Internal Revenue Bulletin 2012-10 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 201
2-10
March 5, 2012
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Notice 2012–18, page 438.
This notice informs state housing finance agencies participat-
ing in a specified pilot program of an alternative way to satisfy
certain inspection and review responsibilities under regulations
section 1.42–5(c)(2). The noticealso invites taxpayers to com-
ment generally on issues relating to regulations section 1.42–5
for potential changes to those rules.
Notice 2012–19, page 440.
This notice provides adjusted limitations on housing expenses
for tax year 2012 for purposes of section 911 of the Code.
Notices 2006–87, 2007–25, 2007–77, 2008–107, 2010–27
and 2011–8 superseded.
Rev. Proc. 2012–17, page 453.
This procedure provides the requirements for furnishing sub-
stitute Schedule K–1,Partner’s Share of Income, Deductions,
Credits, etc., in electronic format.
ESTATE TAX
Notice 2012–21, page 450.
This notice grants to qualifying estates a six-month extension
of time for filing an estate tax return (Form 706) to elect porta-
bility of an unused exclusion amount provided that qualifying
estates file a request for an extension (Form 4768) within 15
months of the decedent’s death. A qualifying estate is the es-
tate of a person who died, survived by a spouse, during the
first half of calendar year 2011, and whose gross estate has
a fair market value that does not exceed $5 million. With the
extension granted by this notice, Form 706 must be filed within
15 months of the decedent’s death.
ADMINISTRATIVE
Notice 2012–21, page 450.
This notice grants to qualifying estates a six-month extension
of time for filing an estate tax return (Form 706) to elect porta-
bility of an unused exclusion amount provided that qualifying
estates file a request for an extension (Form 4768) within 15
months of the decedent’s death. A qualifying estate is the es-
tate of a person who died, survived by a spouse, during the
first half of calendar year 2011, and whose gross estate has
a fair market value that does not exceed $5 million. With the
extension granted by this notice, Form 706 must be filed within
15 months of the decedent’s death.
Rev. Proc. 2012–16, page 452.
This procedure provides issuers of qualified mortgage bonds,
as defined in section 143(a) of the Code, and issuers of mort-
gage credit certificates, as defined in section 25(c), with the
United States median gross income figure most recently com-
puted by the Department of Housing and Urban Development
(HUD). The proposed procedure also provides these issuers
with guidance concerning the area median gross incomes as
computed by HUD. Issuers of qualified mortgage bonds (QMB)
and mortgage credit certificates (MCC) must use these income
figures in determining whether the income limitation placed on
the beneficiaries of the mortgages and certificates may be in-
creased because the residences to be financed are located in
high housing cost areas. See sections 25(c)(2)(A)(iii)(IV) and
143(f)(5). Rev. Proc. 2011–37 obsoleted in part.
(Continued on the next page)
Finding Lists begin on page ii.

Rev. Proc. 2012–17, page 453.
This procedure provides the requirements for furnishing sub-
stitute Schedule K–1,Partner’s Share of Income, Deductions,
Credits, etc., in electronic format.
Rev. Proc. 2012–18, page 455.
This procedure provides guidance regardingex partecommu-
nications between Appeals andother Internal Revenue Service
functions. Rev. Proc. 2000–43 amplified, modified and super-
seded.
March 5, 20122012–10 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly and may be obtained from the
Superintendent of Documents on a subscription basis. Bulletin
contents are compiled semiannually into Cumulative Bulletins,
which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application of
the tax laws, including all rulings that supersede, revoke, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement are not published; however, statements of internal
practices and procedures that affect the rights and duties of
taxpayers are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Secre-
tary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The c
ontents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S.Government Printing Office, Washington, DC 20402.
2012–10 I.R.B.March 5, 2012

March 5, 20122012–10 I.R.B.

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 2010.
—Unified
Credit Agains
t Estate Tax
This notice gr
ants to qualifying estates a six-month
extension of t
ime for filing an estate tax return (Form
706) to elect p
ortability of an unused exclusion
amount provi
ded that qualifying estates file a request
for an extens
ion (Form 4768) within 15 months of
the decedent
’s death. A qualifying estate is the estate
of a person wh
o died, survived by a spouse, during
the first ha
lf of calendar year 2011, and whose gross
estate has a
fair market value that does not exceed $5
million. Wi
th the extension granted by this notice,
Form 706 mus
t be filed within 15 months of the
decedent’s
death. See Notice 2012-21, page 450.
Section 6075.
—Time for
Filing Estate
and Gift
Tax Returns
26 CFR 20.6075–1: Returns; time for filing estate tax
return.
This notice grants to qualifying estates a six-month
extension of time for filing an estate tax return (Form
706) to elect portability of an unused exclusion
amount provided that qualifying estates file a request
for an extension (Form 4768) within 15 months of
the decedent’s death. A qualifying estate is the estate
of a person who died, survived by a spouse, during
the first half of calendar year 2011, and whose gross
estate has a fair market value that does not exceed $5
million. With the extension granted by this notice,
Form 706 must be filed within 15 months of the
decedent’s death. See Notice 2012-21, page 450.
Section 6081.
—Extension
of Time for Fil
ing Returns
26 CFR 20.6081
–1: Extension of time for filing the
return.
This notice gr
ants to qualifying estates a six-month
extension of
time for filing an estate tax return (Form
706) to elect
portability of an unused exclusion
amount provi
ded that qualifying estates file a request
for an extens
ion (Form 4768) within 15 months of
the decedent
’s death. A qualifying estate is the estate
of a person wh
o died, survived by a spouse, during
the first ha
lf of calendar year 2011, and whose gross
estate has a
fair market value that does not exceed $5
million. Wi
th the extension granted by this notice,
Form 706 mus
tbefiledwithin15monthsofthe
decedent’
s death. See Notice 2012-21, page 450.
2012–10 I.R.B.437March 5, 2012

Part III. Administrative, Procedural, and Miscellaneous
Physical Inspections Pilot
Program
Notice 2012–18
PURPOSE
Under § 1.42–5(c)(2) of the Income
Tax Regulations, State housing finance
agencies are required to conduct certain
physical inspectionsand other building
reviews. In connection with inspections
that are conducted under the Physical In-
spection Pilot Program described below,
this notice informs those State agencies
of an alternate manner for satisfying these
review requirements. This notice also so-
licits comments generally on § 1.42–5 and,
in particular, on the review requirements
of § 1.42–5(c)(2).
BACKGROUND
Section 42 of the Internal Revenue
Code sets forth rules for determining the
amount of the low-income housing credit,
which is allowed as a credit against income
tax pursuant to § 38. Section 42(a) pro-
vides that the amount of the low-income
housing credit determined under § 42 for
any taxable year in the credit period is an
amount equal to the applicable percentage
of the qualified basis of each qualified
low-income building. A qualified low-in-
come building is defined in § 42(c)(2)
as any building that is part of a qualified
low-income housing project.
A qualified low-income housing project
is defined in § 42(g)(1) as any project for
residential rental property if the project
meets one of the following tests elected
by the taxpayer: (A) At least 20 percent
of the residential units in the project are
rent-restricted and occupied by individu-
als whose income is 50 percent or less of
area median gross income; or (B) at least
40 percent of the residential units in the
project are rent-restricted and occupied by
individuals whose income is 60 percent
or less of area median gross income. A
low-income unit is a residential unit that
is rent-restricted and its occupants meet
the applicable income limit elected by the
taxpayer as described in § 42(g)(1)(A) or
(B). Section 42(i)(3)(B)(i) provides that a
low-income unit shall not be treated as a
low-income unit unless the unit is suitable
for occupancy and used other than on a
transient basis. Section 42(i)(3)(B)(ii) pro-
vides that the suitability of a unit for oc-
cupancy shall be determined under regu-
lations prescribed by the Secretary taking
into account local health, safety, and build-
ing codes. Failure of the project to meet
the requirements for the test elected by the
taxpayer may result in ineligibility for the
§ 42 credit, reduction in the amount of the
credit, and/or recapture of previously al-
lowed credits.
Section 1.42–5 provides monitoring
procedures that a State housing finance
agency (or its Authorized Delegate within
the meaning of § 1.42–5(f)(1)), hereafter
referred to as “HFA,”must follow in mon-
itoring for compliance with the provisions
of § 42. As part of their compliance-moni-
toring responsibilities, HFAs must perform
physical inspections and review annual
low-income certifications.
In particular, § 1.42–5(c)(2)(ii) requires
that, for each low-income housing project,
andwithinprescribedtimeperiods,the
HFA must conduct an on-site inspection
of each building in the project and, for at
least 20 percent of the project’s low-in-
come units, inspect the units and review
the annual low-income certifications, the
documentation supporting the certifica-
tions, and the rent records for the tenants
in those inspected units.
Section 1.42–5(c)(2)(iii) requires the
HFA to randomly select which low-income
units will be inspected and the records
reviewed.
Section 1.42–5(c)(5) requires the HFA
to report its compliance monitoring ac-
tivities annually on Form 8610,“Annual
Low-Income Housing Credit Agencies Re-
port.”
In 2010, the White House Domestic
Policy Council (DPC) established the
Rental Policy Working Group (RPWG) to
explore ways to improve existing Federal
rental policies. The RPWG consists of
representatives from the DPC, the Na-
tional Economic Council, the Office of
Management and Budget, and the U.S.
Departments of Housing and Urban De-
velopment (HUD), Agriculture, and the
Treasury.
The RPWG solicited from a cross
section of affordable-rental-housing de-
velopers and managers and State and local
officials (Stakeholders) suggestions for
more efficiently achieving Federal rental
objectives, including the coordination of
programmatic rules between the various
Federal rental programs. Stakeholders
identified many areas where adminis-
trative changes could increase overall
programmatic efficiency and reduce bur-
dens on the public. For example, many
projects benefit from more than one Fed-
eral source (e.g., both Federal funding
and low-income housing tax credits). The
rules associated with these different pro-
grams may require physical inspections of
the same project that use different inspec-
tion protocols. As a result, these project
owners and managers must now spend sig-
nificant time preparing for, and responding
to, multiple physical inspection visits for
the same project.
Using input from Stakeholders, the
RPWG prepared specific, actionable pro-
posals for coordination. One such pro-
posal is to avoid duplicative physical
inspections by conducting one coordi-
nated inspection. The Physical Inspection
Pilot Program (Pilot Program) is testing
the feasibility of this proposal in six states
(Michigan, Minnesota, Ohio, Oregon,
Washington, and Wisconsin).
Under this proposal, the HFAs in
these six states may satisfy their prop-
erty-inspection responsibilities under
§ 1.42–5(c)(2)(ii) by using either their
current property-inspection protocol or
the inspection protocol of HUD’s Real
Estate Assessment Center (REAC).
1
The
RPWG hopes to ascertain through the Pilot
Program whether this sort of coordinated
effort will generate savings for property
owners and managers, as well as reduce
cost burdens on local, State, and Federal
governments.
If the participating HFA chooses to use
the REAC inspection protocol for a partic-
ular project, HUD (or its agent) will con-
duct a physical inspection of the project us-
1
Information on the REAC inspection protocol can beaccessed electronically through the following link:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/reac
March 5, 20124382012–10 I.R.B.

ing the REAC inspection protocol on be-
half of the HFA. To achieve the desired
efficiencies, these inspections must sat-
isfy the HFA’s physical inspection respon-
sibilities under § 1.42–5(c)(2)(ii). As de-
scribed above, however, § 1.42–5(c)(2)(ii)
requires that at least 20 percent of the low-
income units in a project be physically in-
spected and that the records for those same
units be reviewed. In some cases, the
number of low-income units physically in-
spected under the REAC inspection proto-
col may not satisfy the 20 percent require-
ment. Absent an exception, an HFA would
need to perform inspections and certifica-
tion reviews for any shortfall of inspected
units in these projects to meet the mini-
mum standard under § 1.42–5(c)(2). That
necessity would undermine the Pilot Pro-
gram’s objective of minimizing duplica-
tion of effort and reducing burdens on the
public. Also, if HUD completes the phys-
ical inspections late in the year, the HFA
may not be able to perform its review of the
annual low-income certifications for those
units timely.
SATISFACTION OF CERTAIN
PROVISIONS OF § 1.42–5(c)(2)
The Internal Revenue Service recog-
nizes the potential inconsistency between
the REAC inspection protocol and cer-
tain review provisions of § 1.42–5(c)(2)
and the potential administrative burdens
caused by those differences. Accordingly,
for the HFAs in States that are participating
in the Pilot Program, and during the time
period of the Pilot Program (scheduled for
November 7, 2011, through December 31,
2012), if a project isphysically inspected
by HUD (or its agent) under the REAC in-
spection protocol, then, for that project—
(1) The HFA is deemed to satisfy the
minimum 20 percent low-income unit
physical inspection requirement and the
requirement to conduct on-site inspec-
tions of all buildings in a project under
§ 1.42–5(c)(2)(ii); and
(2) The HFA may satisfy the cer-
tification review requirement under
§ 1.42–5(c)(2)(ii) by reviewing the annual
low-income certifications, the documen-
tation supporting the certifications, and
the rent records for the tenants in at least
20 percent of the low-income units in the
project, regardless of whether any of the
units whose files are reviewed are among
the units that are physically inspected by
HUD (or its agent).
Use of the REAC inspection protocol
does not supersede or preempt any other
requirements under § 1.42–5. In particular,
under § 1.42–5(d)(2), low-income build-
ings and units must be suitable for oc-
cupancy, taking into account local health,
safety, and building codes. Thus, if a par-
ticipating HFA becomes aware of any vio-
lation of these codes, the HFA must report
the violation to the Service.
REQUEST FOR COMMENTS
The Service and Treasury Department
invite taxpayers to submit written com-
ments on issues relating to this notice and
§ 1.42–5 generally. In particular, the Ser-
vice and Treasury Department encourage
taxpayers to submit written comments re-
garding:
(1) Whether the 20 percent rule un-
der § 1.42–5(c)(2)(ii)(A) and (B) for both
physical inspectionsand certification re-
view is appropriate, including—
•Whether this percentage appropriately
balances the Service’s compliance
concerns against the desirability of re-
ducing the inspection burden on HFAs,
tenants, and building owners;
•Whether the percentage should vary
depending on the type of inspection the
HFA is performing (i.e.,physical in-
spection or annual low-income certifi-
cation review);
•Whether the percentage should vary
with the number of low-income units
inaproject(thatis,thesizeofthe
population from which the units that
will be inspected are to be randomly
drawn); and
•Whether the percentage should vary
depending on whether the inspection
is the initial inspection performed
under § 1.42–5(c)(2)(ii)(A) or the
on-going inspection performed under
§ 1.42–5(c)(2)(ii)(B).
(2) Whether permitting reviews of
the annual low-income certifications
for a sample of units different from
the units physically inspected would
simplify the inspection process under
§ 1.42–5(c)(2)(ii)(A) and (B), and whether
the use of a different sample would impair
the value of the data obtained.
(3) Whether the Service should amend
the current regulations to provide an ex-
ception from the inspection provisions of
§ 1.42–5(d) for inspections done under the
REAC protocol, similar to the exception
under § 1.42–5(d)(3) for inspections per-
formed by the Rural Housing Service un-
der the section 515 program.
Comments should be submitted by
May 31, 2012. Comments may be mailed
to:
Internal Revenue Service
Attn: CC:PA:LPD:PR
(Notice 2011–18)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, D.C. 20044
or hand delivered Monday through Fri-
day between the hours of 8 a.m. and 4 p.m.
to:
Courier’s Desk
Internal Revenue Service
Attn: CC:PA:LPD:PR
(Notice 2011–18)
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Alternatively, persons may sub-
mit comments electronically via
e-mail to the following address:
Notice.Comments@irscounsel.treas.gov.
Persons should include “Notice 2012–18”
in the subject line. All comments
submitted by the public will be available
for public inspection and copying in their
entirety.
DRAFTING INFORMATION
The principal author of this notice is
Julie Hanlon Bolton of the Office of the
Associate Chief Counsel (Passthroughs
and Special Industries). For further infor-
mation regarding this notice, please con-
tact Ms. Hanlon Bolton at (202) 622–3040
(not a toll-free call).
2012–10 I.R.B.439March 5, 2012

