R.B.559
9575, 2012-15 I.R.B.749
9576, 2012-15 I.R.B.723
9577, 2012-15 I.R.B.730
9579, 2012-16 I.R.B.796
9580, 2012-16 I.R.B.801
9581, 2012-16 I.R.B.798
9582, 2012-18 I.R.B.868
9583, 2012-18 I.R.B.866
9584, 2012-20 I.R.B.900
9585, 2012-21 I.R.B.935
9586, 2011-22 I.R.B.960
9587, 2012-22 I.R.B.953
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin
2011–52, dated December 27, 2011.
May 29, 2012ii2012–22 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2012–1 through 2012–22
Announcements:
2002-44
Supplemented by
Notice 2012-13, 2012-9 I.R.B.421
2010-19
Obsoleted by
Ann. 2012-12, 2012-12 I.R.B.562
2011-63
Corrected by
Ann. 2012-9, 2012-7 I.R.B.377
Notices:
2006-52
As clarified and amplified by Notice 2008-40, is
modified by
Notice 2012-26, 2012-17 I.R.B.847
2006-87
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2006-99
Superseded in part by
Notice 2012-20, 2012-13 I.R.B.574
2007-25
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-47
Obsoleted by
REG-137589-07, 2012-21 I.R.B.942
2007-77
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-95
Obsoleted in part by
T.D. 9576, 2012-15 I.R.B.723
2008-98
Modified by
Notice 2012-29, 2012-18 I.R.B.872
2008-107
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2009-86
Modified by
Notice 2012-29, 2012-18 I.R.B.872
2010-27
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
Notices— Continued:
2010-88
As modified by Ann. 2011-40, is superseded by
Notice 2012-1, 2012-2 I.R.B.260
2010-92
Obsoleted by
T.D. 9577, 2012-15 I.R.B.730
2011-8
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2011-28
Superseded by
Notice 2012-9, 2012-4 I.R.B.315
Proposed Regulations:
REG-208274-86
Withdrawn by
Ann. 2012-11, 2012-13 I.R.B.611
REG-151687-10
Withdrawn by
Ann. 2012-23, 2012-22 I.R.B.967
Revenue Procedures:
2000-43
Amplified, modified and superseded by
Rev. Proc. 2012-18, 2012-10 I.R.B.455
2003-61
Superseded by
Notice 2012-8, 2012-4 I.R.B.309
2007-44
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2010-43
Superseded by
Rev. Proc. 2012-22, 2012-17 I.R.B.853
2011-1
Superseded by
Rev. Proc. 2012-1, 2012-1 I.R.B.1
2011-2
Superseded by
Rev. Proc. 2012-2, 2012-1 I.R.B.92
2011-3
Superseded by
Rev. Proc. 2012-3, 2012-1 I.R.B.113
2011-4
Superseded by
Rev. Proc. 2012-4, 2012-1 I.R.B.125
2011-5
Superseded by
Rev. Proc. 2012-5, 2012-1 I.R.B.169
Revenue Procedures— Continued:
2011-6
Superseded by
Rev. Proc. 2012-6, 2012-1 I.R.B.197
2011-7
Superseded by
Rev. Proc. 2012-7, 2012-1 I.R.B.232
2011-8
Superseded by
Rev. Proc. 2012-8, 2012-1 I.R.B.235
2011-9
Superseded by
Rev. Proc. 2012-9, 2012-2 I.R.B.261
2011-10
Superseded by
Rev. Proc. 2012-10, 2012-2 I.R.B.273
2011-14
Modified and clarified by
Rev. Proc. 2012-19, 2012-14 I.R.B.689
Rev. Proc. 2012-20, 2012-14 I.R.B.700
2011-23
Obsoleted in part by
Rev. Proc. 2012-25, 2012-20 I.R.B.914
2011-37
Obsoleted in part by
Rev. Proc. 2012-16, 2012-10 I.R.B.452
2011-40
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-49
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2011-50
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-51
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-62
Corrected by
Ann. 2012-17, 2012-18 I.R.B.876
2012-8
Corrected by
Ann. 2012-7, 2012-6 I.R.B.367
Revenue Rulings:
92-19
Supplemented in part by
Rev. Rul. 2012-6, 2012-6 I.R.B.349
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin 2011–52, dated December 27,
2011.
