Internal Revenue Bulletin 2000-12 (PDF rendition): IRS Announcements

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

INCOME TAX
Rev. Rul. 2000–13, page 774.
Fringe benefits aircraft valuation formula.For purposes
of section 1.61–21(g) of the Income Tax Regulations, relat-
ing to the rule for valuing noncommercial flights on em-
ployer-provided aircraft, the Standard Industry Fare Level
(SIFL) cents-per-mile rates and terminal charges in effect for
the first half of 2000 are set forth.
Rev. Rul. 2000–14, page 779.
LIFO; price indexes; department stores.The January 2000
Bureau of Labor Statistics price indexes are accepted for use by
department stores employing the retail inventory and last-in,
first-out inventory methods for valuing inventories for tax years
ended on, or with reference to, January 31, 2000.
Rev. Rul. 2000–15, page 774.
Election in respect to losses attributable to a disaster.
This ruling lists the areas declared by the President to qualify
as major disaster or emergency areas during 1999 under the
Disaster Relief and Emergency Assistance Act.
Rev. Rul. 2000–16, page 780.
Interests rates; underpayments and overpayments.The
rate of interest determined under section 6621 of the Code for
the calendar quarter beginning April 1, 2000, will be 9 percent
for overpayments (8 percent in the case of a corporation), 9
percent for underpayments, and 11 percent for large corporate
underpayments. The rate of interest paid on the portion of a
corporate overpayment exceeding $10,000 is 6.5 percent.
Notice 2000–16, page 826.
Differential earnings rate for mutual life insurance com-
panies.This notice sets forth the tentative “differential earn-
ings rate” for 1999 and the “recomputed differential earnings
rate” for 1998 under section 809 of the Code.
EXEMPT ORGANIZATIONS
REG–209601–92, page 829.
Proposed regulations under section 513 of the Code relate
to the tax treatment of sponsorship payments received by
exempt organizations. A public hearing is scheduled for June
21, 2000.
Announcement 2000–15, page 837.
A list is provided of organizations that no longer qualify as or-
ganizations to which contributions are deductible under sec-
tion 170 of the Code.
ADMINISTRATIVE
Rev. Proc. 2000–19, page 785.
Substitute printed, computed-prepared, and com-
puter-generated tax forms and schedules.Require-
ments are set forth for privately designed and printed fed-
eral tax forms and conditions under which the Service will
accept computer-prepared and computer-generated tax
forms and schedules. Rev. Proc. 98–65 superseded.
Notice 2000–15, page 826.
Listed transactions.This notice lists certain transactions
that the Service has determined to be tax avoidance transac-
tions and identifies the transactions as “listed transactions” for
purposes of section 1.6011–4T(b)(2) of the Temporary In-
come Tax Regulations and section 301.6111–2T(b)(2) of the
Temporary Procedure and Administration Regulations.
Internal Revenue
bbuulllleettiinn
Bulletin No. 2000–12
March 20, 2000
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.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page ii.
(Continued on the next page)

Notice 2000–17, page 827.
Due date; 1999 federal tax returns; Patriots’ Day.This
notice extends to April 18, 2000, the due date for filing
1999 federal tax returns and requests for extensions, and
for making federal tax payments for taxpayers residing in
certain parts of the northeast due to Patriots’ Day, a legal
holiday in Massachusetts and Maine.
Announcement 2000–12, page 835.
The Treasury Department and Internal Revenue Service have
issued three sets of temporary and proposed regulations re-
quiring promoters to register confidential corporate tax shel-
ters and to maintain lists of investors, and requiring corpo-
rate taxpayers to disclose large transactions that have char-
acteristics common to tax shelters. In addition, the Service
has created an Office of Tax Analysis to serve as the focal
point for efforts to gather information relating to tax shelter
activity and to coordinate appropriate responses.
Announcement 2000–16, page 837.
This announcement is a reprint of proposed regulations
REG–101492–98 (2000–3 I.R.B. 326) with typographical er-
rors corrected.
March 20, 20002000–12 I.R.B.

2000–12 I.R.B.March 20, 2000
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, 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 consolidated 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,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the 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 pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions, and Subpart B, Legislation and Related
Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The first 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 first Bulletin of the succeeding semi-
annual period, respectively.
The IRS Mission
Provide America’s taxpayers top quality service by help-
ing them understand and meet their tax responsibilities
and by applying the tax law with integrity and fairness to
all.
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

March 20, 20007742000–12 I.R.B.
Section 61.—Gross Income
Defined
26 CFR 1.61–21: Taxation of fringe benefits.
Fringe benefits aircraft valuation
formula.For purposes of section
1.61–21(g) of the Income Tax Regula-
tions, relating to the rule for valuing non-
commercial flights on employer-provided
aircraft, the Standard Industry Fare Level
(SIFL) cents-per-mile rates and terminal
charges in effect for the first half of 2000
are set forth.
Rev. Rul. 2000–13
For purposes of the taxation of fringe
benefits under section 61 of the Internal
Revenue Code, section 1.61–21(g) of the
Income Tax Regulations provides a rule
for valuing noncommercial flights on em-
ployer-provided aircraft. Section
1.61–21(g)(5) provides an aircraft valua-
tion formula to determine the value of
such flights. The value of a flight is de-
termined under the base aircraft valuation
formula (also known as the Standard In-
dustry Fare Level formula or SIFL) by
multiplying the SIFL cents-per-mile rates
applicable for the period during which the
flight was taken by the appropriate air-
craft multiple provided in section
1.61–21(g)(7) and then adding the applic-
able terminal charge. The SIFL cents-per-
mile rates in the formula and the terminal
charge are calculated by the Department
of Transportation and are reviewed semi-
annually.
The following chart sets forth the ter-
minal charges and SIFL mileage rates:
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Period During WhichTerminalSIFL Mileage
the Flight Is Taken ChargeRates
1/1/00 - 6/30/00$32.98Up to 500 miles
= $.1804 per mile
501-1500 miles
= $.1376 per mile
Over 1500 miles
= $.1323 per mile
DRAFTING INFORMATION
The principle author of this revenue rul-
ing is Kathleen Edmondson of the Office of
the Associate Chief Counsel (Employee
Benefits and Exempt Organizations). For
further information regarding this revenue
ruling, contact Ms. Edmondson on (202)
622-6080 (not a toll-free call).
Section 165.—Losses
26 CFR 1.165–11: Election in respect of losses
attributable to a disaster.
Election in respect of losses attribut-
able to a disaster.This ruling lists the
areas declared by the President to qualify
as major disaster or emergency areas dur-
ing 1999 under the Disaster Relief and
Emergency Assistance Act.
Rev. Rul. 2000–15
Under § 165(i) of the Internal Revenue
Code, if a taxpayer suffers a loss attribut-
able to a disaster occurring in an area sub-
sequently determined by the President of
the United States to warrant assistance by
the Federal Government under the Disas-
ter Relief and Emergency Assistance Act,
42 U.S.C. §§ 5121–5204c (1988 & Supp.
V 1993) (the Act), the taxpayer may elect
to claim a deduction for that loss on the
taxpayer’s federal income tax return for
the taxable year immediately preceding
the taxable year in which the disaster oc-
curred. For purposes of § 165(i), a disas-
ter includes an event declared a major dis-
aster or an emergency under the Act.
Section 1.165–11(e) of the Income Tax
Regulations provides that the election to
deduct a disaster loss for the preceding year
must be made by filing a return, an
amended return, or a claim for refund on or
before the later of (1) the due date of the
taxpayer’s income tax return (determined
without regard to any extension of time to
file the return) for the taxable year in which
the disaster actually occurred, or (2) the due
date of the taxpayer’s income tax return
(determined with regard to any extension of
time to file the return) for the taxable year
immediately preceding the taxable year in
which the disaster actually occurred.
The provisions of § 165(i) apply only
to losses that are otherwise deductible
under § 165(a). An individual taxpayer
may deduct losses if they are incurred in a
trade or business, if they are incurred in a
transaction entered into for profit, or if
they are casualty losses under § 165(c)(3).
The President has determined that dur-
ing 1999 the areas listed below have been
adversely affected by disasters of suffi-
cient severity and magnitude to warrant
assistance by the Federal Government
under the Act.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Timothy Sheppard of the Office
of Assistant Chief Counsel (Income Tax
and Accounting). For further information
regarding this revenue ruling, contact
Robert M. Casey on (202) 622-4960 (not
a toll-free call).

2000–12 I.R.B.775March 20, 2000
Disaster Areas Type of Date of
in 1999DisasterDisaster
Arizona
County of MaricopaSevere storms, flooding, September 14-23
and high winds
Arkansas
Counties of Bradley, Chicot, Clay, Columbia, Drew, Faulkner, Grant, Severe storms, tornadoes, January 21-31
Greene, Hempstead, Independence, Jackson, Jefferson, Lafayette, and high winds
Lonoke, Miller, Monroe, Poinsett, Pulaski, Randolph, St. Francis,
Saline, and White; and City of Beebe in White County
California
Counties of Butte, Humboldt, Napa, Plumas, San Bernardino, Shasta, Severe firesAugust 24-
Tehama, Trinity, Tuolome, and YubaNovember 29
Colorado
Counties of Bent, Crowley, Custer, Elbert, El Paso, Fremont, Kiowa, Severe storms, April 29-May 19
Larimer, Las Animas, Otero, Pueblo, and Weld flooding, landslides,
and mudslides
Connecticut
Counties of Fairfield, Litchfield, and HartfordHigh winds, September 16-21
heavy rain and flooding
associated with
Tropical Storm Floyd
Delaware
County of New CastleHurricane FloydSeptember 15-17
Florida
Counties of Alachua, Baker, Bay, Bradford, Brevard, Broward, Calhoun, Fire hazardsApril 15-May 25
Charlotte, Clay, Collier, Columbia, Dade, De Soto, Duval, Franklin,
Gadsden, Gilchrist, Glades, Gulf, Hamilton, Hardee, Hendry, Highlands,
Hillsbrough, Holms, Indian River, Jackson, Jefferson, Lee, Leon, Levy,
Liberty, Manatee, Marion, Martin, Monroe, Nassau, Okeechobee Orange,
Osceola, Palm Beach Pinellas, Polk, Putnam, Sarasota, Seminole,
St. Lucie, Swannee, Union, Wakulla, Walton, and Washington
Counties of Brevard, Duval, Flagler, Glades, Highlands, Indian River, Hurricane FloydSeptember 13-25
Martin, Nassau, Palm Beach, St. Johns, St. Lucie, and Volusia.
Counties of Broward and DadeHurricane FloydSeptember 14-16
Counties of Brevard, Broward, Collier, Dade, Flagler, Glades, Hendry, Hurricane IreneOctober 14-24
Highlands, Indian River, Martin, Monroe, Okeechobee, Orange, Osceola,
Palm Beach, Polk, St. Lucie, Seminole, and Volusia
Counties of Charlotte, De Soto, Hardee, Hillsborough, Lake, Lee, Hurricane IreneOctober 14-24
Manatee, Pasco, Pinellas, and Sarasota
Georgia
Counties of Candler and DoolySevere storms and April 15
tornadoes
Counties of Bryan, Camden, Chatham, Glynn, Liberty, and McIntoshHurricane FloydSeptember 14-17
Illinois
Counties of Adams, Brown, Bureau, Calhoun, Cass, Champaign, Record/near January 1-15
Christian, Cook, DeWitt, Douglas, DuPage, Ford, Fulton, Greene, Grundy, record snow
Hancock, Henderson, Henry, Iroquois, Kane, Kankakee, Kendall, Knox,
Lake, La Salle, Livingston, Logan, Macon, Marshall, Mason, McDonough,

March 20, 20007762000–12 I.R.B.
McHenry, McLean, Mercer, Menard, Morgan, Moultrie, Peoria, Piatt, Pike,
Putnam, Sangamon, Schuyler, Scott, Shelby, Stark, Tazewell, Vermillion,
Warren, Will, and Woodford
County of Jo DaviessSevere storms and May 16-17
flash flooding
Indiana
Counties of Adams, Allen, Benton, Blackford, Boone, Carroll, Cass, Clay, Record/near record January 1-15
Clinton, DeKalb, Delaware, Elkhart, Fayette, Fountain, Fulton, Grant, snow
Hamilton, Hancock, Hendricks, Henry, Howard, Huntington, Jasper, Jay,
Johnson, Kosciusko, Lake, Lagrange, LaPorte, Madison, Marion, Marshall,
Miami, Montgomery, Morgan, Newton, Noble, Parke, Porter, Pulaski,
Putnam, Randolph, Rush, St. Joseph, Shelby, Starke, Steuben, Tipton,
Tippecanoe, Vermillion, Vigo, Wabash, Warren, Wayne, Wells, White,
and Whitley
Iowa
Counties of Black Hawk, Bremer, Buchanan, Butler, Chickasaw, Clayton, Severe storms, May 16-29
Clinton, Crawford, Delaware, Dubuque, Fayette, Harrison, Jones, Linn, flooding, and tornadoes
Montgomery, and Scott
Counties of Black Hawk, Bremer, Buchanan, Butler, Cerro Gordo, Severe storms and July 2-August 10
Chickasaw, Clayton, Crawford, Fayette, Floyd, Harrison, Howard, Jones, flooding
Linn, Mills, Mitchell, Montgomery, Pottawattamie, Story, Woodbury,
and Worth
Kansas
Counties of Reno, Sedgwick, and SumnerSevere storms and May 3-6
tornadoes
Louisiana
Parishes of Bossier, Caddo, Claiborne, De Soto, and WebsterSevere storms, tornadoes, April 3-7
and flooding
Maine
Counties of Androscoggin, Cumberland, Kennebec, Oxford, and SomersetHurricane FloydSeptember 16-19
Maryland
Counties of Anne Arundel, Calvert, Caroline, Cecil, Charles, Harford,Hurricane FloydSeptember 16-20
Kent, Queen Anne’s, Somerset, St. Mary’s, and Talbot
Massachusetts
County of WorcesterFireDecember 3-13
Michigan
Counties of Alcona, Allegan, Arenac, Barry, Berrien, Cass, Crawford, Near record snowJanuary 2-15
Ionia, Iosco, Jackson, Kalamazoo, Kent, Lawrence, Lenawee, Macomb,
Marquette, Mecosta, Monroe, Montmorency, Muskegeon, Newaygo,
Oakland, Oceana, Ogemaw, Osceola, Oscoda, Otsego, Ottawa, St. Joseph,
Van Buren, Washtenaw, and Wayne
Minnesota
Counties of Kittston, Marshall, Pennington, Polk, Red Lake, and RoseauSevere ice storms, March 1-May 30
flooding and
heavy rains
Counties of Aitkin, Beltrami, Cass, Clay, Cook, Hubbard, Itasca, Lake,Severe storms, winds,July 4-August 2
and St. Louisand flooding
Missouri
Counties of Andrew, Cole, Iron, Macon, Madison, and OsageSevere storms and April 3-14
flooding

Nebraska
Counties of Burt, Douglas, and WashingtonSevere storms and August 6-9
flooding
Nevada
County of ClarkSevere storms and July 8-16
flash flooding
New Hampshire
Counties of Belknap, Cheshire, and GraftonTropical Storm FloydSeptember 16-18
New Jersey
Counties of Atlantic, Bergen, Burlington, Camden, Cape May, Hurricane FloydSeptember 16-18
Cumberland, Essex, Glouscester, Hudson, Hunterdon, Mercer, Middlesex,
Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union,
and Warren
New Mexico
Counties of Dona Ana, Luna, Mora, Rio Arriba, San Juan, Sandoval, and Severe storms and July 16-August 7
Sierra; and the Mescalero Apache Reservationflooding
New York
Counties of Cattaraugus, Chautauqua, Erie, Genesee, Jefferson, Lewis, Near recod snowJanuary 1-15
Niagara, Orleans, St. Lawrence, and Wyoming
Counties of Livingston, Monroe, Ontario, Orleans, Wayne, and WyomingNear record snowMarch 3-6
Counties of Albany, Dutchess, Essex, Greene, Nassau, Orange, Putnam, Hurricane FloydSeptember 16-18
Rensselaer, Rockland, Schenectady, Schoharie, Suffolk, Ulster, Warren,
and Westchester
North Carolina
Counties of Beaufort, Brunswick, Carteret, Craven, Currituck, Dare,Hurricane DennisAugust 29-
Hyde, New Hanover, Onslow, Pamlico, and PenderSeptember 11
Counties of Alamance, Anson, Beaufort, Bertie, Bladen, Brunswick, Hurricane FloydSeptember 15-
Camden, Carteret, Caswell, Chatham, Chowan, Columbus, Craven, November 2
Cumberland, Currituck, Dare, Davidson, Duplin, Durham, Edgecombe,
Forsyth, Franklin, Gates, Granville, Greene, Guilford, Halifax, Harnett,
Hertford, Hoke, Hyde, Johnston, Jones, Lee, Lenoir, Martin, Montgomery,
Moore, Nash, New Hanover, Northampton, Onslow, Orange, Pamlico,
Pasquotank, Pender, Perquimans, Person, Pitt, Randolph, Richmond,
Robeson, Rockingham, Rowan, Sampson, Scotland, Stanly, Stokes,
Tyrrell, Union, Vance, Wake, Warren, Washington, Wayne, and Wilson
North Dakota
Counties of Barnes, Benson, Bottineau, Burke, Burleigh, Cass, Cavalier, Severe storms, March 1-July 19
Dickey, Divide, Eddy, Emmons, Foster, Grand Forks, Griggs, Kidder, flooding, snow and ice,
LaMoure, Logan, McHenry, McIntosh, McLean, Mercer, Morton, ground saturation,
Mountrail, Nelson, Pembina, Pierce, Ramsey, Ransom, Renville, landslides, mudslides,
Richland, Rolette, Sargent, Sheridan, Sioux, Steele, Stutsman, Towner, and tornadoes
Traill, Walsh, Ward, Wells, and Williams; and the Indian Reservations of
the Spirit Lake Sioux Tribe, Standing Rock Soiux (that portion of the
reservation that lies within the State of North Dakota), Three Affiliated
Tribes, and Turtle Mountain Band of Chippewa
Oklahoma
Counties of Caddo, Canadian, Cleveland, Craig, Creek, Grady, Kingfisher, Tornadoes and severe May 3-5
Latimer, Le Flore, Lincoln, Logan, McClain, Noble, Oklahoma, storms
Okmulgee, Ottawa, Payne Pottawatomie, and Tulsa
2000–12 I.R.B.777March 20, 2000

Pennsylvania
Counties of Juniata and McKeanSevere stormsAugust 20-21
and flooding
Counties of Dauphin, Lycoming, Northumberland, Snyder, and UnionSevere flash floodingSeptember 6-7
associated with
Tropical Depression
Dennis
Counties of Berks, Bucks, Chester, Delaware, Lancaster, Montgomery, Hurricane FloydSeptember 16-29
Philadelphia, and York
Puerto Rico
All 78 municipalitiesHurrican LennyNovember 17-20
South Carolina
Counties Allendale, Bamberg, Barnwell, Beaufort, Berkeley, Calhoun, Hurricane FloydSeptember 14-30
Charleston, Chesterfield, Clarendon, Colleton, Darlington, Dillon,
Dorchester, Florence, Georgetown, Hampton, Horry, Jasper, Kershaw,
Lee, Lexington, Marion, Marlboro, Orangeburg, Richland, Sumter,
and Williamsburg
South Dakota
County of Shannon and the Pine Ridge Indian ReservationSevere storms,June 4-18
tornadoes, and
flooding
Tennessee
Counties of Benton, Carroll, Crockett, Decatur, Dickson, Fayette, Severe storms,January 17-
Franklin, Giles, Hardeman, Haywood, Henderson, Houston, Humphreys, tornadoes, andFebruary 1
Jackson, Lauderdale, Lawrence, Lewis, Madison, Maury, Montgomery, high winds
Perry, Stewart, Warren, and Wayne
Counties of Cheatham, Chester, Davidson, Decatur, Dickson, Severe storms,May 5-19
Hardeman, Hardin, Henderson, Hickman, Houston, Humphreys, tornadoes, and
Lawrence, McNairy, Perry, Stewart, Sumner, White, and Williamsonflooding
Texas
Counties of Bowie, Gregg, Red River, and TitusSevere storms May 4
and tornadoes
Counties of Anderson, Andrews, Angelina, Archer, Armstrong, Austin, Extreme fireAugust 1-
Bailey, Bandera, Bastrop, Baylor, Bell, Bexar, Blanco, Borden, Bosque, hazardsDecember 10
Bowie, Brazoria, Brazos, Brewster, Briscoe, Brown, Burleson, Burnet,
Caldwell, Calhoun, Callahan, Camp, Carson, Cass, Castro, Chambers,
Cherokee, Childress, Clay, Cochran, Coke, Coleman, Collin,
Collingsworth, Colorado, Comal, Comanche, Concho, Cooke, Coryell,
Cottle, Crane, Crockett, Crosby, Culberson, Dallam, Dallas, Dawson,
Deaf Smith, Delta, Denton, DeWitt, Dickens, Donley, Eastland, Ector,
Edwards, El Paso, Ellis, Erath, Falls, Fannin, Fayette, Fisher, Floyd,
Foard, Fort Bend, Franklin, Freestone, Gaines, Galveston, Garza,
Gillespie, Glasscock, Gonzales, Gray, Grayson, Gregg, Grimes,
Guadalupe, Hale, Hall, Hamilton, Hansford, Hardeman, Hardin, Harris,
Harrison, Hartley, Haskell, Hays, Hemphill, Henderson, Hill, Hockley,
Hood, Hopkins, Houston, Howard, Hudspeth, Hunt, Hutchinson, Irion,
Jack, Jackson, Jasper, Jeff Davis, Jefferson, Johnson, Jones, Kaufman,
Kendall, Kent, Kerr, Kimble, King, Kinney, Knox, Lamar, Lamb,
Lampasas, Lavaca, Lee, Leon, Liberty, Limestone, Lipscomb, Llano,
Loving, Lubbock, Lynn, Madison, Marion, Martin, Mason, Matagorda,
McCulloch, McLennan, Medina, Menard, Midland, Milam, Mills,
Mitchell, Montague, Montgomery, Moore, Morris, Motley, Nacogdoches,
March 20, 20007782000–12 I.R.B.

Navarro, Newton, Nolan, Ochiltree, Oldham, Orange, Palo Pinto,
Panola, Parker, Parmer, Pecos, Polk, Potter, Presidio, Rains, Randall,
Reagan, Real, Red River, Reeves, Roberts, Robertson, Rockwall,
Runnels, Rusk, Sabine, San Augustine, San Jacinto, San Saba,
Schleicher, Scurry, Shackelford, Shelby, Sherman, Smith, Somerveil,
Stephens, Sterling, Stonewall, Sutton, Swisher, Tarrant, Taylor, Terrell,
Terry, Throckmorton, Titus, Tom Green, Travis, Trinity, Tyler, Upshur,
Upton, Uvalde, Val Verde, Van Zandt, Victoria, Walker, Waller, Ward,
Washington, Wharton, Wheeler, Wichita, Wilbarger, Williamson,
Wilson, Winkler, Wise, Wood, Yoakum, and Young
Counties of Aransas, Brooks, Cameron, Duval, Hidalgo, Jim Hogg, Severe stormsAugust 21-26
Jim Wells,Kenedy, Kleberg, Nueces, San Patricio, Webb, and Willacyand flooding caused
by Hurricane Bret
U.S. Virgin Islands
The U.S. Virgin IslandsHurricane LennyNovember 16-20
Utah
County of Salt LakeTornado, severeAugust 11
thunderstorms,
and hail
Vermont
Counties of Bennington, Caledonia, Essex, Lamoille, Orange, Orleans,Severe stormsSeptember 16-21
Rutland, Washington, Windham, and Windsorand flooding
associated with
Hurricane Floyd
Virginia
City of HamptonTropical Storm August 27-
DennisSeptember 13
Counties of Accomack, Brunswick, Caroline, Charles City, Chesterfield, Hurricane FloydSeptember 13-26
Dinwiddie, Essex, Fairfax, Gloucester, Greenville, Halifax, Hanover,
Henrico, Isle of Wight, James City, King and Queen, King George,
King William, Lancaster, Lunenberg, Mathews, Mecklenburg,
Middlesex, New Kent, Northampton, Northumberland, Prince George,
Richmond, Southampton, Surry, Sussex, Westmoreland, and York,
and Cities of Chesapeake City, Colonial Heights, Emporia, Franklin,
Hampton, Hopewell, Newport News, Norfolk, Petersburg, Poquoson,
Portsmouth, Richmond, Suffolk, Virginia Beach, and Williamsburg
Wisconsin
Counties of Ashland, Bayfield, Douglas, Florence, Iron, Oneida, Price, Severe storms, straight-July 4-31
Rusk, Sawyer, and Vilasline winds, and flooding
2000–12 I.R.B.779March 20, 2000
Section 472.—Last-in, First-out
Inventories
26 CFR 1.472–1: Last-in, first-out inventories.
LIFO; price indexes; department
stores.The January 2000 Bureau of
Labor Statistics price indexes are ac-
cepted for use by department stores em-
ploying the retail inventory and last-in,
first-out inventory methods for valuing
inventories for tax years ended on, or with
reference to, January 31, 2000.
Rev. Rul. 2000–14
The following Department Store Inven-
tory Price Indexes for January 2000 were
issued by the Bureau of Labor Statistics.
The indexes are accepted by the Internal
Revenue Service, under § 1.472–1(k) of
the Income Tax Regulations and Rev.
Proc. 86–46, 1986–2 C.B. 739, for appro-
priate application to inventories of depart-
ment stores employing the retail inven-
tory and last-in, first-out inventory
methods for tax years ended on, or with
reference to, January 31, 2000.
The Department Store Inventory Price
Indexes are prepared on a national basis
and include (a) 23 major groups of depart-
ments, (b) three special combinations of the
major groups - soft goods, durable goods,
and miscellaneous goods, and (c) a store
total, which covers all departments, includ-
ing some not listed separately, except for
the following: candy, food, liquor, tobacco,
and contract departments.