Determination of Housing Cost
Amounts Eligible for Exclusion
or Deduction for 2012
Notice 2012–19
SECTION 1. PURPOSE
This notice provides adjustments to the
limitation on housing expenses for pur-
poses of section 911 of the Internal Rev-
enue Code (Code) for specific locations for
2012. These adjustments are made on the
basis of geographic differences in housing
costs relative to housing costs in the United
States.
SECTION 2. BACKGROUND
Section 911(a) of the Code allows a
qualified individual to elect to exclude
from gross income the foreign earned in-
come and housing cost amount of such
individual. Section 911(c)(1) defines the
term “housing cost amount” as an amount
equal to the excess of (A) the housing
expenses of an individual for the taxable
year to the extent such expenses do not
exceed the amount determined under sec-
tion 911(c)(2), over (B) 16 percent of the
exclusion amount (computed on a daily
basis) in effect under section 911(b)(2)(D)
for the calendar year in which such taxable
year begins ($259.84 per day for 2012, or
$95,100 for the full year), multiplied by
the number of days of that taxable year
within the applicable period described in
section 911(d)(1). The applicable period
is the period during which the individual
meets the tax home requirement of section
911(d)(1) and either thebona fideresi-
dence requirement of section 911(d)(1)(A)
or the physical presence requirement of
section 911(d)(1)(B). Assuming that the
entire taxable year ofa qualified individ-
ual is within the applicable period, the
section 911(c)(1)(B) amount for 2012 is
$15,216 ($95,100 x .16).
Section 911(c)(2)(A) of the Code lim-
its the housing expenses taken into account
insection911(c)(1)(A)toanamountequal
to (i) 30 percent (adjusted as may be pro-
vided under the Secretary’s authority un-
der section 911(c)(2)(B)) of the amount in
effect under section 911(b)(2)(D) for the
calendar year in which the taxable year of
the individual begins, multiplied by (ii) the
number of days of that taxable year within
the applicable period described in section
911(d)(1). Thus, under this general limi-
tation, a qualified individual whose entire
taxable year is within the applicable period
is limited to maximum housing expenses
of $28,530 ($95,100 x .30) in 2012.
Section 911(c)(2)(B) of the Code au-
thorizes the Secretary to issue regulations
or other guidance to adjust the percentage
under section 911(c)(2)(A)(i) based on
geographic differences in housing costs
relative to housing costs in the United
States. Pursuant to this authority, the
Internal Revenue Service (IRS) and the
Treasury Department published Notice
2006–87, 2006–2 C.B. 766, and Notice
2007–25, 2007–1 C.B. 760, for 2006, No-
tice 2007–77, 2007–2 C.B. 735, for 2007,
Notice 2008–107, 2008–2 C.B. 1266, for
2008 and 2009, Notice 2010–27, 2010–15
I.R.B. 531, for 2009 and 2010, and Notice
2011–8, 2011–8 I.R.B. 503, for 2010 and
2011 to provide adjustments to the limi-
tation on housing expenses for qualified
individuals incurring housing expenses in
countries with high housing costs relative
to housing costs in the United States.
SECTION 3. TABLE OF ADJUSTED
LIMITATIONS FOR 2012
The following table provides adjusted
limitations on housing expenses (in lieu
of the otherwise applicable limitation of
$28,530) for 2012.
CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
AngolaLuanda
229.51
84,000
ArgentinaBuenos Aires
154.3756,500
AustraliaAdelaide89.6232,800
AustraliaBrisbane
88.52
32,400
AustraliaDarwin, Northern Country83.6130,600
AustraliaGold Coast
88.52
32,400
AustraliaMelbourne113.39
41,500
AustraliaOakey
88.52
32,400
AustraliaPerth121.3144,400
AustraliaSydney
89.57
32,782
AustraliaToowoomba
88.52
32,400
AustriaVienna96.72
35,400
Bahamas, TheNassau
135.79
49,700
BahrainBahrain120.2244,000
BarbadosBarbados103.0137,700
March 5, 20124402012–10 I.R.B.

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
BelgiumAntwerp98.6336,100
BelgiumBrussels130.3347,700
BelgiumGosselies118.3143,300
BelgiumHoogbuul98.6336,100
BelgiumMons118.3143,300
BelgiumSHAPE/Chievres118.3143,300
BermudaBermuda
245.90
90,000
Bosnia-HerzegovinaSarajevo83.6130,600
BrazilBrasilia144.26
52,800
BrazilRio de Janeiro
95.9035,100
BrazilSao Paulo
154.6456,600
CanadaCalgary109.0239,900
CanadaDartmouth93.4434,200
CanadaEdmonton96.99
35,500
CanadaHalifax93.4434,200
CanadaLondon, Ontario82.7930,300
CanadaMontreal
154.3756,500
CanadaOttawa136.0749,800
CanadaToronto134.7049,300
CanadaVancouver128.4247,000
CanadaVictoria
91.5333,500
CanadaWinnipeg90.1633,000
Cayman IslandsGrand Cayman
131.15
48,000
ChileSantiago140.16
51,300
ChinaBeijing
194.54
71,200
ChinaHong Kong312.30114,300
ChinaShanghai
155.7457,001
ColombiaBogota147.81
54,100
ColombiaAll cities other than Bogota134.9749,400
Costa RicaSan Jose87.4332,000
DenmarkCopenhagen119.4143,704
Dominican RepublicSanto Domingo124.32
45,500
EcuadorGuayaquil
84.15
30,800
EcuadorQuito
88.52
32,400
EstoniaTallinn127.3246,600
FranceGarches231.6984,800
FranceLe Havre96.17
35,200
FranceLyon133.8849,000
2012–10 I.R.B.441March 5, 2012

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
FranceMarseille124.86
45,700
FranceMontpellier107.92
39,500
FranceParis231.6984,800
FranceSevres231.6984,800
FranceSuresnes231.6984,800
FranceVersailles231.6984,800
GermanyBabenhausen113.6641,600
GermanyBad Aibling96.99
35,500
GermanyBad Nauheim90.9833,300
GermanyBaumholder108.4739,700
GermanyBerlin138.80
50,800
GermanyBirkenfeld108.4739,700
GermanyBoeblingen137.70
50,400
GermanyBonn
114.75
42,000
GermanyButzbach88.80
32,500
GermanyCologne
153.5556,200
GermanyDarmstadt113.6641,600
GermanyFrankfurt am Main
118.58
43,400
GermanyFriedberg90.9833,300
GermanyGarmisch-Partenkirchen
103.55
37,900
GermanyGelnhausen143.17
52,400
GermanyGermersheim
85.79
31,400
GermanyGiebelstadt98.09
35,900
GermanyGiessen98.3636,000
GermanyGrafenwoehr
111.75
40,900
GermanyHanau143.17
52,400
GermanyHannover84.7031,000
GermanyHeidelberg
107.65
39,400
GermanyIdar-Oberstein108.4739,700
GermanyIngolstadt160.11
58,600
GermanyKaiserslautern, Landkreis139.07
50,900
GermanyKitzingen98.09
35,900
GermanyLeimen
107.65
39,400
GermanyLudwigsburg137.70
50,400
GermanyMainz
153.5556,200
GermanyMannheim
107.65
39,400
GermanyMunich160.11
58,600
GermanyNellingen137.70
50,400
March 5, 20124422012–10 I.R.B.

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
GermanyNeubruecke108.4739,700
GermanyOber Ramstadt113.6641,600
GermanyOberammergau
103.55
37,900
GermanyPirmasens139.07
50,900
GermanyRheinau
107.65
39,400
GermanySchwetzingen
107.65
39,400
GermanySeckenheim
107.65
39,400
GermanySembach139.07
50,900
GermanyStuttgart137.70
50,400
GermanyVilseck
111.75
40,900
GermanyWahn
114.75
42,000
GermanyWertheim98.09
35,900
GermanyWiesbaden
153.5556,200
GermanyWuerzburg98.09
35,900
GermanyZweibruecken139.07
50,900
GermanyAll cities other than Augsburg,
Babenhausen, Bad Aibling, Bad Kreuznach,
Bad Nauheim, Baumholder, Berchtesgaden,
Berlin, Birkenfeld, Boeblingen, Bonn,
Bremen, Bremerhaven, Butzbach, Cologne,
Darmstadt, Delmenhorst, Duesseldorf,
Erlangen, Flensburg, Frankfurt am
Main, Friedberg, Fuerth, Garlstedt,
Garmisch-Partenkirchen, Geilenkirchen,
Gelnhausen, Germersheim, Giebelstadt,
Giessen, Grafenwoehr, Grefrath, Greven,
Gruenstadt, Hamburg, Hanau, Handorf,
Hannover, Heidelberg, Heilbronn,
Herongen, Idar-Oberstein, Ingolstadt,
Kaiserslautern, Landkreis, Kalkar,
Karlsruhe, Kerpen, Kitzingen, Koblenz,
Leimen, Leipzig, Ludwigsburg, Mainz,
Mannheim, Mayen, Moenchen-Gladbach,
Muenster, Munich, Nellingen, Neubruecke,
Noervenich, Nuernberg, Ober Ramstadt,
Oberammergau, Osterholz-Scharmbeck,
Pirmasens, Rheinau, Rheinberg,
Schwabach, Schwetzingen, Seckenheim,
Sembach,Stuttgart,Twisteden, Vilseck,
Wahn, Wertheim, Wiesbaden, Worms,
Wuerzburg, Zirndorf, and Zweibruecken
110.1140,300
GhanaAccra98.3636,000
GreeceArgyroupolis
88.52
32,400
GreeceAthens113.6641,600
GreeceElefsis113.6641,600
GreeceEllinikon113.6641,600
2012–10 I.R.B.443March 5, 2012

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
GreeceMt. Hortiatis
88.52
32,400
GreeceMt. Parnis113.6641,600
GreeceMt. Pateras113.6641,600
GreeceNea Makri113.6641,600
GreecePerivolaki
88.52
32,400
GreecePiraeus113.6641,600
GreeceTanagra113.6641,600
GreeceThessaloniki
88.52
32,400
GuatemalaGuatemala City
115.03
42,100
GuyanaGeorgetown
95.6335,000
Holy See, TheHoly See, The
154.3756,500
HungaryBudapest88.80
32,500
HungaryPapá
121.5844,500
IndiaMumbai
185.57
67,920
IndiaNew Delhi82.66
30,252
IndonesiaJakarta103.2137,776
IrelandDublin
134.15
49,100
IrelandShannon Area106.0138,800
IsraelTel Aviv138.80
50,800
ItalyCatania90.1633,000
ItalyGenoa114.2141,800
ItalyGioia Tauro
85.25
31,200
ItalyLa Spezia110.3840,400
ItalyLeghorn96.72
35,400
ItalyMilan230.6084,400
ItalyNaples
146.4553,600
ItalyParma117.2142,900
ItalyPisa96.72
35,400
ItalyPordenone-Aviano117.2142,900
ItalyRome
154.3756,500
ItalySardinia79.2329,000
ItalySigonella90.1633,000
ItalyTurin
115.30
42,200
ItalyVicenza118.3143,300
ItalyAll cities other than Avellino, Brindisi,
Catania, Florence, Gaeta, Genoa, Gioia
Tauro, La Spezia, Leghorn, Milan, Mount
Vergine, Naples, Nettuno, Parma, Pisa,
Pordenone-Aviano, Rome, Sardinia,
Sigonella, Turin, Verona, and Vicenza
92.6233,900
March 5, 20124442012–10 I.R.B.

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
JamaicaKingston
112.57
41,200
JapanAkashi116.6742,700
JapanAkizuki102.7337,600
JapanAtsugi
150.5555,100
JapanCamp Zama
150.5555,100
JapanChiba-Ken
150.5555,100
JapanFussa
150.5555,100
JapanGifu203.0174,300
JapanGotemba111.4840,800
JapanHaneda
150.5555,100
JapanIwakuni117.7643,100
JapanKanagawa-Ken
150.5555,100
JapanKomaki203.0174,300
JapanMachidi-Shi
150.5555,100
JapanMisawa
126.50
46,300
JapanNagoya203.0174,300
JapanOkinawa Prefecture202.7374,200
JapanOsaka-Kobe247.7290,664
JapanSagamihara
150.5555,100
JapanSaitama-Ken
150.5555,100
JapanSasebo126.2346,200
JapanTachikawa
150.5555,100
JapanTokyo349.73128,000
JapanTokyo-to
150.5555,100
JapanYokohama189.3469,300
JapanYokosuka
175.68
64,300
JapanYokota
150.5555,100
KazakhstanAlmaty
131.15
48,000
KoreaCamp Carroll83.0630,400
KoreaCamp Colbern143.44
52,500
KoreaCamp Market143.44
52,500
KoreaCamp Mercer143.44
52,500
KoreaK–16143.44
52,500
KoreaKimhae78.1428,600
KoreaKimpo Airfield143.44
52,500
KoreaMunsan87.9832,200
KoreaOsan AB90.7133,200
KoreaPusan78.1428,600
2012–10 I.R.B.445March 5, 2012

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
KoreaPyongtaek89.0732,600
KoreaSeoul143.44
52,500
KoreaSuwon143.44
52,500
KoreaTaegu86.07
31,500
KoreaTongduchon78.9628,900
KoreaUijongbu84.9731,100
KoreaWaegwan83.0630,400
KoreaAll cities other than Ammo Depot #9, Camp
Carroll, Camp Colbern, Camp Market,
Camp Mercer, Changwon, Chinhae,
Chunchon, K–16, Kimhae, Kimpo Airfield,
Kunsun, Kwangju, Munsan, Osan AB,
Pusan, Pyongtaek, Seoul, Suwon, Taegu,
Tongduchon, Uijongbu, and Waegwan
82.7930,300
KuwaitKuwait City
175.96
64,400
KuwaitAll cities other than Kuwait City
157.6557,700
LuxembourgLuxembourg
126.50
46,300
MacedoniaSkopje96.72
35,400
MalaysiaKuala Lumpur126.2346,200
MalaysiaAll cities other than Kuala Lumpur92.0833,700
MaltaMalta137.98
50,500
MexicoMazatlan84.7031,000
MexicoMerida
103.55
37,900
MexicoMexico City
118.58
43,400
MexicoMonterrey90.7133,200
MexicoAll cities other than Ciudad Juarez,
Cuernavaca, Guadalajara, Hermosillo,
Matamoros, Mazatlan, Merida, Metapa,
Mexico City, Monterrey, Nogales, Nuevo
Laredo, Reynosa, Tapachula, Tijuana,
Tuxtla Gutierrez, and Veracruz
107.65
39,400
MozambiqueMaputo107.92
39,500
NamibiaWindhoek87.7032,100
NetherlandsAmsterdam
144.5452,900
NetherlandsAruba98.3636,000
NetherlandsBrunssum108.7439,800
NetherlandsEygelshoven108.7439,800
NetherlandsHague, The183.8867,300
NetherlandsHeerlen108.7439,800
NetherlandsHoensbroek108.7439,800
NetherlandsHulsberg108.7439,800
NetherlandsKerkrade108.7439,800
March 5, 20124462012–10 I.R.B.

