Internal Revenue Bulletin 2007-11 (PDF rendition): IRS Notices

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Bulletin No. 200
7-11
March 12, 2007
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2007–12, page 685.
Payroll taxes on deferred compensation.This ruling pro-
videsguidanceonwhenataxpayerusinganaccrualmethod
of accounting incurs a liability under section 461 of the Code
for payroll taxes on deferred compensation. Rev. Rul. 69–587
revoked. Rev. Rul. 96–51 amplified.
Rev. Rul. 2
007–13, page 684.
Investor c
ontrol and general public; taxation of variable
contracts
; insurance and annuities.This ruling treats the
grantor o
f a grantor trust as the owner of a life insurance con-
tract tha
t is owned by the trust for purposes of determining
whether a
transfer of a contract (a) is a transfer for valuable
consider
ation, and (b) if so, is a transfer to the insured within
the meani
ng of section 101(a)(2)(B) of the Code.
Rev. Rul. 2007–15, page 687.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for March 2007.
Notice 2007–19, page 689.
This notice provides interim rules, pending the issuance of reg-
ulations under sections 932(c) and 7654(e), concerning the
statute of limitations on assessment with respect to taxpayers
claiming to bebona fideresidents of the U.S. Virgin Islands
(USVI). The notice also provides a new annual information re-
porting requirement for U.S. citizens and resident aliens with
$75,000 or more of gross income who claimbona fideres-
idency status in the USVI. Taxpayers may rely on this notice
until regulations are issued.
Notice 2007–23, page 690.
Low-income housing tax credit; private activity bonds.
Resident populations of the 50 states, the District of Columbia,
Puerto Rico, and the insular areas are provided for purposes
of determining the 2007 calendar year (1) state housing credit
ceiling under section 42(h) of the Code, (2) private activity bond
volume cap under section 146, and (3) private activity bond
volume limit under section 142(k).
Rev. Proc. 2007–24, page 692.
Substitute tax forms and schedules.Requirements are
set forth for privately designed and printed federal tax forms
and conditions under which the Service will accept computer
prepared and computer-generated tax forms and schedules.
Rev. Proc. 2005–74 superseded.
Announcement 2007–27, page 733.
This document provides notice of a public hearing on proposed
regulations (REG–103043–05, 2006–49 I.R.B. 1063) relating
to the obligation of material advisors to prepare and main-
tain lists with respect to reportable transactions under section
6112 of the Code.
Announcement 2007–29, page 733.
This document provides notice of a public hearing on proposed
regulations (REG–103038–05, 2006–49 I.R.B. 1049) relating
to the disclosure of reportable transactions by taxpayers under
section 6011 of the Code.
Announcement 2007–30, page 734.
This document provides notice of a public hearing on proposed
regulations (REG–103039–05, 2006–49 I.R.B. 1057) relating
to the disclosure of reportable transactions by material advi-
sors under section 6111 of the Code.
(Continued on the next page)
Fi
nding Lists begin on page ii.

ADMINISTRATIVE
Announcement 2007–32, page 734.
This document contains corrections to final regulations
(T.D. 9298, 2007–6 I.R.B. 434) that governs the provisions
prohibiting discrimination based on a health factor for group
health plans and issuers of health insurance coverage offered
in connection with a group health plan.
March 12, 20072007–11 I.R.B.

The IRS Mission
Provide America’s taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2007–11 I.R.B.March 12, 2007

Place missing child here.
March 12, 20072007–11 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 101.—Certain
Death Benefits
26 CFR 1.101–1: Exclusion from gross income of
proceeds of life insurance contracts payable by rea-
son of death.
(Also § 671.)
Investor control and general public;
taxation of variable contracts; insur-
ance and annuities.This ruling treats the
grantor of a grantor trust as the owner of a
life insurance contract that is owned by the
trust for purposes of determining whether
a transfer of a contract (a) is a transfer for
valuable consideration, and (b) if so, is a
transfer to the insured within the meaning
of section 101(a)(2)(B) of the Code.
Rev. Rul. 2007–13
ISSUE
Is the grantor who is treated for fed-
eral income tax purposes as the owner of
a trust that owns a life insurance contract
on the grantor’s life treated as the owner
of the contract for purposes of determin-
ing whether a transfer of the contract (a)
is a transfer for a valuable consideration
within the meaning of § 101(a)(2) of the
Internal Revenue Code, and (b) if so, is a
transfer to the insured within the meaning
of § 101(a)(2)(B)?
FACTS
Situation 1.TR1andTR2are grantor
trusts, both of which are treated as wholly
owned byGunder subpart E of Part I of
subchapter J of the Internal Revenue Code.
TR2owns a life insurance contract upon
the life ofG.TR2transfers the life insur-
ance contract toTR1in exchange for cash.
Situation 2. The facts are the same as in
Situation 1, except thatTR2is not a grantor
trust.
LAW AND ANALYSIS
Section 61 defines gross income as all
income from whatever source derived,
including gains derived from dealings in
property.
Section 101(a)(1) provides that, except
asotherwiseprovidedin§§101(a)(2),
101(d), and 101(f), gross income does
not include amounts received under a life
insurance contract if such amounts are
received by reason of the death of the
insured.
Section 101(a)(2) provides, generally,
that if a life insurance contract, or any in-
terest therein, is transferred for a valuable
consideration, the exclusion from gross in-
come provided by § 101(a)(1) shall not ex-
ceed an amount equal to the sum of the
actual value of the consideration and the
premiums and other amounts subsequently
paid by the transferee.
The term “transfer for a valuable con-
sideration” is defined for purposes of
§ 101(a)(2) in § 1.101–1(b)(4) of the In-
come Tax Regulations as any absolute
transfer for value of a right to receive all
or a part of the proceeds of a life insurance
policy.
Section 101(a)(2)(B) provides that
§ 101(a)(2) does not apply to a transfer
of a life insurance contract or any inter-
est therein to the insured, to a partner of
the insured, to a partnership in which the
insured is a partner, or to a corporation
in which the insured is a shareholder or
officer.
In Rev. Rul. 85–13, 1985–1 C.B. 184,
a grantor acquired the corpus of a trust
in exchange for the grantor’s unsecured
promissory note. The ruling concludes
that the grantor is considered to have bor-
rowed the corpus of the trust and, as a re-
sult, is treated as the owner of the trust un-
der § 675(3). Because the grantor is treated
as the owner of the trust, the grantor is
deemed the owner of the trust assets for
federal income tax purposes. In addition,
because the grantor is therefore considered
to own the purported consideration both
before and after the transaction, the ex-
change of a promissory note for the trust
assets is not recognized as a sale for fed-
eral income tax purposes.
In Situation 1, becauseGis treated as
the owner of bothTR1andTR2for fed-
eral income tax purposes,Gis treated as
the owner of all the assets of both trusts, in-
cluding both the life insurance contract and
the cash received for it, both before and af-
ter the exchange. Accordingly, in Situation
1 there has been no transfer of the contract
within the meaning of § 101(a)(2).
In Situation 2, becauseGis treated as
the owner of all the assets ofTR1but not
ofTR2for federal income tax purposes,G
is treated as the owner of the cash (but not
the life insurance contract) before the ex-
change, and as the owner of the life in-
surance contract (but not the cash) after
the exchange. Accordingly, in Situation
2 there has been a transfer of the life in-
surance contract for a valuable consider-
ation within the meaning of § 101(a)(2).
Nevertheless, the transfer for value limita-
tions of § 101(a)(2) do not apply, because
the transfer toTR1is treated as a transfer
toG, the insured, within the meaning of
§ 101(a)(2)(B).
HOLDING
The grantor who is treated for federal
income tax purposes as the owner of a trust
that owns a life insurance contract on the
grantor’s life is treated as the owner of the
contract for purposes of applying the trans-
fer for value limitations of § 101(a)(2).
Accordingly, in Situation 1, the transfer
of a life insurance contract between two
grantor trusts that are treated as wholly
owned by the same grantor is not a trans-
fer for a valuable consideration within the
meaning of § 101(a)(2); in Situation 2,
the transfer of a life insurance contract to
a grantor trust that is treated as wholly
owned by the insured is a transfer to the in-
sured within the meaning of § 101(a)(2)(B)
and is therefore excepted from the transfer
for value limitations under § 101(a)(2).
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Chris Lieu of the Office of As-
sociate Chief Counsel (Financial Institu-
tions & Products). For further informa-
tion regarding this revenue ruling, con-
2007–11 I.R.B.684March 12, 2007

tact Chris Lieu at (202) 622–3970 (not a
toll-free call).
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of March 2007. See Rev.
Rul. 2007-15, page 687.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of March 2007. See Rev. Rul.
2007-15, page 687.
Section 404.—Deduction
for Contributions of an
Employer to an Employees’
Trust or Annuity Plan and
Compensation Under a
Deferred-Payment Plan
This revenue ruling provides guidance on when a
taxpayer using an accrualmethod of accounting in-
curs a liability under section 461 for payroll taxes on
deferred compensation. See Rev. Rul. 2007-12, page
685.
Section
412.—Minimum
Fundin
gStandards
The adj
usted applicable federal short-term, mid-
term, a
nd long-term rates are set forth for the month
of Marc
h 2007. See Rev. Rul. 2007-15, page 687.
Section 461.—General
Rule for Taxable Year
of Deduction
26 CFR 1.461–1: General rule for taxable year of
deduction.
(Also § 404.)
Payroll taxes on deferred compensa-
tion.This ruling provides guidance on
when a taxpayer using an accrual method
of accounting incurs aliability under sec-
tion 461 of the Code for payroll taxes on
deferred compensation. Rev. Rul. 69–587
revoked. Rev. Rul. 96–51 amplified.
Rev. Rul. 2007–12
ISSUE
If the all events test and recurring item
exception of § 461 of the Internal Revenue
Code are otherwise met, may an accrual
method taxpayer treat its Federal Insur-
ance Contributions Act (FICA) and Fed-
eral Unemployment Tax Act (FUTA) tax
liability as incurred in Year 1 if the com-
pensation to which the tax liability relates
is deferred compensation that is deductible
under § 404 in Year 2?
FACTS
X, a corporation, uses an accrual
method of accounting and files its fed-
eral income tax returns on a calendar year
basis. As of the end of Year 1, X has a
fixed liability to pay compensation for ser-
vices provided by X’s employees during
Year 1. As of the end of Year 1, all events
have occurred to establish the fact of X’s
liability for the taxes (“payroll taxes”)
owed under §§ 3111 (the employer’s
share of FICA taxes) and 3301 (FUTA
taxes) related to the compensation, and the
amount of the payroll tax liability can be
determined with reasonable accuracy. X
properly adopted the recurring item excep-
tion under § 1.461–5 of the Income Tax
Regulations as a method of accounting
with respect to the payroll taxes. X pays
the payroll taxes either (1) in Year 1 or
(2) before the earlier of September 15 of
Year 2 or the date X files a timely (includ-
ing extensions) federal income tax return
for Year 1. Therefore, under § 461, the
payroll taxes generally would be treated
as incurred by X in Year 1. However, the
compensation to which the payroll taxes
relate is deferred compensation that is
properly deductible under § 404 in Year 2.
LAW AND ANALYSIS
Section 404(a) provides, in relevant
part, that if compensation is paid or ac-
crued by an employer on account of any
employee under a plan deferring the re-
ceipt of such compensation, and is oth-
erwise deductible under Chapter 1, the
compensation is deductible pursuant to
the rules, and subject to the limitations, of
§ 404.
Section 404(a)(5) provides, in part,
that if the plan of compensation is not
described in § 404(a)(1), (2), or (3), the
compensation deductible under § 404 is
deductible in the taxable year in which
an amount attributable to the compensa-
tion is includible in the gross income of
the employee participating in the plan.
Furthermore, § 404(a)(5) provides that
for purposes of § 404, any vacation pay
that is treated as deferred compensation is
deductible in the employer’s taxable year
that it is paid to the employee.
Section 1.404(b)–1T Q&A 2 provides,
in part, that for purposes of § 404(a), a
plan, or method or arrangement, defers the
receipt of compensation or benefits to the
extent it is one under which an employee
receives compensation or benefits more
than a brief period of time after the end of
the employer’s taxable year in which the
services creating the right to such compen-
sation or benefits are performed. A plan, or
method or arrangement shall be presumed
to be one deferring the receipt of compen-
sation for more than a brief period of time
after the end of an employer’s taxable year
to the extent that compensation is received
after the 15
th
day of the 3
rd
calendar month
after the end of the employer’s taxable year
in which the related services are rendered.
Section 461(a) provides that the amount
of any deduction or credit must be taken
for the taxable year that is the proper tax-
able year under the method of accounting
used in computing taxable income.
Section § 1.461–1(a)(2)(i) provides
that, under an accrual method of account-
ing, a liability is incurred, and is generally
taken into account for federal income tax
purposes, in the taxable year in which (1)
all the events have occurred that establish
the fact of the liability, (2) the amount
of the liability can be determined with
reasonable accuracy, and (3) economic
performance has occurred with respect to
the liability (the “all events test”).See
also§ 1.446–1(c)(1)(ii)(A).
Section 1.461–4(d)(2)(i) provides that
in general, if the liability of a taxpayer
arises out of the providing of services to
the taxpayer by another person, economic
performance occurs as the services are pro-
vided. Section 1.461–4(d)(2)(iii) provides
that with respect to employee benefits
which arise out of the provision of services
to the taxpayer, the economic performance
requirement is satisfied to the extent that
any amount is otherwise deductible under
§ 404. Section 1.461–4(g)(6) provides
March 12, 20076852007–11 I.R.B.

generally that, if a taxpayer is liable to pay
a tax, economic performance occurs as the
tax is paid to the governmental authority
that imposed it.
Section 1.461–5(b)(1) provides a recur-
ring item exception to the general rule of
economic performance. Under the recur-
ring item exception, a liability is treated
as incurred for a taxable year if: (i) at the
end of the taxable year, all events have oc-
curred that establish the fact of the liabil-
ity and the amount can be determined with
reasonable accuracy; (ii) economic perfor-
mance occurs on or before the earlier of
(a) the date that the taxpayer files a re-
turn (including extensions) for the taxable
year, or (b) the 15th day of the 9th calendar
month after the close of the taxable year;
(iii) the liability is recurring in nature; and
(iv) either the amount of the liability is
not material or accrual of the liability in
the taxable year results in better match-
ing of the liability against the income to
which it relates than would result from ac-
crual of the liability in the taxable year in
which economic performance occurs. Sec-
tion 1.461–5(b)(5)(ii) provides that, in the
case of a liability for taxes, the matching
requirement of the recurring item excep-
tion is deemed satisfied.
Rev. Rul. 69–587, 1969–2 C.B. 108,
concludes that, under the all events test of
§ 461, an accrual method employer gener-
ally may not deduct payroll taxes payable
with respect to bonuses and vacation pay
accrued but unpaid at year-end until the
taxable year in which the bonuses and va-
cation pay are paid.
Rev. Rul. 96–51, 1996–2 C.B. 36, con-
cludes that, under the all events test, an ac-
crual method employer may deduct in Year
1 its otherwise deductible payroll taxes im-
posed on year-end wages properly accrued
in Year 1 but paid in Year 2, provided the
employer satisfies the requirements of the
recurring item exception in § 1.461–5 with
respect to those taxes. However, Rev. Rul.
96–51 does not address the application of
§ 404 because the year-end wages were
paid before the 15
th
day of the 3
rd
calen-
dar month after the end of Year 1.
In general, § 404 applies to compensa-
tion paid or accrued by an employer on ac-
count of any employee under a plan de-
ferring the receipt of such compensation.
An employer’s liability for payroll taxes
does not represent compensation paid or
accrued by an employer on account of any
employee. Therefore, § 404 does not con-
trol the deductibility of an employer’s lia-
bility for payroll taxes, even if the payroll
tax liability relates to a deferred compensa-
tion liability subject to the deduction rules
of § 404. Accordingly, § 404 does not alter
the timing of the accrual of X’s payroll tax
liability under § 461.
HOLDING
If the all events test and recurring item
exception of § 461 are otherwise met, an
accrual basis taxpayer may treat its payroll
tax liability as incurred in Year 1, regard-
less of whether the compensation to which
the liability relates is deferred compensa-
tion that is deductible under § 404 in Year
2.
EFFECT ON OTHER DOCUMENTS
Rev. Rul. 96–51 is amplified. Rev.
Rul. 69–587 is revoked.
APPLICATION
A change in treatment of payroll tax
liabilities associated with deferred com-
pensation to comply with this revenue
ruling is a change in method of accounting
within the meaning of §§ 446 and 481 and
the regulations issued thereunder. Accord-
ingly, a taxpayer that wants to change its
treatment of payroll taxes associated with
deferred compensation to comply with
this revenue ruling must obtain the con-
sent of the Commissioner under § 446(e)
and § 1.446–1(e)(2)(i).
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Martin L. Osborne of the Office
of Associate Chief Counsel (Income Tax
and Accounting). For further informa-
tion regarding this revenue ruling, con-
tact Mr. Osborne at (202) 622–7900 (not
a toll-free call).
Section 467.—Certain
Payments for the Use of
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of March 2007. See Rev.
Rul. 2007-15, page 687.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 642.—Special
Rules for C
redits and
Deductio
ns
Federal s
hort-term, mid-term, and long-term rates
are set fo
rth for the month of March 2007. See Rev.
Rul. 2007
-15, page 687.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 9
32.—Coordination
of Unite
d States and Virgin
Islands Income Taxes
A notice provides interim rules concerning the
statute of limitations on assessment for individuals
claiming to bebona fideresidents of the U.S. Virgin
Islands. See Notice 2007-19, page 689.
2007–11 I.R.B.686March 12, 2007

Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for March 2007.
Rev. Rul. 2007–15
This revenue ruling provides various
prescribed rates for federal income tax
purposes for March 2007 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(2) for buildings placed in
service during the current month. Finally,
Table 5 contains the federal rate for deter-
mining the present value of an annuity, an
interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520.
REV. RUL. 2007–15 TABLE 1
Applicable Federal Rates (AFR) for March 2007
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR5.06%5.00%4.97%4.95%
110% AFR5.58%5.50%5.46%5.44%
120% AFR6.09%6.00%5.96%5.93%
130% AFR6.61%6.50%6.45%6.41%
Mid-term
AFR4.86%4.80%4.77%4.75%
110% AFR5.35%5.28%5.25%5.22%
120% AFR5.84%5.76%5.72%5.69%
130% AFR6.34%6.24%6.19%6.16%
150% AFR7.33%7.20%7.14%7.09%
175% AFR8.58%8.40%8.31%8.26%
Long-term
AFR5.01%4.95%4.92%4.90%
110% AFR5.52%5.45%5.41%5.39%
120% AFR6.03%5.94%5.90%5.87%
130% AFR6.54%6.44%6.39%6.36%
REV. RUL. 2007–15 TABLE 2
Adjusted AFR for March 2007
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted
AFR
3.58%3.55%3.53%3.52%
Mid-term adjusted AFR3.71%3.68%3.66%3.65%
Long-term adjusted
AFR
4.18%4.14%4.12%4.10%
March 12, 20076872007–11 I.R.B.

REV. RUL. 2007–
15 TABLE 3
Rates Under Section 382 for March 2007
Adjusted federal long-term rate for the current month4.18%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)4.18%
REV. RUL. 2007–15 TABLE 4
Appropriat
e Percentages Under Section 42(b)(2) for March 2007
Appropriate percentage for the 70% present value low-income housing credit8.15%
Appropriate percentage for the 30% present value low-income housing credit3.49%
REV. RUL. 2007–15 TABLE 5
Rate Under Section 7520 for March 2007
Applicab
le federal rate for determining the present valueof an annuity, an interest for life or a term of years,
or a remai
nder or reversionary interest
5.8%
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 6501.—Limitations
on Assessment and
Collection
A notice provides interim rules concerning the
statute of limitations on assessment for individuals
claiming to bebona fideresidents of the U.S. Virgin
Islands. See Notice 2007-19, page 689.
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
Section 7654.—Coordina-
tion of United States and
Certain Possession Indi-
vidual Income Taxes
A notice provides interim rules concerning the
statute of limitations on assessment for individuals
claiming to bebona fideresidents of the U.S. Virgin
Islands. See Notice 2007-19, page 689.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of March 2007. See Rev. Rul. 2007-15, page 687.
2007–11 I.R.B.688March 12, 2007

Part III. Administrative, Procedural, and Miscellaneous
Statute of Limitations on
Assessment Concerning
Certain Individuals Filing
Income Tax Returns With the
U.S. Virgin Islands
Notice 2007–19
SECTION 1. PURPOSE
This notice provides interim rules under
sections 932(c) and 7654(e) concerning
the statute of limitations on assessment
of the U.S. income tax liability (if any)
of a U.S. citizen or resident alien who
takes the position that he or she is abona
fideresident of the U.S. Virgin Islands
and the U.S. filing obligations of such an
individual. This notice also announces
that the Treasury Department and Internal
Revenue Service (IRS) intend to issue
regulations under sections 932(c) and
7654(e). Finally, this notice announces
that the Treasury Department and the IRS
are studying the feasibility of an auto-
matic exchange of information program
with the U.S. Virgin Islands Bureau of
Internal Revenue concerning income tax
information of individual taxpayers. Such
a program for the timely exchange of
equivalent data in a form compatible with
IRS systems may eliminate the report-
ing requirements set forth in the interim
rules. Until the regulations are issued,
taxpayersmayrelyonthisnotice.
SECTION 2. INTERIM RULES
Under the authority of section 7654(e),
an income tax return filed with the U.S.
Virgin Islands by a U.S. citizen or resident
alien (USVI Form 1040) will be deemed
to be a U.S. income tax return of that in-
dividual for purposes of section 6501(a),
provided that the individual is a covered
person. The term “covered person” means
a U.S. citizen or resident alien who takes
the position that he or she is abona fide
resident of the U.S. Virgin Islands, files
USVI Form 1040 with the U.S. Virgin Is-
lands, and has less than $75,000 of gross
income for the taxable year. For purposes
of this notice, gross income means the total
amount of income from whatever source
derived, before any exclusions or deduc-
tions (for example, disregarding any appli-
cable U.S. Virgin Islands tax benefits au-
thorized under section 934(b)). Gross in-
come does not include income of the indi-
vidual’s spouse.
For example, assume that C, a U.S.
citizen and calendar year taxpayer who
has less than $75,000 of gross income for
2006, takes the position that he is abona
fideresident of the U.S. Virgin Islands and
files USVI Form 1040 for 2006 on March
12, 2007 with the U.S. Virgin Islands. C
does not file Form 1040,U.S. Individual
Income Tax Return(U.S. Form 1040), with
the IRS. C is a covered person. Under
these circumstances, the 3-year period of
limitations under section 6501(a) will ex-
pire on April 15, 2010, and the IRS will
make no further assessment of income tax
for A’s 2006 taxable year after that date
except as otherwise authorized by section
6501.
With respect to a U.S. citizen or resi-
dent alien who takes the position that he or
she is abona fideresident of the U.S. Vir-
gin Islands for a taxable year but who has
gross income of $75,000 or more (referred
to as a non-covered person), a U.S. Form
1040 filed by the non-covered person with
the IRS, on which the non-covered person
reports no gross income and no taxable in-
come, will be treated as an income tax re-
turn described in section 6501(a).
This notice imposes a new annual infor-
mation reporting requirement under sec-
tion 7654 for non-covered persons. The
Treasury Department and the IRS intend
to issue a new form titledBona Fide Resi-
dence-Based Return Positionfor purposes
of this new information reporting require-
ment. Until this form is issued, a non-cov-
ered person will meet the information re-
porting requirement by attaching a state-
ment to U.S. Form 1040 reporting no gross
income and no taxable income. The state-
ment should be titled “Bona Fide Resi-
dence-Based Return Position” and must
set forth the following information.
1. The non-covered person’s name, so-
cial security number, and address as re-
ported on U.S. Form 1040.
2. A statement affirming the non-cov-
ered person’sbona fideresidence in the
U.S. Virgin Islands as defined in Treas.
Reg. § 1.937–1(b) and a brief summary of
the facts on which it is based.
3. An affirmation that the non-covered
person has properly filed a U.S. Virgin Is-
lands individual income tax return, a state-
ment of the total tax liability reported on
USVI Form 1040, and the amount of gross
income reported on such return (adding
back any applicable territorial tax benefits
authorized under section 934(b)).
4. The following declaration signed and
dated by the individual: “Under penalties
of perjury, I declare that I have examined
this statement and the accompanying at-
tachments and to the best of my knowledge
and belief, they are true, correct, and com-
plete.”
For example, assume that on March 12,
2007, N, a U.S. citizen and calendar year
taxpayer with at least $75,000 of gross
income for 2006, files U.S. Form 1040
(2006) with the IRS, taking the position
that he does not have any gross income or
taxable income for U.S. income tax pur-
poses (as reported on lines 22 and 43, re-
spectively) under section 932(c)(4). N at-
taches a Bona Fide Residence-Based Re-
turn Position statement. As a result of fil-
ing U.S. Form 1040, the 3-year period of
limitations under section 6501(a) will ex-
pire on April 15, 2010, and the IRS will
make no further assessment of income tax
for N’s 2006 taxable year after that date
except as otherwise authorized by section
6501.
U.S. Forms 1040 with attached Bona
Fide Residence-Based Return Position
statements must be filed with the Inter-
nal Revenue Service Center, P.O. Box
331 Drop Point S–607, Bensalem, PA
19020–8517. Failure to file the Bona Fide
Residence-Based Position statement is
subject to a penalty under section 6688.
If a non-covered person and his or her
spouse filed a joint USVI Form 1040,
then they may file a jointly executed U.S.
Form 1040 but must attach a separate
Bona Fide Residence-Based Return Po-
sition statement for each spouse who is a
non-covered person.
SECTION 3. EFFECTIVE DATE
This notice applies for taxable years
ending on or after December 31, 2006.
Taxpayers also may choose to apply this
notice to a taxable year ending before
March 12, 20076892007–11 I.R.B.

December 31, 2006 as specified in this
section 3.
A non-covered person may choose to
apply this notice to a taxable year ending
before December 31, 2006 by filing U.S.
Form 1040 with the IRS at the address pro-
vided in section 2, reporting no gross in-
come and no taxable income for that tax-
able year. Although a Bona Fide Resi-
dence-Based Position statement need not
be filed for a taxable year ending before
December 31, 2006, the non-covered per-
son should clearly note on the first page
of U.S. Form 1040 the applicable taxable
year and that U.S. Form 1040 is being filed
in accordance with this notice.
For example, assume that on March 16,
2007, J, a U.S. citizen and calendar year
taxpayer with at least $75,000 of gross
income for taxable year 2003, files U.S.
Form 1040 with the IRS, taking the po-
sition that for taxable year 2003 she does
not have any gross income or taxable in-
come for U.S. income tax purposes under
section 932(c)(4). J clearly marks U.S.
Form 1040 as applying to her taxable year
ending December 31, 2003 and as being
filed in accordance with Notice 2007–19.
Under these circumstances, the 3-year pe-
riod of limitations under section 6501(a)
for taxable year 2003 will expire on March
16, 2010, and the IRS will make no fur-
ther assessment of income tax for J’s 2003
taxable year after that date except as other-
wise authorized by section 6501.
A covered person may choose to ap-
ply this notice to a taxable year ending be-
fore December 31, 2006 by providing doc-
umentation upon examination that estab-
lishes to the satisfaction of the Commis-
sioner that the taxpayer is a covered per-
son. Because the USVI Form 1040 filed
with the U.S. Virgin Islands is deemed to
be a covered person’s U.S. Form 1040, the
covered person’s statute of limitations un-
der section 6501(a) will begin to run on the
date USVI Form 1040 is filed with the U.S.
Virgin Islands.
SECTION 4. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been reviewed and ap-
proved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–2063.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collection of information in this no-
tice is in section 2. This information is
required to determine if a taxpayer sat-
isfies the requirements ofbona fideresi-
dence in the U.S. Virgin Islands under sec-
tion 937(a). The information will be used
to determine if a taxpayer satisfies his or
her U.S. income tax filing requirements.
The collection of information is voluntary.
The likely respondents are individuals.
The estimated total annual reporting
burden is 42,500 hours.
The estimated annual burden per re-
spondent varies from 4 to 6 hours, depend-
ing on individual circumstances, with an
estimated average of 5 hours. The esti-
mated number of respondents is 8,500.
The estimated frequency of responses:
annually.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 5. DRAFTING
INFORMATION
The principal author of this notice
is J. David Varley of the Office of Asso-
ciate Chief Counsel (International). For
further information regarding this notice,
contact Mr. Varley at (202) 435–5262 (not
a toll-free call).
2007 Calendar Year Resident
Population Estimates
Notice 2007–23
This notice informs (1) state and lo-
cal housing credit agencies that allocate
low-income housing tax credits under
§ 42 of the Internal Revenue Code and
(2) states and other issuers of tax-exempt
private activity bonds under § 141, of
the proper population figures to be used
for calculating the 2007 calendar year
population-based component of the state
housing credit ceiling (Credit Ceiling)
under § 42(h)(3)(C)(ii), the 2007 calen-
dar year volume cap (Volume Cap) under
§ 146, and the 2007 volume limit (Volume
Limit) under § 142(k)(5).
The population figures both for the
population-based component of the Credit
Ceiling and for the Volume Cap are de-
termined by reference to § 146(j). That
section provides generally that determina-
tions of population for any calendar year
are made on the basis of the most recent
census estimate of the resident population
of a state (or issuing authority) released
by the U.S. Census Bureau before the
beginning of such calendar year. Section
142(k)(5) provides that the Volume Limit
is based on the State population.
The population-based component of
the Credit Ceiling and the Volume Cap
are adjusted for inflation pursuant to
§§ 42(h)(3)(H) and 146(d)(2), respec-
tively. The adjustments for the 2007 cal-
endar year were published in Rev. Proc.
2006–53, 2006–48 I.R.B. 996. Section
3.08 of Rev. Proc. 2006–53 provides
that, for calendar year 2007, the amounts
used under § 42(h)(3)(C)(ii) to calculate
the Credit Ceiling is the greater of $1.95
multiplied by the State population (see
the resident population figures provided
below) or $2,275,000. Further, section
3.16 of Rev. Proc. 2006–53 provides
that the amounts used under § 146(d)(1)
to calculate the Volume Cap for calendar
year 2007 is the greater of $85 multiplied
by the State population (see the resident
population figures provided below) or
$256,235,000.
The proper population figures for calcu-
lating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2007 cal-
endar year are the estimates of the resi-
dent population of the 50 states, the Dis-
trict of Columbia, and Puerto Rico released
by the U.S. Census Bureau on Decem-
ber 22, 2006, in Press Release CB06–187.
The proper population figures for calcu-
lating the Credit Ceiling, the Volume Cap,
and the Volume Limit for the 2007 calen-
dar year for the insular areas (American
Samoa, Guam, Northern Mariana Islands,
and U.S. Virgin Islands) are the figures re-
leased electronically by the U.S. Census
Bureau on July 17, 2003, and referenced in
Census Bureau Tip Sheet TP03–16, dated
August 8, 2003. For convenience, these
estimates are reprinted below.
2007–11 I.R.B.690March 12, 2007

Resident Population Figures
Alabama4,599,030
Alaska670,053
American Samoa57,794
Arizona6,166,318
Arkansas2,810,872
California36,457,549
Colorado4,753,377
Connecticut3,504,809
Delaware853,476
D.C.581,530
Florida18,089,
888
Georgia9,363,941
Guam171,019
Hawai1,285,498
Idaho1,466,465
Illinois12,831,970
Indiana6,313,520
Iowa2,982,085
Ka
nsas
2,
764,075
Kentucky4,206,074
Louisiana4,287,768
Maine1,321,574
Maryland5,615,727
Massachusetts6,437,193
Michigan10,095,643
Minnesota5,167,101
Mississippi2,910,540
Missouri5,842,713
Montana944,632
Nebraska1,768,331
Nevada2,495,529
New Hampshire1,314,895
New Jersey8,724,560
New Mexico1,954,599
New York19,306,183
North Carolina8,856,505
North Dakota635,867
Northern Mariana Islands82,459
Ohio11,478,006
Oklahoma3,579,212
Oregon3,700,758
March 12, 20076912007–11 I.R.B.