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
(January 1941 = 100, unless otherwise noted)
Percent Change
GroupsJan.Jan.from Jan. 1999
19992000to Jan. 2000
1
1. Piece Goods - - - - - - - - - - - - - - - - - - - - - - -507.3493.8-2.7
2. Domestics and Draperies - - - - - - - - - - - - - - -643.1622.0-3.3
3. Women’s and Children’s Shoes - - - - - - - - - - -640.4613.3-4.2
4. Men’s Shoes - - - - - - - - - - - - - - - - - - - - - - -894.0887.2-0.8
5. Infants’ Wear - - - - - - - - - - - - - - - - - - - - - - -628.6650.83.5
6. Women’s Underwear - - - - - - - - - - - - - - - - -560.7571.41.9
7. Women’s Hosiery - - - - - - - - - - - - - - - - - - - -316.2327.6 3.6
8. Women’s and Girls’ Accessories - - - - - - - - - -535.4530.3-1.0
9. Women’s Outerwear and Girls’ Wear - - - - - - -376.9369.1-2.1
10. Men’s Clothing - - - - - - - - - - - - - - - - - - - - -603.8612.91.5
11. Men’s Furnishings - - - - - - - - - - - - - - - - - - -585.2618.05.6
12. Boys’ Clothing and Furnishings - - - - - - - - - -482.1497.1 3.1
13. Jewelry - - - - - - - - - - - - - - - - - - - - - - - - - -965.3962.0-0.3
14. Notions - - - - - - - - - - - - - - - - - - - - - - - - - -729.7764.54.8
15. Toilet Articles and Drugs - - - - - - - - - - - - - - -946.8970.92.5
16. Furniture and Bedding - - - - - - - - - - - - - - - -678.4697.02.7
17. Floor Coverings - - - - - - - - - - - - - - - - - - - - -602.4603.20.1
18. Housewares - - - - - - - - - - - - - - - - - - - - - - -813.6789.9-2.9
19. Major Appliances - - - - - - - - - - - - - - - - - - - -237.7233.3-1.9
20. Radio and Television - - - - - - - - - - - - - - - - -69.662.7-9.9
21. Recreation and Education
2
- - - - - - - - - - - - - -100.795.2-5.5
22. Home Improvements
2
- - - - - - - - - - - - - - - - -130.3129.8-0.4
23. Auto Accessories
2
- - - - - - - - - - - - - - - - - - -107.8107.6-0.2
Groups 1 - 15: Soft Goods - - - - - - - - - - - - - - - - -586.4588.60.4
Groups 16 - 20: Durable Goods - - - - - - - - - - - - - -459.0446.2-2.8
Groups 21 - 23: Misc. Goods
2
- - - - - - - - - - - - - - -106.0102.2-3.6
Store Total
3
- - - - - - - - - - - - - - - - - - - - - - - - - - -539.4535.4-0.7
1
Absence of a minus sign before the percentage change in this column signifies a price increase.
2
Indexes on a January 1986=100 base.
3
The store total index covers all departments, including some not listed separately, except for the following: candy, food, liquor, tobacco, and contract
departments.
March 20, 20007802000–12 I.R.B.
DRAFTING INFORMATION
The principal author of this revenue ruling
is Alan J. Tomsic of the Office of Assistant
Chief Counsel (Income Tax and Account-
ing). For further information regarding this
revenue ruling, contact Mr. Tomsic on (202)
622-4970 (not a toll-free call).
Section 6621.—Determination
of Interest Rate
26 CFR 301.6621–1: Interest rate.
Interest rates; underpayements and
overpayments.The rate of interest deter-
mined under section 6621 of the Code for
the calendar quarter beginning April 1,
2000, will be 9 percent for overpayments
(8 percent in the case of a corporation), 9
percent for underpayments, and 11 per-
cent for large corporate underpayments.
The rate of interest paid on the portion of
a corporate overpayment exceeding
$10,000 is 6.5 percent.
Rev. Rul. 2000–16
Section 6621 of the Internal Revenue
Code establishes the rates for interest on
tax overpayments and tax underpayments.
Under § 6621(a)(1), the overpayment rate
beginning April 1, 2000, is the sum of the
federal short-term rate plus 3 percentage
points (2 percentage points in the case of
a corporation), except the rate for the por-
tion of a corporate overpayment of tax ex-
ceeding $10,000 for a taxable period is
the sum of the federal short-term rate plus
0.5 of a percentage point for interest com-
putations made after December 31, 1994.
Under § 6621(a)(2), the underpayment
rate is the sum of the federal short-term
rate plus 3 percentage points.
Section 6621(c) provides that for pur-
poses of interest payable under § 6601 on
any large corporate underpayment, the
underpayment rate under § 6621(a)(2) is
determined by substituting “5 percentage
points” for “3 percentage points.” See §
6621(c) and § 301.6621–3 of the Regula-
tions on Procedure and Administration for
the definition of a large corporate under-
payment and for the rules for determining

the applicable date. Section 6621(c) and
§ 301.6621–3 are generally effective for
periods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal short-
term rate for the first month in each calen-
dar quarter.
Section 6621(b)(2)(A) provides that the
federal short-term rate determined under
§ 6621(b)(1) for any month applies during
the first calendar quarter beginning after
such month.
Section 6621(b)(2)(B) provides that in
determining the addition to tax under §
6654 for failure to pay estimated tax for
any taxable year, the federal short-term
rate that applies during the third month
following such taxable year also applies
during the first 15 days of the fourth
month following such taxable year.
Section 6621(b)(3) provides that the
federal short-term rate for any month is
the federal short-term rate determined
during such month by the Secretary in ac-
cordance with § 1274(d), rounded to the
nearest full percent (or, if a multiple of
1/2 of 1 percent, the rate is increased to
the next highest full percent).
Notice 88–59, 1988–1 C.B. 546, an-
nounced that, in determining the quarterly
interest rates to be used for overpayments
and underpayments of tax under § 6621,
the Internal Revenue Service will use the
federal short-term rate based on daily
compounding because that rate is most
consistent with § 6621 which, pursuant to
§ 6622, is subject to daily compounding.
Rounded to the nearest full percent, the
federal short- term rate based on daily
compounding determined during the
month of January 2000 is 6 percent. Ac-
cordingly, an overpayment rate of 9 per-
cent (8 percent in the case of a corpora-
tion) and an underpayment rate of 9
percent are established for the calendar
quarter beginning April 1, 2000. The
overpayment rate for the portion of a cor-
porate overpayment exceeding $10,000
for the calendar quarter beginning April 1,
2000, is 6.5 percent. The underpayment
rate for large corporate underpayments
for the calendar quarter beginning April 1,
2000, is 11 percent. These rates apply to
amounts bearing interest during that cal-
endar quarter.
Under § 6621(b)(2)(B), the 8 percent
rate that applies to estimated tax under-
payments for the first calendar quarter in
2000, as provided in Rev. Rul. 99–53,
1999–50 I.R.B. 657, also applies to such
underpayments for the first 15 days in
April 2000.
Interest factors for daily compound in-
terest for annual rates of 6.5 percent, 8
percent, 9 percent, and 11 percent are
published in Tables 66, 69, 71, and 75 of
Rev. Proc. 95–17,1995–1 C.B. 556, 620,
623, 625, and 629.
Annual interest rates to be compounded
daily pursuant to § 6622 that apply for
prior periods are set forth in the tables ac-
companying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Raymond Bailey of the Office of
Assistant Chief Counsel (Income Tax and
Accounting). For further information re-
garding this revenue ruling, contact Mr.
Bailey on (202) 622-6226 (not a toll-free
call).
2000–12 I.R.B.781March 20, 2000
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
In 1995–1 C.B.
PERIOD RATE DAILY RATE TABLE
Before Jul. 1, 19756%Table 2, pg. 557
Jul. 1, 1975—Jan. 31, 19769%Table 4, pg. 559
Feb. 1, 1976—Jan. 31, 19787%Table 3, pg. 558
Feb. 1, 1978—Jan. 31, 19806%Table 2, pg. 557
Feb. 1, 1980—Jan. 31, 198212%Table 5, pg. 560
Feb. 1, 1982—Dec. 31, 198220%Table 6, pg. 560
Jan. 1, 1983—Jun. 30, 198316%Table 37, pg. 591
Jul. 1, 1983—Dec. 31, 198311%Table 27, pg. 581
Jan. 1, 1984—Jun. 30, 198411%Table 75, pg. 629
Jul. 1, 1984—Dec. 31, 198411%Table 75, pg. 629
Jan. 1, 1985—Jun. 30, 198513%Table 31, pg. 585
Jul. 1, 1985—Dec. 31, 198511%Table 27, pg. 581
Jan. 1, 1986—Jun. 30, 198610%Table 25 pg. 579
Jul. 1, 1986—Dec. 31, 19869%Table 23, pg. 577

March 20, 20007822000–12 I.R.B.
TABLE OF INTEREST RATES
FROM JAN. 1, 1987 - Dec. 31, 1998
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLE PGRATE TABLE PG
Jan. 1, 1987—Mar. 31, 19878%215759%23577
Apr. 1, 1987—Jun. 30, 19878%215759%23577
Jul. 1, 1987—Sep. 30, 19878%215759%23577
Oct. 1, 1987—Dec. 31, 19879%2357710%25579
Jan. 1, 1988—Mar. 31, 198810%7362711%75629
Apr. 1, 1988—Jun. 30, 19889%7162510%73627
Jul. 1, 1988—Sep. 30, 19889%7162510%73627
Oct. 1, 1988—Dec. 31, 198810%7362711%75629
Jan. 1, 1989—Mar. 31, 198910%2557911%27581
Apr. 1, 1989—Jun. 30, 198911%2758112%29583
Jul. 1, 1989—Sep. 30, 198911%2758112%29583
Oct. 1, 1989—Dec. 31, 198910%2557911%27581
Jan. 1, 1990—Mar. 31, 199010%2557911%27581
Apr. 1, 1990—Jun. 30, 199010%2557911%27581
Jul. 1, 1990—Sep. 30, 199010%2557911%27581
Oct. 1, 1990—Dec. 31, 199010%2557911%27581
Jan. 1, 1991—Mar. 31, 199110%2557911%27581
Apr. 1, 1991—Jun. 30, 19919%2357710%25579
Jul. 1, 1991—Sep. 30, 19919%2357710%25579
Oct. 1, 1991—Dec. 31, 19919%2357710%25579
Jan. 1, 1992—Mar. 31, 19928%696239%71625
Apr. 1, 1992—Jun. 30, 19927%676218%69623
Jul. 1, 1992—Sep. 30, 19927%676218%69623
Oct. 1, 1992—Dec. 31, 19926%656197%67621
Jan. 1, 1993—Mar. 31, 19936%175717%19573
Apr. 1, 1993—Jun. 30, 19936%175717%19573
Jul. 1, 1993—Sep. 30, 19936%175717%19573
Oct. 1, 1993—Dec. 31, 19936%175717%19573
Jan. 1, 1994—Mar. 31, 19946%175717%19573
Apr. 1, 1994—Jun. 30, 19946%175717%19573
Jul. 1, 1994—Sep. 30, 19947%195738%21575
Oct. 1, 1994—Dec. 31, 19948%215759%23577
Jan. 1, 1995—Mar. 31, 19958%215759%23577
Apr. 1, 1995—Jun. 30, 19959%2357710%25579
Jul. 1, 1995—Sep. 30, 19958%215759%23577
Oct. 1, 1995—Dec. 31, 19958%215759%23577
Jan. 1, 1996—Mar. 31, 19968%696239%71625
Apr. 1, 1996—Jun. 30, 19967%676218%69623
Jul. 1, 1996—Sep. 30, 19968%696239%71625
Oct. 1, 1996—Dec. 31, 19968%696239%71625
Jan. 1, 1997—Mar. 31, 19978%215759%23577
Apr. 1, 1997—Jun. 30, 19978%215759%23577
Jul. 1, 1997—Sep. 30, 19978%215759%23577
Oct. 1, 1997—Dec. 31, 19978%215759%23577
Jan. 1, 1998—Mar. 31, 19988%215759%23577
Apr. 1, 1998—Jun. 30, 19987%195738%21575
Jul. 1, 1998—Sep. 30, 19987%195738%21575
Oct. 1, 1998—Dec. 31, 19987%195738%21575

TABLE INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995–1 C.B.
RATETABLEPAGE
Jan. 1, 1999—Mar. 31, 19997%19573
Apr. 1, 1999—Jun. 30, 19998%21575
Jul. 1, 1999—Sep. 30, 19998%21575
Oct. 1, 1999—Dec. 31, 19998%21575
Jan. 1, 2000—Mar. 31, 20008%69623
Apr. 1, 2000—Jun. 30, 20009%71625
2000–12 I.R.B.783March 20, 2000
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 - PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B1995–1 C.B.
RATETABLEPGRATETABLEPG
Jan. 1, 1999—Mar. 31, 19996%175717%19573
Apr. 1, 1999—Jun. 30, 19997%195738%21575
Jul. 1, 1999—Sep. 30, 19997%195738%21575
Oct. 1, 1999—Dec. 31, 19997%195738%21575
Jan. 1, 2000—Mar. 31, 20007%676218%69623
Apr. 1, 2000—Jun. 30, 20008%696239%71625
TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 - PRESENT
1995–1 C.B.
RATETABLEPG
Jan. 1, 1991—Mar. 31, 199113%3185
Apr. 1, 1991—Jun. 30, 199112%29583
Jul. 1, 1991—Sep. 30, 199112%29583
Oct. 1, 1991—Dec. 31, 199112%29583
Jan. 1, 1992—Mar. 31, 199211%75629
Apr. 1, 1992—Jun. 30, 199210%73627
Jul. 1, 1992—Sep. 30, 199210%73627
Oct. 1, 1992—Dec. 31, 19929%71625
Jan. 1, 1993—Mar. 31, 19939%23577
Apr. 1, 1993—Jun. 30, 19939%23577
Jul. 1, 1993—Sep. 30, 19939%23577
Oct. 1, 1993—Dec. 31, 19939%23577
Jan. 1, 1994—Mar. 31, 19949%23577
Apr. 1, 1994—Jun. 30, 19949%23577
Jul. 1, 1994—Sep. 30, 199410%25579
Oct. 1, 1994—Dec. 31, 199411%27581
Jan. 1, 1995—Mar. 31, 199511%27581
Apr. 1, 1995—Jun. 30, 199512%29583
Jul. 1, 1995—Sep. 30, 199511%27581
Oct. 1, 1995—Dec. 31, 199511%27581
Jan. 1, 1996—Mar. 31, 199611%75629
Apr. 1, 1996—Jun. 30, 199610%73627

TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS—Continued
FROM JANUARY 1, 1991 - PRESENT
1995–1 C.B.
RATETABLEPG
Jul. 1, 1996—Sep. 30, 199611%75629
Oct. 1, 1996—Dec. 31, 199611%75629
Jan. 1, 1997—Mar. 31, 199711%27581
Apr. 1, 1997—Jun. 30, 199711%27581
Jul. 1, 1997—Sep. 30, 199711%27581
Oct. 1, 1997—Dec. 31, 199711%27581
Jan. 1, 1998—Mar. 31, 199811%27581
Apr. 1, 1998—Jun. 30, 199810%25579
Jul. 1, 1998—Sep. 30, 199810%25579
Oct. 1, 1998—Dec. 31, 199810%25579
Jan. 1, 1999—Mar. 31, 19999%23577
Apr. 1, 1999—Jun. 30, 199910%25579
Jul. 1, 1999—Sep. 30, 199910%25579
Oct. 1, 1999—Dec. 31, 199910%25579
Jan. 1, 2000—Mar. 31, 200010%73627
Apr. 1, 2000—Jun. 30, 200011%75629
March 20, 20007842000–12 I.R.B.
TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 - PRESENT
1995–1 C.B.
RATETABLEPG
Jan. 1, 1995—Mar. 31, 19956.5%18572
Apr. 1, 1995—Jun. 30, 19957.5%20574
Jul. 1, 1995—Sep. 30, 19956.5%18572
Oct. 1, 1995—Dec. 31, 19956.5%18572
Jan. 1, 1996—Mar. 31, 19966.5%66620
Apr. 1, 1996—Jun. 30, 19965.5%64618
Jul. 1, 1996—Sep. 30, 19966.5%66620
Oct. 1, 1996—Dec. 31, 19966.5%66620
Jan. 1, 1997—Mar. 31, 19976.5%18572
Apr. 1, 1997—Jun. 30, 19976.5%18572
Jul. 1, 1997—Sep. 30, 19976.5%18572
Oct. 1, 1997—Dec. 31, 19976.5%18572
Jan. 1, 1998—Mar. 31, 19986.5%18572
Apr. 1, 1998—Jun. 30, 19985.5%16570
Jul. 1. 1998—Sep. 30, 19985.5%16570
Oct. 1, 1998—Dec. 31, 19985.5%16570
Jan. 1, 1999—Mar. 31, 19994.5%14568
Apr. 1, 1999—Jun. 30, 19995.5%16570
Jul. 1, 1999—Sep. 30, 19995.5%16570
Oct. 1, 1999—Dec. 31, 19995.5%16570
Jan. 1, 2000—Mar. 31, 20005.5%64618
Apr. 1, 2000—Jun. 30, 20006.5%66620

2000–12 I.R.B.785March 20, 2000
Rev. Proc. 2000–19
TABLE OF CONTENTS
CHAPTER 1 - INTRODUCTION TO SUBSTITUTE FORMS
Section 1.1 - Overview of Revenue Procedure 2000–19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .786
Section 1.2 - IRS Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .787
Section 1.3 - Nature of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .787
Section 1.4 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .788
Section 1.5 - Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .789
CHAPTER 2 - GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS
Section 2.1 - General Specificiations for Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .789
Section 2.2 - Highlights of Permitted Changes and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .790
Section 2.3 - Vouchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .790
Section 2.4 - Restrictions on Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .791
Section 2.5 - Guidelines for Obtaining IRS Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .791
Section 2.6 - Office of Management and Budget (OMB) Requirements
for All Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .794
CHAPTER 3 - PHYSICAL ASPECTS AND REQUIREMENTS
Section 3.1- General Guidelines for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .794
Section 3.2 - Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .796
Section 3.3 - Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .797
Section 3.4 - Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .797
Section 3.5 - Examples of Approved Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .798
Section 3.6 - Miscellaneous Information for Substitute Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .798
CHAPTER 4 - ADDITIONAL RESOURCES
Section 4.1 - Guidance From Other Revenue Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .799
Section 4.2 - Ordering Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .799
Section 4.3 - Electronic Tax Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .800
Section 4.4 - Federal Tax Forms on CD-ROM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .800
CHAPTER 5 - REQUIREMENTS FOR SPECIFIC TAX RETURNS
Section 5.1 - Tax Returns (Form 1040, 1040A, 1120, Etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .801
Section 5.2 - Changes Permitted to Graphics (Forms 1040A and 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .802
Section 5.3 - Changes Permitted to Form 1040A Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .803
Section 5.4 - Changes Permitted to Form 1040 Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .803
CHAPTER 6 - FORMAT AND CONTENT OF SUBSTITUTE RETURNS
Section 6.1 - Acceptable Formats for Computer-Generated Forms
and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .804
Section 6.2 - Additional Instructions for All Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .804
CHAPTER 7 - OCR FORMS
Section 7.1 - Special Form 1040EZ Optical Character Recognition/Image
Character Recognition (OCR/ICR) Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .805
Section 7.2 - Computer-Generated Alternative Returns,
Form 1040PC Format Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .807
Section 7.3 - Specifications for OCR Scannable Application Forms
for Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .808
Part III. Administrative, Procedural, and Miscellaneous

CHAPTER 8 - MISCELLANEOUS FORMS AND PROGRAMS
Section 8.1 - Paper Substitutes for Form 1042-S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .809
Section 8.2 - Specifications for Filing Substitute Schedules K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .811
Section 8.3 - Procedures for Printing Internal Revenue Service Envelopes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .811
Section 8.4 - Procedures for Substitute Form 5471 and Form 5472 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .813
CHAPTER 9 - ALTERNATIVE METHODS OF FILING
Section 9.1 - Forms for Electronically Filed Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .814
Section 9.2 - FTD Magnetic Tape Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .815
Section 9.3 - Effect on Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .815
EXHIBITS
Exhibit A-1. Schedule A (Preferred)
Exhibit A-2. Schedule A (Acceptable)
Exhibit B-1. Schedule B (Preferred)
Exhibit B-2. Schedule B (Acceptable)
Exhibit CG-A. Schedule A (Computer Generated)
Exhibit CG-B. Schedule B (Computer Generated)
Exhibit C. Sample Checklist
Exhibit L-1. List of Forms Referred to in Revenue Procedure
March 20, 20007862000–12 I.R.B.
Chapter 1
Introduction to Substitute Forms
Section 1.1 - Overview of Revenue Procedure 2000–19
1.1.1 This revenue procedure provides the general requirements and conditions for the development, print
Purposeing, and approval of all substitute tax forms to be acceptable for filing in lieu of official IRS forms.
1.1.2 Certain unique, specialized forms require the use of other additional revenue procedures to supplement
Unique Formsthis publication. See Chapter 4.
1.1.3The Internal Revenue Service accepts quality substitute tax forms that are consistent with the official
Scopeforms and do not have an adverse impact on our processing. The IRS Substitute Forms Program admin-
isters the formal acceptance and processing of these forms nationwide. While this program deals primar-
ily with paper documents, it also interfaces with other processing and filing media such as:
•Magnetic tape,
•Optical character recognition, and
•Electronic filing, etc.
Only those substitute forms that comply fully with the requirements set forth herein are acceptable.
Exhibit L-1 lists the form numbers mentioned in this document and their titles. This revenue proce-
dure is updated as required to reflect pertinent tax year form changes and to meet processing and/or
legislative requirements.
1.1.4 Forms CoveredThe following types of forms are covered by this revenue procedure:
by This
Revenue Procedure•IRS tax returns and their related forms and schedules.
•Applications for permission to file returns electronically and forms used as required documen-
tation for electronically filed returns.
•Powers of Attorney.
•Estimated tax payment vouchers.
•Forms and schedules relating to partnerships, exempt organizations, and employee plans.
1.1.5 The following types of forms are not covered:
Forms NOT
Covered by •W-2, W-3 (see Publication 1141 for information on these forms)
This Revenue •1096, 1098 series, 1099 series, 5498 series, and W-2G (see Publication 1179 for information on