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
NetherlandsLandgraaf108.7439,800
NetherlandsMaastricht108.7439,800
NetherlandsPapendrecht110.9340,600
NetherlandsRotterdam110.9340,600
NetherlandsSchaesburg108.7439,800
NetherlandsSchinnen108.7439,800
NetherlandsSchiphol
144.5452,900
NetherlandsYpenburg183.8867,300
NetherlandsAll cities other than Amsterdam, Aruba,
Brunssum, Coevorden, Eygelshoven,
The Hague, Heerlen, Hoensbroek,
Hulsberg, Kerkrade, Landgraaf, Maastricht,
Margraten, Papendrecht, Rotterdam,
Schaesburg, Schinnen, Schiphol, and
Ypenburg
110.9340,600
Netherlands AntillesCuracao
125.1445,800
New ZealandAuckland
97.5435,700
New ZealandWellington
92.35
33,800
NicaraguaManagua86.8931,800
NigeriaAbuja98.3636,000
NorwayOslo141.26
51,700
NorwayStavanger
119.95
43,900
NorwayAll cities other than Oslo and Stavanger.103.0137,700
PanamaPanama City96.99
35,500
PhilippinesCavite
106.56
39,000
PhilippinesManila
106.56
39,000
PolandPoland80.3329,400
PortugalAlverca141.26
51,700
PortugalLisbon141.26
51,700
QatarDoha99.0836,264
QatarAll cities other than Doha
88.52
32,400
RussiaMoscow
295.08
108,000
RussiaSaint Petersburg163.9360,000
RussiaSakhalin Island
211.7577,500
RussiaVladivostok
211.7577,500
RussiaYekaterinburg
129.51
47,400
RwandaKigali86.07
31,500
Saudi ArabiaJeddah83.7930,667
Saudi ArabiaRiyadh109.2940,000
SingaporeSingapore184.43
67,500
2012–10 I.R.B.447March 5, 2012

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
South AfricaPretoria107.3839,300
SpainBarcelona110.9340,600
SpainMadrid
188.25
68,900
SpainRota113.39
41,500
SpainValencia108.2039,600
SpainAll cities other than Barcelona, Madrid,
Rota, Seville, Seville Province, and
Valencia
81.6929,900
SurinameParamaribo90.1633,000
SwitzerlandBern181.69
66,500
SwitzerlandGeneva
257.10
94,100
SwitzerlandZurich107.1639,219
SwitzerlandAll cities other than Bern, Geneva, and
Zurich
89.8932,900
TaiwanTaipei126.2046,188
TanzaniaDar Es Salaam120.2244,000
ThailandBangkok161.20
59,000
Trinidad and TobagoPort of Spain148.91
54,500
TurkeyIzmir-Cigli86.3431,600
TurkeyYamanlar86.3431,600
UkraineKiev196.7272,000
United Arab EmiratesAbu Dhabi
135.76
49,687
United Arab EmiratesDubai
156.2157,174
United KingdomBasingstoke112.2941,099
United KingdomBath112.0241,000
United KingdomBracknell169.6762,100
United KingdomBristol
105.74
38,700
United KingdomBrookwood116.12
42,500
United KingdomCambridge117.4943,000
United KingdomCaversham201.6473,800
United KingdomCheltenham140.98
51,600
United KingdomCroughton117.2142,900
United KingdomFairford116.9442,800
United KingdomFarnborough
149.4554,700
United KingdomFelixstowe
111.75
40,900
United KingdomGibraltar121.9044,616
United KingdomHarrogate
123.5045,200
United KingdomHigh Wycombe169.6762,100
United KingdomKemble116.9442,800
March 5, 20124482012–10 I.R.B.

CountryLocation
Limitation on
Housing Expenses
(daily)
Limitation on
Housing Expenses
(full year)
United KingdomLakenheath
145.9053,400
United KingdomLiverpool106.0138,800
United KingdomLondon228.4283,600
United KingdomLoudwater
173.5063,500
United KingdomMenwith Hill
123.5045,200
United KingdomMildenhall
145.9053,400
United KingdomOxfordshire
115.85
42,400
United KingdomPlymouth
115.85
42,400
United KingdomPortsmouth
115.85
42,400
United KingdomReading169.6762,100
United KingdomRochester120.2244,000
United KingdomSouthampton120.7744,200
United KingdomSurrey
132.25
48,402
United KingdomWaterbeach119.6743,800
United KingdomWiltshire113.6641,600
United KingdomAll cities other than Basingstoke,
Bath, Belfast, Birmingham, Bracknell,
Bristol, Brookwood, Brough, Cambridge,
Caversham, Chelmsford, Cheltenham,
Chicksands, Croughton, Dunstable,
Edinburgh, Edzell, Fairford, Farnborough,
Felixstowe, Ft. Halstead, Gibraltar,
Glenrothes, Greenham Common,
Harrogate, High Wycombe, Hythe,
Kemble, Lakenheath, Liverpool, London,
Loudwater, Menwith Hill, Mildenhall,
Nottingham, Oxfordshire, Plymouth,
Portsmouth, Reading, Rochester,
Southampton, Surrey, Waterbeach, Welford,
West Byfleet, and Wiltshire
116.12
42,500
VenezuelaCaracas
155.7457,000
VietnamHanoi127.8746,800
VietnamHo Chi Minh City
114.75
42,000
SECTION 4. ELECTION TO APPLY
2012 ADJUSTED LIMITATIONS TO
2011 TAXABLE YEAR
For some locations, the limitation on
housing expenses provided in section 3 of
this notice may be higher than the limita-
tion on housing expenses provided in the
“Table of Adjusted Limitations for 2011”
in Notice 2011–8. A qualified individ-
ual incurring housing expenses in such a
location during 2011 may apply the ad-
justed limitation on housing expenses pro-
videdinsection3ofthisnoticeinlieu
of the amounts provided in the “Table of
Adjusted Limitations for 2011” in Notice
2011–8 (and as set forth in the Instructions
to Form 2555 (2011)).
Treasury and the IRS anticipate that fu-
ture annual notices providing adjustments
to housing expense limitations will make a
similar election available to qualified indi-
viduals that incur housing expenses in the
immediately preceding year. For example,
when adjusted housing expense limitations
for 2013 are issued, it is expected that tax-
payers will be permitted to apply those ad-
justed limitations to the 2012 taxable year.
EFFECT ON OTHER DOCUMENTS
This notice supersedes Notice 2006–87,
2006–2 C.B. 766, Notice 2007–25, 2007–1
C.B. 760, Notice 2007–77, 2007–2 C.B.
735, Notice 2008–107, 2008–2 C.B. 1266,
Notice 2010–27, 2010–15 I.R.B. 531, and
Notice 2011–8, 2011–8 I.R.B. 503.
2012–10 I.R.B.449March 5, 2012

EFFECTIVE DATE
This notice is effective for taxable years
beginning on or after January 1, 2012.
However, as provided in section 4, a tax-
payer may elect to apply the 2012 adjusted
housing limitationscontained in section 3
of this notice to his or her taxable year be-
ginning in 2011.
DRAFTING INFORMATION
The principal author of this notice is
Susan E. Massey of the Office of Associate
Chief Counsel (International). For further
information regarding this notice, contact
Ms. Massey at (202) 622–3840 (not a toll-
free call).
Extension of Time to File
an Estate Tax Return Solely
to Elect Portability of a
Deceased Spousal Unused
Exclusion Amount
Notice 2012–21
SECTION 1. PURPOSE
This notice grants to qualifying estates,
for the purpose of electing under section
2010(c)(5)(A) of the Internal Revenue
Code (Code) (a “portability election”),
a six-month extension of time for filing
Form 706(United States Estate (and Gen-
eration-Skipping Transfer) Tax Return).
This extension applies when the execu-
tor of a qualifying estate did not file a
Form 4768(Application for Extension of
TimeToFileaReturnand/orPayU.S.
Estate (and Generation-Skipping Trans-
fer)Taxes) within nine months after the
decedent’s date of death, and therefore the
estate did not receive the benefit of the
automatic six-month extension. An ex-
ecutor of a qualifying estate that wants to
obtain the extension granted by this notice
must file the application for a six-month
extension no later than 15 months after
the decedent’s date of death. With the
extension granted by this notice, the Form
706 of a qualifying estate will be due 15
months after the decedent’s date of death.
Generally, this notice defines a qualify-
ing estate as the estate of a decedent (1)
whose date of death is after December 31,
2010, and before July 1, 2011, (2) who is
survived by a spouse, and (3) whose gross
estate does not exceed the $5,000,000 ba-
sic exclusion amount for 2011. The exten-
sion provided in this notice is granted pur-
suant to authority under section 6081 of the
Code.
SECTION 2. BACKGROUND
2.01.In General
Sections 302(a)(1) and 303(a) of the
Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act
of 2010, Pub. L. No. 111–312, 124
Stat. 3296, 3302 (2010), amended section
2010(c) of the Code to allow the estate of
a decedent who is survived by a spouse
to make a portability election to permit
the surviving spouse to apply the dece-
dent’s unused exclusion (the deceased
spousal unused exclusion amount, or
DSUE amount) to the surviving spouse’s
own transfers during life and at death. The
portability election may be made only by
the estates of decedents dying after De-
cember 31, 2010.
Section 2010(c)(2), as amended, de-
fines the applicable exclusion amount used
to determine the applicable credit amount
as the sum of the basic exclusion amount
and, in the case of a surviving spouse, the
DSUE amount. Section 2010(c)(3) defines
the basic exclusion amount as $5,000,000,
to be adjusted for inflation in each year af-
ter calendar year 2011. Section 2010(c)(4)
defines the DSUE amount as the lesser
of (A) the basic exclusion amount or (B)
the excess of the basic exclusion amount
of the last deceased spouse of the surviv-
ing spouse over the amount with respect
to which the tentative tax is determined
under section 2001(b)(1) on the estate of
such deceased spouse.
Section 2010(c)(5)(A) provides cer-
tain requirements that the executor of a
deceased spouse must satisfy to allow
a surviving spouse to apply the DSUE
amount of a deceased spouse. In par-
ticular, the executor of the estate of the
deceased spouse must file a Form 706
that includes a computation of the DSUE
amount and on which the executor elects
portability of the DSUE amount. Under
section 2010(c)(5)(A), a portability elec-
tion is effective only if made on a Form
706 that is filed within the time prescribed
by law (including extensions) for filing
such return.
2.02.Filing Dates and Availability of an
Extension
Under section 6075(a), the due date for
filing an estate tax return is nine months
after the date of the decedent’s death. Sec-
tion 6081(a) providesthat the Secretary
may grant a reasonable extension of time
for filing any return and that, except in
the case of taxpayers who are abroad, no
such extension may be for more than six
months.
Section 20.6081–1(a) of the Estate Tax
Regulations provides that a request for an
extension of time to file Form 706 must be
made by filing Form 4768 with the Internal
Revenue Service (Service) office desig-
nated in the application’s instructions and
must include an estimate of the amounts of
estate and generation-skipping transfer tax
liabilities with respect to the estate.
Section 20.6081–1(b) grants an estate
an automatic six-month extension of time
to file Form 706 if Form 4768 is filed on or
before the due date for filing Form 706 and
in accordance with the procedures under
§ 20.6081–1(a).
Section 20.6081–1(c) provides that the
Service, in its discretion and upon the
showing of good and sufficient cause, may
grant an extension of time to file Form
706toanestatethatdidnotrequestan
automatic extension of time to file Form
706 prior to the due date for Form 4768
prescribed in § 20.6081–1(b). Such an
extension cannot be for more than six
months beyond the filing date prescribed
in section 6075(a),unless the executor
is abroad. Section 20.6081–1(c) further
provides that, to obtain such an extension,
Form 4768 must be filed in accordance
with the procedures under § 20.6081–1(a)
and must contain a detailed explanation of
why it is impossible or impractical to file a
reasonably complete Form 706 by the due
date, and an explanation showing good
cause for not requesting the automatic
extension.
2.03.Notice 2011–82
Notice 2011–82, 2011–42 I.R.B. 516,
issued on October 17, 2011, alerts tax-
payers of the applicable requirements to
elect portability of the decedent’s DSUE
March 5, 20124502012–10 I.R.B.

amount. In addition, Notice 2011–82 an-
nounces that the estate of a decedent who
is survived by a spouse will be deemed to
elect portability of the DSUE amount by
the timely filing of a complete and prop-
erly-prepared Form 706. Furthermore,
the notice provides that a timely-filed and
complete Form 706 that is prepared in
accordance with the instructions for that
form will be deemed to contain the com-
putation of the DSUE amount until such
time as the Service revises Form 706 to
expressly contain the computation of the
DSUE amount. Notice 2011–82 also pro-
vides guidance to the estates of deceased
spouses who choose not to make the porta-
bility election. Finally, Notice 2011–82
announces that the Treasury Department
(Treasury) and the Service intend to issue
regulations to implement the portability
provisions included in section 2010(c) of
the Code and, therefore, the notice invites
public comment on anumber of issues
affecting portability for Treasury and the
Service to consider.
SECTION 3. DISCUSSION
In response to the invitation for public
comment on issues affecting portability in
Notice 2011–82, Treasury and the Service
have received comments on a variety of is-
sues. Several commentators raised the is-
sueofanextensionoftimetofileForm
706 to make the portability election. These
commentators noted that the executors of
estates of decedents dying in 2011, partic-
ularly during the early part of 2011, did
not have the benefit of guidance on elect-
ing portability of the decedent’s DSUE
amount and, further, that executors of es-
tates having assets with a value not in ex-
cess of $5,000,000 might not have known
about the requirement to file Form 706 to
make the portability election at all.
In addition to the comments received in
response to the invitation for public com-
ment in Notice 2011–82, the Service has
also received inquiries regarding the avail-
ability of an extension to file Form 706
from practitioners representing estates of
decedents dying in early 2011 that had
missed the due date for filing Form 706
and Form 4768.
Treasury and the Service agree that
many executors of estates of decedents
whodiedinthefirsthalfof2011thatwere
not otherwise required to file Form 706
because of the value of the gross estate
may have been unaware of the requirement
to file Form 706 to make the portability
election. Such an executor would not have
filed Form 706 and, therefore, would not
have made the portability election that
is deemed made by the timely filing of
a complete and properly-prepared Form
706. For the same reasons, such an execu-
tor would not have timely filed Form 4768
to obtain an automatic six-month exten-
sion of time to file Form 706. Accordingly,
Treasury and the Service believe it is
appropriate to offer to executors of quali-
fying estates a six-month extension of time
to file Form 706 until 15 months after the
decedent’s date of death, provided that the
executor of the estate files an application
for a six-month extension on Form 4768
under the authority of this notice before
the date that is 15 months from decedent’s
date of death.
SECTION 4. SCOPE AND
APPLICATION
4.01.This notice applies to qualify-
ing estates of decedents who are citizens
or residents of the United States. For pur-
poses of this notice, a qualifying estate is
an estate in which:
a. The decedent is survived by a spouse;
b. The decedent’s date of death is after
December 31, 2010, and before July 1,
2011; and
c. The fair market value of the dece-
dent’s gross estate does not exceed
$5,000,000.
4.02.For purposes of this notice, an
estate is not a qualifying estate if the es-
tate effectively requested an automatic
six-month extension of time to file Form
706 under § 20.6081–1(b) by timely filing
Form 4768 on or before the due date for
filing Form 706.
4.03.If it is later determined that the
estate does not meet the requirements of
a qualifying estate, no extension will be
treated as granted under this notice, and the
Form 706, therefore, will not be timely.
SECTION 5. GUIDANCE
5.01.Treasury and the Service grant the
executor of a qualifyingestateasix-month
extension of time until 15 months after the
decedent’s date of death to file Form 706 if
the executor meets the following require-
ments:
a. The executor files Form 4768 with
the Service office designated in the form’s
instructions;
b. The executor files Form 4768 no
later than 15 months from the decedent’s
date of death; and
c. The executor enters at the top of
Form 4768 the notation “Notice 2012–21,
Extension for Good Cause Shown” or oth-
erwise sufficiently notifies the Service on
or with Form 4768 that Form 4768 is being
filed pursuant to this notice.
5.02.Theexecutorofaqualifyinges-
tate following the requirements of subsec-
tion 5.01 of this section will be deemed to
have shown good and sufficient cause and
to have provided all explanations required
under § 20.6081–1(c) without the need for
the executor to include any further expla-
nations on Form 4768.
5.03.If, prior to the issuance of this
notice, an executor of a qualifying estate
filed a Form 706 after the due date for fil-
ing Form 706 had passed, but before 15
months from the decedent’s date of death,
without having timely requested an auto-
matic six-month extension of time to file
Form 706, the executor may file Form
4768 in accordance withthe requirements
of this section and the extension will relate
back to the due date of Form 706.
5.04.An executor of a qualifying es-
tate may file Form 4768 at the same time
as the executor files Form 706, as long as
both are filed on or before the date that is
15 months after decedent’s date of death.
5.05.For purposes of section 6081,
except in the case of an executor abroad,
Treasury and the Service cannot grant ad-
ditional extensions of time to file Form 706
beyond the six-month extension granted in
this notice, regardless of whether an execu-
tor files a Form 4768 requesting an addi-
tional extension of time to file.
DRAFTING INFORMATION
The principal author of this no-
tice is Karlene Lesho of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further
information regarding this notice, contact
Karlene Lesho at (202) 622–3090 (not a
toll-free call).
2012–10 I.R.B.451March 5, 2012