Pennsylvania12,440,621
Puerto Rico3,927,776
Rhode Island1,067,610
South Carolina4,321,249
South Dakot
a
781,919
Tennessee6,038,803
Texas23,507,783
U.S. Virgin Islands108,605
Utah2,550,06
3
Vermont623,908
Virginia7,642,884
Washington6,395,798
West Virginia1,818,470
Wisco
nsin
5,556
,506
Wyoming515,004
The principal authors of this notice are
Christopher J. Wilson, Office of the As-
sociate Chief Counsel (Passthroughs and
Special Industries) and Timothy L. Jones,
Office of the Division Counsel/Associate
Chief Counsel (Tax-Exempt and Govern-
ment Entities). For further information re-
garding this notice, contact Mr. Wilson at
(202) 622–3040 (not a toll-free call).
NOTE: This revenue procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifica-
tions for Substitute Forms and Schedules.
Rev. Proc. 2007–24
TABLE OF CONTENTS
PART 1 – INTRODUCTION TO SUBSTITUTE FORMS
SECTION 1.1 – OVERVIEW OF REVENUE PROCEDURE 2007–24...................................................... 694
SECTION 1.2 – IRS CONTACTS..................................................................................... 695
SECTION 1.3 – WHAT’S NEW...................................................................................... 695
SECTION 1.4 – DEFINITIONS...................................................................................... 696
SECTION 1.5 – AGREEMENT...................................................................................... 697
PART 2 – GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS
SECTION 2.1 – GENERAL SPECIFICATIONS FOR APPROVAL........................................................ 698
SECTION 2.2 – HIGHLIGHTS OF PERMITTED CHANGES AND REQUIREMENTS...................................... 699
SECTION 2.3 – VOUCHERS........................................................................................ 700
SECTION 2.4 – RESTRICTIONS ON CHANGES...................................................................... 702
SECTION 2.5 – GUIDELINES FOR OBTAINING IRS APPROVAL....................................................... 702
2007–11 I.R.B.692March 12, 2007

SECTION 2.6 – OFFICE OF MANAGEMENT AND BUDGET (OMB) REQUIREMENTS FOR ALL
SUBSTITUTE FORMS
................................................................................. 705
PART 3 – PHYSICAL ASPECTS AND REQUIREMENTS
SECTION 3.1 – GENERAL GUIDELINES FOR SUBSTITUTE FORMS................................................... 706
SECTION 3.2 – PAPER............................................................................................. 708
SECTION 3.3 – PRINTING......................................................................................... 709
SECTION 3.4 – MARGINS.......................................................................................... 710
SECTION 3.5 – EXAMPLES OF APPROVED FORMATS............................................................... 710
SECTION 3.6 – MISCELLANEOUS INFORMATION FOR SUBSTITUTE FORMS......................................... 711
PART 4 – ADDITIONAL RESOURCES
SECTION 4.1 – GUIDANCE FROM OTHER REVENUE PROCEDURES.................................................. 712
SECTION 4.2 – ELECTRONIC TAX PRODUCTS...................................................................... 712
SECTION 4.3 – FEDERAL TAX FORMS ON CD-ROM................................................................. 713
PART 5 – REQUIREMENTS FOR SPECIFIC TAX RETURNS
SECTION 5.1 – TAX RETURNS (FORMS 1040, 1040A, 1120, ETC.)....................................................... 713
SECTION 5.2 – CHANGES PERMITTED TO GRAPHICS (FORMS 1040A AND 1040)...................................... 714
SECTION 5.3 – CHANGES PERMITTED TO FORM 1040A GRAPHICS.................................................. 715
SECTION 5.4 – CHANGES PERMITTED TO FORM 1040 GRAPHICS................................................... 716
PART 6 – FORMAT AND CONTENT OF SUBSTITUTE RETURNS
SECTION 6.1 – ACCEPTABLE FORMATS FOR SUBSTITUTE FORMS AND SCHEDULES................................. 717
SECTION 6.2 – ADDITIONAL INSTRUCTIONS FOR ALL FORMS...................................................... 718
PART 7 – MISCELLANEOUS FORMS AND PROGRAMS
SECTION 7.1 – SPECIFICATIONS FOR SUBSTITUTE SCHEDULES K-1................................................. 719
SECTI
ON 7.2 – PROCEDURES FOR PRINTING IRS ENVELOPES
....................................
.................. 723
SECTION 7.3 – GUIDELINES FOR SUBSTITUTE FORMS 8655......................................................... 725
PART 8 – ALTERNATIVE METHODS OF FILING
SECTION 8.1 – FORMS FOR ELECTRONICALLY FILED RETURNS.................................................... 725
SECTION 8.2 – EFFECT ON OTHER DOCUMENTS................................................................... 726
EXHIBITS
Exhibit A-1 – Schedule A (Preferred Format)........................................................................... 727
Exhibit A-2 – Schedule A (Acceptable Format).......................................................................... 728
Exhibit B-1 – Form 2106-EZ (Preferred Format)........................................................................ 729
Exhibit B-2 – Form 2106-EZ (Acceptable Format)....................................................................... 730
Exhibit C – Software Developers Voucher.............................................................................. 731
March 12, 20076932007–11 I.R.B.

Exhibit D – Sample Check Sheet...................................................................................... 732
Part 1
Introduction to Substitute Forms
Section 1.1 – Overview of Revenue Procedure 2007–24
1.1.1
Purpose
The purpose of this revenue procedure is to provide guidelines and general requirements
for the development, printing, and approval of substitute tax forms. Approval will be based on
these guidelines. After review and approval,submitted forms will beaccepted as substitutes
for official IRS forms.
1.1.2
Unique Forms
Certain unique specialized forms require the use of other additional publications to supple-
ment this publication. See Part 4.
1.1.3
Scope
The IRS accepts quality substitute tax forms that are consistent with the official forms and
do not have an adverse impact on our processing. The IRS Substitute Forms Unit administers
the formal acceptance and processing of these forms nationwide. While this program deals
primarily with paper documents, it also reviewsfor approval other processing and filing forms
such as those used in electronic filing.
Only those substitute forms that comply fully with the requirements are acceptable. This
revenue procedure is updated as required to reflect pertinent tax year form changes and to meet
processing and/or legislative requirements.
1.1.4
Forms Covered by This
Revenue Procedure
The following types of forms are covered by this revenue procedure:
•IRS tax forms and their related schedules,
•Worksheets as they appear in instruction packages,
•Applications for permission to file returnselectronically and forms used as required docu-
mentation for electronically filed returns,
•Powers of Attorney,
•Over-the-counter estimated tax payment vouchers, and
•Forms and schedules relating to partnerships, exempt organizations, and employee plans.
1.1.5
Forms Not Covered by
This Revenue Procedure
The following types of forms are not covered by this revenue procedure:
•W-2 and W-3 (see Publication 1141 for information on these forms),
•W-2c and W-3c (see Publication 1223 for information on these forms),
•941andScheduleB(Form941)(seePublication4436forinformationontheseforms),
•1096, 1098 series, 1099 series, 5498 series, W-2G, and 1042-S (see Publication 1179 for
information on these forms),
•Federal Tax Deposit (FTD) coupons, which may not be reproduced,
•Forms 1040-ES (OCR) and 1041-ES (OCR), which may not be reproduced,
•Forms 5500, 5500-EZ, and associated schedules (see the Department of Labor website at
w
ww.dol.govfor information on these forms),
•Forms 8717 and 8905, bar-coded forms requiring separate approval,
•Requests for information or documentation initiated by the IRS,
•Forms used internally by the IRS,
2007–11 I.R.B.694March 12, 2007

•State tax forms,
•Forms developed outside the IRS, and
•General Instructions and Specific Instructions (not reviewed by the Substitute Forms Pro-
gram Unit).
Section 1.2 – IRS Contacts
1.2.1
Where To Send
Substitute Forms
Send your substitute forms for approval to the following offices (do not send forms with
taxpayer data):
FormOffice and Address
BSAForms(FINCENFamilyand
TD F 90-22 Family other than
TD F 90-22.1)
IRS Computing Center
BSA Compliance Branch
P.O. Box 32063
Detroit, MI 48232-0063
5500, 5500-EZ, and Schedules A through E,
G, H, I, P, R, SSA, and T for Form 5500
Check EFAST information at the
Department of Labor’s website at
w
ww.efast.dol.gov
8717 and 8905Joanna.H.Weber@irs.gov
All others (except W-2, W-2c, W-3, W-3c,
941, Schedule B (Form 941), 1096, 1098,
1099, 5498, W-2G, and 1042-S)
Internal Revenue Service
Attn: Substitute Forms Program
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6406
Washington, DC 20224
In addition, the Substitute Forms Program Unit can be contacted via email at
*
taxforms@irs.gov(the asterisk must be included in the address). Please enter “Sub-
stitute Forms” on the subject line.
For questions about Forms W-2 and W-3, refer to IRS Publication 1141, General Rules and
Specifications for Substitute Forms W-2 and W-3. For Forms W-2c and W-3c, refer to IRS
Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c. For
Forms 941 and Schedule B (Form 941), refer to IRS Publication 4436, General Rules and Spec-
ifications for Substitute Form 941 and Schedule B (Form 941). For Forms 1096, 1098, 1099,
5498, W-2G, and 1042-S, refer toIRS Publication 1179, General Rules and Specifications for
Substitute Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S.
Section1.3–What’sNew
1.3.1
What’s New
The following changes have been made to the Revenue Procedure for tax year 2006.
•We combined Sections 4.1 and 4.2 in order to reduce duplication.
•Because Forms 8717 and 8905 now contain bar coding, substitutes of these forms must be
forwarded toJ
oanna.H.Weber@irs.gov.
•The Exhibits section has been changed and updated.
March 12, 20076952007–11 I.R.B.

Section 1.4 – Definitions
1.4.1
Substitute Form
A tax form (or related schedule) that differsinanywayfromtheofficialversionandis
intended to replace the form that is printed and distributed by the IRS. This term also covers
those approved substitute forms exhibited in this revenue procedure.
1.4.2
Printed/Preprinted
Form
A form produced using conventional printing processes, or a printed form which has been
reproduced by photocopying or a similar process.
1.4.3
Preprinted Pin-Fed
Form
A printed form that has marginal perforations for use with automated and high-speed print-
ing equipment.
1.4.4
Computer Prepared
Substitute Form
A preprinted form in which the taxpayer’s tax entry information has been inserted by a com-
puter, computer printer, or other computer-type equipment such as word processing equipment.
1.4.5
Computer Generated Substitute
Tax Return or Form
A tax return or form that is entirely designed and printed using a computer printer such as a
laser printer, etc., on plain white paper. This return or form must conform to the physical layout
of the corresponding IRS form, although the typeface may differ. The text should match the
text on the officially printed form as closely aspossible. Condensed text and abbreviations will
be considered on a case-by-case basis.
Exception.All jurats (perjury statements) must be reproduced verbatim.
1.4.6
Manually Prepared
Form
A preprinted reproduced form in which the taxpayer’s tax entry information is entered by
an individual using a pen, pencil, typewriter, or other non-automated equipment.
1.4.7
Graphics
Parts of a printed tax form that are not tax amount entries or required text. Examples of
graphics are line numbers, captions, shadings,special indicators, borders, rules, and strokes
created by typesetting, photographics, photocomposition, etc.
1.4.8
Acceptable Reproduced
Form
A legible photocopy of an original form.
1.4.9
Supporting Statement
(Supplemental Schedule)
A document providing detailed information to support a line entry on an official or approved
substitute form and filed with (attached to) a tax return.
Note.A supporting statement is not a tax form and does not take the place of an official
form.
2007–11 I.R.B.696March 12, 2007

1.4.10
Specific Form Terms
The following specific terms are used throughout this revenue procedure in reference to all
substitute forms: format, sequence, line reference, item caption, and data entry field.
1.4.11
Format
The overall physical arrangement and general layout of a substitute form.
1.4.12
Sequence
Sequence is an integral part of the total format requirement. The substitute form should
show the same numeric and logical placement order of data, as shown on the official form.
1.4.13
Line Reference
The line numbers, letters, or alphanumericsused to identify each captioned line on an offi-
cial form. These line references are printedto the immediate left of each caption and/or data
entry field.
1.4.14
Item Caption
The text on each line of a form, which identifies the data required.
1.4.15
Data Entry Field
Designated areas for the entry of data such as dollar amounts, quantities, responses and
checkboxes.
1.4.16
Advance Draft
A draft version of a new or revised form may be posted to the IRS website for information
purposes. Substitute forms may be submittedbased on these advance drafts, but any company
that receives forms approval based on these earlydrafts is responsible for monitoring and re-
vising forms to mirror any revisions in the final forms provided by the IRS.
Section 1.5 – Agreement
1.5.1
Important Stipulation
of This Revenue Procedure
Any person or company who uses substitute forms and makes all or part of the changes
specified in this revenue procedure agrees to the following stipulations.
•The IRS presumes that any required changes are made in accordance with these procedures
and will not be disruptive to the processing of the tax return.
•Should any of the changes be disruptive to the IRS’s processing of the tax return, the person
or company agrees to accept the determination of the IRS as to whether the form may
continue to be filed.
•The person or company agrees to work with the IRS in correcting noted deficiencies. No-
tification of deficiencies may be made by any combination of fax, letter, email, or phone
contact and may include the return of unacceptable forms for the re-submission of accept-
able forms.
March 12, 20076972007–11 I.R.B.

Part 2
General Guidelines for Submissions and Approvals
Section 2.1 – General Specifications for Approval
2.1.1
Overview
If you produce any tax forms using IRS guidelines on permitted changes, you can generate
your own substitutes without further approval. If your changes are more extensive, you must
get IRS approval before using substitute forms. More extensive changes can include the use
of typefaces and sizes other than those found onthe official form and the condensing of line
item descriptions to save space.
2.1.2
Email Submissions
The Substitute FormsProgram now accepts substitute forms submissions via email. The
email address is*
taxforms@irs.gov(the asterisk must be included in the address). Please in-
clude “PDF Submissions” on the subject line.
Follow these guidelines.
•Your submission should include all the forms you wish to submit in one attached pdf file.
Do not email each form individually.
•An approval check sheet listing the forms you are submitting should always be included in
the pdf file along with the forms.
•Small (fewer than 15 forms), rather than large, submissions should expedite processing.
The optimal submission should contain 15 forms.
•Emailing pdf submissions will not expedite review and approval. The pdf submissions will
be assigned a control number and put in queuealong with mailed-in paper submissions.
•Optimize pdf files before submitting.
•The maximum allowable email attachment is 2.5 megabytes.
•The Substitute Forms Unit accepts zip files.
•To alleviate delays during the peak time of September through December, submit advance
draft forms as early as possible.
If the guidelines are not followed, you may need to resubmit.
In addition to submitting forms via email,you may continue to send your submissions to:
Internal Revenue Service
SE:W:CAR:MP:T:T:SP
Attn: Substitute Forms Program
1111 Constitution Avenue, NW
Room 6406
Washington, DC 20224
2007–11 I.R.B.698March 12, 2007

2.1.3
Expediting the Process
Follow these basic guidelines for expediting the process.
•Always include a check sheet for the Substitute Forms Unit’s response.
•Follow Publication 1167 for general substitute form guidelines. Follow the specialized
publications produced by the Substitute Forms Unit for other specific forms.
•To spread out the workload, send in draft versions of substitute forms when they are posted.
Note.Be sure to make any changes to approved drafts before releasing final versions.
2.1.4
Schedules
Schedules are considered to be an integral part of a complete tax return. A schedule may be
included as part of a form or printed separately.
2.1.5
Examples of Schedules
That Must Be Submitted
with the Return
Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an ex-
ample of this situation. Its Schedules A through U have pages numbered as part of the basic
return. For Form 706 to be approved, the entire form including Schedules A through U must
be submitted.
2.1.6
Examples of Schedules
That Can Be Submitted
Separately
However, Schedules 1, 2, and 3 of Form 1040A are examples of schedules that can be sub-
mitted separately. Although printed by the IRS as a supplement to Form 1040A, none of these
schedules are required to be filed with Form 1040A. These schedules may be separated from
Form 1040A and submitted as substitute forms.
2.1.7
Use and Distribution of
Unapproved Forms
The IRS is continuing a program to identify and contact tax return preparers, forms devel-
opers, and software publishers who use or distribute unapproved forms that do not conform to
this revenue procedure. The use of unapproved forms hinders the processing of the returns.
Section 2.2 – Highlights of Permitted Changes and Requirements
2.2.1
Methods of
Reproducing Internal
Revenue Service Forms
Official IRS tax forms are supplied by the IRS. These forms may be provided in the tax-
payer’s tax package or over-the-counter. Forms can also be picked up at many IRS offices,
post offices, or libraries, and are available on CD-ROM and online atw
ww.irs.gov.
There are methods of reproducing IRS printed tax forms suitable for use as substitutes with-
out prior approval.
•You can photocopy most tax forms and use them instead of the official ones. The entire
substitute form, including entries, must be legible.
•You can reproduce any current tax form as cutsheets, snap sets, and marginally punched,
pin-fed forms as long as you use an official IRS version as the master copy.
•You can reproduce a form that requires a signature as a valid substitute form. Many tax
forms (including returns) have a taxpayer signature requirement as part of the form layout.
The jurat/perjury statement/signature line areas must be retained and worded exactly as on
the official form. The requirement for a signature, by itself, does not prohibit a tax form
from being properly computer-generated.
March 12, 20076992007–11 I.R.B.