Procedurethese forms)
•Federal Tax Deposit (FTD) coupons, which may not be reproduced.
•Forms 1040-ES(OCR) and 1041-ES(OCR), which may not be reproduced.
•Requests for information or documentation initiated by the Service.
•Forms used internally by the Service.
•State tax forms.
•Forms developed outside IRS (except for Form TD F 90-22.1, Report of Foreign Bank and
Financial Accounts).
Section 1.2 — IRS Contacts
1.2.1 Send your substitute forms for approval to the following offices (DO NOTsend forms with taxpayer
Where To Send data):
Substitute Forms
In addition, the Substitute Forms Program can be contacted via email at tfpmail@publish.no.irs.gov.
Use this email address only to inquire about forms covered by this revenue procedure. DO NOT attach
graphic files for approval with email.
For questions about Forms W-2 and W-3, refer to IRS Publication 1141, General Rules and
Specifications for Private Printing of Substitute Forms W-2 and W-3. For Forms 1096, 1098, 1099,
5498, and W-2G, refer to IRS Publication 1179, Specifications for Paper Document Reporting and
Paper Substitutes for Forms 1096, 1098, 1099 Series, 5498, and W-2G.
Section 1.3 - Nature of Changes
1.3.1 Changes to the•The pages of this revenue procedure has been numbered to facilitate ease of use.
Revenue Procedure•The IRS Internet website address has been changed to http://www.irs.gov.References to the FTP
and Telnet addresses have been deleted..
•Definition of “advanced draft” has been added.
•Vendor responsibility for monitoring revisions to official forms has been articulated.
•Section on Form 941 OCR requirements has been removed.
•Pricing information for the Federal Tax Forms CD-ROM has been revised.
•Processing of 1999 Plan Year Forms 5500 and 5500-EZ will be processed by the Pension and
Welfare Benefits Administration, effective July 1, 2000.
2000–12 I.R.B.787March 20, 2000
FormOffice and Address
4789, 8300, 8362, 8852,IRS Computing Center
TD F 90-22.1, TD F 90-22.47BSA Compliance Branch
P.O. Box 32063
Detroit, MI 48232-0063
4461, 4461-A, 4461-B, 5300, 5303, Internal Revenue Service
5307, 5310, 5310-A, and 6406Attn: EP OCR Forms Coordinator
OP:E:EP:FC
1111 Constitution Avenue, NW
Room 2232 IR
Washington, DC 20224
All others (except W-2, W-3, 1096, Internal Revenue Service
1098, 1099, 5498, and W-2G)Attn: Substitute Forms Program
OP:FS:FP:F:CD
1111 Constitution Avenue, NW
Room 5244 IR
Washington, DC 20224

•Form 5500-C/R has been obsoleted for Plan Year 1999.
•The Electronic Filing Program is now called the IRS e-file Program.
•Instructions for the boxes on Form 1042-S have been revised.
•Voucher scan lines now have a six-digit tax period (YYYYMM).
•Forms 8543-NR and 8453-OL are now referenced in the section on electroncially filed returns.
•Forms 1040-ES(OCR) and 1041-ES(OCR) added to list of forms not covered by this revenue
procedure.
•Four-digit portion of ZIP codes on envelopes revised for froms 1040, 940, and 943.
•Various editorial changes have been made.
Section 1.4 - Definitions
1.4.1A tax form (or related schedule) that differs in any way from the official version and is intended to
Substitute replace theentire form that is printed and distributed by the Service. This term also covers those
Formapproved substitute forms exhibited in this revenue procedure.
1.4.2 A form produced using conventional printing processes. Also, a printed form which has been reproduced
Printed (orby photocopying or similar processes.
Preprinted)
Form
1.4.3 A printed form that has marginal perforations for use with automated and high-speed printing equip-
Preprinted ment.
Pin-Fed Form
1.4.4 Computer-A preprinted form in which the taxpayer’s tax entry information has been inserted by a computer, com-
Prepared puter-printer, or other computer type equipment, such as word-processing equipment.
Substitute
Form
1.4.5 Computer- A tax return or form that is entirely designed and printed by the use of a computer printer,such as a
Generated laser printer, etc., on plain white paper. This return or form must conform to the physical layout of the
Substitutecorresponding Service form although the typeface may differ. The text should match the text on the
Tax Return officially printed form as closely as possible; condensed text and abbreviations will be considered
or Formon a case-by-case basis. Exception: All jurats (perjury statements) must be reproduced verbatim.
1.4.6 Manually-A preprinted reproduced form in which the taxpayer’s tax entry information is entered by an individ-
Prepared Formual using a pen, pencil, typewriter, or other non-automated equipment.
1.4.7 Computer-A tax return that contains only the taxpayer’s significant line entries, and is formatted three columns
Generated Answerper page with tax form headings, a summary, and jurat. This return is printed on plain white paper
Sheet Format using a computer printer.
Tax Return
1.4.8 GraphicsThose parts of a printed tax form that are not tax amount entries nor called-for information. Generally,
these are line numbers, captions, shadings, instructions, special indicators, borders, rules, and strokes
created by typesetting, photographics, photocomposition, etc.
1.4.9 Acceptable A legible photocopy of an original form.
Reproduced Form
1.4.10 Supporting A document providing detailed information to support an entry for a line(s) on an official or approved
Statementsubstitute form and filed with (attached to) a tax return. (A supporting statement is not a tax form and
(Supplemental does not take the place of an official form, unless specifically permitted elsewhere in this procedure.)
Schedule)
1.4.11 Specific The following terms are used throughout this revenue procedure in reference to all substitute forms,
Forms Termswith the exception of the 1040PC “answer sheet format” tax return.
March 20, 20007882000–12 I.R.B.
Continued on next page

1.4.12 The overall physical arrangement and general layout of a substitute form.
Format
1.4.13 SequenceThe same numeric and logical placement order of data, as reflected on the official form version.
Sequence is an integral part of the total format requirement.
1.4.14 Line The line numbers, letters or alphanumerics used to identify each captioned line on the official forms,
Reference (Code)and printed to the immediate left of each caption or data entry field.
1.4.15 Item The textual portion of each line on the form identifying the specific data elements required.
Caption
1.4.16 Data All areas designated on a form for the insertion of data, such as dollar amounts, quantities, responses,
Entry Fieldcheckboxes, etc.
1.4.17 AdvancedA draft revision of a new or revised form may be posted to the IRS Internet site for information
Draftpurposes. Substitute forms may be submitted based on these advanced drafts but any company that
receives forms approval based on these early drafts is responsible for monitoring and revising froms
to mirror any revisions in the final forms provided by the Service.
Section 1.5 - Agreement
Section 1.5.1Any person or company who uses substitute forms and makes all or part of the changes specified in
Importantthis revenue procedure agrees to the following stipulations:
Stipulation of
This Revenue
Procedure
•The Internal Revenue Service presumes the changes are made in accordance with these proce-
dures and, as such, will be noninterruptive to the processing of the tax return.
•Should any of the changes prove to be not exactly as described, and as a result become disrup-
tive to the Internal Revenue Service during processing of the tax return, the person or compa-
ny agrees to accept the determination of the IRS as to whether or not the form may continue to
be used during the filing season.
•The person or company agrees to work with the IRS in correcting noted deficiencies.
Notification of deficiencies may be made by any combination of fax, letter, email, or phone con-
tact and may include the return of unacceptable forms for resubmission of acceptable forms.
Chapter 2
General Guidelines for Submissions and Approvals
Section 2.1 - General Specifications for Approval
2.1.1 OverviewIf you produce any tax returns and forms using IRS guidelines on permitted changes, you can gener-
ate your own substitutes without further approval. If your changes are more extensive, you must get
official approval before using substitute forms. These changes include the use of typefaces and sizes
other than those found on the official form and the condensing of line item descriptions to save space.
2.1.2 SchedulesSchedules are considered to be an integral part of a complete tax return when assigned consecutive
page numbers and printed contiguously with page 1 of the return.
2.1.3 Example of Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an example of this
Schedules That situation, where Schedules A through U have pages numbered as part of the basic return. For a Form
Must Be Submitted 706 to be approved, the entire form including Schedules A through U must be submitted.
With the Return
2.1.4 Examples ofHowever, Schedules 1, 2, and 3 of Form 1040A are examples of schedules that can be separately com-
Schedules That puter-generated. Although printed by the IRS as a continuation of Form 1040A, none of these sched-
2000–12 I.R.B.789
Continued on next page

Can Be Submitted ules have page numbers that require them to be filed with Form 1040A, and may, therefore, be sepa-
Separatelyrated from Form 1040A and submitted as computer-generated substitute schedules.
2.1.5 Use andThe Internal Revenue Service is continuing a program to identify and contact tax return preparers,
Distribution offorms developers, and software publishers who use or distribute unapproved forms that do not con-
Unapproved Formsform to this revenue procedure. The use of unapproved forms impedes processing of the returns.
Section 2.2 - Highlights of Permitted Changes and Requirements
2.1.1 Methods of Official versions are supplied by the Internal Revenue Service, such as those in the taxpayer’s tax package,
Reproducing those printed in revenue procedures, and over-the-counter forms available at IRS and other governmental
Internal Revenuepublic offices or buildings. Forms are also available on CD-ROM, and on-line viaFedworld and the Internet.
Service Forms
There are methods of reproducing Internal Revenue Service printed tax forms suitable for use as sub-
stitute tax forms without prior approval.
•You can photocopy most tax forms and use them instead of the official ones. The entire substi-
tute form, including entries, must be legible.
•You can reproduce any current tax form as cut sheets, snapsets, and marginally punched, pin-fed
forms so long as you use an official IRS version as the master copy.
•You can reproduce a “signature form” as a valid substitute form. Many tax forms (including returns)
have a taxpayer signature requirement as part of the form layout. The jurat/perjury statement/sig-
nature line areas must be retained and worded exactly as on the official form. The requirement for
a signature by itself does not prohibit a tax form from being properly computer-generated.
•You can computer-generate Answer Sheet Format Tax Returns on plain bond paper using IRS-
accepted software for the 1040PC format for return types 1040EZ, 1040, 1040A, and attach-
ments, forms, and schedules.
Section 2.3 - Vouchers
2.3.1 OverviewAll payment vouchers (Forms 940-V, 940-EZ(V), 941- V, 943-V, 945-V, 1040-V, and 2290-V) must
be reproduced. Substitute vouchers must be the same size as the officially printed vouchers. Vouchers
that are prepared for printing on a laser printer may include a scanline.
2.3.2 Scanline NNNNNNNNN AA AAAA NN N NNNNNN NNN
SpecificationsAB C D E F G
A - Social Security Number/Employer Identification Number (SSN/EIN) has 9 numeric spaces.
B - Check Digit has 2 alpha spaces.
C - Name Control has 4 alphanumeric spaces.
D - Master File Tax (MFT) Code has 2 numeric spaces (see below).
E - Taxpayer Identification Number (TIN) Type has 1 numeric space (see below).
F - Tax period has six numeric spaces in year/month format (YYYYMM).
G - Transaction Code has 3 numeric spaces.
2.3.3 MFT CodeCode Number for:
•Form 1040 family - 30;
•Form 940/940-EZ - 10;
•Form 941 - 01;
•Form 943 - 11;
•Form 945 - 16; and
•Form 2290 - 60.
2.4 TIN TypeType Number for:
•Form 1040 family - 0; and
•Forms 940, 940-EZ, 941, 943, 945, and 2290 - 2.
2.3.5 Voucher SizeThe voucher size must be exactly 8.0” X 3.25”. The document scanline must be vertically positioned
1.625 inches from the bottom of the scanline to the bottom of the voucher. The right most character
March 20, 20007902000–12 I.R.B.
Continued on next page

of the scanline must be placed 3.5 inches from the right leading edge of the document. The maximum
vertical displacement is .06 inches. The minimum required horizontal clear space between characters
is .014 inches. The line to be scanned must have a clear band 0.25 inches in height from top to bot-
tom of the scanline, and from border to border of the document. “Clear band” means no printing
except for dropout ink.
2.3.6 Print and Vouchers must be imaged in black ink using OCR A or OCR B, size 1 font. The paper must be 20 to
Paper Weight24 pound OCR bond paper weight.
Section 2.4 - Restrictions on Changes
2.4.1 Things YouYou cannot, without prior IRS approval, change any Internal Revenue Service tax form or use your
CANNOT Do to IRS own (non-approved) versions (preprinted labels), including graphics, unless specifically permitted by
Forms Suitable this revenue procedure.
for Substitute
Tax FormsYou cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those areas speci-
fied in Chapter 5 of this revenue procedure) without prior approval from the IRS Substitute Forms
Program.
You cannot use your own preprinted label on tax returns filed with IRS, unless you fully comply with
the exception criteria specified in the section on use of preaddressed IRS labels in this revenue proce-
dure.
Section 2.5 - Guidelines for Obtaining IRS Approval
2.5.1 BasicPreparers who desire to file substitute privately designed and printed tax forms and/or computer-gen-
Requirementserated and computer-prepared tax forms must develop such substitutes using the guidelines for sub-
stitute forms established in this chapter. These substitutes, unless excepted by revenue procedure, must
be approved by the IRS before being filed.
2.5.2 1040PC A software developer who wants to market, distribute, or use for its own clientele, a tax preparation
Format Returnpackage featuring the 1040PC tax return format, must first file an application to participate in the pro-
gram. Only after successfully fulfilling test requirements will a developer’s software package be
accepted by the IRS to produce 1040PC tax returns.
2.5.3 ConditionalThe Internal Revenue Service cannot grant final approval of your substitute form until the official form
Approval Basedhas been published. However, the IRS has established a location on the Internet for the posting of
on Advance Drafts advance drafts of forms. This site can be reached through the Tax Professional’s Corner at
http://www.irs.ustreas.gov/prod/bus_info/tax_pro.
We encourage submission of proposed substitutes of these advance draft forms, and will grant condi-
tional approval based solely on these early drafts. These advance drafts are subject to significant
change before forms are finalized. If these advance drafts are used as the basis for your substitute
forms, you will be responsible for subsequently updating your final forms to agree with the final offi-
cial version before use. These revisions need not be submitted for further approval.
NOTE: Approval of forms based on advance drafts will not be granted after the final version of an offi-
cial form is published.
•Any alteration of forms must be within the limits acceptable to the Service. It is possible that,
from one filing period to another, a change in law or a change in internal need (processing, audit,
compliance, etc.) may change the allowable limits for the alteration of the official form.
•When specific approval of any substitute form (other than those specified in Chapter 2, IRS
Contacts) is desired, a sample of the proposed substitute should be forwarded for consideration
by letter to the Substitute Forms Program Coordinator at the address shown in Chapter 2.
•To expedite multiple forms approval, we prefer that your proposed forms be submitted in sepa-
rate sets by return. For example, Forms 1040 and their normally related schedules or attach-
2000–12 I.R.B.791March 20, 2000
Continued on next page

ments should be submitted separately from Forms 1120, 1065, 5500 Series, etc., if at all possi-
ble. Schedules and forms (e.g., Forms 3468, 4136, etc.) that can be used with more than one
type of return (e.g., 1040, 1041, 1120, etc.) should be submitted only once for approval, regard-
less of the number of different tax returns with which they may be ultimately associated. In addi-
tion, all pages of a multipage form or return should be submitted in the same package.
2.5.4 ApprovingAs no IRS office except the ones specified in this procedure (per the chart in Chapter 1) are authorized
Officesto approve substitute forms, unnecessary delay may result if forms are sent elsewhere for approval.
All forms submitted to any other office must be forwarded to the appropriate office for formal control
and review. The Substitute Forms Program Coordinator may then coordinate the response with the
program analyst responsible for the processing of that form. Such coordination may include allowing
the analyst to officially approve the form. No IRS office is authorized to allow deviations from this
revenue procedure.
2.5.5 Service’sThe IRS does not review or approve the logic of specific software programs, nor confirm the calcula
Review of Software tions entered on forms output from these programs that are submitted for approval. The accuracy of
Programs, etc.the program itself remains the responsibility of the software package developer, distributor, or user.
The Substitute Forms Program is primarily concerned with the prefiling quality review of the final
forms output, produced by whatever means, that are expected to be processed by IRS field offices. For
the above reasons, it is suggested that you submit forms without including any “taxpayer” information
such as names, addresses, monetary amounts, etc.
2.5.6 When to SendProposed substitutes, which are required to be submitted per this revenue procedure, should be sent as
Proposed Substitutesmuch in advance of the filing period as possible. This is to allow adequate time for analysis and
response.
2.5.7 AccompanyingWhen the sample substitute is submitted, there should be an accompanying statement that lists the
Statementform number of each substitute requested and detail those items that deviate from the official form in
position, arrangement, appearance, line numbers, additions, deletions, etc. Included with each of the
items should be a detailed reason or justification for the change and an approximation of the number
of forms expected to be filed.
When requesting approval for multiple forms, the statement should be presented as a checksheet.
Checksheets are not mandatory, but do facilitate the approval process. The checksheet may look like
the example (Exhibit C) displayed in the back of this procedure or may be one of your own design.
Please include your fax number on the checksheet.
2.5.8 Approval/The Substitute Forms Coordinator will fax the checksheet or an approval letter back to the originator
Non-Approvalif a fax number has been provided, unless:
Notice•the requester has asked for a formal letter; or
•significant corrections are required to the submitted forms
Notice of approval may contain qualifications for use of the substitutes. Notices of non-approval let-
ters may specify the changes required for approval, and may also require resubmission of the form(s)
in question. Telephone contact is used when possible.
2.5.9 Duration ofMost signature tax returns and many of their schedules and related forms have the tax (liability) year
Approvalprinted in the upper right corner. Approvals for these forms are usually good for one calendar year
(January through December of the year of filing). Quarterly tax forms in the 94X series, and Form
720, require approval for any quarter in which the form has been revised.
•If the preprinted year is the only change made to a form, the form for the upcoming year is not
subject to review.
•Otherwise, each new filing season requires a new approval.
2.5.10 LimitedLimited continued use of a change approved for one tax year may be allowed for the same form in the
Continued Usefollowing tax year. Examples of such limitations and requirements are the use of abbreviated words,
of Approvedrevised form spacing, compressed text lines, shortened captions, etc., which do not change the con
Changesistency of lines or text on the official forms.
If substantial changes are made to the form, new substitutes must be submitted for approval. If only
minor editorial changes are made to the form, it is not subject to review.
March 20, 20007922000–12 I.R.B.
Continued on next page
2.5.3 Conditional
Approval Based
on Advanced Drafts
(continued)

If you received written approval of a previous tax year substitute form governed by this revenue pro-
cedure and continue to use the approved change on your current tax year substitute form, you may
revise your form to include this change and, without additional written approval, use it as a current tax
year substitute form, provided you comply with the requirements in this revenue procedure.
2.5.11 WhenIf you received written approval for a specific change on a specific form last year, such as deleting the
Approval Is vertical lines used to separate dollars and cents on some forms and schedules, e.g., Schedules A&B
Not Requiredof Form 1040, you may again make the same change on the same form this year if the item changed
is still present on this year’s official form.
•The new substitute does not have to be sent to the IRS and written approval is not required.
•However, the new substitute must conform to the official current year IRS form in other respects:
date, Office of Management and Budget (OMB) approval number, attachment sequence number,
Paperwork Reduction Act Notice statement, arrangement, item caption, line number, line refer-
ence, data sequence, etc.
•It must also comply with this revenue procedure—which may have eliminated, added to, or oth-
erwise changed the guideline(s) which affected the change approved last year.
Exception: Those written approvals which state that the approved change or form would not be
allowed in any other tax year, or for a temporary, limited, or interim approval pending resolution of a
failure to meet one or more IRS-prescribed requirements are subject to revire in subsequent years.
•This authorization for continued use of an approved change is limited to the continuation of
design logic from an immediately prior tax year substitute form to a current tax year substitute
form.
2.5.12 Continuous Forms without preprinted tax years are called “continuous use” forms. Many of these forms had expi-
Use Formsration dates, but these are being phased out. Continuous use forms are revised when a legislative
change affects the form or a change will facilitate processing.
2.5.13 Internet A chart of print dates (for annual and quarterly forms) and most current revision dates (for continuous
Program Chartuse forms) will be maintained on the Internet. For further details, see the section on Internet access in
Chapter 4 of this revenue procedure.
2.5.14 RequiredGenerally, you must send us one copy of each form being submitted for approval. However, if you
Copiesare producing forms for different computer systems (e.g., IBM (or compatible) vs. MacIntosh) or dif-
ferent types of printers (laser vs. dot matrix), and these forms differ significantly in appearance, sub-
mit one copy for each type of system or printer.
2.5.15 Requestor’s Following the receipt of initial approval for a substitute forms package, or of a software output pro-
Responsibility Aftergram to print substitute forms, it is the responsibility of the originator (designer or distributor) to pro-
Receipt of Approval vide each subsequent client firm or individual with the pertinent Service forms requirements that must
be met for continuing acceptability.
Examples of this responsibility include:
•The use of prescribed print paper, font size, legibility, state tax data deletion.
•The legal requirements of the Paperwork Reduction Act Notice for informing all users of sub-
stitute forms of the official use and collection requirements stated in the instructions for the offi-
cial IRS forms, completion of documents, etc.
2.5.16 Source CodeThe Substitute Forms Program Unit, OP:FS:FP:F:CD, will assign a unique source code to each firm
that submits substitute paper forms for approval. This will be a permanent control number that should
be used on every form created by a particular firm.
•This source code should be printed at the bottom left margin area on the first page of every
approved substitute paper form.
•The source code for paper returns consists of three alpha characters.
•This source code should not be used on optically scanned (OCR) forms.
2000–12 I.R.B.793March 20, 2000

Section 2.6 - Office of Management and Budget (OMB) Requirements for All Substitute Forms
2.6.1 OMBLegal Requirements of the Paperwork Reduction Act of 1995 (“Act”). Public Law 104-13 requires that:
Requirements for
All Substitute Forms•OMB approve all IRS tax forms that are subject to the Act,
•Each IRS form contains (in the upper right corner) the OMB number, if any, and
•Each IRS form (or its instructions) states why IRS needs the information, how it will be used,
and whether or not the information is required to be furnished.
This information must be provided to every user of official or substitute tax forms.
2.6.2 Application On forms to which OMB numbers have been assigned:
of Act to Substitute
Forms•All substitute forms must contain in the upper right corner the OMB number that is on the offi-
cial form.
•Format Required - OMB No. XXXX-XXXX (Preferred) or OMB # XXXX-XXXX.
2.6.3 Required You must also inform the users of your substitute forms of the IRS use and collection requirements
Explanation to stated in the instructions for the official IRS form.
Users
•If you provide your users or customers with the official IRS instructions, page 1 of each form
must retain either the Paperwork Reduction Act Notice, or a reference to it as the IRS does on
the official forms (usually in the lower left corner of the forms).
•If the IRS instructions are not provided to users of your forms, the exact text of the Paperwork
Reduction Act Notice must be furnished on the form or separately.
•This notice reads, in part, “We ask for this information to carry out the Internal Revenue laws of
the United States. You are required to give us the information. We need it to ensure that you are
complying with these laws and to allow us to figure and collect the right amount of tax...”
•You must also include a copy of the alternative statement provided to users of your forms with
the forms you submit for approval.
2.6.4 Obtaining The OMB number and Paperwork Reduction Act Notice may be obtained from the official form (or
OMB Numberits instructions), or any format produced by the IRS (e.g., Compact Disc (CD), Internet download, or
and NoticeBulletin Board System (BBS) download).
Chapter 3
Physical Aspects and Requirements
Section 3.1 - General Guidelines for Substitute Forms
3.1.1 GeneralThe Official Form is the standard. Because a substitute form is a variation from the official form, you
Informationshould know the requirements of the official form for the year of use before you modify it to meet your
needs. The IRS provides several means of obtaining the most frequently used tax forms. These
include the Internet, fax-on-demand, CD-ROM and an electronic forms bulletin board (see chapter 4).
3.1.2 DesignEach form must follow the design of the official form as to format arrangement, item caption, line
numbers, line references, and sequence.
3.1.3 State Tax State tax information must not appear (be visible) on the federal tax return or associated form or schedule
Information which is filed with the IRS, except where amounts are claimed on or required by the federal return,
Prohibitede.g., state and local income taxes, Schedule A (Form 1040).
March 20, 20007942000–12 I.R.B.
Continued on next page

3.1.4 Vertical
Alignment of
Amount Fields
3.1.5 Attachment •Most individual income tax forms have a required “attachment sequence number” located just
Sequence Numberbelow the year designation in the upper right corner of the form. The IRS uses this number to
indicate the order in which forms are to be attached to the tax return so they may be processed
in that order. Some of the attachment sequence numbers may change each year.
On computer-prepared forms:
•The sequence number may be printed in no less than 12-point boldface type and centered below
the form’s year designation.
•The sequence number may also be placed following the year designation for the tax form and
separate with an asterisk.
•It is not necessary to duplicate the “Attachment Sequence Number” wording, except for the
actual number.
3.1.6 Paid Preparer’s On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer’s Use Only” area may not be
Information and rearranged or relocated. You may, however, add three extra lines to the paid preparer’s address area
Signature Areawithout prior approval. This applies to other tax forms as well. Please note that the preparer’s area
on Form 1040EZ is on the bottom of page 2. Substitute Forms 1040EZ with the preparer area in any
location other than the bottom of page 2 will not be accepted.
3.1.7 Assembly If developing software or forms for use by others, please inform your customers/clients that the order
of Formsin which the forms are arranged may affect the processing of the package. A return must be arranged
in order indicated below.
2000–12 I.R.B.795March 20, 2000
IF a form is to be...THEN...
A form is to be manually prepared•The federal column must have a vertical line
or some type of indicator in the amount field
to separate dollars from cents if the official
form has a vertical line.
•The cents column must be at least 3/10” wide.
Computer-generated•Vertically align the amount entry fields where
possible.
•Use one of the following amount formats:
•0,000,000.
•0,000,000.00
Computer-prepared•You may remove the vertical line in the
amount field that separates dollars from cents.
•Use one of the following amount formats:
•0,000,000.
•0,000,000.00