2012–22 I.R.B.iiiMay 29, 2012

Revenue Rulings— Continued:
2008-40
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2011-1
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2012-9
Modified by
Rev. Rul. 2012-12, 2012-15 I.R.B.748
Treasury Decision:
9517
Corrected by
Ann. 2012-4, 2012-4 I.R.B.335
Ann. 2012-5, 2012-5 I.R.B.348
May 29, 2012iv2012–22 I.R.B.

INDEX
Internal Revenue Bulletins 2012–1 through
2012–22
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parentheses refer to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Determination letters, issuing procedures (RP 6) 1,197
Employer-sponsored health plan, minimum value (Notice 31) 20,
906
Fees on health insurance policies and self-insured health plans
for the Patient-Centered Outcomes Research Trust Fund
(REG–136008–11) 19,881
Full funding limitations, weighted average interest rates, seg-
ment rates for:
January 2012 (Notice 10) 5,343
February 2012 (Notice 16) 9,498
March 2012 (Notice 24) 13,578
April 2012 (Notice 28) 17,850
May2012(Notice36)22,962
Letter rulings:
And determination letters, areas which will not be issued
from:
Associates Chief Counsel and Division Counsel (TE/GE)
(RP 3) 1,113
Associate Chief Counsel (International) (RP 7) 1,232
And general information letters, procedures (RP 4) 1,125
User fees, request for letter rulings (RP 8) 1,235; correction
(Ann 7) 6,367
Longevity annuity contracts (REG–115809–11) 13,598
Modifications to minimum present value requirements for par-
tial annuity distribution options under defined benefit pension
plans (REG–110980–10) 13,581
Proposed Regulations:
26 CFR 1.401(a)(9)–5, –6, amended; 1.403(b)–6, amended;
1.408–8, amended; 1.408A–6, amended; 1.6047–2, added;
longevity annuity contracts (REG–115809–11) 13,598
26 CFR 1.417(e)–1, amended; modifications to mini-
mum present value requirements for partial annuity
EMPLOYEE PLANS—Cont.
distribution options under defined benefit pension plans
(REG–110980–10) 13,581
26 CFR 40.0–1, amended; 40.6011(a)–1, amended;
40.607(a)–1, amended; 40.6091–1(a), amended;
40.6302(c)–1, amended; 46.0–1, amended; 46.0–2, re-
moved; 46.4375–1, added; 46.4376–1, added; 46.4377–1,
added; fees on health insurance policies and self-insured
health plans for the Patient-Centered Outcomes Research
Trust Fund (REG–136008–11) 19,881
Qualified plans:
Accrued benefits (RR 4) 8,386
Determination letters (Ann 3) 4,335
Group trusts (Notice 6) 3,293
Qualified joint and survivors annuities (RR 3) 8,383
Retirement plans, covered compensation, permitted disparity
(RR 5) 5,337
Regulations:
26 CFR 54.9815–2715, added; 602.101(b), amended; sum-
mary of benefits and coverage and uniform glossary (TD
9575) 15,749
Request for information regarding stop loss insurance
(REG–117645–12) 22,965
Summary of benefits and coverage and uniform glossary (TD
9575) 15,749
Technical advice to IRS employees (RP 5) 1,169
EMPLOYMENT TAX
Employer’s annual federal tax return and modifications to the
deposit rules (TD 9566) 8,389
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Interim guidance for cost of health care coverage reporting on
Form W-2 (Notice 9) 4,315
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
Regulations:
26 CFR 31.3402(t)–0 thru –7, removed; 31.6011(a)–4,
amended; 31.6051–5, removed; 31.6071(a)–1, amended;
31.6302–1, amended; 31.6302–4, amended; removal of
regulations requiring 3% withholding by government enti-
ties (TD 9586) 22,960
26 CFR 31.6011(a)–1, –4, amended; 31.6011(a)–1T, –4T, re-
moved; 31.6071(a)–1, amended; 31.6302–0, –1, amended;
31.6302–0T, –1T, removed; employer’s annual federal tax
return and modifications to the deposit rules (TD 9566) 8,
389
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
2012–22 I.R.B.vMay 29, 2012

EMPLOYMENT TAX—Cont.