26 CFR 601.601: Rules and regulations.
(Also Part I, §§ 25, 103, 143; 1.25–4T, 1.103–1,
6a.103A–2.)
Rev. Proc. 2012–16
SECTION 1. PURPOSE
This revenue procedure provides guid-
ance with respect to the United States and
area median gross income figures that are
to be used by issuers of qualified mortgage
bonds, as defined in § 143(a) of the Inter-
nal Revenue Code, and issuers of mortgage
credit certificates, as defined in § 25(c), in
computing the housing cost/income ratio
described in § 143(f)(5).
SECTION 2. BACKGROUND
.01 Section 103(a) provides that, ex-
cept as provided in § 103(b), gross income
does not include interest on any state or
local bond. Section 103(b)(1) provides
that § 103(a) shall not apply to any pri-
vate activity bond that is not a qualified
bond (within the meaning of § 141). Sec-
tion 141(e) provides that the term “qual-
ified bond” includes any private activity
bond that (1) is a qualified mortgage bond,
(2) meets the applicable volume cap re-
quirements under § 146, and (3) meets the
applicable requirements under § 147.
.02 Section 143(a)(1) provides that the
term “qualified mortgage bond” means a
bond that is issued as part of a “qualified
mortgage issue”. Section 143(a)(2)(A)
provides that the term “qualified mort-
gage issue” means an issue of one or more
bonds by a state or political subdivision
thereof, but only if (i) all proceeds of the
issue (exclusive of issuance costs and a
reasonably required reserve) are to be used
to finance owner-occupied residences; (ii)
the issue meets the requirements of sub-
sections (c), (d), (e), (f), (g), (h), (i), and
(m)(7) of § 143; (iii) the issue does not
meet the private business tests of para-
graphs(1)and(2)of§141(b);and(iv)
with respect to amounts received more
than 10 years after the date of issuance,
repayments of $250,000 or more of prin-
cipal on financing provided by the issue
are used not later than the close of the first
semi-annual period beginning after the
date the prepayment (or complete repay-
ment) is received to redeem bonds that are
part of the issue.
.03 Section 143(f) imposes eligibility
requirements concerning the maximum
income of mortgagors for whom financing
may be provided by qualified mortgage
bonds. Section 25(c)(2)(A)(iii)(IV) pro-
vides that recipients of mortgage credit
certificates must meet the income re-
quirements of § 143(f). Generally, under
§§ 143(f)(1) and 25(c)(2)(A)(iii)(IV),
these income requirements are met only
if all owner-financing under a qualified
mortgage bond and all certified indebt-
edness amounts under a mortgage credit
certificate program are provided to mort-
gagors whose family income is 115 percent
or less of the applicable median family
income. Under § 143(f)(6), the income
limitation is reduced to 100 percent of the
applicable median family income if there
are fewer than three individuals in the
family of the mortgagor.
.04 Section 143(f)(4) provides that the
term “applicable median family income”
means the greater of (A) the area median
gross income for the area in which the res-
idence is located, or (B) the statewide me-
dian gross income for the state in which the
residence is located.
.05 Section 143(f)(5) provides for an
upward adjustment of the income limita-
tions in certain high housing cost areas.
Under § 143(f)(5)(C), a high housing
cost area is a statistical area for which
the housing cost/income ratio is greater
than 1.2. The housing cost/income ratio
is determined under § 143(f)(5)(D) by
dividing (a) the applicable housing price
ratio by (b) the ratio that the area median
gross income bears to the median gross
income for the United States. The applica-
ble housing price ratio is the new housing
price ratio (new housing average purchase
price for the area divided by the new hous-
ing average purchase price for the United
States) or the existinghousing price ratio
(existing housing average area purchase
price divided by the existing housing aver-
age purchase price for the United States),
whichever results in the housing cost/in-
come ratio being closer to 1. This income
adjustment applies only to bonds issued,
and nonissued bond amounts elected, after
December 31, 1988.See§ 4005(h) of the
Technical and Miscellaneous Revenue Act
of 1988, 1988–3 C.B. 1, 311 (1988).
.06 The Department of Housing
and Urban Development (HUD) has
computed the median gross income for
the United States, the states, and statistical
areas within the states. The income
information was released to the HUD
regional offices on December 01, 2011,
and may be obtained by calling the HUD
reference service at 1–800–245–2691.
The income information is also available
at HUD’s World Wide Web site,
http://www.huduser.org/portal/datasets/il.html,
which provides a menu from which you
may select the year and type of data of
interest. The Internal Revenue Service
annually publishes the median gross
income for the United States.
.07 The most recent nationwide aver-
age purchase prices and average area pur-
chase price safe harbor limitations were
published on April 11, 2011, in Rev. Proc.
2011–23, 2011–15 I.R.B. 626.
SECTION 3. APPLICATION
.01 When computing the income re-
quirements of § 143(f), issuers of quali-
fied mortgage bonds and mortgage credit
certificates must use either (1) the me-
dian gross income for the United States,
the states, and statistical areas within the
states, as released to the HUD regional
offices on May 31, 2011, or (2) the me-
dian gross income for the United States,
the states, and statistical areas within the
states, as released to the HUD regional of-
fices on December 01, 2011.
.02 If an issuer uses the median gross
income for the United States, the states,
and statistical areas within the states, as
released to the HUD regional offices on
May 31, 2011, to compute the housing
cost/income ratio under § 143(f)(5),
the issuer must use the median gross
income for the United States, the states,
and statistical areas within the states, as
released to the HUD regional offices on
May 31, 2011, for all purposes under
§ 143(f). Likewise, if an issuer uses
the median gross income for the United
States, the states, and statistical areas
within the states, as released to the HUD
regional offices on December 01, 2011,
to compute the housing cost/income ratio
under § 143(f)(5), the issuer must use the
median gross income for the United States,
the states, and statistical areas within the
states, as released to the HUD regional
offices on December 01, 2011, for all
purposes under § 143(f).
March 5, 20124522012–10 I.R.B.

SECTION 4. EFFECT ON OTHER
REVENUE PROCEDURES
.01 Rev. Proc. 2011–37, 2011–26
I.R.B. 931, is obsolete except as provided
in §§ 3.01, 3.02, or 5.01 of this revenue
procedure.
.02 This revenue procedure does not af-
fect the effective date provisions of Rev.
Rul. 86–124, 1986–2 C.B. 27. Those ef-
fective date provisions will remain opera-
tive at least until the Service publishes a
new revenue ruling that conforms the ap-
proach to effective dates set forth in Rev.
Rul. 86–124 to the general approach taken
in this revenue procedure.
SECTION 5. EFFECTIVE DATES
.01 Issuers must use the United States
and area median gross income figures
specified in § 3.01 of this revenue proce-
dure for commitments to provide financing
that are made, or (if the purchase precedes
the financing commitment) for residences
that are purchased, in the period that be-
gins on December 01, 2011, and ends on
the date when these United States and area
median gross income figures are rendered
obsolete by a new revenue procedure.
DRAFTING INFORMATION
The principal authors of this rev-
enue procedure are David White and
Timothy Jones of the Office of Associate
Chief Counsel (Financial Institutions
& Products). For further information
regarding this revenue procedure, contact
Mr. White or Mr. Jones at (202) 622–3980
(not a toll-free call).
26 CFR 601.602: Tax forms and instructions.
(Also Part 1, sections 6031, 1.6031(b)–1T.)
Rev. Proc. 2012–17
SECTION 1. PURPOSE
.01 This revenue procedure provides
the requirements for furnishing substi-
tute Schedule K–1,Partner’s Share of
Income, Deductions, Credits, etc., in elec-
tronic format. A partnership (including
an Electing Large Partnership, as defined
in section 775 of the Internal Revenue
Code) that follows the procedures set
forth in this revenue procedure will sat-
isfy the requirements of section 6031(b)
of the Internal Revenue Code and section
1.6031(b)–1T(a)(1) of the Income Tax
Regulations.
SECTION 2. BACKGROUND
.01 Section 6031(a) of the Code pro-
vides, in part, that every partnership shall
make a return for each taxable year, stat-
ing specifically the items of its gross in-
come and deductions, and such other infor-
mation as the Secretary may by forms and
regulations prescribe, and shall include in
the return the names and addresses of the
individuals who would be entitled to share
in the taxable income if distributed and the
amount of the distributive share of each in-
dividual.
.02 Section 6031(b) provides, in part,
that each partnership required to file a re-
turn for any partnership taxable year shall
(on or before the day on which the return
for such taxable year was required to be
filed) furnish to each person who is a part-
ner or who holds an interest in such part-
nership as a nominee for another person at
any time during such taxable year a copy
ofsuchinformationrequiredtobeshown
on such return as may be required by reg-
ulations.
.03 Section 1.6031(b)–1T provides, in
part, that each partnership required to file
a return for any partnership taxable year
shall (on or before the day on which the re-
turn for such taxable year is required to be
filed) furnish to each person who is a part-
ner or who holds an interest in such part-
nership as a nominee for another person at
any time during such taxable year a writ-
ten statement containing the information
prescribed by section 1.6031(b)–1T(a)(3)
and any additional information required by
form or accompanying instructions. This
information includes the partner’s distribu-
tive share of any partnership income, gain,
loss, deduction, or credit required to be
shown on the partnership return.
.04 Rev. Proc. 2011–61, 2011–52
I.R.B. 990, provides guidance on the
requirements for forms accepted as sub-
stitutes for official IRS forms. Section 7.1
of Rev. Proc. 2011–61 sets forth specific
guidelines for substitute Schedule K–1s.
Section 7.1.1 of Rev. Proc. 2011–61
provides, in part, that substitute Schedule
K–1s should be as close as possible to
exact replicas of copies of the official IRS
schedules.
SECTION 3. ELECTRONIC
FURNISHING OF SCHEDULE
K–1
.01 A person required by section
6031(b) to furnish a written statement on
Schedule K–1 (furnisher) to the person to
whom it is required to be furnished (recip-
ient) may furnish the Schedule K–1 in an
electronic format in lieu of a paper format.
A furnisher who meets the requirements
of Sections 4 through 10 of this revenue
procedure will be treated as furnishing
the Schedule K–1 in a timely manner and
complying with the provisions of this rev-
enue procedure.
SECTION 4. CONSENT
.01In general.The recipient must
have affirmatively consented to receive
the Schedule K–1 in an electronic format.
The consent may be made electronically
in any manner that reasonably demon-
strates that the recipient can access the
Schedule K–1 in the electronic format in
which it will be furnished to the recip-
ient. Alternatively, the consent may be
made in a paper document if the consent is
confirmed electronically by the recipient
and that consent reasonably demonstrates
that the recipient can access the Schedule
K–1 in the electronic format in which it
will be furnished to the recipient. A new
consent is not required if a partnership
undergoes a technical termination under
section 708(b)(1)(B).
.02Withdrawal of consent.The consent
requirement of Section 4.01 will not be sat-
isfied if the recipient withdraws the con-
sent and the withdrawal takes effect before
the statement is furnished. The furnisher
may provide that a withdrawal of consent
takes effect either on the date it is received
by the furnisher or on a subsequent date
determined by the furnisher and commu-
nicated to the recipient within a reasonable
period of time after the furnisher receives
the withdrawal. The furnisher may also
provide that a request for a paper statement
will be treated as a withdrawal of consent.
.03Change in hardware or software re-
quirements. If a change in hardware or
software required to access the Schedule
2012–10 I.R.B.453March 5, 2012

K–1 creates a material risk that the recipi-
ent will not be able to access the Schedule
K–1, the furnisher must, prior to changing
the hardware or software, provide the re-
cipient with a notice. The notice must de-
scribe the revised hardware and software
required to access the Schedule K–1 and
inform the recipient that a new consent to
receive the Schedule K–1 in the revised
electronic format must be provided to the
furnisher. After changing the revised hard-
ware and software, the furnisher must ob-
tain from the recipient, in the manner de-
scribed in Section 4.01 of this revenue pro-
cedure, a new consent or confirmation of
consent to receive the Schedule K–1 elec-
tronically.
.04Examples.The following examples
illustrate the rules of Section 4 of this rev-
enue procedure:
(1).Example 1.Furnisher F sends Recipient R a
letter stating that R may consent to receive Schedule
K–1 electronically on a website instead of in a pa-
per format. The letter contains instructions explain-
ing how to consent to receiveSchedule K–1 electron-
ically by accessing the website, downloading the con-
sent document, completing the consent document and
e-mailing the completed consent back to F. The con-
sent document posted on the website uses the same
electronic format that F will use for the electronically
furnished Schedule K–1. R reads the instructions and
submits the consent in the manner provided in the in-
structions. R has consented to receive the Schedule
K–1 electronically in the manner described in Sec-
tion 4 of this revenue procedure.
(2).Example 2.Furnisher F sends Recipient R
a secure e-mail stating that R may consent to receive
Schedule K–1 electronically instead of in a paper for-
mat. The secure e-mail contains an attachment in-
structing R how to consent to receive Schedule K–1
electronically. The e-mail attachment uses the same
electronic format that F will use for the electronically
furnished Schedule K–1. R opens the attachment,
reads the instructions, and submits the consent in the
manner provided in the instructions. R has consented
to receive Schedule K–1 electronically in the manner
described in Section 4 of this revenue procedure.
(3).Example 3.Furnisher F posts a notice on
its website stating that Recipient R may receive
Schedule K–1 electronically instead of in a paper
format. The website contains instructions on how R
may access a secure webpage and consent to receive
the statements electronically. R will receive the K–1
through the secure webpage in the same format as
the consent documents. By accessing the secure
webpage and giving consent in the manner provided
in the instructions on the website, R has consented to
receive Schedule K–1 electronically in the manner
described in Section 4 of this revenue procedure.
SECTION 5. REQUIRED
DISCLOSURES
.01In general.Prior to, or at the time
of, a recipient’s consent, the furnisher must
provide to the recipient a clear and con-
spicuous disclosure statement containing
each of the disclosures described in Sec-
tions 5.02 through 5.08 of this revenue pro-
cedure. The statement may be electronic
or on paper. The statement must provide
instructions on how to access and print the
statement.
.02Paper statement.The furnisher
must inform the recipient that the Sched-
ule K–1 will be furnished on paper if the
recipient does not consent to receive it
electronically.
.03Scope and duration of consent.The
furnisher must inform the recipient of the
scope and duration of the consent. For ex-
ample, the furnishermust inform the re-
cipient whether the consent applies to each
Schedule K–1 required to be furnished af-
ter the consent is given until it is with-
drawn in the manner described in Section
4.02 of this revenue procedure or only to
the first Schedule K–1 required to be fur-
nished after the consent is given.
.04Post-consent request for a paper
statement.The furnisher must inform the
recipient of any procedure for obtaining a
paper copy of the recipient’s statement af-
ter providing the consent described in Sec-
tion 4.01 of this revenue procedure and
whether a request for a paper statement
will be treated as a withdrawal of consent.
.05Withdrawal of consent.The fur-
nisher must inform the recipient that—
(1) The recipient may withdraw con-
sent by writing (electronically or on pa-
per) to the person or department whose
name, mailing address, telephone number,
and e-mail address is provided in the dis-
closure statement;
(2) The furnisher may provide that a
withdrawal of consent takes effect either
on the date it is received by the furnisher
or on a subsequent date determined by the
furnisher and communicated to the recipi-
ent within a reasonable period of time after
the furnisher receives the withdrawal.
(3) The furnisher will confirm the with-
drawal and the date on which it takes ef-
fect in writing (either electronically or on
paper); and
(4) A withdrawal of consent does not
apply to a statement that was furnished
electronically in the manner described in
this revenue procedure before the date on
which the withdrawal of consent takes ef-
fect.
.06Notice of termination.The fur-
nisher must inform the recipient of the
conditions under which a furnisher will
cease furnishing statements electronically
to the recipient (for example, the recipi-
ent’s withdrawal from the partnership).
.07Updating information.The fur-
nisher must inform the recipient of the
procedures for updating the information
needed by the furnisher to contact the re-
cipient. The furnisher must inform the re-
cipient of any change in the furnisher’s
contact information.
.08Hardware and software require-
ments.The furnisher must describe to
the recipient the hardware and software
required to access, print, and retain the
Schedule K–1, and the date when the
Schedule K–1 will no longer be available
on the website. The furnisher must inform
the recipient that the Schedule K–1 may
be required to be printed and attached to a
Federal, State, or local income tax return.
SECTION 6
.FORMAT
.01 The electronic version of the Sched-
ule K–1 must contain all required infor-
mation and comply with the instructions
applicable to the Schedule K–1 and appli-
cable revenue procedures and publications
relating to substitute statements to recipi-
ents.
SECTION 7. NOTICE
.01In general.The furnisher must no-
tify the recipient if the statement is posted
on a website. The notice may be delivered
by mail, electronic mail, or in person. The
notice must provide instructions on how to
access and print the statement. The notice
must include the following statement in
capital letters, “IMPORTANT TAX RE-
TURN DOCUMENT AVAILABLE.” If
the notice is provided by electronic mail,
the foregoing statement must be on the
subject line of the electronic mail.
.02Undeliverable electronic address.
If an electronic notice described in Sec-
tion 7 of this revenue procedure is returned
as undeliverable, and the correct electronic
address cannot be obtained from the fur-
nisher’s records or from the recipient, the
March 5, 20124542012–10 I.R.B.