Supporting statements should then follow in the same sequence as the forms they support. Additional
information required should be attached last.
In this way, the forms are received in the order in which they must be processed. If you do not send
returns to us in this order, the IRS has to delay processing to disassemble them and place them in
order before processing is continued.
Section 3.2 - Paper
3.2.1 PaperThe paper must be:
Content•Chemical wood writing paper that is equal to or better than the quality used for the official form,
•At least 18 pound (17” x 22”, 500 sheets), or
•At least 50 pound offset book (25” x 38”, 500 sheets).
3.2.2 Paper with There are several kinds of paper prohibited for substitute forms. These are:
Chemical Transfer•Carbon-bonded paper
Properties•Chemical transfer paper except when the following specifications are met:
•Each ply within the chemical transfer set of forms must be labeled.
•Only the top ply (ply one and white in color), the one that contains chemical on the back
only (coated back), may be filed with the Service.
3.2.3 ExampleA set containing three plies would be constructed as follows:
one ply (coated back), “Federal Return, File with IRS”; ply two (coated front and back), “Taxpayer’s
copy”, and ply three (coated front), “Preparer’s copy.”
•The file designation, “Federal Return, File with IRS,”
for ply one must be printed in the bottom right margin (just below the last line of the form) in
12-point, bold-face type.
•It is not mandatory, but recommended, that the file designation ”Federal Return, File with IRS,”
be printed in a contrasting ink for visual emphasis.
3.2.4 Carbon Do not attach any carbon paper to any return you file with the Internal Revenue Service.
Paper
3.2.5 Paper and We prefer that the color and opacity of paper substantially duplicates that of the original form. This
Ink Colormeans that your substitute must be printed in black ink and may be on white or on the colored paper
the IRS form is printed on. Forms 1040A and 1040 substitute reproductions may be in black ink with-
out the colored shading. The only exception to this rule is Form 1041-ES, which should always be
printed with a very light gray shading in the color screened area. This is necessary to assist us in expe-
ditiously separating this form from the very similar Form 1040-ES.
3.2.6 Page SizeSubstitute or reproduced forms and computer prepared/generated substitutes may be the same size as
the official form (8” x 11” in most cases) or they may be the standard commercial size (8 1/2” x 11”)
exclusive of pin-feed holes. The thickness of the stock cannot be less than .003 inch.
March 20, 20007962000–12 I.R.B.
If the form is...Then sequence is
1040•Form 1040
•Schedules and forms in sequence number
order
Any other (Form 1120, 1120S,•The tax return
1065, 1041, etc.)•Lettered schedules (Schedule D, etc.) in
alphabetical order
•nNnumbered forms in numerical order

Section 3.3 - Printing
3.3.1 Printing The private printing of all substitute tax forms must be by conventional printing processes, photo
Mediumcopying, computer-graphics, or similar reproduction processes.
3.3.2 LegibilityAll forms must have a high standard of legibility, both as to printing and reproduction and as to fill-in
matter. Entries of taxpayer data may be no smaller than eight points. The Internal Revenue Service
reserves the right to reject those with poor legibility. The ink and printing method used must ensure
that no part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quali-
ty deterioration. This includes any subsequent copies or reproductions made from an approved mas-
ter substitute form, either during preparation or during IRS processing.
3.3.3 Type FontMany federal tax forms are printed using “Helvetica” as the basic type font. We request that you use
this type font when composing substitute forms.
3.3.4 Print SpacingSubstitute forms should be printed using a 6 lines/inch vertical print option. They should also be print-
ed horizontally in 10 pitch pica (i.e., 10 print characters per inch) or 12 pitch elite (i.e., 12 print posi-
tions per inch).
3.3.5 Image SizeThe image size of a printed substitute form should be as close as possible to that of the official form.
You may omit any text on both computer-prepared and computer-generated forms that is solely
instructional.
3.3.6 Title Area To allow a large top margin for marginal printing and more lines per page, the title line(s) for all sub-
Changesstitute forms (not including the form’s year designation and sequence number, when present), may be
photographically reduced by 40 percent or reset as one line of type. When reset as one line, the type
size may be no smaller than 14-point. You may omit “Department of the Treasury, Internal Revenue
Service” and all reference to instructions in the form’s title area.
3.3.7 RemoveWhen privately printing substitute tax forms, the Government Printing Office symbol and/or jacket
Government Printing number must be removed. In the same place, using the same type size, print the Employer
Office Symbol and Identification Number (EIN), the Social Security Number (SSN) of the printer or designer, or the IRS
IRS Catalog Numberassigned source code. (We prefer this last number be printed in the lower left area of the first page of
each form.) Also remove the IRS Catalog Number, if one is present in the bottom center margin, and
the Recycle Symbol, if the substitute is not produced on recycled paper.
3.3.8 Printing While it is preferred that both sides of the paper be used for substitute and reproduced forms, result-
on One Side ing in the same page arrangement as that of the official form or schedule, the IRS will not reject your
of Paperforms if only one side of the paper is used.
3.3.9 Photocopy The IRS does not undertake to approve or disapprove the specific equipment or process used in repro-
Equipmentducing official forms. Photocopies of forms must be entirely legible and satisfy the conditions stated
in this and other revenue procedures.
3.3.10 ReproductionsReproductions of official forms and substitute forms that do not meet the requirements of this revenue
procedure may not be filed instead of the official forms. Illegible photocopies are subject to being
returned to the filer for resubmission of legible copies.
3.3.11 Removal You may remove all references to instructions. No prior approval is needed. One exception is that the
of Instructionsstatement, “For Paperwork Reduction Act Notice, see instructions”, must be retained or a similar
statement provided on each form. Some forms refer the taxpayer to a page number in the instructions
for information on the Paperwork Reduction Act.
Section 3.4 - Margins
3.4.1 Margin SizeThe format of a reproduced tax return when printed on the page must have margins on all sides at least
as large as the margins on the official form. This allows room for IRS employees to make the neces-
sary entries on the form during processing.
•A 1/2” to 1/4” inch margin must be maintained across the top, bottom, and both sides (exclusive
of any pin-fed holes) of all computer-generated substitutes.
2000–12 I.R.B.797March 20, 2000

•The marginal, perforated strips containing the pin-fed holes must be removed from all forms
prior to filing with the Internal Revenue Service.
3.4.2 Marginal Non-tax material allowed in limited areas.
Printing
•Printing is never allowed in the top right margin of the tax return form (i.e., Forms 1040, 1040A,
1040EZ, 1120, 940, 941, 5500 Series, etc.). The Service uses this area to imprint a Document
Locator Number for each return.
•With the exception of the actual tax return forms (i.e., Forms 1040, 1040A, 1040EZ, 1120, 940,
941, etc.), you may print in the left vertical margin and in the left half of the bottom margin.
Prior approval is not required for the marginal printing allowed when printed on an official form or on
a photocopy of an official form.
The marginal printing allowance is also the guide for the preparation of acceptable substitute forms.
There is no exception to the requirement that no printing is allowed in the top right margin of the tax
return form.
Section 3.5 - Examples of Approved Formats
3.5.1 Examples of Two sets of exhibits (Exhibits A-1, A-2, B-1, and B-2) are at the end of this revenue procedure. These
Approved Formats are examples of how the guidelines in this revenue procedure may be used in some specific cases.
From the ExhibitsVertical spacing is six (6) lines to the inch.
3.5.2 Examples of Examples of acceptable computer-generated formats are also shown in the Exhibits section of this rev
Acceptable computer-enue procedure. Exhibits CG-A and CG-B show computer-generated Schedules 1995 A and B.
generated formatsVertical spacing is six (6) lines to the inch. You may also refer to them as examples of how the guide-
lines in this revenue procedure may be used in specific cases. A combination of upper and lower case
print fonts is acceptable in producing the computer-generated forms included in this procedure. This
same logic for computer-generated forms can be applied to any IRS form that is normally reproducible
as a substitute form, with the exception of tax return forms as discussed elsewhere. These examples
are from a prior year and are not to be used as substitute forms.
Section 3.6 - Miscellaneous Information for Substitute Forms
3.6.1 Filing To be acceptable for filing, a substitute return or form must print out in a format that will allow the
Substitute Formsparty submitting the return to follow the same instructions as for filing official forms. These instruc-
tions are in the taxpayer’s tax package or in the related form instructions. The form must be on the
appropriate size paper, be legible, and include a jurat where one appears on the published form.
3.6.2 Caution The IRS has received returns produced by software packages with approved output where either the
to Software form heading was altered or the lines were spaced irregularly. This produces an illegible or unrecog-
Publishersnizable return or a return with the wrong number of pages. We realize that many of these problems
are caused by individual printer differences but they may delay input of return data and, in some cases,
generate correspondence to the taxpayer. Therefore, in the instructions to the purchasers of your prod-
uct, both individual and professional, please stress that their returns will be processed more efficient-
ly if they are properly formatted. This includes:
•Having the correct form numbers and titles at the top of the return, and
•Submitting the same number of pages as if the form were an official IRS form, with the line
items on the proper pages.
3.6.3 Use If you are a practitioner filling out a return for a client or a software publisher who prints instruction
Preaddressed manuals, stress the use of the preaddressed label provided in the tax package the IRS sent to the tax
IRS Labelpayer, when available. The use of this label (or its precisely duplicated label information) is extreme-
ly important for the efficient, accurate, and economical processing of a taxpayer’s return. Labeled
returns indicate that a taxpayer is an established filer and permits us to automatically accelerate pro-
cessing of those returns. This results in quicker refunds, more accurate names/addresses and postal
deliveries, and less manual review by IRS functions.
March 20, 20007982000–12 I.R.B.
Continued on next page

3.6.5 ProgrammingWhenever applicable:
to Print Forms
•Use only the following label information format for single filers:
JOHN Q. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
•Use only the following information for joint filers:
JOHN Q. PUBLIC
MARY I. PUBLIC
310 OAK DRIVE
HOMETOWN, STATE 94000
Chapter 4
Additional Resources
Section 4.1 - Guidance From Other Revenue Procedures
4.1.1 General Guidance for the substitute tax forms not covered in this revenue procedure and the revenue proce-
dures that govern their use are as follows:
•Revenue Procedure 94-79, IRS Publication 1355, Requirements and Conditions for the
Reproduction, Private Design, and Printing of Substitute Forms 1040-ES.
•Revenue Procedures 99-24, IRS Publication 1141, General Rules and Specifications for Private
Printing of Substitute Forms W-2 and W-3.
•Revenue Procedure 99-34, IRS Publication 1179, Specifications for Paper Document Reporting
and Paper Substitutes for Forms 1096, 1098, 1099, 5498, and W-2G.
•Revenue Procedure 98-44, IRS Publication 1187, Specifications for Filing Form 1042-S,
Foreign Person’s U.S. Source Income Subject to Withholding, on Magnetic Tape.
•Revenue Procedure 99-29, IRS Publication 1220, Specifications for Filing Forms 1098, 1099,
5498, and W-2G Magnetically or Electronically.
•Revenue Procedure 95-18, IRS Publication 1223, Specifications for Private Printing of
Substitute Forms W-2c and W-3c.
Section 4.2 - Ordering Publications
4.2.1 Sources of The publications listed below may be ordered by calling 1-800-TAX-FORM (1-800-829-3676).
PublicationsIdentify the requested document by IRS publication number:
•Pub. 1141, the revenue procedure on specifications for private printing for Forms W-2 and W-3.
•Pub. 1167, the revenue procedure on substitute printed, computer- prepared, and computer-gen-
erated tax forms and schedules. This publication is available from the IRS Internet website.
•Pub. 1179, the revenue procedure on paper substitute information returns (Forms 1096, 1098,
1099, 5498, and W-2G).
•Pub. 1192, Catalog of Reproducible Forms and Instructions.
•Pub. 1220, the revenue procedure on electronic or magnetic tape and magnetic diskette report-
ing for information returns (Forms 1098, 1099 series, 5498, and W-2G).
•Pub. 1223, the revenue procedure on substitute Forms W-2c and W-3c.
•Pub. 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip
Income and Allocated Tips, on Magnetic Tape.
•Pub. 1245, Magnetic Tape Reporting for Forms W-4.
2000–12 I.R.B.799March 20, 2000
Continued on next page

•Pub. 1345, Handbook for Electronic Filers of Individual Income Tax Returns (Tax Year 1999).
(This is an annual publication; tax year is subject to change). This publication is available from
the IRS Internet website.
•Pub. 1345-A, Handbook for Electronic Filers of Individual Income Tax Returns (Tax Year 1999)
(Supplement). This publication, printed in the late fall, supplements Publication 1345.
•Pub. 1355, the revenue procedure on the requirements for substitute Form 1040-ES.
4.2.2 Where If you are mailing your order, the address to use is determined by your location.
To Order
Section 4.3 - Electronic Tax Products
4.3.1 The Copies of tax forms with instructions, publications, and other tax related materials may be obtained
Internetvia the Internet. Forms can be downloaded in several file formats (PDF- Portable Document Format,
PS - PostScript, and PCL - Printer Control Language). Those choosing to use PDF files for viewing
on a personal computer can also download a free copy of the Adobe Acrobat Reader.
•World Wide Web - http://www.irs.gov
Access to these sites is free but time on the Internet is subject to the fees charged by your Internet provider.
4.3.2 Fedworld The Internal Revenue Information Systems (IRIS) Bulletin Board can be reached via FedWorld, an
(BBS)aggregation of federal BBS maintained by the Department of Commerce. IRIS can be reached direct-
ly by modem at (703) 321-8020; FedWorld’s main number is (703) 321-3339. These are toll calls.
4.3.3 Tax FaxThe most frequently requested tax forms, instructions, and other information are available through IRS
Tax Fax at (703) 368-9694. Call from your fax machine and follow the voice prompts. Your request
will be transmitted directly back to you. Each call is limited to requesting three items; users pay the
telephone line charges.
4.3.4 Report of The Service makes available a site on the Internet that shows print dates for forms used by taxpayers
Print Dates in the preparation of returns and subsequent transactions. It is in three parts:
•Schedule of anticipated print dates of annual returns,
•Schedule of anticipated print dates of quarterly returns, and
•Schedule of last revision dates for continuous use only forms.
The site address is http://www.irs.gov/prod/bus_info/tax_pro/formsch.html. The site will be updated
weekly during peak printing periods and as necessary at other times.
Section 4.4 - Federal Tax Forms on CD-ROM
4.4.1 Information The CD-ROM contains over 3,000 tax forms and publications for small businesses, return preparers,
About Federal Tax and others who frequently need current or prior year tax products. Most current tax forms on the CD-
Forms CD-ROMROM may be filled in electronically, then printed out for submission and saved for recordkeeping.
March 20, 20008002000–12 I.R.B.
If you live in the ...Then mail your order to ...
Western United StatesWestern Area Distribution Center
Rancho Cordova, CA 95743-0001
Central United StatesCentral Area Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
Eastern United States orEastern Area Distribution Center
or foreign countryP.O. Box 85074
Richmond, VA 23261-5074

Other products on the CD-ROM include the Internal Revenue Bulletins, Tax Supplements, and
Internet resources for the tax professional with links to the World Wide Web.
All necessary software to view the files must be installed from the CD-ROM. Software for Adobe
Acrobat Reader is included on the disk. The software will run under Windows 95/98/NT and
MacIntosh System 7.5 and later. All products are presented in Adobe’s Portable Document Format
(PDF). In addition, the TIPs are provided in the Standard Generalized Markup Language (SGML).
4.4.2 System For system requirements, contact the National Technical Information Service (NTIS) help desk at 703-
Requirements and 487-4608.
How to Order the
Federal Tax FormsThe cost of the CD if purchased via the Internet at http://www.irs.gov/cdorders from NTIS is $16 (plus
CD-ROMa $5 handling fee). If purchased using the following methods the cost is $23 (plus a $5 handling fee).
•by phone - 1-877-CDFORMS (1-877-233-6767)
•by fax - (703) 605-6900
•by mail using the order form contained in IRS Publication 1045 (Tax Professionals Program)
•by mail to:
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
There is a $7 discount per CD for orders of 50 or more copies, making the price $16 per CD plus a $5
handling fee.
Chapter 5
Requirements for Specific Tax Returns
Section 5.1 - Tax Returns (Form 1040, 1040A, 1120, Etc.)
5.1.1 Acceptable There are acceptable computer-generated versions of a tax return form (e.g., Form 1040, 1040A, 1120,
Formsetc., which requires a signature and that establishes tax liability) that are permitted under the follow-
ing conditions:
•These substitute returns must be printed on plain white paper.
•Substitute returns and forms must conform to the physical layout of the corresponding IRS form
although the typeface may differ. The text should match the text on the officially published form
as closely as possible; condensed text and abbreviations will be considered on a case-by-case
basis.
Exception: All jurats (perjury statements) must be reproduced verbatim. No text can be added, delet-
ed, or changed in meaning. It must be readily identifiable as a valid tax return.
•Various computer-graphic print media such as laser printing, dot matrix addressable printing,
etc., may be used to produce the substitute forms.
•The substitute return must be the same exact number of pages, and contain the same line text as
the official return.
•All computer-generated tax returns MUST be submitted for approval prior to their original use.
Should you receive an approval letter for a return and the following year’s return has no changes
except the preprinted year, the latter return is not subject to approval. Exception: If the approval
letter specifies a one-time exception for your return, the next year’s return must be approved.
5.1.2 Computer- The accepted condensed print format version for individual returns is the 1040PC “answer sheet for-
Generated mat” tax return. The approval process for Form 1040PC differs from that of traditional forms. See
Condensed Chapter 7 for additional information.
Format Versions
2000–12 I.R.B.801March 20, 2000
Continued on next page

5.1.3 Prohibited The following are prohibited:
Forms•Tax returns (e.g., Forms 1040, etc.) computer-generated on lined or color-barred paper.
•Tax returns that differ from the official IRS forms in a manner that makes them not standard or
processable.
5.1.4 Changes Certain changes (listed in Section 5.2 through 5.4) are permitted to the graphics of the form without
Permitted to prior approval, but these changes apply only to acceptable preprinted forms. Changes not requiring
Forms 1040 prior approval are good only for the annual filing period, which is the current Tax Year. Such changes
and 1040Aare valid in subsequent years only if the official form does not change.
5.1.5 OtherAll changes not listed in Sections 5.2 through 5.4 require prior approval from the Service BEFORE
Changes Not the form may be filed.
Listed
Section 5.2 - Changes Permitted to Graphics (Forms 1040A and 1040)
5.2.1 AdjustmentsYou may make minor vertical and horizontal spacing adjustments to allow for computer or word-pro-
cessing printing. This includes widening the amount columns or tax entry areas so long as the adjust-
ments do not exceed other provisions stated in revenue procedures. No prior approval is needed for
these changes.
5.2.2 Name and The horizontal rules and instructions within the name and address area may be removed and the entire
Address Areaarea left blank; no line or instruction can remain in the area. However, the statement regarding use of
the IRS label should be retained. The heavy ruled border (when present) that outlines the name,
address area, and social security number must not be removed, relocated, expanded, or contracted.
5.2.3 RequiredWhen the name and address area is left blank, the following format must be used when printing the
Formattaxpayer’s name and address. Otherwise, unless the taxpayer’s preprinted label is affixed over the
information entered in this area, the lines must be filled in as shown:
•1st name line (35 characters maximum)
•2nd name line (35 characters maximum)
•In-care-of name line (35 characters maximum)
•City, State (25 char. max.), one blank char., & ZIP (five char.)
5.2.4 Conventional When there is no in-care-of name line, the name and address will consist of only three lines (single
Name and filer) or four lines (joint filer).
Address DataName and address (joint filer) with no in-care-of name line:
JOHN Z. JONES
MARY I. JONES
1234 ANYWHERE ST., APT 111
ANYTOWN, STATE 12321
5.2.5 Example ofName and address (single filer) with in-care-of name line:
In-Care-Of Name
LineJOHN Z. JONES
C/O THOMAS A. JONES
4311 SOMEWHERE AVE.
SAMETOWN, STATE 54345
5.2.6 Social SecurityThe vertical lines separating the format arrangement of the SSN/EIN may be removed. When the ver-
Number (SSN) and tical lines are removed, the SSN and EIN formats must be 000-00-0000 or 00-0000000, respectively
Employer Identification
Number (EIN) Area
5.2.7 Cents Column•You may remove the vertical rule that separates the dollars from the cents.
•All entries in the amount column should have a decimal point following the whole dollar
amounts whether or not the vertical line that separates the dollars from the cents is present.
•You may omit printing the cents, but all amounts entered on the form must follow a consistent
format. You are strongly urged to round off the figures to whole dollar amounts, following the
official return instructions.
March 20, 20008022000–12 I.R.B.
Continued on next page

•Where several amounts are summed together, the total should be rounded off subsequent to the
addition (i.e, individual amounts should not be rounded off for computation purposes).
•When printing money amounts, you must use one of the following ten- character formats: (a)
0,000,000. (b) 000,000.00
•When there is no entry for a line, leave the line blank.
5.2.8 “Paid On all forms, the paid preparer’s information area may not be rearranged or relocated. You may add
Preparer’s Use three lines and remove the horizontal rules in the preparer’s address area.
Only” Area
Section 5.3 - Changes Permitted to Form 1040A Graphics
5.3.1 GeneralNo prior approval is needed for the following changes (for use with computer-prepared forms only).
5.3.2 Line 4 of This line may be compressed horizontally (to allow for same line entry for the name of the qualifying
Form 1040Achild) by using the following caption: “Head of household; child’s name” (name field).
5.3.3 Other LinesAny line whose caption takes up two or more vertical lines may be compressed to one line by using
contractions, etc., and by removing instructional references.
5.3.4 Page 2 ofAll lines must be present and numbered in the order shown on the official form. These lines may also
Form 1040Abe compressed.
5.3.5 ColorIt is not necessary to duplicate the colorscreening used on the official form. A substitute Form 1040A
Screeningmay be printed in black and white only, with no color screening.
5.3.6 OtherNo other changes to the Form 1040A graphics are allowed without prior approval, except for the
Changes Prohibitedremoval of instructions and references to instructions.
Section 5.4 - Changes Permitted to Form 1040 Graphics
5.4.1 GeneralNo prior approval is needed for the following changes (for use with computer-prepared forms only).
5.4.2 Line 4 of This line may be compressed horizontally (to allow for a larger entry area for the name of the quali-
Form 1040fying child) by using the following caption: “Head of household; child’s name” (name field).
5.4.3 Line 6c of The vertical lines separating columns (1) through (4) may be removed. The captions may be short
Form 1040ened to allow a one-line caption for each column.
5.4.4 Other LinesAny other line whose caption takes up two or more vertical lines may be compressed to one line by
using contractions, etc., and by removing instructional references.
5.4.5 Line 21 - The fill-in portion of this line may be expanded vertically to three lines.
Other IncomeThe amount entry box must remain a single entry.
5.4.6 Line 40 of You may change the line caption to read “Tax” and computer print the words “Total includes tax from”
Form 1040 - Taxand either “Form(s) 8814”, or “Form 4972”. If both forms are used , print both form numbers.
5.4.7 Line 47 of You may change the caption to read: “Other credits from Form” and computer-print only the form(s)
Form 1040that apply.
5.4.8 ColorIt is not necessary to duplicate the color screening used on the official form. A substitute Form 1040
Screeningmay be printed in black and white only, with no color screening.
5.4.9 OtherNo other changes to the Form 1040 graphics are permitted without prior approval except for the
Changes Prohibitedremoval of instructions and references to instructions.
2000–12 I.R.B.803March 20, 2000