Removal of regulations requiring 3% withholding by govern-
ment entities (TD 9586) 22,960
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Technical Advice Memoranda (RP 2) 1,92
Withholding on payments by government entities to persons pro-
viding property or services, withdrawn (Ann 23) 22,967
Work opportunity tax credit (WOTC) (Notice 13) 9,492
ESTATE TAX
Extension of time to file estate tax return to elect portability of
a deceased spousal unused exclusion amount under section
2010(c) (Notice 21) 10,450
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Guidance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
Regulations:
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Technical Advice Memoranda (RP 2) 1,92
EXCISE TAX
Aviation fuels, air transportation (Notice 27) 17,849
Fees on health insurance policies and self-insured health plans
for the Patient-Centered Outcomes Research Trust Fund
(REG–136008–11) 19,881
Frequently asked questions, Patient Protection and Affordable
Care Act (Notice 17) 9,501
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Guidance regarding the repeal of section 163(f)(2)(B) (Notice
20) 13,574
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
EXCISE TAX—Cont.
26 CFR 48.4191–1, –2, added; 48.4221–1, –2, amended;
48.4221–2, amended; 48.6416(b)(2)–2, amended; taxable
medical devices (REG–113770–10) 13,587
26 CFR 40.0–1, amended; 40.6011(a)–1, amended;
40.607(a)–1, amended; 40.6091–1(a), amended;
40.6302(c)–1, amended; 46.0–1, amended; 46.0–2, re-
moved; 46.4375–1, added; 46.4376–1, added; 46.4377–1,
added; fees on health insurance policies and self-insured
health plans for the Patient-Centered Outcomes Research
Trust Fund (REG–136008–11) 19,881
Regulations:
26 CFR 54.9815–2715, added; 602.101(b), amended; sum-
mary of benefits and coverage and uniform glossary (TD
9575) 15,749
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Summary of benefits and coverage and uniform glossary (TD
9575) 15,749
Taxable medical devices (REG–113770–10) 13,587
Technical Advice Memoranda (RP 2) 1,92
Telephone excise tax refund deadline (Ann 16) 18,873
EXEMPT ORGANIZATIONS
Annual notice to donors regarding pending and settled declara-
tory judgment suits (Ann 1) 1,249
Application for recognition as a 501(c)(29) organization (TD
9574) 12,559; (REG–135071–11) 12,561
Certain filing changes for tax-exempt organizations (Notice 4) 3,
290
Examples of program-related investments (REG–144267–11)
21,949
Letter rulings:
And determination letters:
Areas which will not be issued from Associates Chief
Counsel and Division Counsel (TE/GE) (RP 3) 1,113
Qualified nonprofit health insurance issuers, procedures
(RP 11) 7,368
And general information letters, procedures (RP 4) 1,125
Exemption application determination letter rulings under sec-
tions 501, 509, 4940, and 4942 (RP 10) 2,273
Exemption application determination letter rulings under sec-
tions 501 and 521 (RP 9) 2,261
User fees, request for letter rulings (RP 8) 1,235; correction
(Ann 7) 6,367
Method of reporting Form 990 information regarding interests in
partnership (Ann 19) 20,934
Public inspection of material relating to tax-exempt organiza-
tions (TD 9581) 17,798
Procedures for charitable trusts to obtain Type III supporting or-
ganization classification rulings (Ann 12) 12,562
May 29, 2012vi2012–22 I.R.B.

EXEMPT ORGANIZATIONS—Cont.
Proposed Regulations:
26 CFR 1.501(c)(29)–1, added; application for recognition as
a 501(c)(29) organization (REG–135071–11) 12,561
26 CFR 53.4944–3, amended; examples of program-related
investments (REG–144267–11) 21,949
Regulations:
26 CFR 1.1501(c)(29)–1T, added;application for recognition
as a 501(c)(29) organization (TD 9574) 12,559
26 CFR 301.6104(a)–1, revised; 301.6110-1, amended; pub-
lic inspection of material relating to tax-exempt organiza-
tions (TD 9581) 17,798
Revocations (Ann 15) 15,794; (Ann 18) 16,845;(Ann20)18,
876; (Ann 22) 19,899
Technical advice to IRS employees (RP 5) 1,169
GIFT TAX
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Guidance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
Regulations:
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,868
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Technical Advice Memoranda (TAMs) (RP 2) 1,92
INCOME TAX
2012 inflation adjustment factors and reference prices for pur-
poses of computing the production tax credit under section 45
(Notice 35) 21,937
Adequate notice revenue procedure renewal (RP 15) 7,369
Advance Pricing Agreement Program (APA) 2011 (Ann 13) 16,
805
Allocation and apportionment of interest expense (TD 9571) 11,
468; (REG–113903–11) 11,486
Allocation of earnings and profits in tax-free transfers from one
corporation to another (REG–141268–11) 19,896
Application of the segregation rules to small shareholders
(REG–149625–10) 2,279
Average area purchase price safe-harbors guidance for 2012 (RP
25) 20,915
INCOME TAX—Cont.