Section 2.3 – Vouchers
2.3.1
Overview
All payment vouchers (Forms 940-V, 940-EZ(V), 941-V, 943-V, 945-V, 1040-V, and
2290-V) must be reproduced in conjunction with their forms. Substitute vouchers must be the
same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser
printer may include a scan line.
2.3.2
Scan Line
Specifications
NNNNNNNNN AAAAAA NNN NNNNNNNNN
Item:AB CDEF G
A.Social Security Number/Employer Identification Number (SSN/EIN) has 9 numeric
spaces.
B.Check Digits have 2 alpha spaces.
C.Name Control has 4 alphanumeric spaces.
D.Master File Tax (MFT) Code has 2 numeric spaces (see below).
E.Taxpayer Identification Number (TIN) Type has 1 numeric space (see below).
F.Tax Period has 6 numeric spaces in year/month format (YYYYMM).
G.Transaction Code has 3 numeric spaces.
2.3.3
MFT Code
Code Number for Forms:
•1040 family – 30;
•940/940-EZ – 10;
•941 – 01;
•943 – 11;
•945 – 16; and
•2290 – 60.
2.3.4
TIN Type
Type Number for:
•Form1040family–0;and
•Forms 940, 940-EZ, 941, 943, 945, and 2290 – 2.
2.3.5
Voucher Size
The voucher size must be exactly 8.0′′x3.25′′(Forms 1040-ES and 1041-ES must be 7.625′′
x3.0′′). The document scan line must be vertically positioned 0.25 inches from the bottom of
the scan line to the bottom of the voucher. The last character on the right of the scan line must
be placed 3.5 inches from the right leading edge of the document. The minimum required
horizontal clear space betweencharacters is .014 inches. The line to be scanned must have a
clear band 0.25 inches in height from top to bottom of the scan line, and from border to border
of the document. “Clear band” means no printing except for dropout ink.
2.3.6
Print and Paper Weight
Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts
may not be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred
paper weight is 20 to 24 pound OCR bond.
2007–11 I.R.B.700March 12, 2007

2.3.7
Specifications for Software
Developers
Certain vouchers may be reproduced for usein the IRS lockbox system. These include
the 1040-V, 1040-ES, the 940 family, and 2290 vouchers. Software developers must follow
these specific guidelines to produce scannable vouchers strictly for lockbox purposes. Also
see Exhibit C.
•The total depth must be 3.25 inches.
•The scan line must be .5 inches from the bottom edge and 1.75 inches from the left edge
of the voucher and left-justified.
•Software developers vouchers must be 8.5 inches wide (instead of 8 inches with a cut line).
Therefore, no vertical cut line is required.
•Scan line positioning must be exact.
•Do not use the over-the-counter format voucher and add the scan line to it.
•All scanned data must be in 12-point OCR A font.
•The 4-digt NACTP ID code should be placedunder the payment indicator arrow.
•Windowed envelopes must not display the scanline in order to avoid disclosure and privacy
issues.
Note.All software developers must ensure that their software uses OCR A font so taxpayers
will be able to print the vouchers in the correct font.
2.3.8
SpecificLinePositions
Follow these line specifications for entering taxpayer data in the lockbox vouchers.
Start Row
Start
ColumnWidth
End
Column
Line Specifications for
Taxpayer Data:
Taxpayer Name5663641
Taxpayer Address, Apt.5763641
Taxpayer City, State, ZIP5863641
Line Specifications for
Mail To Data:
MailAddress57433880
Mail City, State, ZIP58433880
Line Specifications for:
Scan Line6326n/an/a
2.3.9
How to Get Approval
To receive approval, please send 50 voucher samples yearly, by December 8, for testing to
the following address.
March 12, 20077012007–11 I.R.B.

Internal Revenue Service
Attn: Doris Bethea, C5-163
5000 Ellin Rd.
Lanham, MD 20706
For further information, contact Doris Bethea,D
oris.E.Bethea@irs.gov, at 202-283-0218.
Section 2.4 – Restrictions on Changes
2.4.1
What You Cannot
Do to Forms Suitable
for Substitute
Tax Forms
You cannot, without prior IRS approval, change any IRS tax form or use your own (non-
approved) versions including graphics, unless specifically permitted by this revenue procedure.
You cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those
areas specified in Part 5 of this revenue procedure) without prior approval from the IRS Sub-
stitute Forms Unit.
You cannot use your own preprinted label on tax returns filed with the IRS unless you fully
comply with the criteria specified in Section 3.6.3 on the use of pre-addressed IRS labels.
Section 2.5 – Guidelines for Obtaining IRS Approval
2.5.1
Basic Requirements
Preparers who submit substitute privately designed, privately printed, computer generated,
or computer prepared tax forms must develop these substitutes using the guidelines established
in this part. These forms, unless excepted by the revenue procedure, must be approved by the
IRS before being filed.
2.5.2
Conditional Approval Based on
Advanced Drafts
The IRS cannot grant final approval of your substitute form until the official form has been
published. However, the IRS posts advance draft forms in the “Tax Professionals” area of its
website at:
w
ww.irs.gov/taxpros/lists/0,,id=97782,00.html
We encourage submission of proposed substitutes of these advance draft forms and will
grant conditional approval based solely on these early drafts. These advance drafts are subject
to significant change before forms are finalized. If these advance drafts are used as the basis
for your substitute forms, you will be responsible for subsequently updating your final forms to
agree with the final official version. These revisions need not be submitted for further approval.
Note.Approval of forms based on advance drafts will not be granted after the final version
of an official form is published.
2.5.3
Submission Procedures
Follow these general guidelines when submitting substitute forms for approval.
•Any alteration of forms must bewithin the limits acceptable to the IRS. It is possible that,
from one filing period to another, a change in law or a change in internal need (processing,
audit, compliance, etc.) may change the allowable limits for the alteration of the official
form.
2007–11 I.R.B.702March 12, 2007

•When specific approval of any substitute form(other than those specified in Part 1, Sec-
tion 1.2 – IRS Contacts) is desired, a sample of the proposed substitute form should be
forwarded for consideration via email or by letter to the Substitute Forms Unit at the ad-
dressshowninSection1.2.
•Schedules and forms (for example, Forms 3468, 4136, etc.) that can be used with more
than one type of return (for example, 1040, 1041, 1120, etc.) should be submitted only
once for approval, regardless of the number of different tax returns with which they may
be associated. Also, all pages of multi-page forms or returns should be submitted in the
same package.
2.5.4
Approving Offices
Because only the Substitute Forms Unit is authorized to approve substitute forms, unnec-
essary delays may occur if forms are sent to the wrong office. The Substitute Forms Unit may
then coordinate the response with the initiator responsible for revising that particular form.
Such coordination may include allowing the initiator to officially approve the form. No IRS
office is authorized to allow deviations from this revenue procedure.
2.5.5
IRS Review of
Software Programs, etc.
The IRS does not review or approve the logic of specific software programs, nor does the
IRS confirm the calculations on the forms produced by these programs. The accuracy of the
program remains the responsibility of the software package developer, distributor, or user.
The Substitute Forms Unit is primarily concerned with the pre-filing quality review of the
final forms that are expected tobe processed by IRS field offices. For this purpose, you should
submit forms without including any taxpayer information such as names, addresses, monetary
amounts, etc.
2.5.6
When To Send
Proposed Substitutes
Proposed substitutes, which are required to be submitted per this revenue procedure, should
be sent as much in advance of the filing period as possible. This is to allow adequate time for
analysis and response.
2.5.7
Accompanying
Statement
When submitting sample substitutes, you should include an accompanying statement that
lists each form number and its changes from the official form (position, arrangement, appear-
ance, line numbers, additions, deletions, etc.). With eachof the items you should include a
detailed reason for the change.
When requesting approval, please include a check sheet. Check sheets expedite the approval
process. The check sheet may look like the example in Exhibit D displayed in the back of this
procedure or may be one of your own design. Please include your fax number on the check
sheet.
2.5.8
Approval/Non-
Approval Notice
The Substitute Forms Unit will fax the check sheet or an approval letter to the originator if
a fax number has been provided, unless:
•The requester has asked for an email response or for a formal letter, or
•Significant corrections to the submitted forms are required.
Notice of approval may impose qualificationsbefore using the substitutes. Notices of un-
approved forms may specify the changes required for approval and require re-submission of
the form(s) in question. Telephone contact is used when appropriate.
March 12, 20077032007–11 I.R.B.

2.5.9
Duration of
Approval
Most signature tax returns and many of their schedules and related forms have the tax (li-
ability) year printed in the upper right corner. Approvals for these annual forms are usually
good for one calendar year (January through December of the year of filing). Quarterly tax
forms in the 940 series and Form 720 require approval for any quarter in which the form has
been revised.
Because changes are usually made to an annual form every year, each new filing season
generally requires a new submission of a substitute form. Very rarely is updating the preprinted
year the only change made to an annual form.
2.5.10
Limited
Continued Use of an
Approved Change
Limited changes approved for one tax year may be allowed for the same form in the follow-
ing tax year. Examples are the use of abbreviated words, revised form spacing, compressed
text lines, and shortened captions, etc., which do not change the integrity of lines or text on the
official forms.
If substantial changes are made to the form, new substitutes must be submitted for approval.
If only minor editorial changes are made to the form, it is not subject to review. It is the re-
sponsibility of each vendor who has been granted permission to use substitute forms to monitor
and revise forms to mirror any revisions to official forms made by the Service. If there are any
questions, please contact the Substitute Forms Unit.
2.5.11
When Approval
Is Not Required
If you received written approval for a specific change on a form last year, you may make
the same change this year if the item is still present on the official form.
•The new substitute form does not have to be submitted to the IRS and written approval is
not required.
•However, the new substitute form must conform to the official current year IRS form in
other respects: date, Office of Management and Budget (OMB) approval number, attach-
ment sequence number, Paperwork Reduction Act Notice statement, arrangement, item
caption, line number, line reference, data sequence, etc.
•The new substitute must also comply with changes to this revenue procedure. The proce-
dure may have eliminated, added to, or otherwise changed the guideline(s) that affected the
change approved in the prior year.
•An approved change is authorized only for the period from a prior tax year substitute form
to a current tax year substitute form.
Exception.Forms with temporary, limited, or interim approvals (or with approvals that
state a change is not allowed in any other tax year) are subject to review in subsequent years.
2.5.12
Continuous-
Use Forms
Forms without preprinted tax years are called “continuous-use” forms. Continuous-use
forms are revised when a legislative change affects the form or a change will facilitate pro-
cessing. These forms may have revision dates that are valid for longer than one year.
2.5.13
IRS Website
Posting Schedule
A schedule of print dates (for annual and quarterly forms) and most current revision dates
(for continuous-use forms) are maintained on the IRS website. The Tax Products Posting
Schedule can be found atw
ww.irs.gov/formspubs/article/0,,id=103641,00.html. See Section
4.2.2.
2007–11 I.R.B.704March 12, 2007

2.5.14
Required Copies
Generally, you must send us one copy of each form being submitted for approval. However,
if you are producing forms for different computer systems (for example, IBM compatible vs.
Macintosh) or different types of printers (for example, laser vs. inkjet), and these forms differ
significantlyin appearance, submit one copy for each type of system or printer.
2.5.15
Requestor’s
Responsibility
Following receipt of an initial approval for a substitute forms package or a software output
program to print substitute forms, it is the responsibility of the originator (designer or distrib-
utor) to provide client firms or individuals with forms that meet the IRS’s requirements for
continuing acceptability.Examples of this responsibility include:
•Using the prescribed print paper, font size, legibility, state tax data deletion, etc., and
•Informing all users of substitute forms of thelegal requirements of the Paperwork Reduc-
tion Act Notice, which is generally found in the instructions for the official IRS forms.
2.5.16
Source Code
The Substitute Forms Unit will assign a unique source code to each firm that submits sub-
stitute paper forms for approval. This source code will be a permanent identifier that should
be used on every submission by a particular firm.
The source code consists of three alpha characters and should generally be printed at the
bottom left margin area on the first page of every approved substitute form.
Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms
2.6.1
OMB Requirements
for All Substitute Forms
There are legal requirements of the Paperwork Reduction Act of 1995 (The Act). Public
Law 104-13 requires the following.
•OMB approves all IRS tax forms that are subject to the Act.
•Each IRS form contains (in the upper right corner) the OMB number, if assigned.
•Each IRS form (or its instructions) states why the IRS needs the information, how it will
be used, and whether or not the information is required to be furnished to the IRS.
This information must be provided to every user of official or substitute IRS forms or in-
structions.
2.6.2
Application of the Paperwork
Reduction Act
On forms that have been assigned OMB numbers:
•All substitute forms must contain in the upper right corner the OMB number that is on the
official form, and
•The required format is: OMB No. 1545-XXXX (Preferred) or OMB # 1545-XXXX (Ac-
ceptable).
2.6.3
Required
Explanation to Users
You must inform the users of your substitute forms of the IRS use and collection require-
ments stated in the instructions for official IRS forms.
•If you provide your users or customers with the official IRS instructions, each form must
retain either the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Pa-
perwork Reduction Act Notice), or a reference to it as the IRS does on the official forms
(usually in the lower left corner of the forms).
March 12, 20077052007–11 I.R.B.

•This notice reads, in part, “We ask for the information on this form to carry out the Internal
Revenue laws of the United States....”
Note.If no IRS instructions are provided to users of your forms, the exact text of the Paper-
work Reduction Act Notice (or Disclosure, Privacy Act, and PaperworkReduction Act Notice)
must be furnished separately or on the form.
2.6.4
Finding the OMB
Number and Paperwork
Reduction Act Notice
The OMB number and the Paperwork Reduction Act Notice, or references to it, may be
found printed on an official form (or its instructions). The number and the notice are included
on the official paper format and in other formats produced by the IRS (for example, compact
disc (CD) or Internet download).
Part 3
Physical Aspects and Requirements
Section 3.1 – General Guidelines for Substitute Forms
3.1.1
General Information
The official form is the standard. Because a substitute form is a variation from the official
form, you should know the requirements of the official form for the year of use before you
modify it to meet your needs. The IRS provides several means of obtaining the most frequently
used tax forms. These include the Internet and CD-ROM (see Part 4).
3.1.2
Design
Each form must follow the design of the official form as to format arrangement, item cap-
tion, line numbers, line references, and sequence.
3.1.3
State Tax
Information Prohibited
Generally, state tax information must not appearon the federal tax return, associated form,
or schedule that is filed with the IRS. Exceptions occur when amounts are claimed on, or re-
quired by, the federal return (for example, state and local income taxes, on Schedule A of Form
1040).
3.1.4
Vertical Alignment
of Amount Fields
IF a form is to be...THEN...
1.The entry column must have a vertical line or some
type of indicator in the amount field to separate dollars
from cents.
Manually prepared
2.The cents column must be at least 3/10′′wide.
1.Vertically align the amountentry fields where possible.
2.Use one of the following amount formats:
a) 0,000,000, or
Computer generated
b) 0,000,000.00.
2007–11 I.R.B.706March 12, 2007

IF a form is to be...THEN...
1.You may remove the vertical line in the amount field
that separates dollars from cents.
2.Use one of the following amount formats:
a) 0,000,000, or
Computer prepared
b) 0,000,000.00.
3.1.5
Attachment
Sequence Number
Many individual income tax forms have a required “attachment sequence number” located
just below the year designation in the upper right corner of the form. The IRS uses this number
to indicate the order in which forms are to be attached to the tax return for processing. Some
of the attachment sequence numbers may change from year to year.
The following applies to computer prepared forms.
•The sequence number may be printed in no less than 12-point boldface type and centered
below the form’s year designation.
•The sequence number may alsobe placed following the year designation for the tax form
and separated with an asterisk.
•The actual number may be printed without labeling it the “Attachment Sequence Number.”
3.1.6
Assembly of Forms
If developing software or forms for use by others, please inform your customers/clients that
the order in which the forms are arranged may affect the processing of the package. A return
must be arranged in the order indicated below.
IF the form is...THEN the sequence is...
1040• Form 1040, and
• Schedules and forms in attachment sequence number order.
Anyothertaxreturn
(Form 1120, 1120S,
1065, 1041, etc.)
• The tax returns,
• Directly associated schedules (Schedule D, e
tc.),
• Directly associated forms,
• Additional schedules in alphabetical order
,and
• Additional forms in numerical order.
Supporting statements should then follow in the same sequence as the forms they support.
Additional information required should be attached last.
In this way, the forms are received in the order in which they must be processed. If you do
not send returns to us in order, processing may be delayed.
3.1.7
Paid Preparer’s
Information and
Signature Area
On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer’s Use Only” area may
not be rearranged or relocated. You may, however,add three extra lines to the paid preparer’s
address area without prior approval. This applies to other tax forms as well.
3.1.8
Some Common Reasons
for Requiring Changes to
Substitute Forms
Some reasons that substitute form submissions may require changes include the following.
•Failing to preprint certain amounts in entry spaces.
•Shading areas incorrectly.
•Failing to include a reference to the location of the Paperwork Reduction Act Notice.
•Not including parentheses for losses.
•Not including “Attach Statement” when appropriate.
•Including line references or entry spacesthat don’t match the official form.
March 12, 20077072007–11 I.R.B.