Chapter 6
Format and Content of Substitute Returns
Section 6.1 - Acceptable Formats for Computer-Generated Forms and Schedules
6.1.1 Exhibits and Exhibits of acceptable computer-generated formats for the schedules usually attached to the Form
Use of Acceptable 1040 are shown in the Exhibits section of this revenue procedure.
Computer-•If your computer-generated forms appear exactly like the exhibits, no prior authorization is needed.
Generated Formats•Those who want to computer-generate forms not shown here may do so, but they must design
such forms themselves by following the manner and style of those in the Exhibits section of this
revenue procedure, and by taking care to observe other requirements and conditions stated here.
The Service encourages the submission of all proposed forms covered by this revenue procedure.
6.1.2 InstructionsThe format of each substitute schedule or form must follow the format of the official schedule or form
as to item captions, line references, line numbers, sequence, form arrangement and format, etc.
Basically, try to make the form look like the official one, with readability and consistency being pri-
mary factors. You may use periods and/or other similar special characters to separate the various parts
and sections of the form. DO NOT use alpha or numeric characters for these purposes. With the
exceptions described in paragraph 6.1.3, all line numbers and items must be printed even though an
amount is not entered on the line.
6.1.3 Line NumbersWhen a line on an official form is designated by a number or a letter, that designation (reference code)
must be used on a substitute form. The reference code must be printed to the left of the correspond-
ing captioned line and also immediately preceding the data entry field even if there is no reference
code immediately preceding the data entry field on the official form. If an entry field contains multi-
ple lines but shows the line references only one time on the left and right side of the form, do not use
more than the same number of line references on the substitute return.
In addition, the reference code that is immediately before the data field must either be followed by a
period or enclosed in parentheses. There also must be at least two blank spaces between the period or
the right parenthesis and the first digit of the data field. (See example below.)
6.1.4 Decimal PointsA decimal point (i.e., a period) should be used for each money amount regardless of whether the amount
is reported in dollars and cents or in whole dollars, or whether or not the vertical line that separates the
dollars from the cents is present. The decimal points must be vertically aligned when possible.
Example:
5 STATE & LOCAL INC.
TAXES................5 495.00
6 REAL ESTATE
TAXES................6
7 PERSONAL PROPERTY
TAXES................7 198.00
or
5 STATE & LOCAL INC.
TAXES................(5) 495.00
6 REAL ESTATE
TAXES................(6)
7 PERSONAL PROPERTY
TAXES................(7) 198.00
6.1.5 Multiple When submitting multiple page forms, send all pages of the form in the same package. If you are not
Page Formsproducing certain pages, please note that in your cover letter.
Section 6.2 - Additional Instructions for All Forms
6.2.1 Use of YourInternal control numbers and identifying symbols of the computer preparer may be shown on the sub
Own Internal Control stitute, if the use of such numbers or symbols is acceptable to the taxpayer and the taxpayer’s repre-
Numbers and sentative. If shown, such information must not be printed in the top 1/2” clear area of any form or
March 20, 20008042000–12 I.R.B.
Continued on next page

Identifying Symbolsschedule requiring a signature. With the exception of the actual tax return form (i.e., Forms 1040,
1120, 940, 941, 5500 Series, etc.), you may print in the left vertical and bottom left margins. The bot-
tom left margin you may use extends 3 1/2 inches from the left edge of the form.
6.2.2 Descriptions Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one print line
for Captions, by using abbreviations and contractions, and by omitting articles, prepositions, etc. However, suffi-
Lines, etc.cient key words must be retained to permit ready identification of the caption, line, or item.
6.2.3 Derivation Explanatory detail and/or intermediate calculations for derivation of final line totals may be included
of Final Totalson the substitute. We prefer that such calculations be submitted in the form of a supporting statement.
If intermediate calculations are included on the substitute, the line on which they appear may not be
numbered or lettered. Intermediate calculations may not be printed in the right column. This column
is reserved for official numbered and lettered lines that correspond to the ones on the official form. If
a supporting statement is submitted, intermediate calculations or subtotals may be formatted at the pre-
parer’s option.
6.2.4 Instructional Text prescribed for the official form, which is solely instructional in nature, e.g., “Attach this sched-
Text Prescribed ule to Form 1040,” “See instructions,” etc., may be omitted from the substitute form.
for the Official Form
6.2.5 Mixing of Information for more than one schedule or form may not be shown on the same printout page. Both
Forms on the Same sides of the paper may be printed for multiple page official forms; but it is unacceptable to intermix
Page Prohibited single page schedules of forms, except for Schedules A and B (Form 1040), which are printed back to
back by the Service.
Schedule E can be printed on both sides of the paper, because the official form is multiple page, with
page 2 continued on the back. However, do not print Schedule E on the front page and Schedule SE
on the back, or Schedule A on the front and Form 8615 on the back, etc. Both pages of a substitute
form must match the official form version it represents, except that the back page may be blank if the
Service form only contains the instructions thereon.
6.2.6 Identifying Identify all computer-prepared substitutes clearly; print the form designation 1/2” from the top mar-
Computer-Prepared gin and 1 1/2” from the left margin; print the title centered on the first line of print; and print the tax-
Substitutesable year and, where applicable, the sequence number on the same line _ to 1” from right margin.
Include the taxpayer’s name and SSN on all forms and attachments. Also, print the OMB number as
reflected on the official form.
6.2.7 Negative Negative (or loss) monetary amount entries should be enclosed in brackets, or signed minus, to assist
Amountsin the accurate computation and input of form data. On many official forms the Service preprints
brackets in selected negative data fields, and these designations should be retained or inserted on
affected substitute forms.
Chapter 7
OCR Forms
Section 7.1 - Special Form 1040EZ Optical Character Recognition/Image Character Recognition
(OCR/ICR) Requirements
7.1.1 Form 1040EZThe Form 1040EZ is designed in OCR/ICR format. The IRS has the capability to machine read this
Designed in form by optical character recognition/image character recognition (OCR/ICR) equipment. Form
OCR/ICR Format1040EZ data may also be filed electronically or on a 1040PC format return.
An acceptable substitute OCR/ICR Form 1040EZ must generally be an exact replica of the official
OCR/ICR reproduction proof with respect to layout, content, and required OCR/ICR characteris-
tics.
2000–12 I.R.B.805March 20, 2000

7.1.2 PaperThe special paper requirements which must be met for the development of a substitute (privately print
Requirements fored) OCR/ICR Form 1040EZ include the following:
OCR/ICR Form
1040EZ
7.1.3 Specific Ink The specific ink requirements which must be met for this form include the following:
Requirements
March 20, 20008062000–12 I.R.B.
PropertyRequirements
Color and quality of paperPaper must be white, OCR/ICR grade bond,
with no fluorescent additives or water marks,
and with zero rag content.
Reflectivity of paperMust be 80% or greater.
OpacityThe paper opacity ratio must be 80% or more.
Paper WeightSpecified paper weight is 20 lb. OCR/ICR
bond (.0035”).
DirtMust not exceed 10 parts per million.
Finish (smoothness)Must be between 90 and 160 units (Sheffield).
PorosityPaper should have a Gurley reading between
15 and 95.
GlossPaper with shiny or lustrous appearance
(glossy) should be avoided.
SizeForm trim size must be 8” x 11”.
PropertyRequirements
Print ColorThe face of the form prints in black and green,
the back prints in black only (70 % screen).
InkGreen ink used must be highly reflective
OCR/ICR type, such as Flint J-27975, or an
exact match. Black ink used must be nonre-
flective.
Face RegistrationBlack to green must be .02” (plus or minus)
both horizontally and vertically.
Face ScreenForms contain a green-screened background
equal to a 15% tone of 110-line screen. Follow
registration marks on repro-proof for screen
positioning. Handprinted boxes are included
on Page 1 of the reproduction proof and should
be printed as a 50% value of the recommended
OCR/ICR green ink. Inks used for handprinted
boxes must reflect at least 90% of the back-
ground on which it is printed as measured in
the visible range.
Face MarginsApproximately 2/6” head from top trimmed
edge to screen (1/2” to black image). 1/6” out-
side from trimmed edges to screen.
Back Margins1/2” head, 5/16” foot, and 5/16” sides.
Back ScreenBack copy should be screened for 70% tone
value.

7.1.4 TypographyType must be substantially identical in both size and shape with corresponding type on the official
form reproduction proof.
7.1.5 ProperTo assure proper alignment and position of handprinted characters representing return lines 1 through
Alignment and 10 tax data, they must be handprinted (entered) into the preprinted amount field boxes on the form. A
Position of #2 lead wooden pencil, or blue, and/or black ink pen (ball point, fountain, or felt-tipped) is recom-
Handprinted mended as the writing tool that will consistently provide the required stroke width and print contrast
Characterson entered characters.
7.1.6 Reading of Reading of handprinted characters requires adherence to the following techniques:
Handprinted •Enter numeric amount digits carefully and clearly. Fill at least 2/3 of the individual character
Characterbox height, keeping the character within the box with no overlapping or touching characters. Specific
Techniquesrequired constraints are shown below.
•When entering “fours”, keep the top open.
•When entering “ones”, do not use serifs.
•When entering “twos”, do not add extra loops.
•All character lines must be connected with no gaps.
7.1.7 Note:All the general and detailed provisions of this revenue procedure apply (in addition to this specific
OCR/ICR Section) to the development of substitute OCR/ICR Forms 1040EZ.
Section 7.2 - Computer-Generated Alternative Returns, 1040PC Format Return
7.2.1 IntroductionThe Internal Revenue Service offers an electronic approach for filing individual income tax returns.
The 1040PC Format Return is an alternative to th e conventional preprinted tax return. The 1040PC
is an answer sheet return, generated on a personal computer in a three-column format, that prints only
tax data that is input into the software. Tax returns are filed by tax preparers and taxpayers using com-
mercially available tax preparation software packages that include the 1040PC Format Return print
option.
7.2.2 1040PC 1040PC Format Returns are computer-prepared, printed on plain white paper, signed and mailed to the
Format Returns designated processing center, and processed like any other conventionally filed return.
7.2.3 Software Preparers, or taxpayers, must purchase IRS-accepted tax preparation software packages that include
Packages Must the 1040PC print option. All that is necessary to participate in 1040PC is a personal computer, accept-
Be Purchaseded software, a printer, and plain white paper. The 1040PC is attractive to tax preparers and taxpayers
who might not be interested or capable of electronic filing.
7.2.4 Options The Direct Deposit option is available to taxpayers filing 1040PC returns. Balance due returns may
Available to also be filed using 1040PC. The payment may be forwarded to the Service Center with a separate
Taxpayerspayment voucher (Form 1040-V).
7.2.5 Use of the All software used to generate the 1040PC Format Return must be tested and accepted by the Internal
1040PC ProgramRevenue Service. Testing will validate 1040PC returns generated by the software and that the soft-
ware program is in compliance with validity and consistency checks in the IRS 1040PC project spec-
ifications. Software developers who wish to participate in the 1040PC program must submit Form
9356, Application for Software Developers to Participate in the 1040PC Answer Sheet for Individual
Income Tax Returns, to the 1040PC Filing Section.
7.2.6 Acceptance Upon successful completion of software acceptance testing, the software developer will be issued a
Codesoftware acceptance code that will be embedded into the software and print on every 1040PC return
generated. This is not the same as the Source Code issued by the Substitute Forms Program or the
approval number which is generated for OCR Scannable Application Forms for Employee Plans.
7.2.7 References/ The Internal Revenue Service believes that 1040PC will prove beneficial to taxpayers, tax preparers,
Information on and the Service. For specific information about the alternative computer-generated 1040PC Format
the 1040PC Return, refer to Publication 1678, Project 1040PC, Handbook for 1040PC Format Preparers and
Format ReturnPublication 1630, Project 1040PC, Specifications for Software Developers. You may also call (202)
283-0823 or write:
2000–12 I.R.B.807March 20, 2000

Internal Revenue Service
1040PC Filing Office, OP:FS:S:P:S
5000 Ellin Rd
Lanham, MD 20706
Section 7.3 - OCR Scannable Application Forms for Employee Plans
7.3.1 OCR Forms 4461, 4461-A, 4461-B, 5300, 5303, 5307, 5310-A, 5310-A, and 6406 are OCR scannable doc-
Scannable uments submitted to key district offices for employee plans matters. They may be submitted as com-
Documentsputer-generated substitute forms if the requirements of this section are satisfied.
7.3.2 OCR Data An OCR data sheet must be generated according to the following requirements:
Sheet Requirements•Set at least 1” margin at top, bottom, and both sides.
•A data element consists of a less than sign (delimiter), information or at least 5 blank spaces, and
a greater than sign (delimiter). All data elements from page one of the application forms listed
above must be printed on the OCR data sheet, even if no information is entered between the
delimiters.
•Each data element must start at the left margin.
•One line for each data field, except for employer and plan name fields which may be two lines.
However, only one set of delimiters may bracket the field, even if the field is on two lines.
•Each data element must appear on the OCR data sheet in the same sequence as printed on the
preprinted form, reading top to bottom and from left to right.
•Each data field must be sequentially numbered at left commencing with 1. See Notice 90-38 for
examples of the acceptable format.
•The data sheet must be printed on 8 _” x 11” white nonrecycled paper suitable for use with print-
ing equipment and duplicating machines. A photocopy is not acceptable. Heavyweight bond
paper and onion skin paper are not acceptable.
•Use 10 pitch type in a standard business font (e.g., courier, elite, pica).
•Add at least two spaces before and after each less than and greater than sign (delimiters).
•Do not fold or staple the OCR data sheet. It may remain loose, or be paper or spring clipped to
the application.
•At the top of the OCR data sheet add the heading “OCR Data Sheet, File With Application Form
(Enter Form Number), Approval Number” (leave nine spaces for approval number).
7.3.3 Where To The OCR data sheet must be submitted for approval to EP OCR Forms Coordinator, OP:E:EP:FC,
Send OCR Data Room 2232, 1111 Constitution Ave., NW, Washington, DC 20224.
Sheet for Approval
7.3.4 Submission The OCR data sheet must be submitted with a complete word-for-word identical copy of the applica-
Requirements tion form except as described below. This copy may be a photocopy or a computer-generated substi-
tute form. Computer-generated substitute forms may be submitted for approval to the address above.
However, except for the OCR data sheet, such approval is not required if the requirements of this rev-
enue procedure are satisfied. If approval is requested, leave nine spaces for the approval number
above the OMB approval number.
7.3.5 Procedures The OCR data sheet replaces the first copy of page 1 of the application which must otherwise be sub-
for Filing the mitted in duplicate. To avoid confusion when generating the OCR data sheet, the following wording
OCR Data Sheetshould be deleted from page 1 of the application: “File page 1 of the form in duplicate” and “Both
copies of this page must be signed”. If the Procedural Requirements Checklist is being generated, the
following line item statements should be modified as indicated. The question “Has page one been sub-
mitted in duplicate” should be modified to read, “Have you submitted the OCR data sheet?”, and the
question “Have you signed both copies of page 1 of the application?” should be modified to read
“Have you signed the application?”
7.3.6 Nonscannable Nonscannable EP application forms, e.g., Form(s) 5305 and 5306, may be computer generated. They
EP Application need not be submitted for approval if the requirements of this revenue procedure are satisfied. If
Formsapproval is desired, these forms may be submitted to the Substitute Forms Coordinator.
March 20, 20008082000–12 I.R.B.

Chapter 8
Miscellaneous Forms and Programs
Section 8.1 - Paper Substitutes for Form 1042-S
8.1.1 PaperPaper substitutes for Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, that
Substitutestotally conform to the specifications contained in this procedure may be privately printed without prior
approval from the Internal Revenue Service. Proposed substitutes not conforming to these specifica-
tions must be submitted for consideration.
8.1.2 Timeframe The request should be submitted by November 15 of the year prior to the year the form is to be used.
for Submission This is to allow the Service adequate time to respond and the submitter adequate time to make any cor-
of Form 1042-S rections. These requests should contain a copy of the proposed form, the need for the specific devia-
tion(s), and the number of information returns to be printed.
8.1.3 RevisionsForm 1042-S is subject to annual review and possible change. Withholding agents and form suppli-
ers are cautioned against overstocking supplies of the privately printed substitutes.
8.1.4 Obtaining Copies of the official form for the reporting year may be obtained from most Service offices. The
CopiesService provides only cut sheets (no carbon interleaves) of these forms. Continuous fan-fold/pin-fed
forms are not provided.
8.1.5 Instructions Instructions for withholding agents:
For Withholding •Only original copies may be filed with the Service. Carbon copies and reproductions are
Agentsnot acceptable.
•The term “Recipient’s U.S. taxpayer identification number” for an individual means the social
security number (SSN) or individual taxpayer identification number (ITIN), consisting of nine
digits separated by hyphens as follows: 000-00-0000. For all other recipients, the term means
employer identification number (EIN). The EIN consists of nine digits separated by hyphen as
follows: 00-0000000. The taxpayer identification number (TIN) must be in one of these formats.
•Withholding agents are requested to type or machine print whenever possible, provide quality
data entries on the forms (that is, use black ribbon and insert data in the middle of blocks well
separated from other printing and guidelines), and take other measures to guarantee a clear, sharp
image. Withholding agents are not required, however, to acquire special equipment solely for
the purpose of preparing these forms.
•The “VOID” and “CORRECTED” boxes must be printed at the bottom left corner of the form,
and checked if applicable.
•Substitute forms prepared in continuous or strip form must be burst and stripped to conform to
the size specified for a single form before they are filed with the Service. The dimensions are
found below. Computer cards are acceptable provided they meet all requirements regarding lay-
out, content, and size.
8.1.6 Substitute
Forms Format
Requirements
2000–12 I.R.B.809March 20, 2000
PropertySubstitute Forms Format Requirements
PrintingPrivately printed substitute Forms 1042-S must
be exact replicas of the official forms with
respect to layout and contents. Only the dimen-
sions of the substitute form may differ and the
printing of the Government Printing Office sym-
bol must be deleted. The exact dimensions are
found below.
Line EntriesLine 1 must be present, line 2 may be omitted if
it is not needed. If line 2 is omitted, also omit
line 3.
ColumnsNone of the columns can be omitted. Each col-
umn (a through h) must be present and in the
exact order. The column for each payment
amount must contain the appropriate caption.

March 20, 20008102000–12 I.R.B.
PropertySubstitute Forms Format Requirements
Color Quality of Paper•Paper For Copy A must be white chemical
wood bond, or equivalent, 20 pound (basis 17 x
22-500), plus or minus 5 percent; or offset book
paper, 50 pound (basis 25 x 38-500). No opti-
cal brighteners may be added to the pulp or
paper during manufacture. The paper must con-
sist of principally bleach chemical woodpulp or
recycled printed paper. It also must be suitably
sized to accept ink without feathering.
• Copies B, C, D (for Recipient), and E (For
Withholding Agent) are provided in the offi-
cial assembly solely for the convenience of
the withholding agent. Withholding agents
may choose the format, design, color and
quality of the paper used for these copies.
Color and Quality of InkAll printing must be in a high quality non-gloss black
ink. Bar codes should be free from picks and voids.
TypographyType must be substantially identical in size and
shape to corresponding type on the official form.
All rules on the document are either 1 point
(0.015”) or 3 point (0.045”). Vertical rules must
be parallel to the left edge of the document; hor-
izontal rules, parallel to the top edge.
Dimensions• The official form is 8” wide x 5-1/2” deep,
exclusive of a _ snap stub on the left side of
the form. The snap feature is not required on
substitutes.
• The width of a substitute Copy A must be a
minimum of 7” and a maximum of 8”,
although adherence to the size of the official
form is preferred. If the width of substitute
Copy A is reduced from that of the official
form, the width of each field on the substitute
form must be reduced proportionately. The
left margin must be 1/2” and free of all print-
ing other than that shown on the official form.
• The depth of a substitute Copy A must be a
minimum of 5 1/6” and a maximum of 5 1/2”.
CarbonsCarbonized forms or “spot carbons” are not per-
missible. Interleaved carbons, if used, must be
of good quality to preclude smudging and
should be black.
Other CopiesCopies B, C, and D are required to be furnished
forthe convenience of payees who are required
to send a copy of the form with other federal and
state returns they file. Copy E may be desired as
a withholding agent’s record/copy.
Assembly If all five parts are present, the parts of the assem-
bly shall be arranged from top to bottom as fol-
lows: Copy A (Original) “For Internal Revenue
Service,” Copies B, C, and D “For Recipient,” and
Copy E “For Withholding Agent.”

Section 8.2- Specifications for Filing Substitute Schedules K-1
8.2.1 Schedule K-1 Prior approval is NOT required for a substitute Schedule K-1 that accompanies Form 1065 (for part-
Requirementsnership), a Form 1120S (for small business corporation), or a Form 1041 (for fiduciary) when the sub-
stitute Schedule K-1 meets all of the following requirements.
•The Schedule K-1 must contain the payer and recipient’s name, address and SSN/EIN.
•The Schedule K-1 must contain all the items required for use by the taxpayer.
•The line items must be in the same order and arrangement as those on the official form.
•Each taxpayer’s information must be on a separate sheet of paper. Therefore, all continuously
printed substitutes must be separated, by taxpayer, before filing with the Service.
•Schedule K-1 for recipients must have instructions for required line items attached.
•You may be subject to penalties if you file Schedules K-1 with the Service and furnish Schedules
K-1 to partners, shareholders, or beneficiaries that do not conform to the specifications of this
revenue procedure.
•The amount of each partner’s shareholder’s or beneficiary’s share of each line item must be
shown. The furnishing of a total amount of each line item and a percentage (or decimal equiv-
alent) to be applied to such total amount by the partner, shareholder, or beneficiary does not sat-
isfy the law and the specifications of this revenue procedure.
•If you file Schedules K-1 not conforming to the above specifications, IRS may consider these as
not processable and return them to you to be filed correctly. You may also be subjected to the
penalty as mentioned.
Section 8.3 - Procedures for Printing Internal Revenue Service Envelopes
8.3.1 Procedures Organizations are permitted to produce substitute tax return envelopes. Use of substitute return
for Printing IRS envelopes that comply with the requirements set forth in this section will assist in delivery of mail by
Envelopesthe U.S. Postal Service and facilitate internal sorting once the envelopes are received at the Internal
Revenue Service Centers.
The permanent five-digit ZIP codes must be utilized when mailing returns to the prescribed service
center:
8.3.2 Sorting ofThe sorting of returns by form type is accomplished by the preprinted bar codes on return envelopes
Returns by that are included in each specific type of form or package mailed to the taxpayer. The 32 bit bar code
Form Typelocated to the left of the address on each envelope identifies the type of form that person is filing and
assists the Service in consolidating like returns for processing. Failure to use the envelopes furnished
by the Service results in additional processing time and effort, and possibly delays the timely deposit
of funds, processing of returns, and issuance of refund checks.
8.3.3 Sorting of The Internal Revenue Service will not furnish or sell bulk quantities of preprinted tax return envelopes
Returns by ZIP+4 to taxpayers or tax practitioners. A suitable alternative has been developed that will accommodate the
or 9 Digit ZIP Codessorting needs of both the IRS and the U.S. Postal Service. The new alternative is based on the use of
2000–12 I.R.B.811March 20, 2000
Service CenterZip Code
Atlanta, GA39901
Kansas City, MO64999
Austin, TX73301
Philadelphia, PA19255
Memphis, TN37501
Andover, MA05501
Cincinnati, OH45999
Holtsville, NY00501
Ogden, UT84201
Fresno, CA93888

ZIP + 4 or 9 digit ZIP codes for mailing various types of tax returns to the different area service cen-
ters. Essentially, the Postal Service will utilize the last four digits to identify and sort the various form
types into separate groups for processing. The list of add-on four digits or + 4 portion of the 9 digit
ZIP codes with the related form designations is provided below and is to become a permanent part of
the five digit service center ZIP codes shown above.
8.3.4 Add-on Four
Digits or + 4
Portion of the
9 Digit ZIP Codes
8.3.5 Changes Beginning July 1, 2000, all Forms 5500 and 5500-EZ (for the 1999 plan year) will be processed by
Involving EPMFthe Pension and Welfare Benefits Administration (PWBA), an agency of the Department of Labor. In
Forms (Plan Yearaddition, Form 5500-C/R has been obsoleted for plan year 1999. Forms 5500 and 5500-EZ should
1999)be filed as follows:
Forms 5500 and 5500-EZ for plan year 1999 will be printed in green drop-out ink. While it is not set-
ting up a program to approve substitute (non-standard) forms, PWBA has announced that it will not
reject during the first processing year any 1999 annual return/report filing submitted on an unofficial
computer generated version of the form. They have however established the following criteria:
•The form should be the same size as the hand-print form.
•The layout on each page should be the same as the layout on the approved hand-print form.
•There should be no addition or deletion of words, and no misspellings or abbreviations (other
than exact duplication of abbreviations on the approved form).
•The font size, spacing, and boxes on the form should be substantially the same as those used on
the approved hand-print form.
Additional information is available on the PWBA website, http://www.efast.dol.gov.
March 20, 20008122000–12 I.R.B.
Form ZIP + FOURPackage
XXXXX-0001Reserved
XXXXX-01021040
XXXXX-0005941
XXXXX-0046940
XXXXX-0018943
XXXXX-00111065
XXXXX-00121120
XXXXX-00131120S
XXXXX-00141040EZ
XXXXX-00151040A
XXXXX-00205500-CR
XXXXX-00245500EZ
XXXXX-0027990
XXXXX-00312290
XXXXX-00445500
If the plan year is ...Then file the form with ...
1999 even if the form used is The PWBA. See the instructions for Forms
a prior year form5500 and 5500-EZ for the mailing addresses.
Do not use the tables in paragraphs 8.3.1 or
8.3.4.
1998 or earlierThe Internal Revenue Service using the tables
in paragraphs 8.3.1 and 8.3.4.