furnisher must furnish the notice by mail
or in person within 30 calendar days after
the electronic notice is returned.
SECTION 8.AMENDED SCHEDULE
K–1
.01 If the furnisher has amended a re-
cipient’s Schedule K–1 that was furnished
electronically, the furnisher must furnish
the amended Schedule K–1 to the recipi-
ent electronically within 30 calendar days
of the date that the Schedule K–1 has
been amended. If the recipient’s Sched-
ule K–1 was furnished through a website
posting and the furnisher has amended
the Schedule K–1, the furnisher must no-
tify the recipient that it has posted the
amended Schedule K–1 on the website
within 30 calendar days of such posting
in the manner described in Section 7.01
of this revenue procedure. The furnisher
must provide the amended Schedule K–1
orthenoticebymailorinpersonif—
(1) An electronic notice of the website
posting of an original Schedule K–1 or the
amended Schedule K–1 was returned as
undeliverable; and
(2) The recipient has not provided a new
e-mail address.
SECTION 9. ACCESS PERIOD
.01 A Schedule K–1, or amended
Schedule K–1, furnished on a website
must be retained on the website for twelve
months following the end of the partner-
ship’s tax year to which the Schedule K–1
relates, or six months after the date of is-
suance of the Schedule K–1, (or amended
Schedule K–1), whichever is later.
SECTION 10. PAPER STATEMENTS
AFTER WITHDRAWAL OF CONSENT
.01. If a recipient withdraws consent to
receive a statement electronically and the
withdrawal takes effect before the state-
ment is furnished electronically, a paper
statement must be furnished. Notwith-
standing Section 7.03, an amended Sched-
ule K–1 shall be considered a new state-
ment for purposes of determining whether
a paper statement must be furnished fol-
lowing a withdrawal of consent under this
section when the withdrawal occurs be-
tween the date the original Schedule K–1
was furnished and the date the amended
Schedule K–1 is furnished. A paper state-
ment furnished after the statement due
date under this section will be considered
timely if furnished within 30 calendar days
after the date the withdrawal of consent is
received by the furnisher.
SECTION 11. APPROVAL OF
SUBSTITUTE SCHEDULE K–1
.01 The furnisher will not need IRS ap-
proval to use a substitute Schedule K–1 un-
der the procedures described in Rev. Proc.
2011–61 if the electronic copy it furnishes
is an exact copy of the official Schedule
K–1.
SECTION 12. FAILURE TO FURNISH
.01 If a furnisher fails to comply with
the requirements of this revenue proce-
dure, the furnisher may be deemed to have
failed to furnish the Schedule K–1 to the
recipient. See section 6722 for penalties
for failure to furnish correct payee state-
ments.
SECTION 13. OTHER RELATED
DOCUMENTS
.01. For rules regarding the elec-
tronic filing of the Form 1065,U.S. Re-
turn of Partnership Income, see section
6011(e)(2) and section 301.6011–3 of
the Procedure and Administration Reg-
ulations. For rules regarding substitute
Schedule K–1, see Rev. Proc. 2011–61,
2011–52 I.R.B. 990, and successor publi-
cations and instructions.
SECTION 14. EFFECTIVE DATE
This revenue procedure applies on and
after Feb. 13, 2012.
SECTION 15. DRAFTING
INFORMATION
.01 The principal author of this rev-
enue procedure is Michael E. Hara of
the Office of Associate Chief Counsel
(Procedure and Administration). Mr. Hara
may be contacted at (202) 622–4910 (not
a toll-free number).
26 CFR 601.106: Ex Parte communications between
appeals and other Internal Revenue Service employ-
ees.
Rev. Proc. 2012–18
SECTION 1. BACKGROUND
Section 1001(a) of the Internal Revenue
Service Restructuring and Reform Act of
1998, Pub. L. No. 105–206, 112 Stat.
685 (RRA), required the Commissioner of
Internal Revenue to develop and imple-
ment a plan to reorganize the Internal Rev-
enue Service (IRS). In addition, the RRA
specifically directed the Commissioner to
“ensure an independent appeals function
within the Internal Revenue Service, in-
cluding the prohibition * * * ofex parte
communications between appeals officers
and other Internal Revenue Service em-
ployees to the extent that such communi-
cations appear to compromise the indepen-
dence of the appeals officers.” RRA sec-
tion 1001(a)(4). Inaccordance with that
directive, the Department of the Treasury
and the IRS issued guidance in Rev. Proc.
2000–43, 2000–2 C.B. 404.
Since the issuance of Rev. Proc.
2000–43 in October 2000, the IRS has
made changes to some of its business prac-
tices and adopted new ones that did not
exist at the time that the revenue procedure
was issued. Accordingly, Treasury and
the IRS issued Notice 2011–62, 2011–32
I.R.B. 126 (Aug. 8, 2011), which set forth
a proposed revenue procedure to revise
Rev. Proc. 2000–43 by addressing these
changed circumstances, as well as clari-
fying and modifying the rules in light of
the IRS’ experience working with that
revenue procedure. Also, the revenue
procedure was redesigned from a question
and answer format to a narrative format to
improve usability. In connection with that
change, the material was rearranged and
organized under appropriate headings to
make it easier to find.
Notice 2011–62 invited public com-
ment regarding the proposed revenue pro-
cedure. Treasury and the IRS considered
all comments received and the proposed
revenue procedure has been modified to
take into account the concerns raised. For
example, the remedies section has been
modified to provide that Appeals employ-
ees shall ask the taxpayer/representative
for input regarding what is an appropriate
2012–10 I.R.B.455March 5, 2012

remedy. The final agency decision maker
regarding the appropriate remedy in each
case will be a second-level manager. Also,
the“opportunitytoparticipate” section has
been modified to clarify that if no agree-
ment can be reached regarding a mutually
acceptable date and time for the discus-
sion or meeting, Appeals should notify
the taxpayer/representative of the date and
time that the discussion or meeting will
take place. After having the discussion or
meeting, Appeals should share with the
taxpayer/representative the substance of
the discussion or meeting, as appropri-
ate, and give the taxpayer/representative
a reasonable period of time within which
to respond. Additionally, the discussion
of the role of Appeals with respect to the
development of settlement initiatives has
been clarified. Lastly, consistent with the
rule that theex partecommunication rules
do not apply to communications between
Appeals and Counsel with respect to cases
docketed in the Tax Court, the section
regarding remand memoranda in collec-
tion due process cases has been revised
to remove the prohibition on including
legal analysis or legal advice in remand
memoranda.
In addition, the Internal Revenue Man-
ual (IRM) will be revised to provide
additional guidance,as appropriate, re-
garding theex partecommunication rules
andtrainingwillbeprovidedtoallaf-
fected functions. Many of the comments
will be addressed in the IRM or training
rather than in the revenue procedure. Fur-
thermore, although not adopted in this
revenue procedure, Appeals will consider
implementing some mechanism to track
breaches of theex partecommunication
rules. It is envisioned that this tracking
mechanism will help Appeals executives
monitor breaches of theex partecommuni-
cation rules and the steps taken by Appeals
to rectify any breaches of those rules. Any
tracking mechanism that is adopted will
generically describethe breaches of theex
partecommunication rules and will not be
case or employee specific.
The procedures set forth in this revenue
procedure are designed to accommodate
the overall interests of tax administration,
while preserving operational features that
are vital to Appeals’ case resolution pro-
cesses within the structure of the IRS and
ensuring open lines of communication be-
tween Appeals and the taxpayer/represen-
tative. Consistent with section 1001(a)(4),
this revenue procedure does not adopt the
formalex parteprocedures that would ap-
ply in a judicial proceeding. It is designed
to ensure the independence of the Appeals
organization, while preserving the role of
Appeals as a flexible administrative settle-
ment authority, operating within the IRS’
overall framework of tax administration
responsibilities.
.01Highlights.As previously provided
in Rev. Proc. 2000–43:
(1) Appeals will retain procedures for:
(a) Premature referrals.
(b) Raising certain new issues.
(c) Seeking review and comments from
the originating function with respect to
new information or evidence furnished by
the taxpayer/representative.
(2) Appeals will continue to be able
to obtain legal advice from the Office of
Chief Counsel, subject to the limitations
set forth in section 2.06(1), below.
(3) The Commissioner and other IRS
officials responsible for overall IRS oper-
ations (including Appeals), as referenced
in section 2.07(5), below, may continue to
communicateex partewith Appeals to ful-
fill their responsibilities.
.02Notable Differences.
(1) Guiding principles have been added
to aid in understanding the overall ap-
proach to applying theex partecommuni-
cation rules.
(2) Definitions for certain terms have
been added or clarified.
(3) Transmittals and the permissible
content of the administrative file have
been clarified.
(4) The application of theex partecom-
munication rules to collection due process
(CDP) cases, including those CDP cases
that are remanded by the Tax Court, has
been addressed.
(5) The discussion of Appeals’ involve-
ment in multifunctional meetings has been
expanded.
(6) The application of theex partecom-
munication rules in the context of alter-
native dispute resolution proceedings has
been addressed.
(7) The remedies available to taxpayers
in the event of a breach of theex parte
communication rules have been clarified.
(8) A statement that theex partecom-
munication rules do not create substantive
rights affecting a taxpayer’s liability or the
IRS’ ability to determine, assess, or collect
that tax liability has been added.
SECTION 2. GUIDANCE
CONCERNING EX PARTE
COMMUNICATIONS AND THE
APPLICATION OF RRA SECTION
1001(a)(4)
.01Definitions.For purposes of this
revenue procedure and the application of
RRA section 1001(a)(4), the terms set
forth below are defined as follows:
(1)Ex Parte Communication.An “ex
partecommunication” is a communication
that takes place between any Appeals em-
ployee (e.g., Appeals Officers, Settlement
Officers, Appeals Team Case Leaders,
Appeals Tax Computation Specialists) and
employees of other IRS functions, without
the taxpayer/representative being given an
opportunity to participate in the commu-
nication. The term includes all forms of
communication, oral or written. Written
communications include those that are
manually or electronically generated.
(a)Communications Outside the Scope
of the Term “Ex Parte Communication.”
The term “ex partecommunication” does
not include the following (not an exhaus-
tive list):
(i)Database Inquiries.Account in-
quiries, transcript requests, and other simi-
lar inquiries conducted in an electronic en-
vironment are not considered communica-
tions because they donot involve a dia-
logue or interaction between two or more
individuals. This exception does not ap-
ply to the administrative file, which may
be maintained electronically in whole or in
part. For a discussion of the rules applica-
ble to the administrative file, see section
2.03(4), below.
(ii)Communications Solely Between or
Among Appeals Employees.These are not
consideredex partecommunications be-
cause they do not involve employees from
IRS functions outside of Appeals.
(iii)Communications with IRS Func-
tions Other than Originating Functions.
Special rules apply to communications
between Appeals employees and employ-
ees of certain IRS functions other than
originating functions, as defined in sec-
tion 2.01(2), below. Employees in other
IRS functions include those in Counsel,
Criminal Investigation, Competent Au-
thority, Taxpayer Advocate Service, and
March 5, 20124562012–10 I.R.B.