Basis reporting by securities brokers and basis determination for
debt instruments and options (REG–102988–11) 4,326;(No-
tice 34) 21,937
Bonds, national and area median gross income figures guidance
for 2012 (RP 16) 10,452
Certain transfers of property to regulated investment com-
panies (RICs) and real estate investment trusts (REITs)
(REG–139991–08) 21,945
Changes affecting tax year 2011 filing of information returns
(Ann 6) 6,366
Conduit financing arrangements (TD 9562) 5,339
Continuing education provider and accrediting organization (RP
12) 2,275
Corporate reorganization, guidance on the measurement of con-
tinuity of interest (TD 9565) 8,378; (REG–124627–11) 8,417
Credits:
Iowa credit disaster relief (Notice 7) 4,308
New markets tax credit (TD 9560) 4,299
Reimbursements under section 1603 of American Recovery
and Reinvestment Tax Act (ARRTA) of 2009 (Notice 23)
11,485
Low-income housing credit:
2012 population figures used for calculations (Notice 22)
13,576
Recapture under new section 42(j)(6) (RP 27) 21,940
Section 42 qualified contract provisions (TD 9587) 22,953
Work opportunity tax credit (WOTC) (Notice 13) 9,492
Current refundings of tax-exemptbonds in certain disaster relief
bond programs (Notice 3) 3,289
Damages received on account of personal physical injuries or
physical sickness (TD 9573) 12,498
Deduction for energy efficient commercial building property
(Notice 26) 17,847
Definition of a taxpayer (TD 9576) 15,723
Depreciation, 2012 limitation on deductions for passenger auto-
mobiles (RP 23) 14,712
Determination of housing cost amounts eligible for exclusion or
deduction for 2012 (Notice 19) 10,440
Disciplinary actions involving attorneys, certified public ac-
counts, enrolled agents, and enrolled actuaries (Ann 8) 7,373
Dividend equivalents from sources within the United States (TD
9527) 11,474; (REG–120282–10) 11,487
Electronic filing of K–1s (RP 17) 10,453
Employer-sponsored health plan, minimum value (Notice 31) 20,
906
Equitable relief under section 66(c) or section 6015(f) (Notice 8)
4,309
Ex parte communications between appeals and other Internal
Revenue Employees (RP 18) 10,455
Extension of time to file estate tax return to elect portability of
a deceased spousal unused exclusion amount under section
2010(c) (Notice 21) 10,450
Foreign earned income exclusion, 2011 update (RP 21) 11,484
Foreign tax credit splitting events (TD 9577) 15,730;
(REG–132736–11) 15,793
2012–22 I.R.B.viiMay 29, 2012

INCOME TAX—Cont.