•Printing text that is different from the official form.
•Altering the jurat.
Section 3.2 – Paper
3.2.1
Paper Content
The paper must be:
•Chemical wood writing paper that is equal to or better than the quality used for the official
form,
•At least 18 pound (17′′x22′′, 500 sheets), or
•At least 50 pound offset book (25′′x38′′, 500 sheets).
3.2.2
Paper with
Chemical Transfer
Properties
There are several kinds of paper prohibited for substitute forms. These are:
1. Carbon-bonded paper, and
2. Chemical transfer paper except when the following specifications are met:
a. Each ply within the chemical transfer set of forms must be labeled, and
b. Only the top ply (ply one and white in color), the one that contains chemical
on the back only (coated back), may be filed with the IRS.
3.2.3
Example
A set containing three plies would be constructed as follows:ply one (coated back), “Fed-
eral Return, File with IRS”; ply two (coated front and back), “Taxpayer’s copy”; and ply three
(coated front), “Preparer’s copy.”
The file designation, “Federal Return, File with IRS” for ply one, must be printed in the
bottom right margin (just below the last line of the form) in 12-point boldface type.
It is not mandatory, but recommended, that the file designation “Federal Return, File with
IRS” be printed in a contrasting ink for visual emphasis.
3.2.4
Carbon Paper
Do not attach any carbon paper to any return you file with the IRS.
3.2.5
Paper and Ink
Color
We prefer that the color and opacity of paper substantially duplicatesthat of the original
form. This means that your substitute must be printed in black ink and may be on white or on
the colored paper the IRS form is printed on. Forms 1040A and 1040 substitute reproductions
may be in black ink without the colored shading. The only exception to this rule is Form
1041-ES, which should always be printed with a very light gray shading in the color screened
area. This is necessary to assist us in expeditiously separating this form from the very similar
Form 1040-ES.
2007–11 I.R.B.708March 12, 2007

3.2.6
Page Size
Substitute or reproduced forms and computer prepared/generated substitutes may be the
same size as the official form or they may be the standard commercial size (8
1
/2′′x11′′). The
thickness of the stock cannot be less than .003 inches.
Section 3.3 – Printing
3.3.1
Printing Medium
The private printing of all substitute tax forms must be by conventional printing processes,
photocopying, computer graphics, or similar reproduction processes.
3.3.2
Legibility
All forms must have a high standard of legibility as to printing, reproduction, and fill-in
matter. Entries of taxpayer data may be no smaller than eight points. The IRS reserves the
right to reject those with poor legibility. The ink and printing method used must ensure that no
part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quality
deterioration. This standard must be followedfor any subsequent copies or reproductions made
from an approved master substitute form, either during preparation or during IRS processing.
3.3.3
Type Font
Many federal tax forms are printed using “Helvetica” as the basic type font. We request that
you use this type font when composing substitute forms.
3.3.4
Print Spacing
Substitute forms should be printed using a 6 lines/inch vertical print option. They should
also be printed horizontally in 10 pitch pica (that is, 10 print characters per inch) or 12 pitch
elite (that is, 12 print positions per inch).
3.3.5
Image Size
The image size of a printed substitute form should be as close as possible to that of the
official form. You may omit any text on both computer prepared and computer generated forms
that is solely instructional.
3.3.6
Title Area Changes
To allow a large top margin for marginal printing and more lines per page, the title line(s)
for all substitute forms (not including the form’s year designation and sequence number, when
present), may be photographically reduced by40 percent or reset as one line of type. When
reset as one line, the type size may be no smaller than 14-point. You may omit “Department
of the Treasury, Internal Revenue Service” and all reference to instructions in the form’s title
area.
3.3.7
Remove
Government Printing
Office Symbol and IRS
Catalog Number
When privately printing substitute tax forms, the Government Printing Office (GPO) sym-
bol and/or jacket number must be removed. In the same place using the same type size, print
the Employer Identification Number (EIN) of the printer or designer or the IRS assigned source
code. (We prefer this last number be printed in the lower left area of the first page of each form.)
Also, remove the IRS CatalogNumber (Cat. No.) and the recycle symbol if the substitute is
not produced on recycled paper.
March 12, 20077092007–11 I.R.B.

3.3.8
Printing on One
Side of Paper
While it is preferred that both sides of the paper be used for substitutes and reproduced
forms, resulting in the same page arrangement as that of the official form or schedule, the IRS
will accept your forms if only one side of the paper is used.
3.3.9
Photocopy
Equipment
The IRS does not undertake to approve or disapprove the specific equipment or process
used in reproducing official forms. Photocopies of forms must be entirely legible and satisfy
the conditions stated in this and other revenue procedures.
3.3.10
Reproductions
Reproductions of official forms and substitute forms that do not meet the requirements of
this revenue procedure may not be filed instead of the official forms. Illegible photocopies are
subject to being returned to the filer for re-submission of legible copies.
3.3.11
Removal of
Instructions
You may remove references to instructions. No prior approval is needed.
Exception.The words “For Paperwork Reduction Act Notice, see instructions” must be
retained or a similar statement indicating the location of the Notice must be provided on each
form.
Section 3.4 – Margins
3.4.1
Margin Size
The format of a reproduced tax form when printed on the page must have margins on all
sides at least as large as the margins on the official form. This allows room for IRS employees
to make necessary entries on the form during processing.
•A
1
/2-inch to
1
/4-inch margin must be maintained across the top, bottom, and both sides of
all substitute forms.
•The marginal, perforated strips containing pin-fed holes must be removed from all forms
priortofilingwiththeIRS.
3.4.2
Marginal Printing
Prior approval is not required for the marginal printing allowed when printed on an official
form or on a photocopy of an official form.
•With the exception of the actual tax forms (for example, Forms 1040, 1040A, 1040EZ,
1120, 940, 941, etc.), you may print in the left vertical margin and in the left half of the
bottom margin.
•Printing is never allowed in the top right margin of the tax form (for example, Forms 1040,
1040A, 1040EZ, 1120, 940, 941, etc.). The Service uses this area to imprint a Document
Locator Number for each return. There are no exceptions to this requirement.
Section 3.5 – Examples of Approved Formats
3.5.1
Examples of
Approved Formats From
the Exhibits
Two sets of exhibits (Exhibits A-1 and 2; B-1 and 2) at the end of this revenue procedure
are examples of how these guidelines may be used. Vertical spacing is six (6) lines to the inch.
A combination of upper-case and lower-case print font is acceptable in producing substitute
forms.
2007–11 I.R.B.710March 12, 2007

ThesamelogicmaybeappliedtoanyIRSformthat is normally reproducible as a substitute
form, with the exception of the tax return forms as discussed elsewhere.
Note.These exhibits may be from a prior year and are not to be used as current substitute
forms.
Section 3.6 – Miscellaneous Information for Substitute Forms
3.6.1
Filing Substitute
Forms
To be acceptable for filing, a substitute form must print out in a format that will allow the
filer to follow the same instructions as for filing official forms. These instructions are in the
taxpayer’s tax package or in the related form instructions. The form must be legible, must be
on the appropriately sized paper, and must include a jurat where one appears on the published
form.
3.6.2
Caution to Software
Publishers
The IRS has received returns produced by software packages with approved output where
either the form heading was altered or the lines were spaced irregularly. This produces an
illegible or unrecognizable return or a return with the wrong number of pages. We realize
that many of these problems are caused by individual printer differences but they may delay
input of return data and, in some cases, generate correspondence to the taxpayer. Therefore,
in the instructions to the purchasers of your product, both individual and professional, please
stress that their returns will beprocessed more efficiently if they are properly formatted. This
includes:
•Having the correct form numbers and titles at the top of the return, and
•Submitting the same number of pages as if the form were an official IRS form with the line
items on the proper pages.
3.6.3
Use Pre-Addressed
IRS Label
If you are a practitioner filling out a return for a client or a software publisher who prints
instruction manuals, stress the use of the pre-addressed label provided in the tax package the
IRS sent to the taxpayer, when available. The use of this label (or its precisely duplicated label
information) is extremely important for the efficient, accurate, and economical processing of
a taxpayer’s return. Labeled returns indicate that a taxpayer is an established filer and permits
the IRS to automatically accelerate processing of those returns. This results in quicker refunds,
less manual review by IRS functions, and greater accuracy in names, addresses, and postal
deliveries.
3.6.4
Caution to
Producers of
Software Packages
If you are producing a software package that generates name and address data onto the tax
return, do not under any circumstances program either the IRS preprinted check digits or a
practitioner derived name control to appear on any return prepared and filed with the IRS.
3.6.5
Programming
to Print Forms
Whenever applicable:
•Use only the following label information format for single filers:
JOHN Q. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
March 12, 20077112007–11 I.R.B.

•Use only the following information for joint filers:
JOHN Q. PUBLIC
MARY I. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
Part 4
Additional Resources
Section 4.1 – Guidance From Other Revenue Procedures
4.1.1
General
The IRS publications listed below provide guidance for substitute tax forms not covered in
this revenue procedure. The publications are available only on the IRS website. Identify the
requested document by the IRS publication number.
•Publication 1141, General Rules and Specifications for Substitute Forms W-2 and W-3.
•Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099,
5498, W-2G, and 1042-S.
•Publication 1187, Specifications for FilingForms 1042-S, Foreign Person’s U.S. Source
Income Subject to Withholding,Electronically or Magnetically.
•Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W-2G Electroni-
cally or Magnetically.
•Publication 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.
•Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information
Return of Tip Income and Allocated Tips, Electronically or Magnetically.
•Publication 1345, Handbook for Authorized IRSe-fileProviders of Individual Income Tax
Returns.
•Publication 1345-A, Filing SeasonSupplement for Authorized IRSe-fileProviders.
•Publication 4436, General Rules and Specifications for Substitute Form 941 and Schedule
B (Form 941).
Section 4.2 – Electronic Tax Products
4.2.1
The IRS Website
Copies of tax forms with instructions, publications, draft forms, fillable forms, prior year
forms and publications, and other tax-related information may be found on the IRS website at
w
ww.irs.gov.
4.2.2
Tax Products
Posting Schedule
The IRS website provides a Tax Products Posting Schedule for the official forms released
for use by taxpayers. The schedule has three parts.
•Anticipated print dates of annual returns.
•Anticipated print dates of quarterly returns.
•Last revision dates and target print dates for continuous-use forms.
Thesiteaddressisw
ww.irs.gov/formspubs/article/0,,id=103641,00.html. The site will be
updated weekly during peak printing periodsand as necessary at other times. The planned
dates are subject to change.
2007–11 I.R.B.712March 12, 2007

Section 4.3 – Federal Tax Forms on CD-ROM
4.3.1
Information
About Federal
Tax Forms CD-ROM
The CD-ROM contains over 3,000 tax forms and publications for small businesses, return
preparers, and others who frequently need current or prior year tax products. Most current
tax forms on the CD-ROM may be filled in electronically, then printed out for submission
and saved for recordkeeping. Other products on the CD-ROM include the Internal Revenue
Bulletins, Tax Supplements, and Internet resources for the tax professional with links to the
World Wide Web.
4.3.2
System
Requirements and
How To Order the Federal Tax
Forms CD-ROM
For system requirements, contact the National Technical Information Service (NTIS) help
desk at 703-487-4608. Prices are subject to change.
The cost of the CD if purchased via the Internet ath
ttp://www.irs.gov/cdordersfrom NTIS,
is $35 (with no handling fee).
If purchased using the following methods,the cost for each CD is $35 (plus a $5 handling
fee). These methods are:
•By phone – 1-877-CDFORMS (1-877-233-6767),
•By fax – 703-605-6900,
•By mail using the order form contained in IRS Publication 1045
(Tax Professionals Guide), and
•By mail to:
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
Part 5
Requirements for Specific Tax Returns
Section 5.1 – Tax Returns (Forms 1040, 1040A, 1120, etc.)
5.1.1
Acceptable F
orms
Tax forms (su
ch as Forms 1040, 1040A, and 1120) require a signature and establish tax
liability. C
omputer generated versions are acceptable under the following conditions.
•These substi
tute forms must be printed on plain white paper.
•Substitute f
orms must conform to the physical layout of the corresponding IRS form al-
though the ty
peface may differ. The text should match the text on the officially published
form as close
ly as possible. Condensed text and abbreviations will be considered on a
case-by-cas
ebasis.
Caution.Al
l jurats (perjury statements) must bereproduced verbatim. No text can be
added, dele
ted, or changed in meaning.
•Various com
puter graphic print media such as laser printing, inkjet printing, etc., may be
used to prod
uce the substitute forms.
•The substit
ute form must be the same number of pages and contain the same line text as
the officia
lform.
•All substit
ute forms must be submitted for approval prior to their original use. You do not
need approv
al for a substitute form if its only change is the preprinted year and you had
received a p
rior year approval letter.
Exception
.If the approval letter specifies a one time exception for your form, the next
year’s for
m must be approved.
March 12, 20077132007–11 I.R.B.

5.1.2
Prohibited Forms
The following are prohibited.
•Computer generated tax forms (for example, Form 1040, etc.) on lined or color barred
paper.
•Tax forms that differ from the official IRS forms in a manner that makes them not standard
or unable to process.
5.1.3
Changes
Permitted to Forms
1040 and 1040A
Certain changes (listed in Sections 5.2 through 5.4) are permitted to the graphics of the form
without prior approval, but these changes apply to only acceptable preprinted forms. Changes
not requiring prior approval are good only for the annual filing period, which is the current tax
year. Such changes are valid in subsequent years only if the official form does not change.
5.1.4
Other Changes
Not Listed
All changes not listed in Sections 5.2 through 5.4 require approval from the IRS before the
form can be filed.
Section 5.2 – Changes Permitted to Graphics (Forms 1040A and 1040)
5.2.1
Adjustments
You may make minor vertical and horizontal spacing adjustments to allow for computer or
word processing printing. This includes widening the amount columns or tax entry areas if the
adjustments comply with other provisions stated in revenue procedures. No prior approval is
needed for these changes.
5.2.2
Name and Address Area
The horizontal rules and instructions within the name and address area may be removed and
the entire area left blank. No line or instruction can remain in the area. However, the statement
regarding use of the IRS label should be retained. The heavy ruled border (when present) that
outlines the name, address area, and social security number must not be removed, relocated,
expanded, or contracted.
5.2.3
Required Format
When the name and address area is left blank, the following format must be used when
printing the taxpayer’s name and address. Otherwise, unless the taxpayer’s preprinted label is
affixed over the information entered in this area, the lines must be filled in as shown below.
•1st name line (35 characters maximum).
•2nd name line (35 characters maximum).
•In-care-of name line (35 characters maximum).
•City, state (25 characters maximum), one blank character, and ZIP code.
5.2.4
Conventional
Name and
Address Data
When there is no in-care-of name line, the name and address will consist of only three lines
(singlefiler)orfourlines(jointfiler).Nameand address (joint filer) with no in-care-of name
line:
JOHN Z. JONES
MARY I. JONES
1234 ANYWHERE ST., APT. 111
ANYTOWN, STATE 12321
2007–11 I.R.B.714March 12, 2007

5.2.5
Example of
In-Care-Of
Name Line
Name and address (single filer) with in-care-of name line:
JOHN Z. JONES
C/O THOMAS A. JONES
4311 SOMEWHERE AVE.
SAMETOWN, STATE 54345
5.2.6
SSN and
Employer Identification
Number (EIN) Area
The vertical lines separating the format arrangement of the SSN/EIN may be removed.
When the vertical lines are removed, the SSNand EIN formats must be 000-00-0000 or
00-0000000, respectively.
5.2.7
Cents Column
•You may remove the vertical rule that separates the dollars from the cents.
•All entries in the amount column should have a decimal point following the whole dollar
amounts whether or not the vertical line that separates the dollars from the cents is present.
•You may omit printing the cents, but all amounts entered on the form must follow a con-
sistent format. You are strongly urged to round off the figures to whole dollar amounts,
following the official form instructions.
•When several amounts are summed together, the total should be rounded off after addition
(that is, individual amounts should not be rounded off for computation purposes).
•When printing money amounts, you must use one of the following formats:
(a) 0,000,000.;
(b) 0,000,000.00.
•When there is no entry for aline, leave the line blank.
5.2.8
“Paid Preparer’s
Use Only” Area
On all forms, the paid preparer’s information area may not be rearranged or relocated. You
may add three lines and remove the horizontal rules in the preparer’s address area.
Section 5.3 – Changes Permitted to Form 1040A Graphics
5.3.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only).
5.3.2
Line 4 of
Form 1040A
This line may be compressed horizontally (to allow for same line entry for the name of the
qualifying child) by using the following caption: “Head of household; child’s name” (name
field).
5.3.3
Other Lines
Any line with text that takes up two or more vertical lines may be compressed to one line
by using contractions, etc., and by removing instructional references.
March 12, 20077152007–11 I.R.B.