the Commissioner and other IRS officials
with overall supervisory responsibilities.
For a discussion of communications with
those functions, see 2.06, 2.07(2), 2.07(3),
2.07(4), and 2.07(5), respectively.
(iv)Communications with Other Gov-
ernmental Entities.These are not con-
sideredex partecommunications because
RRA section 1001(a)(4) only applies to
communications between Appeals and
other IRS employees, and the persons with
whom Appeals is communicating at other
governmental entities do not fall into that
category. See section 2.08, below, for
examples.
(v)Communications in Which the Tax-
payer/Representative Is Given an Oppor-
tunity to Participate.These are not con-
sideredex partecommunications because
the taxpayer/representative is offered a
chance to be involved in the communica-
tion. Even if the taxpayer/representative
chooses not to participate in the communi-
cation, theex partecommunication rules
do not apply.
(2)Originating Function.An “origi-
nating function” is an organization within
the IRS that makes determinations that are
subject to the Appeals process. For pur-
poses of this revenue procedure, the term
includes the Examination, Collection, and
Service Center (Campus) functions, or
their successor organizations. For a dis-
cussion of communications with Counsel
or Criminal Investigation, see sections
2.06 and 2.07(2), respectively. For a dis-
cussion of communications with other IRS
functions or other governmental entities,
see sections 2.07 and 2.08, respectively.
None of those functions are originating
functions.
(3)Opportunity to Participate.
(a)Oral communications.The phrase
“opportunity to participate” means that
the taxpayer/representative will be given a
reasonable opportunity to attend a meeting
or be a participant in a conference call
between Appeals and the originating func-
tion when the strengths and weaknesses
of the facts, issues, or positions in the
taxpayer’s case are discussed. The tax-
payer/representative will be notified of a
scheduled meeting or conference call and
invited to participate. If the taxpayer/rep-
resentative is unable to participate in the
meeting or conference call at the sched-
uled time, reasonable accommodations
will be made to reschedule it. See also
section 2.01(3)(d), below.
(b)Written communications.Atax-
payer/representative is considered to have
been given an “opportunity to participate”
with respect to a written communication
that is received by Appeals if the tax-
payer/representative is furnished a copy
of the written communication and given a
chance to respond to it either orally or in
writing.
(c)Waiver.If the taxpayer/representa-
tive is given an opportunity to participate
in a discussion but declines to participate,
Appeals should proceed with the discus-
sion or meeting but should document the
taxpayer’s/representative’s declination. A
taxpayer/representative has the option of
granting a waiver on acommunication-by-
communication basisor a waiver covering
all communications that might occur dur-
ing the course of Appeals’ consideration of
a specified case. If a taxpayer/representa-
tive provides a blanket waiver with respect
to a particular case, the taxpayer/represen-
tative may revoke that waiver at any time,
effective with respect to communications
occurring subsequent to the revocation.
(d)Unreasonable delay.The IRS will
not delay scheduling a meeting for a pro-
tracted period of time to accommodate
the taxpayer/representative. Facts and cir-
cumstances will govern what constitutes
a reasonable delay. If the taxpayer/rep-
resentative seeks to unreasonably delay
a meeting or conference call, Appeals
should proceed with the discussion or
meeting but should document the reason
for proceeding without the taxpayer/rep-
resentative. Additionally, if no agreement
can be reached regarding a mutually ac-
ceptable date and time for the discussion
or meeting, Appeals should notify the
taxpayer/representative of the date and
time that the discussion or meeting will
take place. If the taxpayer/representative
does not participate in the discussion or
meeting, Appeals should share with the
taxpayer/representative the substance of
the discussion or meeting, as appropriate,
and give the taxpayer/representative a rea-
sonable period of time within which to
respond.
.02Guiding Principles.Except as
specifically addressed in other provisions
of this revenue procedure, the following
guiding principles govern communica-
tions between Appeals and other IRS
functions, including Counsel.
(1)Principles of Tax Administration.It
is the role of the IRS, and those employees
charged with the duty of interpreting the
law, to determine the reasonable meaning
of various Code provisions in light of the
Congressional purpose in enacting them;
to apply and administer the law in a reason-
able and practical manner; and to perform
this work in a fair and impartial manner,
with neither a government nor a taxpayer
point of view. See Rev. Proc. 64–22,
1964–1 C.B. 689.
(2)Appeals’ Independence.Appeals
serves as the administrative dispute reso-
lution forum for any taxpayer contesting
an IRS compliance action. It has long been
Appeals’ mission “to resolve tax contro-
versies, without litigation, on a basis that is
fair and impartial to both the Government
and the taxpayer and in a manner that will
enhance voluntary compliance and public
confidence in the integrity and efficiency
of the Service.” IRM 8.1.1.1(1). RRA
section 1001(a)(4) established a statutory
basis for Appeals’ independence by re-
quiring that the Commissioner “ensure an
independent appeals function within the
Internal Revenue Service . . . .” Rather
than establish an external appeals function
(as suggested in some legislative propos-
als), RRA maintained Appeals within the
IRS while seeking to significantly rein-
force its independence. Consequently,
despite their distinct roles within tax ad-
ministration and required adherence to
policies set by the Commissioner, Appeals
and other IRS functions, including Coun-
sel, share a responsibility to interact —
in all circumstances — in a manner that
preserves and promotes Appeals’ inde-
pendence. To further this independence,
Appeals must continue its practice of
impartial decision making while coordi-
nating with other IRS functions to carry
out the Commissioner’s policies on tax
administration.
Independence, therefore, is one of Ap-
peals’ most important core values, and
the RRA statutory prohibition onex parte
communications “to the extent that such
communications appear to compromise
the independence of the appeals officers”
is a significant component of Appeals’
independence. The guidance set forth in
this revenue procedure is designed to ac-
commodate the overall interests of tax ad-
2012–10 I.R.B.457March 5, 2012

ministration while ensuring that Appeals
is adequately insulated from influence (or
the appearance of influence) by other IRS
functions, thereby providing Appeals with
an unencumbered working environment
within which to objectively and indepen-
dently evaluate the facts and law that are
relevant to each case and quantify the haz-
ards of litigation based on that evaluation.
(3)Legal Advice.
(a)In General.The Chief Counsel is
the legal adviser to the Commissioner and
the IRS’ officers and employees on all
matters pertaining to the interpretation,
administration, and enforcement of the
internal revenue laws and related statutes.
I.R.C. § 7803(b)(2)(A). As reflected in
the Chief Counsel’s mission statement,
the IRS’ mission statement, and section
2.02(1), above, attorneys in the Office of
Chief Counsel are expected to provide
legal advice based on an independent
determination of the “correct and impar-
tial interpretation of the internal revenue
laws” and by applying “the [tax] law with
integrity and fairness to all.” The fact that
various attorneys in the Office of Chief
Counsel may be simultaneously engaged
in multiple activities, including some ac-
tivities involving an advocacy role, does
not diminish the responsibility of each to
exercise independent judgment in render-
ing legal advice.
(b)Appeals.Appeals employees gen-
erally are not bound by the legal ad-
vice that they receive from the Office of
Chief Counsel with respect to their cases.
Rather, the legal advice is but one fac-
tor that Appeals will take into account
in its consideration of the case. Appeals
employees remain ultimately responsible
for independently evaluating the strengths
and weaknesses of the issues in the cases
assigned to them and making indepen-
dent judgments concerning the overall
strengths and weaknesses of the cases and
the hazards of litigation. Accordingly,
Appeals may obtain legal advice from the
Office of Chief Counsel consistent with
this revenue procedure without compro-
mising Appeals’ independence.
(4)Opportunity to Participate.As pro-
vided in section 2.01(1) and (3), above,
by definition, if the taxpayer/representa-
tive is given an opportunity to participate
with respect to a communication, that com-
munication is notex parte,and,thus,the
communication is permissible under theex
partecommunication rules.
(5)Exceptions.Not all communica-
tions between Appeals employees and em-
ployees of other IRS functions are prohib-
ited, even ifex parte. For example, as de-
scribed in more detail in section 2.03(2),
below, communications regarding ministe-
rial, administrative,or procedural matters
are permissible. Similarly, as described in
more detail in section 2.04, below, Appeals
may listen to or be briefed on generic, non-
case-specific discussions of issues with-
out violating theex partecommunication
rules.
(6)Communications with Other IRS
Functions.To fulfill its role of provid-
ing an independent dispute resolution
function within the IRS, Appeals must
be able to make fully informed, indepen-
dent judgments regarding the strengths
and weaknesses of positions and to prop-
erly evaluate the hazards of litigation in
cases within its jurisdiction. To accom-
plish these tasks, Appeals stays abreast
of relevant legal and tax administration
developments, including the views and
analysis of stakeholders, as well as the
Commissioner’s policies and operational
goals. One effective and efficient way
of obtaining some of this information
is for Appeals to participate in generic,
noncase-specific discussions with other
IRS functions, including Counsel, such as
participation in multifunctional meetings.
Hence, Appeals’ participation in these
discussions or meetings is permissible un-
der theex partecommunication rules, as
described in more detail in section 2.04,
below.
In general, Appeals may not engage in
discussions with the originating function
regarding the strengths and weaknesses of
the issues and positions in cases or with re-
spect to matters other than ministerial, ad-
ministrative, or procedural matters, with-
out providing the taxpayer/representative
an opportunity to participate. For a fuller
discussion of these rules, see section 2.03,
below.
(7)CuringaBreachoftheExParte
Communication Rules.Most breaches of
theex partecommunication rules may be
cured by timely notifying the taxpayer/rep-
resentative of the situation, sharing the
communication or information in question,
and affording the taxpayer/representative
a reasonable period of time within which
to respond. The specific administrative
remedy that may be made available in any
particular case is within the sole discre-
tion of Appeals. For a fuller discussion of
remedies, see section 2.10, below.
(8)No Substantive Rights.Theex parte
communication rules set forth in this rev-
enue procedure do not create substantive
rights affecting the taxpayer’s tax liability
or the IRS’ ability to determine, assess, or
collect that tax liability, including statutory
interest and any penalties, if applicable.
.03Communications with Originating
Function.
(1)General Rule. Ex partecommunica-
tions between Appeals employees and em-
ployees of originating functions are pro-
hibited to the extent the communications
appear to compromise Appeals’ indepen-
dence. See RRA section 1001(a)(4). As
discussed more fully below, not allex parte
communications are prohibited.
(2)Ministerial, Administrative, or
Procedural Matters.Communications be-
tween Appeals and an originating function
regarding ministerial, administrative, or
procedural matters during any stage of a
case are permissible without involving the
taxpayer/representative. If communica-
tions with the originating function extend
beyond ministerial, administrative, or pro-
cedural matters in that the substance of
the issues in the case is addressed, those
communications are prohibited unless the
taxpayer/representative is given an oppor-
tunity to participate.
(a)Examples.Communications regard-
ing ministerial, administrative, or proce-
dural matters include, but are not limited
to, the following:
(i) Communications about whether
certain information was requested and
whether it was received.
(ii) Communications about the avail-
ability of a document referred to in the
workpapers that the Appeals Officer can-
not locate in the file.
(iii) Communications to clarify the con-
tent of illegible documents or writings.
(iv) Communications regarding case
controls on the IRS’ management infor-
mation systems.
(v) Communications relating to tax cal-
culations that are solely mathematical in
nature.
(vi) Communications about whether
any closed cases exist that involve or af-
fect the taxpayer or a related party, or other
March 5, 20124582012–10 I.R.B.

information about a closed case (includ-
ing the terms on which a closed case was
resolved), that do not extend beyond what
is in the public or administrative record.
Examples of these closed cases include,
but are not limited to, cases involving
bankruptcy, innocent spouse, TEFRA
partnership, or criminal investigation is-
sues. Any discussion about the substance
of a closed case extending beyond what
is in the public or administrative record is
prohibited unless the taxpayer/representa-
tive is given an opportunity to participate.
For purposes of the preceding sentence,
any information contained in the adminis-
trative file for the closed case or any of the
IRS’ databases is considered to be part of
the administrative record. Moreover, the
public or administrative record limitation
described in this paragraph does not apply
to discussions between Appeals and the
originating function in connection with
a post-settlement conference or equiva-
lent communication. For a discussion of
post-settlement conferences, see section
2.03(11), below. Additionally, this para-
graph is limited to closed cases and does
not apply to communications with respect
to the case that Appeals is reviewing. For
a discussion of communications relating to
other pending cases that involve or affect
the taxpayer or a related party, see section
2.03(13), below.
(vii) Communications regarding gen-
eral information about related cases, such
as the number of other pending cases in-
volving the same or substantially similar
type of transaction or issue,e.g., tax shelter
transactions or industry-wide issues, and
the aggregate amount of money in dis-
pute in those cases. This paragraph also
includes communications about the exis-
tence or status of related cases, such as
cases involving a promoter, material advi-
sor, or tax return preparer. For a discussion
of communications with respect to closed
cases that involve or affect the taxpayer or
a related party, see section 2.03(2)(a)(vi),
above. For a discussion of communica-
tions relating to other pending cases that
involveoraffectthetaxpayerorarelated
party, see section 2.03(13), below.
(viii) Communications regarding the
status of the case that Appeals is review-
ing, such as whether the case or an issue
in the case has been resolved or when a
case is expected to be closed. This does
not include any discussion of the terms
of the resolution of an issue prior to the
case being closed or the issue resolved
with finality, such as by the parties enter-
ing into a closing agreement. Permitted
communications concerning the status of
the case should be limited to a direct, nar-
row exchange of information without any
surrounding discussion. They are not in-
tended to provide the originating function
or other IRS function a chance to discuss
the strengths and weaknesses of the case
or position in the case, advocate for a
particular result, object to a potential res-
olution, or otherwise attempt to influence
Appeals’ decision in any way.
(ix) Communications regarding math-
ematical errors affecting the proposed tax
liability discovered upon computational
review. These errors should be discussed
with both the taxpayer/representative and
the originating function before the cor-
rection is made, but the discussions may
be held separately. If the error involves
the interpretation of a legal principle or
application of the law to a particular set
of facts, however, the taxpayer/represen-
tative should be given an opportunity to
participate in any scheduled meetings with
the originating function to discuss this type
of discrepancy. In some cases, Appeals
may choose to return the case to the orig-
inating function forfurther development
and correction.
(x) Communications referring a refund
claim filed during the Appeals process to
the originating function for consideration.
See section 2.03(9), below.
(xi) Communications in connection
with a CDP hearing to verify compliance
with legal or administrative requirements;
communications withrespect to verifica-
tion of assets/liabilities involving a col-
lection alternative during a CDP hearing;
or communications regarding deadlines
relating to a remanded CDP case. See
sections 2.03(10)(b) and (c)(i)(B), below.
(3)Prohibited Communications.Ex-
amples of communications between Ap-
peals and an originating function that are
prohibited unless the taxpayer/representa-
tive is given an opportunity to participate
include, but are not limited to, the follow-
ing:
(a) Discussions about the accuracy of
the facts presented by the taxpayer and the
relative importance of the facts to the de-
termination.
(b) Discussions of the relative merits or
alternative legal interpretations of authori-
ties cited in a protest or in a report prepared
by the originating function.
(c) Discussions of the originating func-
tion’s perception of the demeanor or cred-
ibility of the taxpayer or taxpayer’s repre-
sentative.
(d) Discussions of the originating
function’s views concerning the level of
cooperation (or lack thereof) of the tax-
payer/representative during the originating
function’s consideration of the case.
(e) Discussions regarding the origi-
nating function’s views concerning the
strengths and weaknesses of the case or
the parties’ positions in the case.
(f) Communications from the originat-
ing function to advocate for a particular re-
sult or to object to a potential resolution of
the case or an issue in the case.
(4)Administrative File.
(a)In General.The administrative file
transmitted to Appeals by the originating
function is not considered to be anex parte
communication within the context of this
revenue procedure. The administrative
file, which contains, among other things,
the proposed determination and the tax-
payer’s protest or other approved means
of communicating disagreement with the
proposed determination, sets forth the
boundaries of the dispute between the tax-
payer and the IRS and forms the basis for
Appeals to assume jurisdiction.
(b)Transmittal.The transmittal mem-
orandum, a T-Letter, or any similar docu-
ment that the originating function uses to
transmit the administrative file (transmit-
tal) should not include statements or com-
ments intended to influence Appeals’ de-
cision-making process. This includes rec-
ommendations concerning what Appeals
should consider and how Appeals should
resolve the case. In contrast, it is permis-
sible to include in the transmittal a neutral
list of unagreed issues, without discussion,
and to indicate which ones, if any, are coor-
dinated issues. If the transmittal includes
the type of statements or comments de-
scribed in the second sentence of this para-
graph, or includes other prohibited com-
munications in a document that is either
placed on top of the administrative file as
a transmittal or inserted into the adminis-
trative file in conjunction with preparing
the case for transmission to Appeals, the
document must be shared by the originat-
2012–10 I.R.B.459March 5, 2012