Forms:
W-2 and W-3, general rules and specifications, correction to
RP2011–62(Ann17)18,873
W-2c and W-2c, general rules and specifications (RP 22) 17,
853
1097, 1098, 3921, 3922, 5498, 8935, and W-2, requirements
for filing electronically; correction to Rev. Proc. 2011–40
(Ann 2) 2,285
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Gross income, exclusions, restitution payments under the Traf-
ficking Victims Protection Act of 2000 (Notice 12) 6,365
Guidance on reporting of interest paid to nonresident aliens (TD
9584) 20,900
Guidance priority list (Notice 25) 15,789
Guidance regarding deductionand capitalization of expen-
ditures related to tangible property (TD 9564) 14,614;
(REG–168745–03) 14,718
Guidance regarding foreign base company sales income (TD
9563) 6,354
Guidance regarding the repeal of section 163(f)(2)(B) (Notice
20) 13,574
Guidance under section 267(f), deferral of loss on transactions
(TD 9583) 18,866
Guidance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
Health insurance coverage, information reporting (Notice 32) 20,
910
Health savings accounts (HSAs):
Indian health service (Notice 14) 8,411
Inflation adjusted amounts (RP 26) 20,933
Information reporting by passport applicants (Ann 11) 13,611
Insurance tax, insurance companies, interest rate tables (RR 6) 6,
349
Interest:
Investment:
Federal short-term, mid-term, and long-term rates for:
January (RR 2) 3,286
February (RR 7) 6,362
March (RR 9) 11,478; correction (RR 12) 15,748
April (RR 11) 14,686
May (RR 13) 19,878
Rates:
Underpayment and overpayments, quarter beginning:
April 1, 2012 (RR 8) 13,563
Letters rulings:
And determination letters, areas which will not be issued
from:
Associate Chief Counsel andDivision Counsel (TE/GE)
(RP 3) 1,113
Associate Chief Counsel (International) (RP 7) 1,232
And information letters issued by Associate Offices, determi-
nation letters issued by Operating Divisions (RP 1) 1,1
Local lodging expenses (REG–137589–07) 21,942
Maximum vehicle values, specialvaluation rules, 2012 (RP 13)
3,295
INCOME TAX—Cont.
Nonconventional source fuel credit, 2011 section 45K inflation
adjustment factor, section 45K reference price (Notice 30) 18,
874
Physical inspection pilot program (Notice 18) 10,438
Procedure for obtaining automatic consent to change to
the method of accounting provided in sections 1.162–3T,
1.162–4T, 1.263(a)–1T, 1.263(a)–2T, and 1.263(a)–3T (TD
9564) for taxable years beginning on or after January 1, 2012
(RP 19) 14,689
Procedure for obtaining automatic consent to change to the
method of accounting provided in sections 1.167(a)–4T,
1.168(i)–1T, 1.168(k)–7T, and 1.168(i)–8T (TD 9564) for
taxable years beginning on or after January 1, 2012 (RP 20)
14,700
Proposed Regulations:
26 CFR 1.162–3T, –4T, –11T, added; 1.165–2T, added;
1.167(a)–4T, –7T, –8T, added; 1.263(a)–1T, –2T, –3T,
–6T, added; 1.263A–1T, added; 1.1016–3T, added;
1.162–11, amended; 1.165–2, amended; 1.167(a)–7, –8,
amended; 1.168(i)–0, –1, amended; 1.263(a)–0, amended,
1.1016–3, amended; 1.162–6, removed;1.162–3, –4, re-
vised; 1.167(a)–4, revised, 1.263(a)–1, –2, –3, revised,
guidance regarding deduction and capitalization of expen-
ditures relating to tangible property (REG–168745–03) 14,
614
26 CFR 1.162–31, added; 1.262–1, amended; local lodging
expenses (REG–137589–07) 21,942
26 CFR 1.275–7, revised; treasury inflation-protected securi-
ties issued at a premium (REG–130777–11) 5,347
26 CFR 1.312–11, amended; 1.381(c)(2)–1(d), removed; al-
location of earnings and profits in tax-free transfers from
one corporation to another (REG–141268–11) 19,896
26 CFR 1.337(d)–7, amended; certain transfers of property
to regulated investment companies (RICs) and real estate
investment trusts (REITs) (REG–139991–08) 21,945
26 CFR 1.368–1, amended; corporate reorganizations,
guidance on the measurement of continuity of interest
(REG–124627–11) 8,417
26 CFR 1.382–3, amended; application of section 382 seg-
regation rules to small shareholders (REG–149625–10) 2,
279
26 CFR 1.469–0, amended; 1.469–5, –5T, –9, revised; mate-
rial participation of limited partners (REG–109369–10) 9,
434
26 CFR 1.482–7, amended; use of differential income stream
as an application of the income method and as a consider-
ation in assessing the best method (REG–145474–11) 11,
497
26 CFR 1.704–1, amended; 1.909–0 thru 6, added; foreign tax
credit splitting events (REG–132736–11) 15,793
26 CFR 1.861–9, –11, revised; allocation and apportionment
of interest expense (REG–113903–11) 11,488
26 CFR 1.863–7, amended; 1.871–15, –16, added; 1.881–2,
added; 1.892–3, added; 1.894–1, added; 1.1441–2, –3, –4,
–6, –7, amended; 1.1461.1, amended; dividend equivalents
May 29, 2012viii2012–22 I.R.B.