5.3.4
Page 2 of
Form 1040A
All lines must be present and numbered in the order shown on the official form. These lines
mayalsobecompressed.
5.3.5
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040A may be printed in black and white only with no color screening.
5.3.6
Other Changes
Prohibited
No other changes to the Form 1040A graphics are allowed without prior approval except
for the removal of instructions and references to instructions.
Section 5.4 – Changes Permitted to Form 1040 Graphics
5.4.1
General
No prior approval is needed for the followingchanges (for use with computer prepared
forms only). Specific line numbers in the following headings may have changed due to tax law
changes.
5.4.2
Line 4 of
Form 1040
This line may be compressed horizontally (to allow for a larger entry area for the name of the
qualifying child) by using the following caption: “Head of household; child’s name” (name
field).
5.4.3
Line 6c of
Form 1040
The vertical lines separatingcolumns (1) through (4) may be removed. The captions may
be shortened to allow a one line caption for each column.
5.4.4
Other Lines
Any other line with text that takes up two or more vertical lines may be compressed to one
line by using contractions, etc., and by removing instructional references.
5.4.5
Line 21 – Other Income
The fill-in portion of this line may be expanded vertically to three lines. The amount entry
box must remain a single entry.
5.4.6
Line 44 of
Form 1040 – Tax
You may change the line caption to read “Tax” and computer print the words “Total includes
tax from” and either “Form(s) 8814” or “Form 4972.” If both forms are used, print both form
numbers. This specific line number may have changed.
5.4.7
Line 55 of
Form 1040 –
Other Credits
You may change the caption to read: “Other credits from Form” and computer print only
the form(s) that apply.
2007–11 I.R.B.716March 12, 2007

5.4.8
Color Screening
It is not necessary to duplicate the color screening used on the official form. A substitute
Form 1040 may be printed in black and white only with no color screening.
5.4.9
Other Changes
Prohibited
No other changes to the Form 1040 graphics arepermitted without prior approval except
for the removal of instructions and references to instructions.
Part 6
Format and Content of Substitute Returns
Section 6.1 – Acceptable Formats for Substitute Forms and Schedules
6.1.1
Exhibits and Use of Acceptable
Formats
Exhibits of acceptable formats for Schedule A, usually attached tothe Form 1040, and Form
2106-EZ are shown in the exhibits section of this revenue procedure.
•If your computer generated forms appear exactly like the exhibits, no prior authorization
is needed.
•You may computer generate forms not shown here, but you must design them by following
the manner and style of those in the exhibits section.
•Take care to observe other requirements and conditions in this revenue procedure. The IRS
encourages the submission of all proposed forms covered by this revenue procedure.
6.1.2
Instructions
The format of each substitute form or schedule must follow the format of the official form
or schedule as to item captions, line references, line numbers, sequence, form arrangement
and format, etc. Basically, try to make the form look like the official one, with readability and
consistency being primary factors. You may use periods and/or other similar special characters
to separate the various parts and sections of the form. Do not use alpha or numeric characters
for these purposes. All line numbers and items must be printed even though an amount is not
enteredontheline.
6.1.3
Line Numbers
When a line on an official form is designated by a number or a letter, that designation (ref-
erence code) must be used on a substitute form. The reference code must be printed to the left
of the text of each line and immediately preceding the data entry field, even if no reference
code precedes the data entry field on the officialform. If an entry field contains multiple lines
and shows the line references once on the left and right side of the form, use the same number
of line references on the substitute form.
In addition, the reference code that is immediately before the data field must either be fol-
lowed by a period or enclosed in parentheses. There also must be at least two blank spaces
between the period or the right parenthesis and the first digit of the data field. (See example
below.)
6.1.4
Decimal Points
A decimal point (that is, a period) should be used for each money amount regardless of
whether the amount is reported in dollars and cents or in whole dollars, or whether or not the
vertical line that separates the dollars from the cents is present. The decimal points must be
vertically aligned when possible.
March 12, 20077172007–11 I.R.B.

Example:
5 STATE & LOCAL INC. TAXES...............5.495.00
6 REAL ESTATE TAXES............................6.
7 PERSONAL PROPERTY TAXES............7.198.00
or
5 STATE & LOCAL INC. TAXES...............(5)495.00
6 REAL ESTATE TAXES.............................(6)
7 PERSONAL PROPERTY TAXES.............(7)198.00
6.1.5
Multi-Page Forms
When submitting a multi-page form, send all its pages in the same package.
Exception.If you will not be producing certain pages, please note that in your cover letter.
Section 6.2 – Additional Instructions for All Forms
6.2.1
Use of Your
Own Internal Control
Numbers and
Identifying Symbols
You may show the computer prepared internal control numbers and identifying symbols on
the substitute if using such numbers or symbols is acceptable to the taxpayer and the taxpayer’s
representative. Such information must not be printed in the top
1
/2inch clear area of any form
or schedule requiring a signature. Except for the actual tax return form (Forms 1040, 1120,
940, 941, etc.), you may print in the left vertical and bottom left margins. The bottom left
margin you may use extends 3
1
/2inches from the left edge of the form.
6.2.2
Descriptions for
Captions, Lines, etc.
Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one
print line by using abbreviations and contractions, and by omitting articles, prepositions, etc.
However, sufficient key words must be retained to permit ready identification of the caption,
line, or item.
6.2.3
Determining
Final Totals
Explanatory detail and/or intermediate calculations for determining final line totals may
be included on the substitute. We prefer that such calculations be submitted in the form of a
supporting statement. If intermediate calculations are included on the substitute, the line on
which they appear may not be numbered or lettered. Intermediate calculations may not be
printed in the right column. This column is reserved only for official numbered and lettered
lines that correspond to the ones on the official form. Generally, you may choose the format
for intermediate calculations or subtotalson supporting statements to be submitted.
6.2.4
Instructional
Text on the Official Form
Text on the official form, which is solely instructional (for example, “See instructions,”
etc.), may generally be omitted from the substitute form.
6.2.5
Mixing Forms
ontheSamePageProhibited
You may not show more than one form or schedule on the same printout page. Both sides
of the paper may be printed for multi-page official forms, butit is unacceptable to intermix
single page schedules of forms except for Schedules A and B (Form 1040), which are printed
back to back by the IRS.
2007–11 I.R.B.718March 12, 2007

For instance, Schedule E can be printed on both sides of the paper because the official form
is multi-page, with page 2 continued on the back. However, do not print Schedule E on the
front page and Schedule SE on the back, or Schedule A on the front and Form 8615 on the
back, etc. Both pages of a substitute form must match the official form. The back page may
be left blank if the back page of the official form contains only the instructions.
6.2.6
Identifying
Substitutes
Identify all computer prepared substitutes clearly. Print the form designation
1
/2inch from
the top margin and 1
1
/2inches from the left margin. Print thetitle centered on the first line of
print. Print the taxable year and, where applicable, the sequence number on the same line
1
/2
inch to 1 inch from the right margin. Include the taxpayer’s name and SSN on all forms and
attachments. Also, print the OMB number as reflected on the official form.
6.2.7
Negative Amounts
Negative (or loss) amount entries should be enclosed in brackets or parentheses or include
a minus sign. This assists in accurate computation and input of form data. The IRS pre-prints
parentheses in negative data fields on many official forms. These parentheses should be re-
tained or inserted on printouts of affected substitute forms.
Part 7
Miscellaneous Forms and Programs
Section 7.1 – Specifications for Substitute Schedules K-1
7.1.1
Requirements
for Schedules K-1
That Accompany
Forms 1041, 1065, 1065-B,
and 1120S
Because of significant changes to improve processing, prior approval is now required for
substitute Schedules K-1 that accompany Form1041 (for estates and trusts), Form 1065 (for
partnerships), Form 1065-B (for electing large partnerships), or Form 1120S (for S corpora-
tions). Substitute Schedules K-1 should be as close as possible to exact replicas of copies of
the official IRS schedules and follow the same process for submitting other substitute forms
and schedules. Before releasing their substitute forms, software vendors are responsible for
making any subsequent changes that have been made to the final official IRS forms after the
draft forms have been posted.
You must include all information on the form. Submit Schedules K-1 to the IRS at
*
taxforms@irs.govwith “Attn: Substitute Forms” on the subject line or at:
Internal Revenue Service
Attn: Substitute Forms Prog
ram
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, N
W
Room 6406
Washington, D.C. 20224
Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S.
•661106 for Form 1041,
•651106 for Form 1065, and
•671106 for Form 1120S.
Please allow white space around the 6-digit code.
March 12, 20077192007–11 I.R.B.

Schedules K-1 that accompany Forms 1041, 1065, 1065-B, or 1120S must meet all specifi-
cations. The specifications include, but are not limited to, the following requirements.
•You will no longer be ab
le to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are req
uired to use. All lines must be included.
•The words “*See attach
ed statement for additional information.” must be preprinted in the
lower right hand side o
n Schedules K-1 of Forms 1041, 1065, and 1120S.
•AllK-1sthatarefiled
with the IRS should be printed on standard 8.5” x 11” paper (the
international standa
rd (A4) of 8.27” x 11.69” may be substituted).
•Each recipient’s info
rmation must be on a separate sheet of paper. Therefore, you must
separate all continuo
usly printed substitutes, by recipient, before filing with the IRS.
•No carbon copies or pre
ssure-sensitive copies will be accepted.
•The Schedule K-1 must c
ontain the name, address, and SSN or EIN of both the entity (es-
tate,trust,partners
hip, or S corporation) and the recipient (beneficiary, partner, or share-
holder).
•TheScheduleK-1mustc
ontain the tax year, the OMB number, the schedule number (K-1),
the related form numb
er (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the
same position and format as shown on the official IRS schedule.
•The Schedule K-1 must
contain all the line items as shown on the official form, except for
the instructions, if
any are printed on the back of the official Schedule K-1.
•The line items or boxe
s must be in the same order and arrangement as those on the official
form.
•The amount of each rec
ipient’s share of each item must be shown. Furnishing a total
amount of each item an
d a percentage (or decimal equivalent) to be applied to such to-
tal amount by the reci
pient does not satisfy the law and the specifications of this revenue
procedure.
•State or local tax-re
lated information may not be included on the Schedules K-1 filed with
the IRS.
•Theentitymayhaveto
pay a penalty if substitute Schedules K-1 are filed that do not con-
form to specificati
ons.
•Additionally, the I
RS may consider the Schedules K-1 that do not conform to specifications
as not being able to p
rocess and may return Forms 1041, 1065, 1065-B, or 1120S to the
entity to be filed co
rrectly.
Schedules K-1 that are 2-D bar-coded will continue to require prior approval from the IRS
(see Sections 7.1.3 through 7.1.5).
7.1.2
Special Requirements
for Recipient Copies of
Schedules K-1
Standardization for reporting informationis required for recipient copies of substitute
Schedules K-1 of Forms 1041, 1065, 1065-B, and 1120S. Uniform visual standards are
provided to increase compliance by allowing recipients and practitioners to more easily
recognize a substitute Schedule K-1. The entity must furnish to each recipient a copy of
Schedule K-1 that meets the following requirements.
•Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065,
and 1120S.
•661106 for Form 1041,
•651106 for Form 1065, and
•671106 for Form 1120S.
Please allow white space around the 6-digit code.
•You will no longer be able to produce Schedules K-1 that contain only those lines or boxes
that taxpayers are required to use. All lines must be included.
•Both pages 1 and 2 of Schedules K-1 of Forms 1065 and 1120S must be provided to each
recipient.
•The words “*See attached statement for additional information.” must be preprinted in the
lower right hand side on Schedules K-1 of Forms 1041, 1065, and 1120S.
•The Schedule K-1 must contain the name, address, and SSN or EIN of both the entity and
recipient.
2007–11 I.R.B.720March 12, 2007

•The Schedule K-1 must contain the tax year, the OMB number, the schedule number (K-1),
the related form number (1041, 1065, 1065-B, or 1120S), and the official schedule name
in substantially the same position and format as shown on the official IRS schedule.
•All applicable amounts and information required to be reported must be titled and numbered
in the same manner as shown on the officialIRS schedule. The line items or boxes must
be in the same order and arrangement and must be numbered like those on the official IRS
schedule.
•The Schedule K-1 must contain all items required for use by the recipient. The instructions
to the schedule must identify the line orbox number and code, if any, for each item as
shown in the official IRS schedule.
•The amount of each recipient’s share of eachitem must be shown. Furnishing a total
amount of each line item and a percentage (or decimal equivalent) to be applied to such
total amount by the recipient does not satisfy the law and the specifications of this revenue
procedure.
•Instructions to the recipient that are substantially similar to those on or accompanying the
official IRS schedule must be provided to aid in the proper reporting of the items on the
recipient’s income tax return. Where items are not reported to a recipient because they do
not apply, the related instructions may be omitted.
•The quality of the ink or other material used to generate recipients’ schedules must produce
clearly legible documents. In general, black chemical transfer inks are preferred.
•In order to assure uniformity of substitute Schedules K-1, the paper size should be standard
8.5” x 11” (the international standard (A4) of 8.27” x 11.69” may be substituted.)
•The paper weight, paper color, font type, font size, font color, and page layout must be such
that the average recipient can easily decipher the information on each page.
•State or local tax-related information may be included on recipient copies of substitute
Schedules K-1. All non-tax-related information should be separated from the tax informa-
tion on the substitute schedule to avoid confusion for the recipient.
•The legend “Important Tax Return Document Enclosed” must appear in a bold and con-
spicuous manner on the outside of the envelope that contains the substitute recipient copy
of Schedule K-1.
•The entity may have to pay a penalty if a substitute Schedule K-1 furnished to any recipient
does not conform to the specifications of this revenue procedure and results in impeding
processing.
7.1.3
Requirements
for Schedules K-1
with Two-Dimensional
(2-D) Bar Codes
In an effort to reduce the burden of manually transcribing tax documents, improve qual-
ity, and increase government efficiency, theIRS is pleased to providespecifications for 2-D
bar-coded substitute Schedules K-1 for Forms 1041, 1065, and 1120S. The IRS encourages
voluntary participation in adding 2-D barcoding.
Note.If software vendors do not want to produce bar-coded Schedules K-1, they may
produce the official IRS Schedules K-1 but cannot use the expedited process for approving
bar-coded K-1s and their parent returns as outlined in Section 7.1.5.
In addition to the requirements in Sections 7.1.1 and 7.1.2, the bar-coded Schedules K-1
must meet the following specifications.
•The bar code should print in the space labeled “For IRS Use Only” on each Schedule K-1.
The entire bar code must print within the “For IRS Use Only” box surrounded by a white
space of at least
1
/4inch.
•Bar codes must print in PDF 417 format.
•The bar codes must always be in the specifiedformat with every field represented by at
least a field delimiter (carriage return). Leaving out a field in a bar code will cause every
subsequent field to be misread.
•Be sure to include the 6-digit form ID code in the upper right of Schedules K-1 of Forms
1041, 1065, and 1120S.
•661106 for Form 1041,
March 12, 20077212007–11 I.R.B.