ingfunctionwiththetaxpayer/representa-
tive at the time that the administrative file
is sent to Appeals.
(c)Rebuttal to Protest.If a rebuttal to
the taxpayer’s protest is prepared by the
originating function, it must be shared with
the taxpayer/representative by the origi-
nating function at the time that it is sent to
Appeals.
(d)Contents of Administrative File.
The administrative file shall be compiled
and maintained by the originating function
in accordance with the established proce-
dures within that function or as otherwise
directed by the reviewer(s) assigned to the
case. The originating function, however,
shall refrain from placing in the adminis-
trative file any notes, memoranda, or other
documents that normally would not be
included in the administrative file in the
ordinary course of developing the case if
the reason for including this material in the
administrative file is to attempt to influ-
ence Appeals’ decision-making process.
For example, the originating function
should not include gratuitous comments
in the case history, a memo to the file, or a
transmittal document, such as a T-Letter,
if the substance of the comments would
be prohibited if they were communicated
to Appeals separate and apart from the
administrative file. In contrast, it is per-
missible to contemporaneously include
statements or documents that are pertinent
to the originating function’s consideration
of the case in the administrative file even
if the substance of those comments, state-
ments, or documents would be prohibited
if they were communicated to Appeals
separate and apart from the administrative
file.
(5)Preconference Meetings.Precon-
ference meetings between Appeals and the
originating function without providing the
taxpayer/representative an opportunity to
participate are an example of the type of
communications that theex partecommu-
nication rules were designed to prohibit.
These meetings should not be held unless
the taxpayer/representative is given an op-
portunity to participate.
(6)Premature Referrals.Appealsisthe
administrative settlement arm of the IRS.
If a case is not ready for Appeals’ con-
sideration, Appeals may return it for fur-
ther development or for other reasons de-
scribed in IRM 8.2.1.6. Appeals may com-
municate with the originating function re-
garding the anticipated return of the case,
including an explanation of the additional
development that Appeals is requesting or
other reasons why the case is being re-
turned, but generally may not engage in
a discussion of matters beyond the types
of ministerial, administrative, or proce-
dural matters set forth in section 2.03(2),
above, as part of a discussion of whether
the premature referral guidelines require
further activity by the originating function.
When the case is returned to the originat-
ing function, Appeals must timely notify
the taxpayer/representative that the case
has been returned to the originating func-
tion, in whole or in part, for further de-
velopment. In addition, the supplemen-
tal report prepared by the originating func-
tion reflecting the additional development
that was done must be shared with the tax-
payer/representative.
(7)Submission of New Information.If
new information or evidence is submitted
to Appeals by the taxpayer/representative,
the principles set forth in IRM 8.2.1.9.3
should be followed. In general, the orig-
inating function should be given the op-
portunity to timely review and comment
on significant new information presented
by the taxpayer. “Significant new informa-
tion” is information of a nonroutine nature
that, in the judgment of Appeals, may have
had an impact on the originating function’s
findings or that may impact Appeals’ in-
dependent evaluation of the strengths and
weaknesses of the issues, including the
litigating hazards relating to those issues.
Normally, the review can be accomplished
by sending the material to the originating
function while Appeals retains jurisdiction
of the case and proceeds with resolution
of other issues. Alternatively, Appeals
may return the entire case to the originat-
ing function and relinquish jurisdiction, in
its sole discretion, in accordance with the
IRM. The taxpayer/representative must be
timely notified when a case is returned to
the originating function or new material
not available during initial consideration
has been sent to the originating function.
The results of the originating function’s re-
view of the new information must be com-
municated to the taxpayer/representative.
(8)New Issues Raised in Appeals.Ap-
peals will continue to follow the principles
of Policy Statement 8–2 and the “General
Guidelines” outlined in IRM 8.6.1.6.2 in
deciding whether to raise a new issue.
Under Appeals’ new issue policy, new
issues must continue to meet the “mate-
rial” and “substantial” tests set forth in
the IRM. Communications will be in ac-
cordance with the guiding principles in
section 2.02(6), above.
(9)Refund Claims Filed During the Ap-
peals Process.Refund claims filed dur-
ing the Appeals process generally are re-
ferred to the originating function with a
request for expedited review. Referrals
of these refund claims to the originating
function involves no discussion about the
strengths and weaknesses of the issue, and
thus, fall within the ministerial, adminis-
trative, or proceduralmatters exception set
forth in section 2.03(2), above. The tax-
payer/representative must be timely noti-
fied when the refund claim is referred to
the originating function. The results of the
originating function’s review of the refund
claim must be communicated to the tax-
payer/representative.
(10)Collection Due Process.
(a)Collection Cases In General.The
principles applicable to discussions be-
tween Appeals employees and officials
in originating functions apply to cases
that originate in the Collection function,
such as CDP appeals, collection appeals
program cases, offers in compromise, and
trust fund recovery penalty cases. These
discussions must be held in accordance
with the guiding principles in section
2.02(6), above.
(b)Ministerial, Administrative, or Pro-
cedural Matters.Sections 6320 and 6330
of the Internal Revenue Code provide
that, as part of a CDP hearing, the Ap-
peals officer must obtain verification that
the requirements of any applicable law
or administrative procedure have been
met. Communications seeking to verify
compliance with legal and administrative
requirements fall within the ministerial,
administrative, or procedural matters
exception set forth in section 2.03(2),
above. Similarly, communications with
respect to verification of assets/liabilities
involving a collection alternative during
a CDP hearing fall within the ministe-
rial, administrative,or procedural matters
exception. Therefore, those communica-
tions are permissible without providing
the taxpayer/representative an opportunity
to participate.
(c)Remand By Tax Court.As provided
in section 2.06(2)(a), below, theex parte
March 5, 20124602012–10 I.R.B.

communication rules do not apply to com-
munications between Appeals and Coun-
sel with respect to cases docketed in the
Tax Court. CDP cases that are remanded
by the Tax Court for further considera-
tion (or reconsideration) by Appeals fall
into a different category, however. Al-
though remanded CDP cases remain un-
der the Tax Court’s jurisdiction, the Ap-
peals employee assigned to the remanded
CDP case must be impartial in the review
of the remanded case within the mean-
ing of section 6320(b)(3) or 6330(b)(3),
as applicable, requiring the application of
similar considerations to those underlying
theex partecommunication rules. There-
fore, the following guidelines apply to re-
manded CDP cases.
(i)Instructions Regarding the Remand.
(A) The Counsel attorney who handled
the CDP case in the Tax Court should pre-
pare a written memorandum to Appeals
explaining the reasons why the court re-
manded the case to Appeals, any special
requirements in the court’s Order (e.g.,
whether and to what extent a new con-
ference should be held; whether the case
must be reassigned to a different Appeals
employee than the Appeals employee
who handled the original CDP case; and
what material Appeals is prohibited from
reviewing, if any), and what issues the
court has ordered Appeals to address on
remand. The memorandum should not
discuss the credibility of the taxpayer or
the accuracy of the facts presented by the
taxpayer. A copy of the memorandum will
be provided by the Counsel attorney to the
taxpayer/representative.
(B) Communications to Appeals from
the Counsel attorney handling the Tax
Court case regarding deadlines relating
to the remanded CDP case fall within the
ministerial, administrative, or procedural
matters exception, and thus, are permissi-
ble communications that may take place
without providing the taxpayer/represen-
tative an opportunity to participate.
(ii)Legal Advice.
A request by Appeals for legal advice
in connection with a remanded CDP case
may be handled by the same Counsel at-
torney who is handling the Tax Court case.
(iii)Review of Supplemental Notice By
Counsel.The Counsel attorney handling
the Tax Court case should review the sup-
plemental notice of determination before it
is issued to the taxpayer. This review is
for the limited purpose of ensuring compli-
ance with the Tax Court’s remand Order.
(11)Post-Settlement Conference.The
post-settlement conference with Examina-
tion is held after the case has been closed
by Appeals. The purpose of the conference
is to inform Examination about the settle-
ment of issues to ensure that Examination
fully understands the settlement and the ra-
tionale for the resolution. The conference
provides an opportunity for Appeals to dis-
cuss with Examination the application of
Delegation Order 236, or subsequent del-
egation orders (i.e., settlement by Exami-
nation consistent with a prior Appeals’ set-
tlement with the same or related taxpayer).
The tax periods that are the subject of the
post-settlement conference have been fi-
nalized and the participants are cautioned
to limit discussion to the results in the
closed cycle. Any discussion of the resolu-
tion of issues present in the closed periods
does not compromise the independence of
Appeals, and, thus, post-settlement con-
ferences between Appeals and Examina-
tion are permissible without giving the tax-
payer/representative an opportunity to par-
ticipate. In contrast, any discussion that
addresses open cycles in either Examina-
tion or Appeals with respect to the same
or a related taxpayer is subject to the guid-
ance provided in this revenue procedure
relating to communications with the orig-
inating function contained in section 2.03,
above.
(12)Review of Coordinated Issues.
(a)Cases in Compliance’s Jurisdiction.
Delegation Order 4–25 provides the Com-
pliance function with limited authority to
settle certain issues with Appeals’ review
and approval. Specifically, this limited
settlement authority applies with respect
to issues that are coordinated, for exam-
ple, in the Technical Advisor Program (or
any successor program), and are the sub-
ject of either an Appeals Settlement Guide-
line (ASG) or an Appeals Settlement Posi-
tion (ASP). Under existing procedures, the
proposed settlement generally must be ap-
proved by the Examination Technical Ad-
visor and the Appeals Technical Guidance
Coordinator (TGC) for the issue in ques-
tion. The purpose of the required coordi-
nation is to ensure that the resolution by
Examination is consistent with the analy-
sis set forth in the ASG or ASP. Commu-
nications between Compliance employees
and the TGC in connection with satisfying
this coordination requirement are permis-
sible without giving the taxpayer/represen-
tative an opportunity to participate.
(b)Cases in Appeals’ Jurisdiction.
Under existing procedures, Appeals’ set-
tlements involving coordinated issues,
including but not limited to issues that
are the subject of either an ASG or an
ASP, must be reviewed and concurred by
the TGC for that issue. The TGC serves
as a resource person for the Appeals or-
ganization. The purpose of the required
coordination is to ensure that resolutions
of coordinated issues are consistent nation-
wide. Communications between Appeals
employees and the TGC are entirely inter-
nal within Appeals, and, consequently, the
ex partecommunication rules do not ap-
ply to those communications. See section
2.01(1)(a)(ii).
(13)Taxpayers with Multiple Open
Cases.Special considerations are required
when a taxpayer has multiple open cases.
This situation may arise, for example,
when the taxpayer has cases involving
the same issue pending with different IRS
functions, including Counsel, which is
common with respect to large corporate
taxpayers, or the taxpayer has multiple
cases involving the same issue pending
with Appeals in both docketed and non-
docketed status. The IRS has an interest
in coordinating the handling of open cases
regarding the same taxpayer to ensure
that the responsible offices have complete
information to make informed decisions
about the cases within their respective
jurisdictions.
Discussions held with respect to open
cases must be in accordance with the guid-
ing principles in section 2.02(6) and the
operative rules set forth in section 2.03,
above, as well as sections 2.06, 2.07, and
2.08, below. Theex partecommunication
rules may not apply to some of the open
cases, such as those docketed in the Tax
Court or under the jurisdiction of the De-
partment of Justice, see sections 2.06(2)
and 2.08(2), below, but may apply to one
or more other open cases of the taxpayer.
.04Participation in Multifunctional
Meetings.
(1)General Rule.Multifunctional
meetings are meetingsthat include repre-
sentatives from various IRS components,
usually Compliance and Counsel. A
meeting of the members of an Issue Man-
agement Team (IMT), or its successor
2012–10 I.R.B.461March 5, 2012

type function, is an example of this type of
meeting. These multifunctional meetings
usually involve general discussions of how
to handle technical issues or procedural
matters. Appeals does not participate
on IMTs but can be briefed by IMTs, as
long as the discussion remains generic
rather than case-specific. Similarly, all
participants in any type of multifunctional
meeting need to be cognizant of theex
partecommunication rules and ensure that
taxpayer-specific discussions do not take
place while Appeals is present.
As provided in sections 2.02(2) and (6),
above, Appeals must have access to the
views and analysis of stakeholders so that
they can make fully-informed, indepen-
dent judgments. Listening to generic, non-
case-specific discussions involving other
IRS functions, including Counsel, in the
context of a multifunctional meeting pro-
vides Appeals with an important forum in
which to meet, in part, these needs, and en-
ables Appeals to effectively serve as the
administrative settlement arm of the IRS.
Accordingly, Appeals may attend multi-
functional meetings subject to the restric-
tions in section 2.04(2), below, regarding
case-specific discussions.
(a)Settlement Initiatives.To address
particular issues or types of transactions,
the IRS sometimes develops settlement
initiatives. Appeals’ perspective in the
formulation of the terms contained in
these settlement initiatives is essential to
the IRS’ ability to resolve cases without
litigation. Therefore, Appeals is permitted
to work collaboratively with Compliance
and Counsel to assist with the develop-
ment of these settlement initiatives by
providing input to other IRS functions,
including originating functions and Coun-
sel, in generic discussions of issues and
transactions. Any case-specific discus-
sions continue to be prohibited, unless the
taxpayer/representative is given an oppor-
tunity to participate.
(2)Case-Specific Discussions.Any
discussion of a specific taxpayer’s case in
connection with a multifunctional meeting
should be postponed until such time as
it can be conducted outside of Appeals’
presence. The preceding sentence does
not apply with respect to post-settlement
conferences, as discussed in more detail in
section 2.03(11), above.
.05Alternative Dispute Resolution.
(1)Cases Not in Appeals’ Jurisdic-
tion.Certain alternative dispute resolu-
tion (ADR) programs, such as fast track
settlement, involve the use of Appeals
employees to facilitate settlement while
the case is still in Examination’s juris-
diction. See,e.g.,Rev. Proc. 2003–40,
2003–1 C.B. 1044 (Large and Mid-Size
Business Fast Track Settlement Program);
Announcement 2011–5, 2011–4 I.R.B.
430 (Small Business/Self Employed Fast
Track Settlement Program); Announce-
ment 2008–105, 2008–2 C.B. 1219 (Tax
Exempt and Government Entities Fast
Track Settlement Program); and subse-
quent published guidance regarding these
or similar programs. Private caucuses be-
tween the mediator and individual parties
are often a key element in the process.
The prohibition againstex partecommu-
nications between Appeals employees and
other IRS employees does not apply be-
cause Appeals employees are not acting
in their traditional Appeals’ settlement
role. Consequently, Appeals employees
may haveex partecommunications with
an originating function in connection with
any Fast Track or similar ADR proceed-
ings. For a discussion of communications
between Appeals and Counsel, see sec-
tion 2.06, below. In contrast, theex parte
communication rulesapply in the context
of Appeals’ consideration of an issue un-
der the Early Referral to Appeals process,
Rev. Proc. 99–28, 1999–2 C.B. 109, or
the Accelerated Issue Resolution program,
Rev. Proc. 94–67, 1994–2 C.B. 800 (or
subsequent published guidance regarding
these programs).Ex partecommunica-
tions are not an integral part of those types
of ADR procedures because jurisdiction
has shifted to Appeals in those cases.
(2)Post-Appeals Mediation.Theex
partecommunication rules do not apply
to communications in connection with
Post-Appeals Mediation proceedings.
Revenue Procedure 2009–44, 2009–2
C.B. 462, describes an optional Appeals’
mediation procedure that is available after
Appeals’ settlement discussions are un-
successful and when all other issues are
resolved except for the issue(s) for which
mediation is being requested. See also
Announcement 2011–6, 2011–4 I.R.B.
433. The Appeals employee who serves
as the mediator in these proceedings to
promote settlement negotiations between
the parties, who are the taxpayer and Ap-
peals, will not have been a member of the
Appeals’ team that considered the case.
Section6.02ofRev.Proc. 2009–44 states
that “the parties are encouraged to include,
in addition to the required decision-mak-
ers, those persons with information and
expertise that will be useful to the deci-
sion-makers and the mediator.” 2009–2
C.B. at 463. Section 6.02 further provides
that “Appeals has the discretion to com-
municateex partewith the IRS Office of
Chief Counsel, the originating function,
e.g., Compliance, or both, in prepara-
tion for or during the mediation session.
Appeals also has the discretion to have
Counsel, the originating function, or both,
participate in the mediation proceeding.”
Id.
.06Communications with Counsel.
(1)General Rule.As provided in sec-
tion 2.02(3), above, the Chief Counsel is
the legal adviser to the Commissioner and
his or her officers and employees (includ-
ing employees of Appeals) on all mat-
ters pertaining to the interpretation, ad-
ministration, and enforcement of the in-
ternal revenue laws and related statutes.
As part of the legal advice process, attor-
neys in the Office of Chief Counsel exer-
cise independent judgment in addressing
the strengths and weaknesses of the par-
ties’ respective positions, the hazards of
litigation, the quality and admissibility of
the evidence, and how a judge might react
to the evidence or particular arguments.
Appeals employees are entitled to ob-
tain legal advice from attorneys in the Of-
fice of Chief Counsel and, except as pro-
vided below, are permitted to do so un-
der theex partecommunication rules. Ap-
peals employees generally are not bound
by the legal advice that they receive from
theOfficeofChiefCounsel. Thelegal
advice is but one factor that Appeals will
take into account in its consideration of the
case. Appeals employees independently
evaluate the strengths and weaknesses of
the specific issues in the cases assigned
to them and make an independent judg-
ment concerning the overall strengths and
weaknesses of the cases they are review-
ing and the hazards of litigation. See IRM
8.6.2.6.4 and 8.6.4.1.
Appeals employeesshould not commu-
nicateex parteregarding an issue in a case
pending before them with a field attorney
if the field attorney personally provided le-
March 5, 20124622012–10 I.R.B.