8.3.6 Reproducible The Reproducible Program that in past years supplied the envelope Reproduction Proofs was abol-
Program Is ished September 30, 1996. The IRS will no longer provide camera copy to practitioners for the pro-
Abolishedduction of envelopes. Practitioners must develop their own camera copy.
8.3.7 Guidelines Use of preparer company names, addresses, and logos is permissible as long as prescribed clear areas
for Having are not invaded. The government recommends that the envelope stock have an average opacity not
Envelopes less than 89 percent and contain a minimum of 50 percent waste paper. Use of carbon-based ink is
Preprintedessential for effective address and bar code reading. Envelope construction can be of side seam or
diagonal seam design. The government recommends that the size of the envelope should be 5-3/4” by
9”. Continuous pin-fed construction is not desirable but is permissible if the glued edge is at the top.
This requirement is firm because mail opening equipment is designed to slice or otherwise open the
bottom edge of each envelope.
8.3.7 Envelopes/The above procedures or guidelines are written for the user having envelopes preprinted. Many prac-
Zip Codestitioners may not wish to have volumes of the different envelopes with differing ZIP codes/form des-
ignations preprinted for reasons of low volume, warehousing, waste, etc. In this case, the practition-
er can type or machine print the addresses with the appropriate ZIP codes to accommodate sorting. If
the requirements/guidelines outlined in this section cannot be met, then use of only the appropriate five
digit service center ZIP code is needed.
Section 8.4 - Procedures for Substitute Form 5471 and Form 5472
8.4.1 Form 5471 This section covers instructions for producing substitutes for:
and Form 5472•Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations,
and accompanying Schedules J, M, N, and O.
•Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign
Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the
Internal Revenue Code).
8.4.2 Paper and Paper and computer-generated substitutes for Form 5471 and the accompanying Schedules J, M, N,
Computer-Generated and O, and Form 5472 that totally conform to the specifications contained in this procedure may be
Substitutes privately printed, but must have prior approval and are subject to annual review from the Internal
Revenue Service.
8.4.3 Official Forms Copies of the official forms for the reporting year may be obtained from most Service offices. The
Can Be Obtained Service provides only cut sheets of these forms. Continuous fan-folded/pin-fed forms are not provided.
From Most
Service Offices
8.4.4 Quality The Service will accept quality substitute tax forms that are consistent with the official forms they rep-
Substitute Formsresent AND that do not have an adverse impact on our processing. Therefore, only those substitute
forms that conform to, and do not deviate from, the corresponding official forms are acceptable.
8.4.5 Computer-If the substitute returns and schedules meet the guidelines prescribed herein, the Service will (for fil-
Prepared Tax ing purposes) accept computer-prepared Forms 5471 and 5472 filled in by a computer, word process-
Formsing equipment or similar automated equipment or a combination of computer-prepared/generated and filled
in information. They may be filed separately or attached to individual or business income tax returns.
8.4.6 Format The specifications for Form 5471 and 5472 are as follows:
Arrangement
•The substitute must follow the design of the official form as to format, arrangement, item cap-
tion, line numbers, line references, and sequence. It must be an exact textual and graphic MIR-
ROR image of the official form for it to be acceptable.
•The filer must use one of the official ten character amount formats. All entries in the amount
column should have a decimal point following the whole dollar amounts whether or not the ver-
tical line that separates the dollars from the cents is present. It must follow a consistent format.
•The reference code must be printed to the left of the corresponding captioned line and also
immediately preceding the data entry field EVEN if there is no reference code preceding the data
entry field on the official form. The reference code that is immediately before the data field must
either be followed by a period or enclosed in parentheses. There also must be at least two blank
spaces between the period or the right parenthesis and the first digit of the data field.
2000–12 I.R.B.813March 20, 2000

•The size of the page must be the same as the official form (8 1/2” x 11”).
•The acceptable type is “Helvetica”.
•The spacing of the type must be 6 lines/inch vertical, 10 or 12 print characters per inch horizontally.
•A 1/2 to 1/4” margin must be maintained across the top, bottom, and both sides (exclusive of any
pin-fed holes).
•The substitute form must be of the same number of pages as the official one.
•The preprinted brackets in the money fields should be retained.
•The filer must COMPLETELY fill in all the specified numbers or referenced lines as they appear
on the official form (not just totals) BEFORE attaching any supporting statement.
•Supporting statements are NEVER to be used until the required official form they support are
first totally filled in (completed). A blank or incomplete form that refers to a supporting state-
ment, in lieu of completing a tax return, is unacceptable.
•Descriptions for captions, lines, etc., appearing in the substitute forms may be limited to one
print line by using abbreviations and contractions, and by omitting articles, prepostitons, etc.
However, sufficient key words must be retained to permit ready identification of the caption,
line, or item.
•Text prescribed for the official form, which is solely instructional in nature, e.g., “Attach this
schedule to Form 1040”, “See instruction”, etc., may be omitted from the form.
8.4.7 Filing Instructions for filing substitute forms are the same as for filing official forms.
Instructions
Chapter 9
Alternative Methods of Filing
Section 9.1 - Forms for Electronically Filed Returns
9.1.1 Electronic Electronic filing is a method by which qualified filers transmit tax return information directly to an
Filing ProgramIRS Service Center over telephone lines in the format of the official Internal Revenue Service forms.
The Service accepts both refund and balance due indiviual tax returns that are filed electronically.
9.1.2 Applying Anyone wishing to participate in the IRS e-File program for individual income tax returns must sub-
for the Electronic mit a Form 8633, Application To Participate in the IRS e- fileProgram. (Note:For business returns,
Filing Program prospective participants must submit a Form 9041, Application For Electronic/Magnetic Media Filing
of Business and Employee Benefit Plan Returns.)
9.1.3 Mailing
Intructions
March 20, 20008142000–12 I.R.B.
If an application filed is...Then mail it to:
Form 8633 for Individual Internal Revenue Service
Income Taxes (regular mail)Andover Service Center
Attn: EFU Acceptance - Stop 983
P.O. Box 4099
Woburn, MA 01888-4099
Form 8633 for Individual Internal Revenue Service
Income Taxes (overnight mail)Andover Service Center
Attn: EFU Acceptance -Stop 983
310 Lowell Street
Andover, MA 05501
Form 9041 for Forms 1065Internal Revenue Service
Andover Service Center
Attn: EFU Acceptance - Stop 983
P.O. Box 4050
Woburn, MA 01888-4050
Form 9041 for Forms 1041Internal Revenue Service
Philadelphia Service Center
Attn: DP 115
11601 Roosevelt Blvd.
Philadelphia, PA 19154

9.1.4 Obtaining The taxpayer signature does not appear on the electronically transmitted tax return and is obtained by
the Taxpayerthe qualified electronic filer on Form 8453, U. S. Individual Income Tax Declaration for an IRS e-file
SignatureReturn, for Forms 1040, 1040A, and 1040EZ. Form 8453, which serves as a transmittal for the asso-
ciated non electronic (paper) documents, such as Forms W-2, W-2G, and 1099-R, is a one-page form
and can only be approved through the Substitute Forms Program in that format. Forms 8453-OL and
8453-NR serve the same purpose for taxpayers filing through online services and Form 1040-NR fil-
ers, respectively. For specific information about electronic filing, refer to Publication 1345, Handbook
for Electronic Filers of Individual Income Tax Returns. (Note:For business returns, the electron-
ic/magnetic media participants must use the official Form 8453-E, F or P, or an approved substitute
that duplicates the official form in language, format, content, color, and size.)
9.1.5 Guidelines A participant in the electronic filing program who wants to develop a substitute form should follow
for Preparing the guidelines for preparing substitute forms throughout this publication, and send a sample of the
Substitute Forms form for approval to the Substitute Forms Coordinator at the address in Chapter 2. Forms 8453 pre-
in the Electronic pared using a font where all IRS-approved wording will not fit on a single page will not be accepted
Filing Programas a substitute form. This applies primarily to dot-matrix printers, although forms prepared similarly
on laser and inkjet printers will also be rejected. PLEASE NOTE:Use of unapproved forms could
result in suspension of the participant from the electronic filing program.
Section 9.2 - FTD Magnetic Tape Payments
9.2.1 Instructions Publication 1315 provides the requirements and instructions for reporting agents who sumit Federal
for Reporting Tax Deposits (FTD) payment information on magnetic tape. Magnetic tape submissions for FTD can
Agents be made for Forms 940, 941, 942, 943, 720, CT-1, 990-PF, 990-T, 990-C, 1042, and 1120,
9.2.2 Instructions Revenue Procedure 89–49 (Pub. 1374) provides the requirements and instructions for certain banks
for Banks and fiduciaries to submit quarterly Form 1041-ES payments on magnetic tape through the Federal Tax
and Fiduciaries Deposit (FTD) system.
Section 9.3 - Effect on Other Documents
9.3.1 Effect on This revenue procedure supersedes Revenue Procedure 98–65, I.R.B. 1998–52.
Other Documents
2000–12 I.R.B.815March 20, 2000
Form 9041 for Forms 5500 and 5500-EZInternal Revenue Service
Attn: EFU (EPMF), Stop 261
P.O. Box 30309, A.M.F.
Memphis, TN 38310

March 20, 20008162000–12 I.R.B.

2000–12 I.R.B.817March 20, 2000

March 20, 20008182000–12 I.R.B.

2000–12 I.R.B.819March 20, 2000

March 20, 20008202000–12 I.R.B.

2000–12 I.R.B.821March 20, 2000

March 20, 20008222000–12 I.R.B.

2000–12 I.R.B.823March 20, 2000

March 20, 20008242000–12 I.R.B.

2000–12 I.R.B.825March 20, 2000

Listed Transactions
Notice 2000–15
Transactions that are the same as or
substantially similar to transactions de-
scribed in the list below have been deter-
mined by the Internal Revenue Service to
be tax avoidance transactions and are
identified as “listed transactions” for pur-
poses of § 1.6011–4T(b)(2) of the Tempo-
rary Income Tax Regulations and §
301.6111–2T(b)(2) of the Temporary Pro-
cedure and Administration Regulations.
As a result, corporate taxpayers may need
to disclose their participation in these
listed transactions as prescribed in §
1.6011–4T, and promoters (or other per-
sons responsible for registering tax shelter
transactions) may need to register such
transactions under § 301.6111–2T. In ad-
dition, promoters must maintain lists of
investors with respect to these listed
transactions pursuant to § 301.6112–1T.
(1) Rev. Rul. 90–105, 1990–2 C.B. 69
(transactions in which taxpayers claim de-
ductions for contributions to a qualified
cash or deferred arrangement or matching
contributions to a defined contribution
plan where the contributions are attribut-
able to compensation earned by plan par-
ticipants after the end of the taxable year);
(2) Notice 95–34, 1995–1 C.B. 309
(certain trust arrangements purported to
qualify as multiple employer welfare ben-
efit funds exempt from the limits of §§
419 and 419A of the Internal Revenue
Code);
(3) Notice 95–53, 1995–2 C.B 334
(certain multiple-party transactions in-
tended to allow one party to realize rental
or other income from property or service
contracts and to allow another party to re-
port deductions related to that income
(often referred to as “lease strips”));
(4) Transactions described in Part II of
Notice 98–5, 1998–1 C.B. 334 (transac-
tions in which the reasonably expected
economic profit is insubstantial in com-
parison to the value of the expected for-
eign tax credits);
(5) Transactions substantially similar to
those at issue in ASA Investerings Part-
nership v. Commissioner, No. 98–1583
(D.C. Cir. Feb. 1, 2000) and ACM Part-
nership v. Commissioner, 157 F.3d 231
(3d Cir. 1998) (transactions involving
contingent installment sales of securities
by partnerships in order to accelerate and
allocate income to a tax-indifferent part-
ner, such as a tax-exempt entity or foreign
person, and to allocate later losses to an-
other partner);
(6) Prop. Treas. Reg. § 1.643(a)–8
(transactions involving distributions de-
scribed in
§ 1.643(a)–8 from charitable remainder
trusts);
(7) Rev. Rul. 99–14, 1999–13 I.R.B. 3
(transactions in which a taxpayer purports
to lease property and then purports to im-
mediately sublease it back to the lessor
(that is, lease-in/lease out or LILO trans-
actions));
(8) Notice 99–59, 1999–52 I.R.B. 761
(transactions involving the distribution of
encumbered property in which taxpayers
claim tax losses for capital outlays that
they have in fact recovered);
(9) Treas. Reg. § 1.7701(l)–3 (transac-
tions involving fast-pay arrangements as
defined in § 1.7701(l)–3(b)); and
(10) Rev. Rul. 2000–12, 2000–11 I.R.B.
744, dated March 13, 2000 (certain transac-
tions involving the acquisition of two debt
instruments the values of which are ex-
pected to change significantly at about the
same time in opposite directions).
This notice is effective February 28,
2000, the date this notice was released to
the public.
The principal author of this notice is
Richard Castanon of the Office of Assis-
tant Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this notice contact Richard
Castanon on (202) 622-3080 (not a toll-
free call).
Differential Earnings Rate for
Mutual Life Insurance
Companies
Notice 2000–16
This notice publishes a tentative deter-
mination under § 809 of the Internal Rev-
enue Code of the “differential earnings
rate” for 1999 and the rate that is used to
calculate the “recomputed differential
earnings amount” for 1998. (The latter
rate is referred to in this notice as the “re-
computed differential earnings rate” for
1998.) These rates are used by mutual
life insurance companies to calculate their
federal income tax liability for taxable
years beginning in 1999.
BACKGROUND
Section 809(a) provides that, in the
case of any mutual life insurance com-
pany, the amount of the deduction allow-
able under § 808 for policyholder divi-
dends is reduced (but not below zero) by
the “differential earnings amount.” Any
excess of the differential earnings amount
over the amount of the deduction allow-
able under § 808 is taken into account as a
reduction in the closing balance of re-
serves under subsections (a) and (b) of §
807. The “differential earnings amount”
for any taxable year is the amount equal
to the product of (a) the life insurance
company’s average equity base for the
taxable year multiplied by (b) the “differ-
ential earnings rate” for that taxable year.
The “differential earnings rate” for the
taxable year is the excess of (a) the “im-
puted earnings rate” for the taxable year
over (b) the “average mutual earnings
rate” for the second calendar year preced-
ing the calendar year in which the taxable
year begins. The “imputed earnings rate”
for any taxable year is the amount that
bears the same ratio to 16.5 percent as the
“current stock earnings rate” for the tax-
able year bears to the “base period stock
earnings rate.”
Section 809(f) provides that, in the case
of any mutual life insurance company, if
the “recomputed differential earnings
amount” for any taxable year exceeds the
differential earnings amount for that tax-
able year, the excess is included in life in-
surance gross income for the succeeding
taxable year. If the differential earnings
amount for any taxable year exceeds the
recomputed differential earnings amount
for that taxable year, the excess is allowed
as a life insurance deduction for the suc-
ceeding taxable year. The “recomputed
differential earnings amount” for any tax-
able year is an amount calculated in the
same manner as the differential earnings
amount for that taxable year, except that
the average mutual earnings rate for the
calendar year in which the taxable year
begins is substituted for the average mu-
tual earnings rate for the second calendar
year preceding the calendar year in which
the taxable year begins.
The stock earnings rates and mutual
earnings rates taken into account under §
809 generally are determined by dividing
statement gain from operations by the av-
erage equity base. For this purpose, the
March 20, 20008262000–12 I.R.B.

term “statement gain from operations”
means “the net gain or loss from opera-
tions required to be set forth in the annual
statement, determined without regard to
Federal income taxes, and ... properly ad-
justed for realized capital gains and
losses....” See§ 809(g)(1). The term “eq-
uity base” is defined as an amount deter-
mined in the manner prescribed by regu-
lations equal to surplus and capital
increased by the amount of nonadmitted
financial assets, the excess of statutory re-
serves over the amount of tax reserves,
the sum of certain other reserves, and 50
percent of any policyholder dividends (or
other similar liability) payable in the fol-
lowing taxable year. See§ 809(b)(2), (3),
(4), (5) and (6). Section 1.809–10 of the
Income Tax Regulations provides that the
equity base includes both the asset valua-
tion reserve and the interest maintenance
reserve for taxable years ending after De-
cember 31, 1991.
Section 1.809–9(a) of the regulations
provides that neither the differential earn-
ings rate under § 809(c) nor the recom-
puted differential earnings rate that is
used in computing the recomputed differ-
ential earnings amount under § 809(f)(3)
may be less than zero.
Rev. Rul. 99–3, 1999–3 I.R.B. 4, pro-
vides that a life insurance subsidiary of a
mutual holding company is not a mutual
life insurance company for which the de-
duction for policyholder dividends is re-
duced pursuant to §§ 808(c)(2) and 809.
As described above, the differential
earnings rate for 1999 and the recomputed
differential earnings rate for 1998 affect
the income and deductions reported by
mutual life insurance companies on their
federal income tax returns for the 1999
taxable year.
Data necessary to determine the tentative
differential earnings rate for 1999 and the
tentative recomputed differential earnings
rate for 1998 have been compiled from re-
turns filed by mutual life insurance compa-
nies and certain stock life insurance compa-
nies. The Internal Revenue Service is
currently examining these returns. This ex-
amination will not be completed before the
March 15, 2000, due date for filing 1999
calendar year returns.
NOTICE OF TENTATIVE RATES
This notice publishes a tentative deter-
mination of the differential earnings rate
for 1999 and of the recomputed differen-
tial earnings rate for 1998. This notice
also publishes a tentative determination of
the rates on which the calculation of the
differential earnings rate for 1999 and the
recomputed differential earnings rate for
1998 are based. The final determination
of these rates is expected to be published
before September 1, 2000.
The tentative determination of the dif-
ferential earnings rate for 1999 and the
tentative determination of the recomputed
differential earnings rate for 1998 that are
published in this notice should be used by
mutual life insurance companies to calcu-
late the amount of tax liability for taxable
years beginning in 1999 (in the case of
companies that file returns before publi-
cation of the final determination of these
rates) or to calculate the amount of esti-
mated unpaid tax liability for taxable
years beginning in 1999 (in the case of
companies that are allowed an extension
of time to file returns). Companies that
file returns before publication of the final
determination of these rates should file
amended returns after the final determina-
tion of these rates is published. If there is
a failure to pay tax for a taxable year be-
ginning in 1999 and the failure is attribut-
able to a difference between (a) the tenta-
tive determination of the differential
earnings rate for 1999 and recomputed
differential earnings rate for 1998 and (b)
the final determination of these rates, then
any such failure through September 15,
2000, will be treated as due to reasonable
cause and will not give rise to any addi-
tion to tax under § 6651.
The tentative determination of the rates
is set forth in Table 1.
DRAFTING INFORMATION
The principal author of this notice is
Katherine A. Hossofsky of the Office of
the Assistant Chief Counsel (Financial In-
stitutions and Products). For further in-
formation regardingthis notice, contact
Ms. Hossofsky on (202) 622-3477 (not a
toll-free call).
Filing and Payment Due Date
Requirements for Certain
Northeastern Taxpayers
Affected by Legal Holiday
Notice 2000–17
For taxpayers that reside in the north-
eastern states of Connecticut, Maine,
Massachusetts, New Hampshire, Rhode
Island, Vermont, and New York (except
New York City, and the New York coun-
ties of Nassau, Rockland, Suffolk, and
Westchester), this notice provides guid-
ance regarding the due dates for filing
federal tax returns (whether paper or elec-
tronic) and making federal tax payments.
Generally, these northeastern taxpayers
are instructed to send their federal tax re-
turns to the Internal Revenue Service
Center in Andover, Massachusetts. How-
ever, northeastern taxpayers who are
2000–12 I.R.B.827March 20, 2000
Notice 2000–16 Table 1
Tentative Determination of Rates To Be Used For Taxable Years Beginning in 1999
Differential earnings rate for 1999 . . . . . . . . . . . . . . .0.249
Recomputed differential earnings rate for 1998 . . . . .0.182
Imputed earnings rate for 1998 . . . . . . . . . . . . . . . . . .16.193
Imputed earnings rate for 1999 . . . . . . . . . . . . . . . . . .15.815
Base period stock earnings rate . . . . . . . . . . . . . . . . .18.221
Current stock earnings rate for 1999 . . . . . . . . . . . . .17.465
Stock earnings rate for 1996 . . . . . . . . . . . . . . . . . . . .17.238
Stock earnings rate for 1997 . . . . . . . . . . . . . . . . . . . .19.321
Stock earnings rate for 1998 . . . . . . . . . . . . . . . . . . . .15.836
Average mutual earnings rate for 1997 . . . . . . . . . . . .15.566
Average mutual earnings rate for 1998 . . . . . . . . . . . .16.011

making a payment with their federal tax
return or automatic extension of time to
file are instructed to send these docu-
ments and payments to Pittsburgh, Penn-
sylvania, and not to the Andover Service
Center. These instructions may cause
some confusion for the 2000 filing season
because the due date for filing tax returns
and making payments is Saturday, April
15, 2000, and Monday, April 17, 2000, is
Patriots’ Day, a legal holiday in Massa-
chusetts and Maine, but not elsewhere.
To eliminate this confusion for these
northeastern taxpayers for the 2000 filing
season, federal tax returns (including the
1999 Form 1040, U.S. Individual Income
Tax Return), automatic extensions of time
to file, and federal tax payments (includ-
ing the payment of the first installment of
estimated tax for 2000), which are due
April 15, 2000, will be treated as timely if
they are sent by April 18, 2000, to either
the Andover Service Center or Pittsburgh,
Pennsylvania, as instructed. This special
treatment for the 2000 filing season is dis-
tinguished from the general Service posi-
tion on due dates for filing and paying
federal taxes set forth in Rev. Rul. 90–5,
1990–1 C.B. 189. See alsoNotice 95–17,
1995–1 C.B. 300.
The principal author of this notice is
Charles A. Hall of the Office of Assistant
Chief Counsel (Income Tax and Account-
ing). For further information regarding
this notice contact Charles A. Hall at
(202) 622-4940 (not a toll-free call).
March 20, 20008282000–12 I.R.B.