•651106 for Form 1065, and
•671106 for Form 1120S.
Please allow white space around the 6-digit code.
7.1.4
Approval
Process for
Bar-Coded Schedules K-1
Prior to releasing commercially available tax software that creates bar-coded Schedules K-1,
the printed schedule and the bar code must both be tested. Bar code testing must be done
using the final official IRS Schedule K-1. Bar code approval requests must be resubmitted for
any subsequent changes to the official IRS form that would affect the bar code. Below are
instructions and a sequence of events that will comprise the testing process.
•The IRS has released the final Schedule K-1 bar-code specifications by publishing them
on the IRS.gov website (seeh
ttp://www.irs.gov/efile/article/0,,id=129859,00.html).
•The IRS will publish a set of test documents that will be used to test the ability of tax
preparation software to create bar codes in the correct format.
•Software developers will submit two identical copies of the test documents – one to the
IRS and one to a contracted testing vendor.
•The IRS will use one set to ensure the printed schedules comply withstandard substitute
forms specifications.
•If the printed forms fail to meet the substitute form criteria, the IRS will inform the software
developer of the reason for noncompliance.
•The software developer must resubmit the Schedule(s) K-1 until they pass the substitute
forms criteria.
•The testing vendor will review the bar codes to ensure they meet the published bar-code
specifications.
•If the bar code(s) does not meet published specifications, the testing vendor will contact
the software developer directly informing them of the reason for noncompliance.
•Software developers must submit new bar-coded schedules until they pass the bar-code
test.
•When the bar code passes, the testing vendor will inform the IRS that the developer has
passed the bar-code test and the IRS will issue an overall approval for both the substitute
form and the bar code.
•After receiving this consolidated response, the software vendor is free to release software
for tax preparation as long as any subsequent revisions to the schedules do not change the
fields.
•Find the mailing address for the testing vendor below. Separate and simultaneous mailings
to the IRS and the vendor will reduce testing time.
7.1.5
Procedures
for Reducing Testing Time
In order to help provide incentives to the software development community to participate
in the Schedule K-1 2-D project, the IRS has committed to expediting the testing of bar-coded
Schedules K-1 and their associated parent returns. To receive this expedited service, follow
the instructions below.
•Mail the parent returns (Forms 1065, 1120S,1041) and associated bar-coded Schedule(s)
K-1 to the appropriate address below in a separate package from all other approval requests.
Internal Revenue Service
Attn: Bar-Coded K-1
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue, NW
Room 6406
Washington, D.C. 20224
2007–11 I.R.B.722March 12, 2007

•Mail one copy of the parent form(s) and Schedule(s) K-1 to the IRS and another copy to
the testing vendor at the address below.
Northrop Grumman Information Tech
Attn: Bill Philpot, Product Assurance Manager
1800 Alexander Bell Drive
Suite 300
Reston, VA 20191
Phone: 703-453-1200
•Include multiple email and phone contact points in the packages.
•While the IRS can expedite bar-coded Schedules K-1 and their associated parent returns,
it cannot expedite the approvalof non-associated tax returns.
Section 7.2 – Procedures for Printing IRS Envelopes
7.2.1
Procedures for Printing IRS
Envelopes
Organizations are permitted to produce substitute tax return envelopes. Use of substitute
return envelopes that comply with the requirements set forth in this section will assist in de-
livery of mail by the U.S. Postal Service and facilitate internal sorting at the Internal Revenue
Service Centers.
Use the following 5-digit ZIP codes when mailing returns to the IRS Service Centers:
Service CenterZIP Code
Atlanta, GA39901
Kansas City, MO64999
Austin, TX73301
Philadelphia, PA19255
Memphis, TN37501
Andover, MA05501
Cincinnati, OH45999
Ogden, UT84201
Fresno, CA93888
7.2.2
Sorting Returns
by Form Type
Sorting returns by form type is accomplished bythe preprinted bar codes on return envelopes
included in each specific type of form or package mailed to the taxpayers. The 32 bit bar code
on the left of the address on each envelope identifies the type of form the taxpayer is filing, and
it assists in consolidating like returns for processing. Failure to use the envelopes furnished by
the IRS results in additional processing time and effort, and possibly delays the timely deposit
of funds, processing of returns,and issuance of refund checks.
March 12, 20077232007–11 I.R.B.

7.2.3
ZIP+4 or 9-Digit
ZIP Codes
The IRS will not furnish or sell bulk quantities of preprinted tax return envelopes to tax-
payers or tax practitioners. A suitable alternative has been developed that will accommodate
the sorting needs of both the IRS and the United States Postal Service (USPS). The alternative
is based on the use of ZIP+4, or 9-digit ZIP codes, for mailing various types of tax returns to
the IRS Service Centers. The IRS uses the last four digits to identify and sort the various form
types into separate groups for processing. Thelist of 4-digit extensions with the related form
designations is provided below.
ZIP+4Package
XXXXX-00021040
XXXXX-0005941
XXXXX-0006940
XXXXX-0008943
XXXXX-00111065
XXXXX-00121120
XXXXX-00131120S
XXXXX-00141040EZ
XXXXX-00151040A
XXXXX-0027990
XXXXX-00312290
7.2.4
Guidelines for
Having Envelopes Preprinted
You may use the preparers’ company names, addresses, and logos as long as you do not
interfere with the clear areas. The government recommends that the envelope stocks have an
average opacity of not less than 89 percent andcontain a minimum of 50 percent waste paper.
Use of carbon based ink is essential for effective address and bar-code reading. Envelope
construction can be of side seam or diagonal seam design. The government recommends that
the size of the envelope should be 5
3
/4inches by 9 inches. Continuous pin-fed construction
is not desirable, but is permissible, if the glued edge is at the top. This requirement is firm
because mail opening equipment is designed to open the bottom edge of each envelope.
7.2.5
Envelopes/ZIP
Codes
The above procedures or guidelines are written for the user having envelopes preprinted.
Many practitioners may not wish to have large quantities of envelopes with differing ZIP
codes/form designations preprinted due to low volume, warehousing, waste, etc. In this case,
the practitioner can type or machine print the addresses with the appropriate ZIP codes to ac-
commodate sorting. If the requirements/guidelines outlined in this section cannot be met, then
use only the appropriate 5-digit service center ZIP code.
2007–11 I.R.B.724March 12, 2007

Section 7.3 – Guidelines for Substitute Forms 8655
7.3.1
Increased Standardization for
Forms 8655
Increased standardization for reporting information on substitute Forms 8655 is now re-
quired to aid in processing and for compliance purposes. Please follow the guidelines in Sec-
tion 7.3.2.
7.3.2
Requirements for Substitute
Forms 8655
Please follow these specific requirements when producing substitute Forms 8655.
•The first line of the title must be “Reporting Agent Authorization.”
•If you want to include a reference to “State Limited Power of Attorney,” it can be in paren-
theses under the title. “State” must be the first word within the parentheses.
•You must include “Form 8655” on the form.
•While the line numbers do not have to match the official form, the sequence of the infor-
mation must be in the same order.
•The size of any variable data must be printed in a font no smaller than 10-point.
•For adequate disclosure checks, the following must be included for each taxpayer:
(a) Name,
(b) EIN, and
(c) Address.
•At this time, Form 944 will not be required if Form 941 is checked. Only those forms that
the reporting agent company supports need to be listed.
•The jurat must be identical with the exception of references to line numbers.
•A contact name and number for the reporting agent is not required.
•Line 17, or the equivalent line, must include two checkboxes.
•Any state information included should be contained in a separate section of the substitute
form. Preferably this information will be in the same area as line 19 of the official form.
•All substitute Forms 8655 must be approved by the Substitute Forms Unit as outlined in
the Form 8655 specifications in Publication 1167.
•If you have not already been assigned a 3-letter source code, you will be given one when
your substitute form is approved. This source code should be included in the lower left
corner of the form.
Part 8
Alternative Methods of Filing
Section 8.1 – Forms for Electronically Filed Returns
8.1.1
Electronic Filing
Program
Electronic filing is a method by which qualified filers transmit tax return information di-
rectly to an IRS Service Center in the format of the official IRS forms. The IRS accepts both
refund and balance-due individual tax returns that are filed electronically.
March 12, 20077252007–11 I.R.B.

8.1.2
Applying to
Participate in IRSe-file
Anyone wishing to participate in IRSe-fileof tax returns must submit ane-fileapplica-
tion. The application can be completed and submitted electronically on the IRS website at
w
ww.irs.govor by filing Form 8633, Application to Participate in the IRSe-fileProgram.
8.1.3
Mailing
Instructions
IF submitting Form 8633 by...THEN mail it to...
Regular mailInternal Revenue Service
Andover Submission Processing Center
Attn: EFU Acceptance - Testing Stop 983
P.O. Box 4099
Woburn, MA 01888-4099
Overnight mailInternal Revenue Service
Andover Submission Processing Center
Attn: EFU Acceptance - Testing Stop 983
310 Lowell Street
Andover, MA 05501-0001
8.1.4
Obtaining the
Taxpayer Signature
Form 8453, U.S. Individual Income Tax Declaration for an IRSe-fileReturn, is the sig-
nature document for an electronically filed 1040, 1040A, or 1040EZ return not filed with an
electronic signature. Form 8453, which serves as a transmittal for associated nonelectronic
(paper) documents such as Forms 3115, 5713, 8283, and 8332, is a one-page form and can
only be approved through the Substitute Forms Program in that format. Form 8453-OL serves
the same purpose for taxpayers filing through online services. For specific information about
electronic filing, refer to Publication 1345, Handbook for Authorized IRSe-fileProviders of
Individual Income Tax Returns.
8.1.5
Guidelines for
Preparing Substitute Forms in the
Electronic Filing Program
A participant in the electronic filing program, who wants to develop a substitute form should
follow the guidelines throughout this publication and send a sample form for approval to the
Substitute Forms Unit at the address in Part 1. If you do not prepare Substitute Form 8453
using a font in which all IRS wording fitson a single page, the form will not be accepted.
Note.Use of unapproved forms could result in suspension of the participant from the elec-
tronic filing program.
Section 8.2 – Effect on Other Documents
8.2.1
Effect on Other
Documents
This revenue procedure supersedes Revenue Procedure 2005–74, 2005–2 C.B. 1098.
2007–11 I.R.B.726March 12, 2007

March 12, 20077272007–11 I.R.B.

2007–11 I.R.B.728March 12, 2007

March 12, 20077292007–11 I.R.B.

2007–11 I.R.B.730March 12, 2007

March 12, 20077312007–11 I.R.B.

2007–11 I.R.B.732March 12, 2007

Part IV. Items of General Interest
AJCA Modifications to the
Section 6112 Regulations
Announcement 2007–27
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of public hearing on pro-
posed rulemaking.
SUMMARY: This document provides
notice of a public hearing on proposed
rulemaking (REG–103043–05, 2006–49
I.R.B. 1063) relating to the obligation of
material advisors to prepare and maintain
lists with respect to reportable transactions
under section 6112.
DATES: The public hearing is being held
on Tuesday, March 20, 2007, at 10:00 a.m.
The IRS must receive outlines of the topics
to be discussed at the public hearing by
March 6, 2007.
ADDRESSES: The public hearing is be-
ing held in the IRS Auditorium, Internal
Revenue Service Building, 1111 Constitu-
tion Avenue, NW, Washington, DC 20224.
Due to building security procedures, vis-
itors must enter at the Constitution Av-
enue entrance. In addition, all visitors
must present photo identification to enter
the building.
Mail outlines to CC:PA:LPD:PR
(REG–103043–05), room 5205, In-
ternal Revenue Service, POB 7604,
Ben Franklin Station, Washington,
DC 20044.Submissions may be
hand-delivered Monday through Fri-
day between the hours of 8:00 a.m.
and 4:00 p.m.to CC:PA:LPD:PR
(REG–103043–05), Couriers Desk, In-
ternal Revenue Service, 1111 Constitu-
tion Avenue, NW, Washington, DC or
sent electronically via the Federal erule-
making Portal atwww.regulations.gov
(IRS-REG–103043–05).
FOR FURTHER INFORMATION
CONTACT: Concerning submissions of
comments, the hearing and/or to be placed
on the building access list to attend the
hearing Kelly Banks at (202) 622–7180
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
The subject of the public hearing
is the notice of proposed rulemaking
(REG–103043–05) that was published
in theFederal Registeron Thursday,
November 2, 2006 (71 FR 64501). The
notice also announced that a hearing will
be scheduled if requested by the public in
writing by January 31, 2007.
The rules of 26 CFR 601.601 apply to
the hearing. A period of 10 minutes is al-
lotted to each person for presenting oral
comments. After the deadline has passed,
persons who have submitted written com-
ments and wish to present oral comments
at the hearing must submit an outline of the
topics to be discussed and the amount of
time to be devoted to each topic (a signed
original and eight (8) copies) by March 6,
2007.
The IRS will prepare an agenda con-
taining the schedule of speakers. Copies of
the agenda will be made available free of
charge, at the hearing. Because of access
restrictions, the IRS will not admit visitors
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER IN-
FORMATION CONTACT” section of this
document.
LaNita Van Dyke,
Branch Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Offic
e of the Federal Register on February 14,
2007, 8:45 a.m., and published in the issue of the Federal
Register for February 15, 2007, 72 F.R. 7361)
AJCA Modifications to the
Section 6011 Regulations
Announcement 2007–29
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of public hearing on pro-
posed rulemaking.
SUMMARY: This document provides
notice of a public hearing on proposed
rulemaking (REG–103038–05, 2006–49
I.R.B. 1049) relating to the disclosure
of reportable transactions under section
6011.
DATES: The public hearing is being held
on Tuesday, March 20, 2007, at 10:00 a.m.
The IRS must receive outlines of the topics
to be discussed at the public hearing by
March 6, 2007.
ADDRESSES: The public hearing is be-
ingheldintheIRSAuditorium,Internal
Revenue Service Building, 1111 Constitu-
tion Avenue, NW, Washington, DC 20224.
Due to building security procedures, vis-
itors must enter at the Constitution Av-
enue entrance. In addition, all visitors
must present photo identification to enter
the building.
Mail outlines to CC:PA:LPD:PR
(REG–103038–05), room 5205, In-
ternal Revenue Service, POB 7604,
Ben Franklin Station, Washington,
DC 20044.Submissions may be
hand-delivered Monday through Fri-
day between the hours of 8:00 a.m.
and4:00p.m. toCC:PA:LPD:PR
(REG–103038–05), Couriers Desk, In-
ternal Revenue Service, 1111 Constitu-
tion Avenue, NW, Washington, DC or
sent electronically via the Federal erule-
making Portal atwww.regulations.gov
(IRS-REG–103038–05).
FOR FURTHER INFORMATION
CONTACT: Concerning submissions of
comments, the hearing and/or to be placed
on the building access list to attend the
hearing Kelly Banks at (202) 622–7180
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
The subject of the public hearing
is the notice of proposed rulemaking
(REG–103038–05) that was published
in theFederal Registeron Thursday,
November 2, 2006 (71 FR 64488).
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing.
A period of 10 minutes is allotted to
each person for presenting oral comments.
After the deadline has passed, persons
March 12, 20077332007–11 I.R.B.