INCOME TAX—Cont.
from sources within the United States (REG–120282–10)
11,489
26 CFR 1.6038D–0 thru –8, added; reporting of specified for-
eign financial assets (REG–130302–10) 8,412
26 CFR 1.6045–1, amended; 1.6045A–1, amended;
1.6045B–1, amended; basis reporting by securities brokers
and basis determination for debt instruments and options
(REG–102988–11) 4,326
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
Publications:
1141, general rules and specifcations for Forms W-2 and W-3,
correction to RP 2011–62 (Ann 17) 18,873
1187, specifications for filing Form 1040–S, foreign person’s
U.S. source income subject to withholding, electronically;
correction (Ann 6) 6,366
1220, specifications for filing Forms 1097, 1098, 3921, 3922,
5498, 8935, and W-2 electronically; correction to Rev.
Proc. 2011–40 (Ann 2) 2,285; correction (Ann 6) 6,366
1223, general rules and specifications for Forms W-2c and
W-3c (RP 22) 17,853
1239, specifications for filing Form 8027, employer’s annual
information return of tip income and allocated tips, elec-
tronically; correction (Ann 6) 6,366
Recurring item exception (RR 1) 2,255
Regulations:
26 CFR 1.42–18, added; 602.101, amended; section 42 qual-
ified contract provisions (TD 9587) 22,953
26 CFR 1.45D–1, added; 1.45D–1, amended; new markets
tax credit (TD 9560) 4,299
26 CFR 1.104–1, revised; damages received on account of
personal physical injuries or physical sickness (TD 9573)
12,498
26 CFR 1.267(f)–1, amended guidance under section 267(f),
deferral of loss on transactions (TD 9583) 18,866
26 CFR 1.275–7T, added; treasury inflation-protected securi-
ties issued at a premium (TD 9561) 5,341
26 CFR 1.367(a)–1, –1T, amended; 1.482–0, –1, –2, –4, –5,
–8, –9, amended; 1.482–0T, –1T, –2T, –4T, —7T, –8T, –9T,
removed; 1.482–7, added; 1.861–17, amended; 1.6662–6,
amended; 301.7701–1, amended; 602.101, revised; section
482, methods to determine taxable income in connection
with a cost sharing arrangement (TD 9568) 12,499
26 CFR 1.368–1, amended; 1.368–1T, removed; corporate
reorganizations, guidance on the measurement of continuity
of interest (TD 9565) 8,378
26 CFR 1.482–7, amended; 1.482–7T, added; use of differen-
tial income stream as an application of the income method
and as a consideration in assessing the best method (TD
9569) 11,465
26 CFR 1.642(c)–3, amended; 1.643(a)–5, amended; guid-
ance under sections 642 and 643 (income ordering rules)
(TD 9582) 18,869
26 CFR 1.704–1, amended; 1.704–1T, added; 1.909–0T,
–2T. –3T, –4T, –5T, –6T, added; foreign tax credit splitting
events (TD 9577) 15,730
INCOME TAX—Cont.