2000–12 I.R.B.829March 20, 2000
Notice of Proposed Rulemaking
and Notice of Public Hearing
Taxation of Tax-Exempt
Organizations’ Income from
Corporate Sponsorship
REG–209601-92
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Withdrawal of previous pro-
posed rules, notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations relating to the tax
treatment of sponsorship payments re-
ceived by exempt organizations. The
Taxpayer Relief Act of 1997 amended the
Internal Revenue Code to provide that un-
related trade or business does not include
the activity of soliciting and receiving
qualified sponsorship payments. This ac-
tion affects exempt organizations that re-
ceive sponsorship payments. This docu-
ment provides notice of a public hearing
on these proposed regulations. This docu-
ment also withdraws proposed rules pub-
lished on January 22, 1993.
DATES: Written or electronic comments
must be received by May 30, 2000. Out-
lines of topics to be discussed at the public
hearing scheduled for June 21, 2000, at 10
a.m. must be received by May 31, 2000.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG-209601-92),
room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m.
to: CC:DOM:CORP:R (REG-209601-
92), room 5226, Courier’s Desk, Inter-
nal Revenue Service, 1111 Constitution
Avenue, NW., Washington, DC. Alterna-
tively, taxpayers may submit comments
electronically via the Internet by select-
ing the “Tax Regs” option on the IRS
Home Page, or by submitting comments
directly to the IRS Internet site at
http://www.irs.gov/tax_regs/regslist.htm
l. The public hearing will be held in
room G-043, Internal Revenue Building,
1111 Constitution Avenue, NW., Wash-
ington, DC.
FOR FURTHER INFORMATION CON-
TACT: Stephanie Lucas Caden, (202)
622-6080 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
Exempt organizations generally must
pay tax on unrelated business taxable in-
come, as defined in section 512. Section
512(a)(1) defines unrelated business tax-
able income (UBTI) as the gross income
derived by an organization from any unre-
lated trade or business (as defined in sec-
tion 513) regularly carried on by it, less
the deductions that are directly connected
with the carrying on of the trade or busi-
ness, both computed with the modifica-
tions provided in section 512(b).
Section 513(a) defines unrelated trade
or businessas any trade or business the
conduct of which is not substantially re-
lated (aside from the need of an organiza-
tion for income or funds or the use it
makes of the profits derived) to the exer-
cise or performance by the organization
of its charitable, educational, or other pur-
pose or function constituting the basis for
its exemption under section 501. Section
513(c), captioned “Advertising, Etc., Ac-
tivities,” provides that the term trade or
businessincludes any activity carried on
for the production of income from the sale
of goods or
the performance of services, and that
an activity does not lose identity as a trade
or business merely because it is carried on
within a larger aggregate of similar activi-
ties or within a larger complex of other
endeavors which may, or may not, be re-
lated to the exempt purposes of the orga-
nization. See §1.513-1(b).
The IRS first published a Notice of
Proposed Rulemaking (1993 proposed
regulations) on January 22, 1993 (58 F.R.
5687), proposing that the regulations
under section 513 be amended to provide
guidance on the proper tax treatment of
sponsorship payments received by an ex-
empt organization. The 1993 proposed
regulations focused on the nature of the
services provided by the exempt organi-
zation rather than the benefit received by
the sponsor. The 1993 proposed regula-
tions distinguished advertising, which is
an unrelated trade or business activity,
from acknowledgments, which are the
mere recognition of a sponsor’s payment,
and therefore do not result in UBTI. Ad-
vertising was defined as any message or
other programming material, broadcast or
otherwise transmitted, published, dis-
played or distributed in exchange for any
remuneration, that promotes or markets
any company, service, facility or product.
Acknowledgments were defined as mere
recognition of sponsorship payments or
identification of the sponsor rather than
promotion of its products, services or fa-
cilities. Under the 1993 proposed regula-
tions, the term acknowledgment included:
sponsor logos and slogans that do not
contain comparative or qualitative de-
scriptions; locations and telephone num-
bers; value-neutral descriptions including
displays or visual depictions; and sponsor
brand or trade names and product or ser-
vice listings.
In a so-called “tainting rule,” the 1993
proposed regulations provided that if any
activities, messages or programming ma-
terial constituted advertising with respect
to a sponsorship payment, then all related
activities, messages or programming ma-
terial that might otherwise be acknowl-
edgments would be considered advertis-
ing.
The 1993 proposed regulations clari-
fied that the rules regarding corporate
sponsorship apply uniformly to all spon-
sorship activities, both broadcast and non-
broadcast activities, unless otherwise ex-
pressly stated, without regard to the local
nature of the organization or activities or
to the amount of the sponsorship pay-
ment. The 1993 proposed regulations ex-
pressly did not apply to qualified conven-
tion and trade show activities or to the
sale of advertising in exempt organization
periodicals.
The 1993 proposed regulations also
proposed to amend the regulations under
section 512(a) by adding examples of the
allocation rule governing exploitation of
exempt activities in cases involving spon-
sorship income.
A public hearing on the 1993 proposed
regulations was held on July 8, 1993.
Public comments received by the IRS
Part IV. Items of General Interest

March 20, 20008302000–12 I.R.B.
generally welcomed the guidance as an
important step in clarifying this area of
the law, but suggested modifications.
Several comments concerned the effec-
tive date of the amendments, but there
was no consensus as to an appropriate ef-
fective date. In addition, numerous com-
ments requested elimination of the taint-
ing rule. One comment expressed
concern that the approach taken in the
1993 proposed regulations to the exploita-
tion rules of §1.512(a)-1(d) was likely to
create confusion and could lead to appli-
cation of the exploitation exception in a
manner far broader than was intended.
The Taxpayer Relief Act of 1997, Pub-
lic Law 105-34, section 965 (111 Stat.
788, 893-94), amended the Internal Rev-
enue Code by adding section 513(i). Sec-
tion 513(i) governs the treatment of cer-
tain sponsorship payments by providing
that qualified sponsorship payments are
not subject to the unrelated business in-
come tax (UBIT). Section 513(i) defines
qualified sponsorship paymentsas pay-
ments made by a person engaged in a
trade or business with respect to which
there is no arrangement or expectation
that such person will receive any substan-
tial return benefit other than the use or ac-
knowledgment of the name or logo (or
product lines) of the person’s trade or
business in connection with the exempt
organization’s activities. Section 513(i)
further provides that use or acknowledg-
ment does not include advertising (includ-
ing messages containing qualitative or
comparative language, price information
or other indications of savings or value, or
an endorsement or other inducement to
purchase, sell, or use a sponsor’s products
or services). The legislative history to
section 513(i) indicates that the use of
promotional logos or slogans that are an
established part of the sponsor’s identity
does not, by itself, constitute advertising.
H.R. Conf. Rep. No. 220, 105
th
Cong., 1
st
Sess. 476 (1997). Section 513(i)(2)(B)(i)
provides that qualified sponsorship pay-
ments do not include payments where the
amount is contingent upon the level of at-
tendance at an event, broadcast ratings, or
other factors indicating the degree of pub-
lic exposure to an activity. However, the
fact that a payment is contingent upon a
sponsored activity actually being con-
ducted or broadcast does not, by itself,
cause the payment to fail to be a qualified
sponsorship payment. The legislative his-
tory to section 513(i) further indicates that
mere display or distribution, whether for
free or remuneration, of a sponsor’s prod-
ucts by the sponsor or the organization to
the general public at a sponsored event is
not considered advertising. H.R. Conf.
Rep. No. 220, 105
th
Cong., 1
st
Sess. 474
(1997).
Section 513(i) differs from the 1993
proposed regulations in that section 513(i)
has no tainting rule. Instead, section
513(i) specifically provides that, to the
extent a portion of a payment would (if
made as a separate payment) be a quali-
fied sponsorship payment, that portion of
such payment and the other portion of
such payment are treated as separate pay-
ments. For example, if a sponsorship
arrangement entitles the sponsor to both
product advertising and use or acknowl-
edgment of the sponsor’s name or logo by
the organization, the section 513(i) safe
harbor applies only to the amount, if any,
of the payment that exceeds the fair mar-
ket value of the product advertising pro-
vided to the sponsor. Similarly, providing
facilities, services or other privileges to a
sponsor or the sponsor’s designees (e.g.,
complimentary tickets, pro-am playing
spots in golf tournaments, or receptions
for major donors) in connection with a
sponsorship arrangement is evaluated as a
separate transaction in determining
whether the organization has UBTI. A li-
cense granted to a sponsor as part of a
sponsorship arrangement that allows a
sponsor to use an intangible asset of the
organization (e.g., the organization’s
trademark, patent, logo, or designation) is
likewise treated as a separate transaction.
H.R. Conf. Rep. No. 220, 105
th
Cong., 1
st
Sess. 475 (1997). Whether a separate
transaction that falls outside of the section
513(i) safe harbor is subject to the UBIT
depends on the application of existing
rules under sections 512, 513, and 514.
Section 513(i) applies to payments so-
licited or received after December 31,
1997. Section 513(i) does not apply to
qualified convention and trade show ac-
tivities (described in section
513(d)(3)(B)) or to the sale of an ac-
knowledgment or advertising in exempt
organization periodicals. For this pur-
pose, the term periodicalsmeans regu-
larly scheduled and printed material pub-
lished by or on behalf of an exempt
organization that is not related to and pri-
marily distributed in connection with a
specific event conducted by the exempt
organization.
Although section 513(i) codifies the
1993 proposed regulations in many re-
spects, there are significant differences,
including the elimination of the tainting
rule. To reflect these differences, and in
response to comments submitted on the
1993 proposed regulations, a number of
changes are made in these proposed regu-
lations, and some additional areas are ad-
dressed, such as exclusivity arrange-
ments. In light of these changes, the IRS
and the Treasury Department decided to
issue regulations in proposed form, rather
than final form, to provide an opportunity
for further comment.
Discussion of Proposed Regulations
These proposed regulations amend the
regulations under section 513 to provide
guidance in the area of corporate sponsor-
ship. Following section 513(i), these pro-
posed regulations provide that qualified
sponsorship payments are not UBTI.
These proposed regulations define the
term qualified sponsorship paymentsto
mean payments made by any person en-
gaged in a trade or business with respect
to which there is no arrangement or ex-
pectation that such person will receive
any substantial return benefit in exchange
for making the payment.
These proposed regulations define the
phrase substantial return benefit
to mean
any benefit other than (1) a use or ac-
knowledgment of the payor’s name or
logo in connection with the exempt orga-
nization’s activities, or (2) certain goods
or services that have an insubstantial
value under existing IRS guidelines.
Generally, benefits such as complimen-
tary tickets, pro-am playing spots, and re-
ceptions for donors have an insubstantial
value only if they have a fair market value
of not more than 2% of the payment, or
$74 (for tax years beginning in calendar
year 2000), whichever is less. See
§1.170A-13(f)(8)(i)(A); Rev. Proc. 90-12
(1990-1 C.B. 471), as adjusted for infla-
tion (see Rev. Proc. 99-42, 1999-46 I.R.B.
568 (November 15, 1999)). If a payor re-
ceives a substantial return benefit (such as
complimentary tickets having a fair mar-
ket value in excess of $74) in exchange
for a payment, the section 513(i) safe har-

2000–12 I.R.B.831March 20, 2000
bor does not apply to the payment (or por-
tion thereof) attributable to the substantial
return benefit. In that case, whether the
payment (or portion thereof) is subject to
UBIT must be determined under existing
principles and rules. Thus, the payment
may not be subject to UBIT because the
exempt organization’s activity is not an
unrelated trade or business within the
meaning of section 513(a) (for example,
because substantially all of the work in
carrying on the trade or business is per-
formed by volunteers) or is not “regularly
carried on” within the meaning of section
512(a)(1), or because one of the section
512(b) modifications applies.
These proposed regulations clarify that
sponsored activities within the scope of
the section 513(i) safe harbor may include
a single event (such as a bowl game, a
walkathon or a television program); a se-
ries of related events (such as a concert
series or a sports tournament); an activity
of extended or indefinite duration (such as
an art exhibit); or continuing support of
an exempt organization’s operation. A
payment (or portion thereof) may be a
qualified sponsorship payment regardless
of whether the sponsored activity con-
ducted by the organization is substantially
related to its tax exempt purpose. H.R.
Conf. Rep. No. 220, 105
th
Cong., 1
st
Sess.
474 n.44 (1997).
Consistent with section 513(i)(3), the
tainting rule of the 1993 proposed regula-
tions has been removed. However, these
proposed regulations clarify that for an
exempt organization to avail itself of the
section 513(i) safe harbor, it must estab-
lish that some portion of the payment ex-
ceeds the fair market value of any sub-
stantial return benefit received by a payor
in return for making the payment. In a
sponsorship arrangement, the fair market
value of the substantial return benefit may
equal the entire amount of the sponsor-
ship payment. The burden of establishing
the fair market value of any substantial re-
turn benefit falls on the exempt organiza-
tion because the exempt organization has
superior access to relevant information re-
garding its sponsorship arrangements.
These proposed regulations state that the
exempt organization’s determination of
the fair market value of a substantial re-
turn benefit provided to the payor will not
be set aside for purposes of applying the
section 513(i) safe harbor so long as the
organization makes a reasonable and
good faith valuation of the substantial re-
turn benefit received by the payor.
These proposed regulations provide
that the right to be the only sponsor of an
activity, or the only sponsor representing
a particular trade, business or industry is
generally not a substantial return benefit.
Any portion of the payment attributable to
the exclusive sponsorship arrangement,
therefore, may be a qualified sponsorship
payment. However, if in return for a pay-
ment, the exempt organization agrees that
products or services that compete with the
payor’s products or services will not be
sold or provided in connection with one
or more activities of the exempt organiza-
tion, the payor has received a substantial
return benefit and the portion of the pay-
ment attributable to the exclusive
provider arrangement is not a qualified
sponsorship payment. Consistent with
the allocation rule described above, when
a payor receives both exclusive sponsor-
ship and exclusive provider rights in ex-
change for making a payment, the fair
market value of the exclusive provider
arrangement and any other substantial re-
turn benefit is determined first (i.e., with-
out regard to the existence of the exclu-
sive sponsorship arrangement).
The IRS and the Treasury Department
have concluded that the examples in-
cluded in the 1993 proposed regulations
interpreted §1.512(a)-1(d) too broadly by
allowing exempt organizations to apply
excess expenses directly connected with
the conduct of an exempt activity (such as
the conduct of a bowl game) to offset in-
come from a separate, unrelated business
activity (such as the sale of clothing fea-
turing the name and logo of the bowl
game) which does not have a proximate
and primary relationship to the exempt
activity. An example in these proposed
regulations clarifies that §1.512(a)-1(d)
applies only in circumstances where the
unrelated business activity and the ex-
empt activity are closely connected, such
that a taxable entity pursuing the same
business activity would normally also
conduct the exempt activity. The example
involves the sale of advertising in a mu-
seum’s exhibition catalog. In this exam-
ple, the sale of advertising exploits an ac-
tivity — the publication of editorial
material — normally conducted by tax-
able entities that sell advertising. There-
fore, the example concludes that any net
loss related to the museum’s publication
of its exhibition catalog (after taking into
account any income derived from or at-
tributable to publication of the catalog)
may be applied to offset any net unrelated
business income from the museum’s sale
of advertising in the catalog. In contrast,
expenses related to the costs of the exhibi-
tion itself are not directly connected with
the unrelated advertising activity and can-
not be applied to offset income from the
advertising activity.
As discussed above, existing principles
and rules will determine the UBIT conse-
quences of any portion of a payment that
falls outside the section 513(i) safe har-
bor. Existing principles and rules will
also determine the non-UBIT conse-
quences of sponsorship arrangements, in-
cluding benefits to the payor. For exam-
ple, see Rev. Rul. 77-367 (1977-2 C.B.
193), and Rev. Rul. 66-358 (1966-2 C.B.
218), regarding inurement and private
benefit.
These proposed regulations do not
specifically address the Internet activities
of exempt organizations. However, the
IRS and the Treasury Department are re-
viewing the application of existing tax
laws governing exempt organizations, in-
cluding the UBIT rules, to Internet activi-
ties. Comments are specifically requested
on the application of the rules governing
periodicals and trade shows in section
513(i)(2)(B)(ii) to an exempt organiza-
tion’s Internet sites, and on whether pro-
viding a link to a sponsor’s Internet site is
advertising within the meaning of section
513(i)(2)(A) and §1.513-4(c)(2)(iv).
These proposed regulations clarify that
qualified sponsorship payments in the
form of money or property (but not ser-
vices) are treated as contributions re-
ceived by the exempt organization for
purposes of determining public support to
the organization under section
170(b)(1)(A)(vi) or section 509(a)(2).
The exclusion of contributed services for
purposes of determining public support is
consistent with the general rule regarding
donated services. See §§1.509(a)-3(f),
1.170A-9(e)(7)(i), 1.170A-1(g). Thus,
qualified sponsorship payments in the
form of money or property are treated as
contributions for purposes of Part I (Rev-
enue, Expenses, and Changes in Net As-
sets or Fund Balances) of Form 990, “Re-

March 20, 20008322000–12 I.R.B.
turn of Organization Exempt from In-
come Tax.” The fact that a payment is a
qualified sponsorship payment that is
treated as a “contribution” to the payee
organization does not determine whether
the payment is deductible by the payor
under section 162 or section 170.
Proposed Effective Date
These regulations are proposed to
apply on the date they are published as
final in the Federal Register, although
organizations may rely on these proposed
regulations for payments received be-
tween January 1, 1998, and the date the
regulations are published as final in the
Federal Register.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Exec-
utive Order 12866. Therefore, a regula-
tory assessment is not required. It also
has been determined that section 553(b)
of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
regulations, and because these regulations
do not impose a collection of information
on small entities, the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6) does not
apply. Therefore, a Regulatory Flexibility
Analysis is not required. Pursuant to sec-
tion 7805(f) of the Internal Revenue
Code, the notice of proposed rulemaking
will be submitted to the Chief Counsel for
Advocacy of the Small Business Admin-
istration for comment on its impact on
small business.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any written com-
ments (a signed original and eight (8)
copies) and electronic comments that are
submitted timely to the IRS. The IRS and
Treasury Department request comments
on the clarity of the proposed regulations
and how they may be made easier to un-
derstand. In particular, the IRS and the
Treasury Department request comments
on whether further clarification is needed
regarding the application of §1.512(a)-
1(d) in the context of corporate sponsor-
ship payments or other unrelated business
activities. All comments will be available
for public inspection and copying.
A public hearing has been scheduled
for June 21, 2000, at 10 a.m. in room G-
043, Internal Revenue Building, 1111
Constitution Avenue, NW., Washington,
DC. Due to building security procedures,
visitors must enter at the 10
th
Street en-
trance, located between Constitution and
Pennsylvania Avenues, NW. In addition,
all visitors must present photo identifica-
tion to enter the building. Because of ac-
cess restrictions, visitors will not be ad-
mitted beyond the immediate entrance
area more than 15 minutes before the
hearing starts. For information about
having your name placed on the building
access list to attend the hearing, see the
“FOR FURTHER INFORMATION
CONTACT” section of this preamble.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish to
present oral comments at the hearing must
submit timely written comments and an
outline of the topics to be discussed and
the time to be devoted to each topic (a
signed original and eight (8) copies) by
May 31, 2000.
A period of 10 minutes will be allotted
to each person for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receiving outlines has
passed. Copies of the agenda will be
available free of charge at the hearing.
Drafting Information
The principal author of these regula-
tions is Stephanie Lucas Caden, Office of
Associate Chief Counsel (Employee Ben-
efits and Exempt Organizations), Internal
Revenue Service. However, personnel
from other offices of the Service and the
Treasury Department participated in their
development.
* * * * *
Withdrawal of Proposed Amendments
Accordingly, under the authority of 26
U.S.C. 7805, the proposed amendments to
26 CFR part 1, relating to §1.512(a)-1 and
§1.513-4, published in the Federal Regis-
terfor January 22, 1993 (58 FR 5687),
are withdrawn.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is pro-
posed to be amended as follows:
PART 1—INCOME TAX
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. In §1.170A-9, a sentence is
added to the end of paragraph (e)(6)(i) to
read as follows:
§1.170A-9 Definition of section
170(b)(1)(A) organization.
* * * * *
(e) * * *
(6) Definition of support; meaning of
general public—(i) In general. * * *
For purposes of this paragraph (e), the
term contributionsincludes qualified
sponsorship payments (as defined in
§1.513-4) in the form of money or prop-
erty (but not services).
* * * * *
Par. 3. In §1.509(a)-3, a sentence is
added to the end of paragraph (f)(1) to
read as follows:
§1.509(a)-3 Broadly, publicly supported
organizations.
* * * * *
(f) Gifts and contributions distin-
guished from gross receipts—(1)In gen-
eral.* * * For purposes of section
509(a)(2), the term contributionsincludes
qualified sponsorship payments (as de-
fined in §1.513-4) in the form of money
or property (but not services).
* * * * *
Par. 4. In §1.512(a)-1, paragraph (e) is
amended by:
1. Revising the heading and introduc-
tory text for paragraph (e);
2. Redesignating the current Example
to readExample 1;
3. Adding Example 2.
The revisions and additions read as fol-
lows:
§1.512(a)-1 Definition.
* * * * *
(e) Examples. This section is illus-
trated by the following examples:
Example 1. * * *
Example 2. (i) P, a manufacturer of photographic
equipment, underwrites a photography exhibition
organized by M, an art museum described in section
501(c)(3). In return for a payment of $100,000, M
agrees that the exhibition catalog sold by M in con-
nection with the exhibit will advertise P’s product.
The exhibition catalog will also include educational
material, such as copies of photographs included in
the exhibition, interviews with photographers, and
an essay by the curator of M’s department of pho-
tography. For purposes of this example, assume that

2000–12 I.R.B.833March 20, 2000
none of the $100,000 is a qualified sponsorship pay-
ment within the meaning of section 513(i) and
§1.513-4, that M’s advertising activity is regularly
carried on, and that the entire amount of the payment
is unrelated business taxable income to M. Ex-
penses directly connected with generating the unre-
lated business taxable income (i.e., direct advertis-
ing costs) total $25,000. Expenses directly
connected with the preparation and publication of
the exhibition catalog (other than direct advertising
costs) total $110,000. M receives $60,000 of gross
revenue from sales of the exhibition catalog. Ex-
penses directly connected with the conduct of the
exhibition total $500,000.
(ii) The computation of unrelated business tax-
able income is as follows:
(A) Unrelated trade or business (sale of advertis-
ing):
Income$100,000
Directly-connected
expenses(25,000)
Subtotal75,000$75,000
(B) Exempt function (publication of exhibition cat-
alog):
Income (from
catalog sales)60,000
Directly-connected
expenses(110,000)
Net exempt function
income (loss)(50,000)(50,000)
Unrelated business
taxable income25,000
(iii) Expenses related to publication of the exhi-
bition catalog exceed revenues by $50,000. Because
the unrelated business activity (the sale of advertis-
ing) exploits an exempt activity (the publication of
the exhibition catalog), and because the publication
of editorial material is an activity normally con-
ducted by taxable entities that sell advertising, the
net loss from the exempt publication activity is al-
lowed as a deduction from unrelated business in-
come under paragraph (d)(2) of this section. In con-
trast, the presentation of an exhibition is not an
activity normally conducted by taxable entities en-
gaged in advertising and publication activity for pur-
poses of paragraph (d)(2) of this section. Conse-
quently, the $500,000 cost of presenting the
exhibition is not directly connected with the conduct
of the unrelated advertising activity and does not
have a proximate and primary relationship to that
activity. Accordingly, M has unrelated business tax-
able income of $25,000.
Par. 4. Section 1.513-4 is added to read
as follows:
§1.513-4 Certain sponsorship not unre-
lated trade or business.
(a) In general.Under section 513(i),
the receipt of qualified sponsorship pay-
ments by an exempt organization which is
subject to the tax imposed by section 511
does not constitute receipt of income from
an unrelated trade or business.
(b) Exception. The provisions of this
section do not apply with respect to pay-
ments made in connection with qualified
convention and trade show activities. For
rules governing qualified convention and
trade show activity, see §1.513-3. The
provisions of this section also do not
apply to income derived from the sale of
advertising or acknowledgments in ex-
empt organization periodicals. For this
purpose, the term periodicalmeans regu-
larly scheduled and printed material pub-
lished by or on behalf of the exempt orga-
nization that is not related to and
primarily distributed in connection with a
specific event conducted by the exempt
organization. For rules governing the sale
of advertising in exempt organization pe-
riodicals, see §1.512(a)-1(f).
(c) Qualified sponsorship payment—
(1) Definition. The term qualified spon-
sorship paymentmeans any payment of
money, transfer of property, or perfor-
mance of services by any person engaged
in a trade or business with respect to
which there is no arrangement or expecta-
tion that the person will receive any sub-
stantial return benefit. In determining
whether a payment is a qualified sponsor-
ship payment, it is irrelevant whether the
sponsored activity is related or unrelated
to the recipient organization’s exempt
purpose. It is also irrelevant whether the
sponsored activity is temporary or perma-
nent.
(2) Substantial return benefit—(i) In
general. For purposes of this section, a
substantial return benefitmeans any ben-
efit other than goods, services or other
benefits of insubstantial value that are dis-
regarded under paragraph (c)(2)(ii) of this
section, or a use or acknowledgment de-
scribed in paragraph (c)(2)(iii) of this sec-
tion. A substantial return benefit includes
advertising as defined in paragraph
(c)(2)(iv) of this section, providing facili-
ties, services or other privileges to the
payor or persons designated by the payor
(except as provided in paragraph (c)(2)(ii)
of this section), and granting the payor or
persons designated by the payor an exclu-
sive or nonexclusive right to use an intan-
gible asset (e.g., trademark, patent, logo,
or designation) of the exempt organiza-
tion.
(ii) Certain goods or services disre-
garded. (A) For purposes of paragraph
(c)(2)(i) of this section, goods, services or
other benefits are disregarded if–
(1) The goods, services or other bene-
fits provided to the payor or persons des-
ignated by the payor have an aggregate
fair market value of not more than 2% of
the amount of the payment, or $74 (ad-
justed for tax years beginning after calen-
dar year 2000 by an amount determined
under section 1(f)(3), by substituting “cal-
endar year 1999” for “calendar year
1992” in section 1(f)(3)(B)), whichever is
less (or such other amount(s) as may be
specified in a revenue procedure or other
form of guidance issued by the Commis-
sioner); or
(2) The only benefits provided to the
payor or persons designated by the payor
are token items (e.g., bookmarks, calen-
dars, key chains, mugs, posters, tee shirts)
bearing the exempt organization’s name
or logo that have an aggregate cost within
the limit established for low cost articles
under section 513(h)(2) (or such other
limit as may be specified in a revenue
procedure or other form of guidance is-
sued by the Commissioner); however,
token items (as described above) provided
to employees of the payor, or to partners
of a partnership that is the payor, are dis-
regarded if the combined total cost of the
token items provided to each employee or
partner does not exceed the limit stated in
this paragraph (c)(2)(ii)(A)(2).
(B) If the fair market value of the bene-
fits (or the cost, in the case of token
items) exceeds the amount or limit speci-
fied in paragraph (c)(2)(ii)(A) of this sec-
tion, then (except as provided in para-
graph (c)(2)(iii) of this section) the entire
fair market value (as opposed to cost) of
such benefits, not merely the excess
amount, is a substantial return benefit.
(iii) Use or acknowledgment.For pur-
poses of this section, a substantial return
benefit does not include the use or ac-
knowledgment of the name or logo (or
product lines) of the payor’s trade or busi-
ness in connection with the activities of
the exempt organization. Use or ac-
knowledgment does not include advertis-
ing as described in paragraph (c)(2)(iv) of
this section, but may include the follow-
ing: logos and slogans that do not contain
qualitative or comparative descriptions of
the payor’s products, services, facilities or
company; a list of the payor’s locations,
telephone numbers, or Internet address;
value-neutral descriptions, including dis-
plays or visual depictions, of the payor’s
product-line or services; and the payor’s
brand or trade names and product or ser-