gal advice regarding the same issue in the
same case to the originating function or
personally served as an advocate for the
originating function regarding the same is-
sue in the same case. This restriction only
applies while Appeals is performing its du-
ties of evaluating the strengths and weak-
nesses of the specific issues in specific
cases and the overall hazards of litigation
for those cases. If an Appeals employee is
not functioning in that capacity, for exam-
ple, if an Appeals employee is preparing a
statutory notice of deficiency, this restric-
tion does not apply.
(2)Docketed Cases.
(a)In General.Theex partecommu-
nication rules do not apply to communica-
tions between Appeals and Counsel in con-
nection with cases docketed in the United
States Tax Court. Communications be-
tween Appeals and the originating func-
tion in docketed cases are still subject to
theex partecommunication rules if the
case is within Appeals’ settlement jurisdic-
tion.
(b)Collection Due Process Cases.For
a discussion of the application of theex
partecommunication rules to CDP cases
remanded by the Tax Court, see section
2.03(10)(c).
.07Communications with Other IRS
Functions.
(1)Outside Consultants and Experts.
Outside consultants or experts under con-
tract with the IRS, other than those hired
directly by Appeals, are treated as IRS em-
ployees for purposes of this revenue proce-
dure. Consequently, communications be-
tween Appeals and these outside consul-
tants or experts are subject to theex parte
communication rules. See section 2.02(6).
In contrast, communications between Ap-
peals and outside consultants or experts
hired by Counsel in docketed cases are
not subject to theex partecommunication
rules. See section 2.06(2).
(2)Criminal Investigation.Criminal
Investigation (CI) is not an originating
function as defined in section 2.01(2),
above, because Appeals does not review
CI’s determinations. Communications
between Appeals and CI are generally
ministerial in nature. For example, Ap-
peals and CI may confirm the existence
of a CI investigation, which would freeze
Appeals’ action, or Appeals may review
a CI closed case to find information rele-
vant to the case that Appeals is reviewing.
Similarly, CI may communicateex parte
with Appeals to obtain information or
documents in Appeals’ possession that
may be relevant to the activities of CI
or to ensure that Appeals’ actions will
not interfere with any ongoing criminal
investigation or be inconsistent with any
prior criminal investigations. Since these
types of communications do not address
the strengths or weaknesses of an open
case, they are permissible under section
2.02(6), above. For a discussion of com-
munications between Appeals and CI that
go beyond the above matters, see section
2.03(13), above.
(3)Competent Authority.The United
States Competent Authority is responsi-
ble for the timely and effective implemen-
tation of tax treaties and tax information
exchange agreements. Communications
between Appeals and IRS employees at
the request or on behalf of the competent
authority relating to a taxpayer’s request
for relief under competent authority pro-
cedures, see Rev. Proc. 2006–54, 2006–2
C.B. 1035, are permissible. It is presumed
that the competent authority is acting at the
request and with the consent of the tax-
payer. Communications between Appeals
and IRS employees that are unrelated to
the taxpayer’s request for relief under com-
petent authority procedures, however, con-
tinuetobesubjecttotheex partecommu-
nication rules.
(4)Taxpayer Advocate Service.Com-
munications with Appeals that are initiated
by the Taxpayer Advocate Service (TAS)
are permissible. It is presumed that the
TAS employees are acting at the request
and with the consent of the taxpayer. Due
to the nature of their role within the IRS
and their relationship with the taxpayer,
TAS employees may discuss with Appeals
the strengths and weaknesses of the par-
ties’ respective positions and may advo-
cate for a particular result in the case.
(5)Commissioner and Other IRS Offi-
cials with Overall Supervisory Responsi-
bilities.The Commissioner is responsi-
ble for administering, managing, conduct-
ing, directing, and supervising the execu-
tion and application of the internal rev-
enue laws or related statutes and tax con-
ventions to which the United States is a
party. I.R.C. § 7803(a)(2)(A). In the course
of exercising that statutory responsibility,
the Commissioner and those officials, such
as the Deputy Commissioners, who have
overall supervisory responsibility for IRS
operations, may communicate with Ap-
peals about specific cases or issues and
may direct that other IRS officials, includ-
ing Counsel officials, participate in meet-
ings or discussions about cases or issues
without providing the taxpayer/representa-
tive an opportunity to participate.
.08Communications with Other Gov-
ernmental Entities.
(1)Joint Committee on Taxation.Sec-
tion 6405 requires the IRS to submit a
report to the Joint Committee on Taxa-
tion concerning any refund or credit in
excess of the statutory amount, and the
IRS must wait at least 30 days after sub-
mitting the report before making the re-
fund or credit that is the subject of the
report. The Joint Committee or its staff
will occasionally question a settlement or
raise a new issue. Communications be-
tween Appeals and the Joint Committee or
its staff are permissible without providing
the taxpayer/representative an opportunity
to participate. Theex partecommunica-
tion rules only apply to communications
between Appeals and other IRS employ-
ees. Since the Joint Committee is part of
the Legislative Branch, not the IRS, theex
partecommunication rules do not apply to
communications with the Joint Committee
or its staff.
(2)Department of Justice.Appeals
may communicate with employees of the
Department of Justice, including the U.S.
Attorneys’ offices, without giving the
taxpayer/representative an opportunity to
participate. Theex partecommunication
rules only apply to communications be-
tween Appeals and other IRS employees.
Since the Department of Justice is not part
of the IRS, theex partecommunication
rules do not apply to communications with
the Department of Justice.
.09Monitoring Compliance.It is the
responsibility of all IRS employees to en-
sure compliance with theex partecom-
munication rules. All IRS employees will
make every effort to promptly terminate
any communications not permitted by the
ex partecommunication rules. To improve
understanding of theex partecommuni-
cation rules, Appeals and other impacted
IRS employees, including Counsel, will
receive training on the contents of this rev-
enue procedure and will be encouraged to
seek managerial guidance whenever they
have questions about the propriety of anex
2012–10 I.R.B.463March 5, 2012

partecommunication. Additionally, man-
agers will consider feedback from other
functions and will be responsible for mon-
itoring compliance during their day-to-day
interaction with employees, as well as dur-
ing workload reviews and closed case re-
views. Breaches will be addressed in ac-
cordance with existing administrative and
personnel processes on a case-by-case ba-
sis.
.10Remedies Available to Taxpayers.
(1)General Rule.Theex partecom-
munication rules set forth in this revenue
procedure do not create substantive rights
affecting the taxpayer’s tax liability or the
IRS’ ability to determine, assess, or col-
lect that tax liability, including statutory
interest and any penalties, if applicable.
The IRS takes theex partecommunica-
tion rules seriously and will continue its
efforts to ensure compliance through train-
ing and oversight. Most breaches of theex
partecommunication rules may be cured
by timely notifying the taxpayer/represen-
tative of the situation, sharing the commu-
nication or information in question, and af-
fording the taxpayer/representative an op-
portunity to respond. Consequently, Ap-
peals shall notify the taxpayer/representa-
tive of the breach and request input from
the taxpayer/representative regarding the
appropriate remedy for a breach of theex
partecommunication rules. After consid-
ering the specific facts and discussing the
matter with the taxpayer/representative, as
appropriate, Appeals may determine that
an additional remedy is warranted, includ-
ing reassigning the case to a different Ap-
peals/Settlement Officer who has had no
prior involvement in the case. The specific
administrative remedy, however, that may
be made available in any particular case
is within the sole discretion of Appeals.
The deciding official for the determination
of the appropriate remedy for a breach of
theex partecommunication rules will be
a second-level manager. For a discussion
of court directed cures for breaches of the
ex partecommunication rules, see section
2.10(2), below.
(2)Collection Due Process Cases.If
the Tax Court determines that a breach
of theex partecommunication rules oc-
curred during the course of a CDP hearing
in Appeals, the Tax Court may remand the
case to Appeals for either a new or a sup-
plemental hearing, depending upon what
steps the court concludes are necessary to
rectify the breach. See section 2.03(10)(c),
above.
SECTION 3. EFFECT ON OTHER
DOCUMENTS
Rev. Proc. 2000–43, 2000–2 C.B. 404,
is amplified, modified, and superseded.
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective
for communications between Appeals
employees and other IRS employees, in-
cluding Counsel, that take place after
May 15, 2012.
SECTION 5. DRAFTING
INFORMATION
The principal authors of this revenue
procedure are Henry S. Schneiderman,
Office of the Associate Chief Counsel
(Procedure and Administration) and
April Adams-Johnson, Office of
Appeals.For further information
regarding this revenue procedure, contact
Mr. Schneiderman at (202) 622–3400 (not
a toll-free number) or Ms. Adams-Johnson
at (203) 781–3143 (not a toll-free number).
March 5, 20124642012–10 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
DC—Dummy Corporation.
DE—Donee.
Del. Order
—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2012–10 I.R.B.iMarch 5, 2012

Numerical Finding List
1
Bulletins 2012–1 through 2012–10
Announcements:
2012-1, 2012-1 I.R.B.249
2012-2, 2012-2 I.R.B.285
2012-3, 2012-4 I.R.B.335
2012-4, 2012-4 I.R.B.335
2012-5, 2012-5 I.R.B.348
2012-6, 2012-6 I.R.B.366
2012-7, 2012-6 I.R.B.367
2012-8, 2012-7 I.R.B.373
2012-9, 2012-7 I.R.B.377
Notices:
2012-1, 2012-2 I.R.B.260
2012-3, 2012-3 I.R.B.289
2012-4, 2012-3 I.R.B.290
2012-5, 2012-3 I.R.B.291
2012-6, 2012-3 I.R.B.293
2012-7, 2012-4 I.R.B.308
2012-8, 2012-4 I.R.B.309
2012-9, 2012-4 I.R.B.315
2012-10, 2012-5 I.R.B.343
2012-11, 2012-5 I.R.B.346
2012-12, 2012-6 I.R.B.365
2012-13, 2012-9 I.R.B.421
2012-14, 2012-8 I.R.B.411
2012-15, 2012-9 I.R.B.424
2012-16, 2012-9 I.R.B.427
2012-17, 2012-9 I.R.B.430
2012-18, 2012-10 I.R.B.438
2012-19, 2012-10 I.R.B.440
2012-21, 2012-10 I.R.B.450
Proposed Regulations:
REG-109369-10, 2012-9 I.R.B.434
REG-130302-10, 2012-8 I.R.B.412
REG-149625-10, 2012-2 I.R.B.279
REG-102988-11, 2012-4 I.R.B.326
REG-124627-11, 2012-8 I.R.B.417
REG-130777-11, 2012-5 I.R.B.347
Revenue Procedures:
2012-1, 2012-1 I.R.B.1
2012-2, 2012-1 I.R.B.92
2012-3, 2012-1 I.R.B.113
2012-4, 2012-1 I.R.B.125
2012-5, 2012-1 I.R.B.169
2012-6, 2012-1 I.R.B.197
2012-7, 2012-1 I.R.B.232
2012-8, 2012-1 I.R.B.235
2012-9, 2012-2 I.R.B.261
2012-10, 2012-2 I.R.B.273
2012-11, 2012-7 I.R.B.368
Revenue Procedures— Continued:
2012-12, 2012-2 I.R.B.275
2012-13, 2012-3 I.R.B.295
2012-14, 2012-3 I.R.B.296
2012-15, 2012-7 I.R.B.369
2012-16, 2012-10 I.R.B.452
2012-17, 2012-10 I.R.B.453
2012-18, 2012-10 I.R.B.455
Revenue Rulings:
2012-1, 2012-2 I.R.B.255
2012-2, 2012-3 I.R.B.286
2012-3, 2012-8 I.R.B.383
2012-4, 2012-8 I.R.B.386
2012-5, 2012-5 I.R.B.337
2012-6, 2012-6 I.R.B.349
2012-7, 2012-6 I.R.B.362
Treasury Decisions:
9559, 2012-2 I.R.B.252
9560, 2012-4 I.R.B.299
9561, 2012-5 I.R.B.341
9562, 2012-5 I.R.B.339
9563, 2012-6 I.R.B.354
9565, 2012-8 I.R.B.378
9566, 2012-8 I.R.B.389
9567, 2012-8 I.R.B.395
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin
2011–52, dated December 27, 2011.
March 5, 2012ii2012–10 I.R.B.

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2012–1 through 2012–10
Announcements:
2002-44
Supplemented by
Notice 2012-13, 2012-9 I.R.B.421
2011-63
Corrected by
Ann. 2012-9, 2012-7 I.R.B.377
Notices:
2006-87
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-25
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2007-77
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2008-107
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2010-27
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2010-88
As modified by Ann. 2011-40, is superseded by
Notice 2012-1, 2012-2 I.R.B.260
2011-8
Superseded by
Notice 2012-19, 2012-10 I.R.B.440
2011-28
Superseded by
Notice 2012-9, 2012-4 I.R.B.315
Revenue Procedures:
2000-43
Amplified, modified and superseded by
Rev. Proc. 2012-18, 2012-10 I.R.B.455
2003-61
Superseded by
Notice 2012-8, 2012-4 I.R.B.309
2007-44
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2011-1
Superseded by
Rev. Proc. 2012-1, 2012-1 I.R.B.1
Revenue Procedures— Continued:
2011-2
Superseded by
Rev. Proc. 2012-2, 2012-1 I.R.B.92
2011-3
Superseded by
Rev. Proc. 2012-3, 2012-1 I.R.B.113
2011-4
Superseded by
Rev. Proc. 2012-4, 2012-1 I.R.B.125
2011-5
Superseded by
Rev. Proc. 2012-5, 2012-1 I.R.B.169
2011-6
Superseded by
Rev. Proc. 2012-6, 2012-1 I.R.B.197
2011-7
Superseded by
Rev. Proc. 2012-7, 2012-1 I.R.B.232
2011-8
Superseded by
Rev. Proc. 2012-8, 2012-1 I.R.B.235
2011-9
Superseded by
Rev. Proc. 2012-9, 2012-2 I.R.B.261
2011-10
Superseded by
Rev. Proc. 2012-10, 2012-2 I.R.B.273
2011-37
Obsoleted in part by
Rev. Proc. 2012-16, 2012-10 I.R.B.452
2011-40
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-49
Modified by
Ann. 2012-3, 2012-4 I.R.B.335
2011-50
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2011-51
Corrected by
Ann. 2012-6, 2012-6 I.R.B.366
2012-8
Corrected by
Ann. 2012-7, 2012-6 I.R.B.367
Revenue Rulings:
92-19
Supplemented in part by
Rev. Rul. 2012-6, 2012-6 I.R.B.349
Revenue Rulings— Continued:
2008-40
Modified by
Notice 2012-6, 2012-3 I.R.B.293
2011-1
Modified by
Notice 2012-6, 2012-3 I.R.B.293
Treasury Decision:
9517
Corrected by
Ann. 2012-4, 2012-4 I.R.B.335
Ann. 2012-5, 2012-5 I.R.B.348
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2011–27 through 2011–52 is in Internal Revenue Bulletin 2011–52, dated December 27,
2011.
2012–10 I.R.B.iiiMarch 5, 2012

March 5, 20122012–10 I.R.B.

2012–10 I.R.B.March 5, 2012

March 5, 20122012–10 I.R.B.

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