26 CFR 1.706–1, amended; 1.901–2, amended; definition of
a taxpayer (TD 9576) 15,723
26 CFR 1.861–9T, amended; 1.1.861–11T, amended; reduc-
tion of foreign tax credit limitation categories under section
904(d) (TD 9571) 11,471
26 CFR 1.863–7, amended; 1.863–7T, added; 1.871–15T,
added; 1.871–16T, added; 1.881–2, amended; 1.881–2T,
added; 1.1441–2, –3, –4, –7, amended; 1.144–2T, –3T, –4T,
–7T, added; 1.1461–1, amended; 1.1461–1T, added; divi-
dend equivalents from sources within the United States (TD
9572) 11,471
26 CFR 1.863–10, added; 1.863–10T, removed; source of in-
come from qualified fails charges (TD 9579) 16,796
26 CFR 1.881–3, amended; conduit financing arrangements
(TD 9562) 5,339
26 CFR 1.954–3, amended; 1.954–3T, removed; guidance re-
garding foreign base company sales income (TD 9563) 6,
354
26 CFR 1.1248–1, amended; 1.1248–1T, removed; treatment
of gain recognized with respect to stock in certain foreign
corporations upon distributions (TD 9585) 21,935
26 CFR 1.6038D–0T thru –8T, added; reporting of specified
foreign financial assets (TD 9567) 8,395
26 CFR 1.6049–4, revised; 1.6049–5, –6, amended;
1.6049–8, revised; 31.3406(g)–1, revised; guidance on
reporting of interest paid to nonresident aliens (TD 9584)
20,900
26 CFR 1.6695–2, revised; tax return preparer penalties under
section 6695 (TD 9570) 11,479
26 CFR 300.0, amended; 300.12, revised; 300.13, added; user
fee to take the registered tax return preparer competency
examination (TD 9559) 2,252
26 CFR 301.6109–1, amended; updating of employer identi-
fication numbers (REG–135491–10) 17,803
26 CFR 301.7623, amended; rewards and awards for infor-
mation relating to violations of internal revenue laws (TD
9580) 17,801
26 CFR 901.11, amended; regulations governing the perfor-
mance of actuarial services under the Employee Retirement
Income Security Act (ERISA)of 1974; correction (Ann 4)
4,335;correction(Ann5)5,348
Regulations governing the performance of actuarial services un-
der the Employee Retirement Income Security Act (ERISA) of
1974; correction (Ann 4) 4,335; correction (Ann 5) 5,348
Reporting deposit interest, exchange of information (RP 24) 20,
913
Reporting of specified foreign financial assets (TD 9567) 8,395;
(REG–130302–10) 8,412
Request for comments on reporting by applicable large employ-
ers on health insurance coverage under employer-sponsored
plans (Notice 33) 20,911
Rewards and awards for information relating to violations of in-
ternal revenue laws (TD 9580) 17,801
Revocations, exempt organizations (Ann 15) 15,794; (Ann 18)
16,845; (Ann 20) 18,876; (Ann 22) 19,899
2012–22 I.R.B.ixMay 29, 2012

INCOME TAX—Cont.
Safe harbor reporting:
Eligible REMICs required to report on Schedule Q informa-
tion with respect to REMIC assets (Notice 5) 3,291
Guidance for REIT investing in certain REMIC regular and
residual interests (RP 14) 3,296
Section 304 transactions (Notice 15) 9,495
Section 482, methods to determine taxable income in connection
with a cost sharing arrangement (TD 9568) 12,499
Source of income from qualified fails charges (TD 9579) 16,796
Standard industry fare level (SIFL) (RR 10) 14,614
Standard mileage rates, 2012 (Notice 1) 2,260
Student loan bonds (Ann 14) 14,721
Substitute forms, W-2c and W-3c, general rules and specifica-
tions (RP 22) 17,853
Tax conventions:
U.S.–Germany agreement on pensions (Ann 21) 19,898
Tax return preparer penalties under section 6695 (TD 9570) 11,
479
Technical Advice Memoranda (TAMs) (RP 2) 1,92
Transitional relief for section 6045B issuer returns and state-
ments for 2011 organizational actions (Notice 11) 5,346
Treasury inflation-protected securities issued at a premium (TD
9561) 5,341; (REG–130777–11) 5,347
Treatment of gain recognized with respect to stock in certain for-
eign corporations upon distributions (TD 9585) 21,935
Updating of employer identification numbers (REG-135491-10)
17,803
Use of differential income streamas an application of the income
method and as a consideration in assessing the best method
(TD 9569) 11,465; (REG–145474–11) 11,497
User fee to take the registered tax return preparer competency
examination (TD 9559) 2,252
SELF-EMPLOYMENT TAX
Furnishing identifying number of tax return preparer
(REG–124791–11) 15,791
Letter rulings and information letters issued by Associate Of-
fices, determination letters issued by Operating Divisions (RP
1) 1,1
Proposed Regulations:
26 CFR 1.6109–2, amended; furnishing identifying number
of tax return preparer (REG–124791–11) 15,791
Technical Advice Memoranda (TAMs) (RP 2) 1,92
May 29, 2012x2012–22 I.R.B.

2012–22 I.R.B.May 29, 2012

May 29, 20122012–22 I.R.B.

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