who have submitted written comments
and wish to present oral comments at the
hearing must submit an outline of the
topics to be discussed and the amount of
time to be devoted to each topic (a signed
original and eight (8) copies) by March 6,
2007.
TheIRSwillprepareanagendacon-
taining the schedule of speakers. Copies
of the agenda will be made available free
of charge at the hearing. Because of access
restrictions, the IRS will not admit visitors
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER IN-
FORMATION CONTACT” section of this
document.
LaNita Van Dyke,
Branch Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on February 14,
2007, 8:45 a.m., and published in the issue of the Federal
Register for February 15, 2007, 72 F.R. 7360)
AJCA Modifications to the
Section 6111 Regulations
Announcement 2007–30
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of public hearing on pro-
posed rulemaking.
SUMMARY: This document provides
notice of a public hearing on proposed
rulemaking (REG–103039–05, 2006–49
I.R.B. 1057) relating to the disclosure of
reportable transactions by material advi-
sors under section 6111.
DATES: The public hearing is being held
on Tuesday, March 20, 2007, at 10:00 a.m.
The IRS must receive outlines of the topics
to be discussed at the public hearing by
March 6, 2007.
ADDRESSES: The public hearing is be-
ing held in the IRS Auditorium, Internal
Revenue Service Building, 1111 Constitu-
tion Avenue, NW, Washington, DC 20224.
Due to building security procedures, vis-
itors must enter at the Constitution Av-
enue entrance. In addition, all visitors
must present photo identification to enter
the building.
Mail outlines to CC:PA:LPD:PR
(REG–103039–05), room 5205, In-
ternal Revenue Service, POB 7604,
Ben Franklin Station, Washington,
DC 20044.Submissions may be
hand-delivered Monday through Fri-
day between the hours of 8:00 a.m.
and 4:00 p.m.to CC:PA:LPD:PR
(REG–103039–05), Couriers Desk, In-
ternal Revenue Service, 1111 Constitu-
tion Avenue, NW, Washington, DC or
sent electronically via the Federal erule-
making Portal atwww.regulations.gov
(IRS-REG–103039–05).
FOR FURTHER INFORMATION
CONTACT: Concerning submissions of
comments, the hearing and/or to be placed
on the building access list to attend the
hearing Kelly Banks at (202) 622–7180
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
The subject of the public hearing
is the notice of proposed rulemaking
(REG–103039–05) that was published
in theFederal Registeron Thursday,
November 2, 2006 (71 FR 64496). The
notice also announced that a hearing will
be scheduled if requested by the public in
writing by January 31, 2007.
The rules of 26 CFR 601.601 apply to
the hearing.
A period of 10 minutes is allotted to
each person for presenting oral comments.
After the deadline has passed, persons
who have submitted written comments
and wish to present oral comments at the
hearing must submit an outline of the
topics to be discussed and the amount of
time to be devoted to each topic (a signed
original and eight (8) copies) by March 6,
2007.
The IRS will prepare an agenda con-
taining the schedule of speakers. Copies
of the agenda will be made available free
of charge at the hearing. Because of access
restrictions, the IRS will not admit visitors
beyond the immediateentrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER IN-
FORMATION CONTACT” section of this
document.
LaNita Van Dyke,
Branch Chief,
Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on February 14,
2007, 8:45 a.m., and published in the issue of the Federal
Register for February 15, 2007, 72 F.R. 7360)
Nondiscrimination and
Wellness Programs in Health
Coverage in the Group
Market; Correction
Announcement 2007–32
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correcting amendments.
SUMMARY: This document contains cor-
rection to final regulations (T.D. 9298,
2007–6 I.R.B. 434) that were published in
theFederal Registeron Wednesday, De-
cember 13, 2006 (71 FR 75014) governing
the provisions prohibiting discrimination
based on a health factor for group health
plans and issuers of health insurance cov-
erage offered in connectionwithagroup
health plan.
DATES: The correction is effective Febru-
ary 12, 2007.
FOR FURTHER INFORMATION
CONTACT: Russ Weinheimer, (202)
622–6080 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
The correction notice that is the subject
of this document is under section 9802 of
the Internal Revenue Code.
2007–11 I.R.B.734March 12, 2007

Need for Correction
As published, final regulations (T.D.
9298) contain errors that may prove to be
misleading and are in need of clarification.
*****
Correction of Publication
Accordingly, 26 CFR part 54 is cor-
rected by making the following correcting
amendments:
PART 54—PENSION EXCISE TAXES
Paragraph 1. The authority citation for
part 54 continues to read, in part, as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 54.9802–1(b)(2)(i)(D)
is amended by revising paragraph (ii) of
Example 4.
Par. 3. Section 54.9802–1(f)(1) is
amended by revising the first sentence
of the paragraph. The revisions read as
follows:
§ 54.9802–1 Pro
hibiting discrimination
against partic
ipants and beneficiaries
basedonahealt
hfactor.
*****
(b) * * *
(2) * * *
(i) * * *
(D)***
Example 4.***
(ii)Conclusion.InthisExample 4, the limit does
not violate this paragraph (b)(2)(i) because $2,000 of
benefits for the treatment of TMJ are available uni-
formly to all similarly situated individuals and a plan
may limit benefits covered in relation to a specific
disease or condition if the limit applies uniformly to
all similarly situated individuals and is not directed
at individual participants or beneficiaries. (This ex-
ample does not address whether the plan provision
is permissible under the Americans with Disabilities
Act or any other applicable law.)
*****
(f) * * *
(1) * * * If none of the conditions for
obtaining a reward under a wellness pro-
gram are based on an individual satisfying
a standard that is related to a health factor
(or if a wellness program does not provide
a reward), the wellness program does not
violate this section, if participation in the
program is made available to all similarly
situated individuals. * * *
*****
LaNita Van Dyke,
Chief, Publications and
Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).
(Filed by the Office of the Federal Register on February 21,
2007, 8:45 a.m., and published in the issue of the Federal
Register for February 22, 2007, 72 F.R. 7929)
March 12, 20077352007–11 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 rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2007–11 I.R.B.iMarch 12, 2007

Numerical Finding List
1
Bulletins 2007–1 through 2007–11
Announcements:
2007-1, 2007-1 I.R.B.243
2007-2, 2007-2 I.R.B.263
2007-3, 2007-4 I.R.B.376
2007-4, 2007-7 I.R.B.518
2007-5, 2007-4 I.R.B.376
2007-6, 2007-4 I.R.B.376
2007-7, 2007-4 I.R.B.377
2007-8, 2007-5 I.R.B.416
2007-9, 2007-5 I.R.B.417
2007-10, 2007-6 I.R.B.464
2007-11, 2007-6 I.R.B.464
2007-12, 2007-6 I.R.B.465
2007-13, 2007-7 I.R.B.519
2007-14, 2007-7 I.R.B.519
2007-15, 2007-8 I.R.B.596
2007-16, 2007-8 I.R.B.597
2007-17, 2007-8 I.R.B.597
2007-18, 2007-9 I.R.B.625
2007-19, 2007-7 I.R.B.521
2007-20, 2007-8 I.R.B.599
2007-21, 2007-9 I.R.B.630
2007-22, 2007-9 I.R.B.631
2007-23, 2007-10 I.R.B.665
2007-24, 2007-10 I.R.B.681
2007-25, 2007-10 I.R.B.682
2007-26, 2007-10 I.R.B.682
2007-27, 2007-11 I.R.B.733
2007-28, 2007-10 I.R.B.683
2007-29, 2007-11 I.R.B.733
2007-30, 2007-11 I.R.B.734
2007-32, 2007-11 I.R.B.734
Notices:
2007-1, 2007-2 I.R.B.254
2007-2, 2007-2 I.R.B.254
2007-3, 2007-2 I.R.B.255
2007-4, 2007-2 I.R.B.260
2007-5, 2007-3 I.R.B.269
2007-6, 2007-3 I.R.B.272
2007-7, 2007-5 I.R.B.395
2007-8, 2007-3 I.R.B.276
2007-9, 2007-5 I.R.B.401
2007-10, 2007-4 I.R.B.354
2007-11, 2007-5 I.R.B.405
2007-12, 2007-5 I.R.B.409
2007-13, 2007-5 I.R.B.410
2007-14, 2007-7 I.R.B.501
2007-15, 2007-7 I.R.B.503
2007-16, 2007-8 I.R.B.536
2007-18, 2007-9 I.R.B.608
2007-19, 2007-11 I.R.B.689
Notices— Continued:
2007-20, 2007-9 I.R.B.610
2007-21, 2007-9 I.R.B.611
2007-22, 2007-10 I.R.B.670
2007-23, 2007-11 I.R.B.690
Proposed Regulations:
REG-157711-02, 2007-8 I.R.B.537
REG-159444-04, 2007-9 I.R.B.618
REG-152043-05, 2007-2 I.R.B.263
REG-161919-05, 2007-6 I.R.B.463
REG-125632-06, 2007-5 I.R.B.415
REG-147144-06, 2007-10 I.R.B.680
Revenue Procedures:
2007-1, 2007-1 I.R.B.1
2007-2, 2007-1 I.R.B.88
2007-3, 2007-1 I.R.B.108
2007-4, 2007-1 I.R.B.118
2007-5, 2007-1 I.R.B.161
2007-6, 2007-1 I.R.B.189
2007-7, 2007-1 I.R.B.227
2007-8, 2007-1 I.R.B.230
2007-9, 2007-3 I.R.B.278
2007-10, 2007-3 I.R.B.289
2007-11, 2007-2 I.R.B.261
2007-12, 2007-4 I.R.B.354
2007-13, 2007-3 I.R.B.295
2007-14, 2007-4 I.R.B.357
2007-15, 2007-3 I.R.B.300
2007-16, 2007-4 I.R.B.358
2007-17, 2007-4 I.R.B.368
2007-18, 2007-5 I.R.B.413
2007-19, 2007-7 I.R.B.515
2007-20, 2007-7 I.R.B.517
2007-21, 2007-9 I.R.B.613
2007-22, 2007-10 I.R.B.675
2007-23, 2007-10 I.R.B.675
2007-24, 2007-11 I.R.B.692
Revenue Rulings:
2007-1, 2007-3 I.R.B.265
2007-2, 2007-3 I.R.B.266
2007-3, 2007-4 I.R.B.350
2007-4, 2007-4 I.R.B.351
2007-5, 2007-5 I.R.B.378
2007-6, 2007-5 I.R.B.393
2007-7, 2007-7 I.R.B.468
2007-8, 2007-7 I.R.B.469
2007-9, 2007-6 I.R.B.422
2007-10, 2007-10 I.R.B.660
2007-11, 2007-9 I.R.B.606
2007-12, 2007-11 I.R.B.685
2007-13, 2007-11 I.R.B.684
2007-15, 2007-11 I.R.B.687
Tax Conventions:
2007-23, 2007-10 I.R.B.665
Treasury Decisions:
9298, 2007-6 I.R.B.434
9299, 2007-6 I.R.B.460
9300, 2007-2 I.R.B.246
9301, 2007-2 I.R.B.244
9302, 2007-5 I.R.B.382
9303, 2007-5 I.R.B.379
9304, 2007-6 I.R.B.423
9305, 2007-7 I.R.B.479
9306, 2007-6 I.R.B.420
9307, 2007-7 I.R.B.470
9308, 2007-8 I.R.B.523
9309, 2007-7 I.R.B.497
9310, 2007-9 I.R.B.601
9311, 2007-10 I.R.B.635
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2006–27 through 2006–52 is in Internal Revenue Bulletin
2006–52, dated December 26, 2006.
March 12, 2007ii2007–11 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2007–1 through 2007–11
Notices:
2002-45
Modified by
Notice 2007-22, 2007-10 I.R.B.670
2005-29
Modified and superseded by
Notice 2007-4, 2007-2 I.R.B.260
2005-86
Modified by
Notice 2007-22, 2007-10 I.R.B.670
2006-2
Modified and superseded by
Notice 2007-4, 2007-2 I.R.B.260
2006-50
Amplified, clarified, and modified by
Notice 2007-11, 2007-5 I.R.B.405
Proposed Regulations:
REG-208270-86
Corrected by
Ann. 2007-4, 2007-7 I.R.B.518
REG-121509-00
Corrected by
Ann. 2007-17, 2007-8 I.R.B.597
REG-141901-05
Corrected by
Ann. 2007-7, 2007-4 I.R.B.377
REG-142270-05
Corrected by
Ann. 2007-2, 2007-2 I.R.B.263
REG-125632-06
Corrected by
Ann. 2007-26, 2007-10 I.R.B.682
REG-127819-06
Corrected by
Ann. 2007-5, 2007-4 I.R.B.376
REG-136806-06
Corrected by
Ann. 2007-6, 2007-4 I.R.B.376
Hearing cancelled by
Ann. 2007-19, 2007-7 I.R.B.521
Revenue Procedures:
98-20
Superseded by
Rev. Proc. 2007-12, 2007-4 I.R.B.354
Revenue Procedures— Continued:
2000-38
Modified by
Rev. Proc. 2007-16, 2007-4 I.R.B.358
2000-50
Modified by
Rev. Proc. 2007-16, 2007-4 I.R.B.358
2001-42
Modified and amplified by
Rev. Proc. 2007-19, 2007-7 I.R.B.515
2002-9
Modified and amplified by
Rev. Proc. 2007-14, 2007-4 I.R.B.357
Modified by
Rev. Proc. 2007-16, 2007-4 I.R.B.358
2004-11
Superseded by
Rev. Proc. 2007-16, 2007-4 I.R.B.358
2004-65
Modified and superseded by
Rev. Proc. 2007-20, 2007-7 I.R.B.517
2005-12
Superseded by
Rev. Proc. 2007-17, 2007-4 I.R.B.368
2005-69
Superseded by
Rev. Proc. 2007-15, 2007-3 I.R.B.300
2005-74
Superseded by
Rev. Proc. 2007-24, 2007-11 I.R.B.692
2006-1
Superseded by
Rev. Proc. 2007-1, 2007-1 I.R.B.1
2006-2
Superseded by
Rev. Proc. 2007-2, 2007-1 I.R.B.88
2006-3
Superseded by
Rev. Proc. 2007-3, 2007-1 I.R.B.108
2006-4
Superseded by
Rev. Proc. 2007-4, 2007-1 I.R.B.118
2006-5
Superseded by
Rev. Proc. 2007-5, 2007-1 I.R.B.161
2006-6
Superseded by
Rev. Proc. 2007-6, 2007-1 I.R.B.189
2006-7
Superseded by
Rev. Proc. 2007-7, 2007-1 I.R.B.227
Revenue Procedures— Continued:
2006-8
Superseded by
Rev. Proc. 2007-8, 2007-1 I.R.B.230
2006-35
Modified by
Rev. Proc. 2007-22, 2007-10 I.R.B.675
Revenue Rulings:
69-141
Modified by
Notice 2007-22, 2007-10 I.R.B.670
69-587
Revoked by
Rev. Rul. 2007-12, 2007-11 I.R.B.685
75-161
Obsoleted by
Rev. Rul. 2007-8, 2007-7 I.R.B.469
76-188
Obsoleted by
Rev. Rul. 2007-8, 2007-7 I.R.B.469
78-330
Modified by
Rev. Rul. 2007-8, 2007-7 I.R.B.469
81-225
Clarified and amplified by
Rev. Rul. 2007-7, 2007-7 I.R.B.468
92-19
Supplemented in part by
Rev. Rul. 2007-10, 2007-10 I.R.B.660
96-51
Amplified by
Rev. Rul. 2007-12, 2007-11 I.R.B.685
2002-41
Modified by
Notice 2007-22, 2007-10 I.R.B.670
2003-43
Modified by
Notice 2007-2, 2007-2 I.R.B.254
2003-92
Clarified and amplified by
Rev. Rul. 2007-7, 2007-7 I.R.B.468
2003-102
Modified by
Notice 2007-22, 2007-10 I.R.B.670
2005-24
Modified by
Notice 2007-22, 2007-10 I.R.B.670
2005-76
Supplemented and superseded by
Rev. Rul. 2007-4, 2007-4 I.R.B.351
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2006–27 through 2006–52 is in Internal Revenue Bulletin 2006–52, dated December 26,
2006.
2007–11 I.R.B.iiiMarch 12, 2007

Revenue Rulings— Continued:
2006-36
Modified by
Notice 2007-22, 2007-10 I.R.B.670
Treasury Decisions:
9263
Corrected by
Ann. 2007-22, 2007-9 I.R.B.631
9276
Corrected by
Ann. 2007-20, 2007-8 I.R.B.599
Ann. 2007-21, 2007-9 I.R.B.630
9278
Corrected by
Ann. 2007-9, 2007-5 I.R.B.417
Ann. 2007-10, 2007-6 I.R.B.464
9286
Corrected by
Ann. 2007-8, 2007-5 I.R.B.416
9298
Corrected by
Ann. 2007-32, 2007-11 I.R.B.734
9303
Corrected by
Ann. 2007-25, 2007-10 I.R.B.682
March 12, 2007iv2007–11 I.R.B.

2007–11 I.R.B.March 12, 2007

March 12, 20072007–11 I.R.B.

INTERNAL REVENUE BULLETIN
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