March 20, 20008342000–12 I.R.B.
vice listings. Logos or slogans that are an
established part of a payor’s identity are
not considered to contain qualitative or
comparative descriptions. Mere display
or distribution, whether for free or remu-
neration, of a payor’s product by the
payor or the exempt organization to the
general public at the sponsored activity is
not considered an inducement to pur-
chase, sell or use the payor’s product for
purposes of this section and, thus, will not
affect the determination of whether a pay-
ment is a qualified sponsorship payment.
(iv) Advertising. For purposes of this
section, the term advertisingmeans any
message or other programming material
which is broadcast or otherwise transmit-
ted, published, displayed or distributed,
and which promotes or markets any trade
or business, or any service, facility or
product. Advertising includes messages
containing qualitative or comparative lan-
guage, price information or other indica-
tions of savings or value, an endorsement,
or an inducement to purchase, sell, or use
any company, service, facility or product.
A single message that contains both ad-
vertising and an acknowledgment is ad-
vertising. This section does not apply to
activities conducted by a payor on its
own. For example, if a payor purchases
broadcast time from a television station to
advertise its product during commercial
breaks in a sponsored program, the ex-
empt organization’s activities are not
thereby converted to advertising.
(v) Exclusivity arrangements—(A) Ex-
clusive sponsor. An arrangement that ac-
knowledges the payor as the exclusive
sponsor of an exempt organization’s ac-
tivity, or the exclusive sponsor represent-
ing a particular trade, business or indus-
try, generally does not, by itself, result in
a substantial return benefit. For example,
if in exchange for a payment, an organiza-
tion announces that its event is sponsored
exclusively by the payor (and does not
provide any advertising or other substan-
tial return benefit to the payor), the payor
has not received a substantial return bene-
fit.
(B) Exclusive provider. An arrange-
ment that limits the sale, distribution,
availability, or use of competing products,
services, or facilities in connection with
an exempt organization’s activity gener-
ally results in a substantial return benefit.
For example, if in exchange for a pay-
ment, the exempt organization agrees to
allow only the payor’s products to be sold
in connection with an activity, the payor
has received a substantial return benefit.
(d) Allocation of payment—(1) In gen-
eral. If there is an arrangement or expec-
tation that the payor will receive a sub-
stantial return benefit with respect to any
payment, then only the portion, if any, of
the payment that exceeds the fair market
value of the substantial return benefit (de-
termined on the date the sponsorship
arrangement is entered into) is a qualified
sponsorship payment. However, if the
exempt organization does not establish
that the payment exceeds the fair market
value of any substantial return benefit,
then no portion of the payment constitutes
a qualified sponsorship payment. The un-
related business income tax (UBIT) treat-
ment of any payment (or portion thereof)
that is not a qualified sponsorship pay-
ment is determined by application of sec-
tions 512, 513 and 514. For example,
payments related to an exempt organiza-
tion’s providing facilities, services, or
other privileges to the payor or persons
designated by the payor, advertising, ex-
clusive provider arrangements described
in paragraph (c)(2)(v)(B) of this section, a
license to use intangible assets of the ex-
empt organization, or other substantial re-
turn benefits, are evaluated separately in
determining whether the exempt organi-
zation realizes unrelated business taxable
income. The fair market value of any
substantial return benefit provided as part
of a sponsorship arrangement is the price
at which the benefit would be provided
between a willing recipient and a willing
provider of the benefit, neither being
under any compulsion to enter into the
arrangement, and both having reasonable
knowledge of relevant facts, and without
regard to any other aspect of the sponsor-
ship arrangement.
(2) Anti-abuse provision. To the extent
necessary to prevent avoidance of the rule
stated in paragraph (d)(1) of this section,
where the exempt organization fails to
make a reasonable and good faith valua-
tion of any substantial return benefit, the
Commissioner (or the Commissioner’s
delegate) may determine the portion of a
payment allocable to such substantial re-
turn benefit and may treat two or more re-
lated payments as a single payment.
(e) Special rules—(1) Written agree-
ments. The existence of a written spon-
sorship agreement does not, in itself,
cause a payment to fail to be a qualified
sponsorship payment. The terms of the
agreement, not its existence or degree of
detail, are relevant to the determination of
whether a payment is a qualified sponsor-
ship payment. Similarly, the terms of the
agreement and not the title or responsibil-
ities of the individuals negotiating the
agreement determine whether a payment
(or any portion thereof) made pursuant to
the agreement is a qualified sponsorship
payment.
(2) Contingent payments. The term
qualified sponsorship payment does not
include any payment the amount of which
is contingent, by contract or otherwise,
upon the level of attendance at one or
more events, broadcast ratings, or other
factors indicating the degree of public ex-
posure to the sponsored activity. The fact
that a payment is contingent upon spon-
sored events or activities actually being
conducted does not, by itself, cause the
payment to fail to be a qualified sponsor-
ship payment.
(3) Determining public support. Quali-
fied sponsorship payments in the form of
money or property (but not services) are
treated as contributions received by the
exempt organization for purposes of de-
termining public support to the organiza-
tion under section 170(b)(1)(A)(vi) or
section 509(a)(2). See §§1.509(a)-3(f)(1)
and 1.170A-9(e)(6)(i). The fact that a
payment is a qualified sponsorship pay-
ment that is treated as a contribution to
the payee organization does not determine
whether the payment is deductible by the
payor under section 162 or section 170.
(f) Examples. The provisions of this
section are illustrated by the following ex-
amples. The tax treatment of any pay-
ment (or portion of a payment) that does
not constitute a qualified sponsorship
payment is governed by general UBIT
principles. In these examples, the recipi-
ents of the payments at issue are section
501(c) organizations. The only benefits
received by the payors are those specifi-
cally indicated in the example. The ex-
amples are as follows:
Example 1. M, a local charity, organizes a
marathon and walkathon at which it serves to partic-
ipants drinks and other refreshments provided free
of charge by a national corporation. The corporation
also gives M prizes to be awarded to winners of the
event. M recognizes the assistance of the corpora-

tion by listing the corporation’s name in promotional
fliers, in newspaper advertisements of the event and
on T-shirts worn by participants. M changes the
name of its event to include the name of the corpora-
tion. M’s activities constitute acknowledgment of
the sponsorship. The drinks, refreshments and
prizes provided by the corporation are a qualified
sponsorship payment, which is not income from an
unrelated trade or business.
Example 2. N, an art museum, organizes an exhi-
bition and receives a large payment from a corpora-
tion to help fund the exhibition. N recognizes the
corporation’s support by using the corporate name
and established logo in materials publicizing the ex-
hibition, including banners, posters, brochures and
public service announcements. N also hosts a dinner
for the corporation’s executives. The fair market
value of the dinner exceeds the amount specified in
paragraph (c)(2)(ii) of this section. N’s use of the
corporate name and logo in connection with the ex-
hibition constitutes acknowledgment of the sponsor-
ship. However, the dinner for corporate executives
is a substantial return benefit. Only that portion of
the payment, if any, that N can demonstrate exceeds
the fair market value of the dinner is a qualified
sponsorship payment.
Example 3. O coordinates sports tournaments for
local charities. An auto manufacturer agrees to un-
derwrite the expenses of the tournaments. O recog-
nizes the auto manufacturer by including the manu-
facturer’s name and established logo in the title of
each tournament as well as on signs, scoreboards
and other printed material. The auto manufacturer
receives complimentary admission passes and pro-
am playing spots for each tournament that have a
fair market value in excess of the amount specified
in paragraph (c)(2)(ii) of this section. Additionally,
O displays the latest models of the manufacturer’s
premier luxury cars at each tournament. O’s use of
the manufacturer’s name and logo and display of
cars in the tournament area constitute acknowledg-
ment of the sponsorship. However, the admission
passes and pro-am playing spots are a substantial re-
turn benefit. Only that portion of the payment, if
any, that O can demonstrate exceeds the fair market
value of the admission passes and pro-am playing
spots is a qualified sponsorship payment.
Example 4. P conducts an annual college football
bowl game. P sells to commercial broadcasters the
right to broadcast the bowl game on television and
radio. A major corporation agrees to be the exclu-
sive sponsor of the bowl game. The detailed con-
tract between P and the corporation provides that the
name of the bowl game will include the name of the
corporation. The contract further provides that the
corporation’s name and established logo will appear
on players’ helmets and uniforms, on the scoreboard
and stadium signs, on the playing field, on cups used
to serve drinks at the game, and on all related printed
material distributed in connection with the game.
The agreement is contingent upon the game being
broadcast on television and radio, but the amount of
the payment is not contingent upon the number of
people attending the game or the television ratings.
The contract provides that television cameras will
focus on the corporation’s name and logo on the
field at certain intervals during the game. P’s use of
the corporation’s name and logo in connection with
the bowl game constitutes acknowledgment of the
sponsorship. The exclusive sponsorship arrange-
ment is not a substantial return benefit. The entire
payment is a qualified sponsorship payment, which
is not income from an unrelated trade or business.
Example 5. Q organizes an amateur sports team.
A major pizza chain gives uniforms to players on
Q’s team, and also pays some of the team’s opera-
tional expenses. The uniforms bear the name and
established logo of the pizza chain. During the final
tournament series, Q distributes free of charge sou-
venir flags bearing Q’s name to employees of the
pizza chain who come out to support the team. The
flags cost $2 each. The flags are not a substantial re-
turn benefit because they are token items that qual-
ify as low cost articles under paragraph (c)(2)(ii) of
this section. Q’s use of the name and logo of the
pizza chain in connection with the tournament con-
stitutes acknowledgment of the sponsorship. The
funding and supplied uniforms are a qualified spon-
sorship payment, which is not income from an unre-
lated trade or business.
Example 6. R is a liberal arts college. A soft
drink manufacturer makes a substantial payment to
the college’s English department, and in exchange,
R names a writing competition after the soft drink
manufacturer. In addition, R agrees to limit all soft
drink sales on campus to the manufacturer’s brand
of soft drink. R’s use of the manufacturer’s name in
the writing competition constitutes acknowledgment
of the sponsorship. However, limiting all soft drink
sales on campus to the manufacturer’s brand of soft
drink, i.e., the exclusive provider arrangement, is a
substantial return benefit. Only that portion of the
payment, if any, that R can demonstrate exceeds the
fair market value of the exclusive provider arrange-
ment is a qualified sponsorship payment.
Example 7. S is a noncommercial broadcast sta-
tion that airs a program funded by a local music
store. In exchange for the funding, S broadcasts the
following message: “This program has been brought
to you by the Music Shop, located at 123 Main
Street. For your music needs, give them a call today
at 555-1234. This station is proud to have the Music
Shop as a sponsor.” Because this single broadcast
message contains both advertising and an acknowl-
edgment, the entire message is advertising and con-
stitutes a substantial return benefit. Unless S estab-
lishes that the amount of the payment exceeds the
fair market value of the advertising, none of the pay-
ment is a qualified sponsorship payment.
Example 8. T, a symphony orchestra, performs a
series of concerts. A program guide that contains
notes on guest conductors and other information
concerning the evening’s program is distributed by T
at each concert. The Music Shop makes a payment
to T in support of the concert series. As a supporter
of the event, the Music Shop is recognized in the
program guide and on a poster in the lobby of the
concert hall. The Music Shop receives complimen-
tary tickets to the concert series. The fair market
value of the complimentary tickets exceeds the
amount specified in paragraph (c)(2)(ii) of this sec-
tion. The lobby poster states that “The T concert is
sponsored by the Music Shop, located at 123 Main
Street, telephone number 555-1234.” The program
guide contains the same information and also states,
“Visit today for the finest selection of music CDs
and cassette tapes.” T’s use of the Music Shop’s
name, address and telephone number in the lobby
poster constitutes acknowledgment of the sponsor-
ship. However, the promotion in the program guide
and complimentary tickets are a substantial return
benefit. Only that portion of the payment, if any,
that T can demonstrate exceeds the fair market value
of the promotion in the program guide and compli-
mentary tickets is a qualified sponsorship payment.
Example 9. U, a national charity dedicated to
promoting health, organizes a campaign to inform
the public about potential cures to fight a serious
disease. As part of the campaign, U sends represen-
tatives to community health fairs around the country
to answer questions about the disease and inform the
public about recent developments in the search for a
cure. A pharmaceutical company makes a payment
to U to fund U’s booth at a health fair. U places a
sign in the booth displaying the pharmaceutical
company’s name and slogan, “Better Research, Bet-
ter Health,” which is an established part of the com-
pany’s identity. In addition, U grants the pharma-
ceutical company a license to use U’s logo in
marketing its products to health care providers
around the country. U’s display of the pharmaceuti-
cal company’s name and slogan constitutes ac-
knowledgment of the sponsorship. However, the li-
cense granted to the pharmaceutical company to use
U’s logo is a substantial return benefit. Only that
portion of the payment, if any, that U can demon-
strate exceeds the fair market value of the license
granted to the pharmaceutical company is a quali-
fied sponsorship payment.
Example 10. V, a trade association, publishes a
monthly scientific magazine
for its members containing information about
current issues and developments in the field. A text-
book publisher makes a large payment to V to have
its name displayed on the inside cover of the maga-
zine each month. Because the monthly magazine is
aperiodical within the meaning of paragraph (b) of
this section, the section 513(i) safe harbor does not
apply. See §1.512(a)-1(f).
Robert E. Wenzel,
Deputy Commissioner
of Internal Revenue.
(Filed by the Office of the Federal Register on Feb-
ruary 29, 2000, 8:45 a.m., and published in the issue
of the Federal Register for March 1, 2000, 65
F.R. 11012)
Disclosure Requirements for
Corporate Tax Shelters
Announcement 2000-12
The Treasury Department and Internal
Revenue Service issued three sets of tem-
porary and proposed regulations requiring
promoters to register confidential corpo-
rate tax shelters and to maintain lists of
investors and requiring corporate taxpay-
ers to disclose large transactions that have
characteristics common to tax shelters. In
addition, the Service has created an Office
of Tax Shelter Analysis to serve as the
focal point for efforts to gather and ana-
2000–12 I.R.B.835March 20, 2000

lyze information relating to tax shelter ac-
tivity and to coordinate appropriate re-
sponses. Together, these actions will en-
able the Service to more quickly and
effectively address transactions used to
claim tax benefits that are not properly al-
lowable under the Internal Revenue Code.
See Internal Revenue Bulletin
2000–11, March 13, 2000, for the follow-
ing temporary and proposed regulations:
T.D. 8875, page 761; T.D. 8876, page
753; T.D. 8877, page 747; REG–
103736–00, page 768; REG–110311–98,
page 767; REG–103735–00, page 770.
General Scope and Effect of New
Disclosure Requirements
In general, the three regulations are de-
signed to provide the Service with better in-
formation about tax shelters and other tax-
motivated transactions through a
combination of registration and informa-
tion disclosure by promoters and tax return
disclosure by corporate taxpayers. The reg-
ulations are intended to require disclosure
of transactions that should be subject to
careful scrutiny by the Service. The regula-
tions are designed not to require disclosure
of customary business transactions or trans-
actions with tax benefits that the Service
has no reasonable basis to challenge. The
regulations do not alter substantive tax
rules, and thus disclosure under the regula-
tions does not affect the legal determination
whether tax benefits claimed by taxpayers
are allowable.
Registration of Tax Shelters by Promoters
The first set of regulations is issued
under § 6111(d) of the Code as enacted by
the Taxpayer Relief Act of 1997. These
regulations require tax shelter promoters
to register with the Service transactions
(1) that have been structured for a signifi-
cant purpose of tax avoidance or evasion,
(2) that are offered to corporate partici-
pants under conditions of confidentiality,
and (3) for which the tax shelter promot-
ers may receive fees in excess of
$100,000.
The promoter registration requirements
apply to confidential corporate tax shelters
offered for sale after today. In general, reg-
istration of a confidential corporate tax
shelter is required not later than the day that
the first offering for sale of interests in such
shelter occurs. However, as a transition
matter, no registration is required to be filed
until 180 days after today.
List Maintenance Requirements for
Promoters
The second set of regulations, issued
pursuant to § 6112 of the Code, requires
promoters of corporate tax shelters to
maintain lists of investors and copies of
all offering materials and to make this in-
formation available for inspection by the
Service upon request. These require-
ments apply to transactions that have been
structured for a significant purpose of tax
avoidance or evasion (as defined under §
6111(d)), whether or not offered under
conditions of confidentiality and whether
or not the promoter fees may exceed
$100,000.
These new list maintenance require-
ments apply to interests in corporate tax
shelters acquired by investors after today.
However, as a transition matter, the Ser-
vice will not ask to inspect lists or offer-
ing materials until 180 days after today.
Reporting Requirements for Corporate
Taxpayers
The third set of regulations is issued
pursuant to § 6011 of the Code and re-
quires corporate taxpayers to disclose
their participation in “reportable transac-
tions” by attaching a short information
statement to their income tax returns. In
general, a separate statement will be re-
quired for each reportable transaction for
each taxable year in which a corporation’s
federal income tax liability is affected by
its participation in such a transaction. For
the first taxable year in which a statement
is attached to a taxpayer’s return, a copy
of the statement must be filed with the
Service in Washington, D.C. All of the
information required to complete the
statement should be readily available to
taxpayers at the time their returns are
filed.
Disclosure is generally required only
for transactions that are expected to re-
duce a taxpayer’s income tax liability by
more than $5 million in a single taxable
year or more than $10 million in multiple
years and that have characteristics com-
mon to corporate tax shelters. However,
these thresholds are lowered to $1 million
and $2 million for certain transactions
identified through published guidance as
“listed transactions” (discussed below).
Reporting generally is not required for
customary business transactions or trans-
actions with tax benefits that the Service
has no reasonable basis to challenge.
In general, disclosure is required only
for reportable transactions entered into
after today. However, disclosure is re-
quired for a listed transaction entered into
on or before today if the tax benefits of
the transaction are first claimed on a re-
turn filed after today.
Notice 2000-15: Listed Transactions
Promoter registration and taxpayer dis-
closure generally are required for certain
listed transactions. The specific transac-
tions currently designated as listed trans-
actions are identified in Notice 2000-15,
which has been issued concurrently with
the temporary and proposed regulations.
The Treasury and the Service have deter-
mined that each of those listed transac-
tions involves a significant tax avoidance
purpose and that the intended tax benefits
are subject to disallowance under existing
law. The list set forth in Notice 2000-15
may be supplemented from time to time,
when other such tax avoidance transac-
tions are identified.
Office of Tax Shelter Analysis
The newly established Office of Tax
Shelter Analysis is part of the Large and
Mid-Size Business Division and is lo-
cated in Washington, D.C. The office is
expected to serve as a clearinghouse for
all information relating to tax shelter ac-
tivity that comes to the attention of the
Service, including information relating to
tax shelters affecting taxpayers other than
those served by the Large and Mid-Size
Business Division.
The Office of Tax Shelter Analysis
will, among other things, review all dis-
closures by promoters and taxpayers
under the new disclosure regulations for
the purposes of identifying potentially im-
proper tax shelter transactions, identify-
ing taxpayers that have participated in
such transactions, and better assessing the
overall extent of tax shelter activity by
corporate taxpayers. Where it is deter-
mined to be warranted, the Office of Tax
Shelter Analysis will also coordinate the
Service’s follow-up efforts relating to
such disclosed transactions.
The Office of Tax Shelter Analysis, act-
ing with the Office of Chief Counsel and
Treasury’s Office of Tax Policy, will eval-
March 20, 20008362000–12 I.R.B.

uate the tax treatment of new forms of
tax-structured transactions at the earliest
possible time. This review process is nec-
essary not only to identify improper tax
shelters, but also to protect taxpayers that
engage in legitimate business transac-
tions. The Service wants to ensure that
transactions are not labeled as improper
tax shelters merely because they are novel
or complex.
In addition to analyzing transactions
that are reported to the Service under the
new disclosure rules, the Office of Tax
Shelter Analysis will provide a central-
ized point for the review of tax shelter
transactions that come to the attention of
the Service in other ways, including trans-
actions examined by field personnel and
those that are disclosed to the Service by
taxpayers, practitioners, and other mem-
bers of the public. Persons who wish to
submit information relating to particular
forms of tax shelters to the Service by
mail should send such information to: In-
ternal Revenue Service LM:PF, Office of
Tax Shelter Analysis, 1111 Constitution
Ave., N.W., Washington, D.C. 20224. A
telephone number and e-mail address for
the Office of Tax Shelter Analysis will be
announced in the near future.
Public Comments
In the notices of proposed rulemaking,
the Treasury and the Service have invited
interested persons to submit comments on
the terms of the temporary and proposed
regulations. Comments are also invited
on the other matters discussed in this an-
nouncement.
Deletions From Cumulative List
of Organizations Contributions
to Which Are Deductible Under
Section 170 of the Code
Announcement 2000–15
The names of organizations that no
longer qualify as organizations described
in section 170(c)(2) of the Internal Rev-
enue Code of 1986 are listed below.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an orga-
nization ceases to qualify under section
170(c)(2) if the organization has not
timely filed a suit for declaratory judg-
ment under section 7428 and if the con-
tributor (1) had knowledge of the revoca-
tion of the ruling or determination letter,
(2) was aware that such revocation was
imminent, or (3) was in part responsible
for or was aware of the activities or omis-
sions of the organization that brought
about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on March 20, 2000,
and would end on the date the court first
determines that the organization is not de-
scribed in section 170(c)(2) as more par-
ticularly set forth in section 7428(c)(1).
For individual contributors, the maxi-
mum deduction protected is $1,000, with
a husband and wife treated as one contrib-
utor. This benefit is not extended to any
individual who was responsible, in whole
or in part, for the acts or omissions of the
organization that were the basis for revo-
cation.
Earth Alliance San Diego
San Diego, CA
EarthCare, Inc.
San Diego, CA
ECO Republic
San Diego, CA
Global Friends
San Diego, CA
Hospital Shared Services, Inc.
Warrendale, PA
North American Veterans Society
Albany, OH
Relief for Service in Combat
Zone and for Presidentially
Declared Disaster
Announcement 2000–16
This announcement is a reprint of pro-
posed regulations REG–101492–98
(2000–3 I.R.B. 326) with typographical
errors corrected.
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: This document contains
proposed regulations relating to the post-
ponement of certain tax-related deadlines
due either to service in a combat zone or a
Presidentially declared disaster. The pro-
posed regulations reflect changes to the
law made by the Taxpayer Relief Act of
1997. The proposed regulations affect
taxpayers serving in a combat zone and
taxpayers affected by a Presidentially de-
clared disaster.
DATES: Written or electronically gener-
ated comments and requests for a public
hearing must be received by March 30,
2000.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG-101492-98),
room 5228, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington, DC
20044. Submissions may be hand delivered
between the hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (REG-101492-98),
Courier’s Desk, Internal Revenue Service,
1111 Constitution Avenue NW, Washington,
DC. Alternatively, taxpayers may submit
comments electronically via the Internet by
selecting the ``Tax Regs’’ option on the IRS
Home Page, or by submitting comments di-
rectly to the IRS Internet site at
http://www.irs.gov/tax__regs/regslist.html.
FOR FURTHER INFORMATION CON-
TACT: Concerning the regulations, Bev-
erly A. Baughman, (202) 622-4940; con-
cerning the hearing and submissions of
written comments, Guy Traynor (202)
622-7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to the Regulations on Proce-
dure and Administration (26 CFR part
301) under section 7508 of the Internal
Revenue Code (Code), relating to post-
ponement of certain acts by reason of ser-
vice in a combat zone, and section 7508A,
relating to postponement of certain tax-re-
lated deadlines by reason of a Presiden-
tially declared disaster. Section 7508A
was added to the Code by section 911 of
the Taxpayer Relief Act of 1997, Pub. L.
105-34 (111 Stat. 788 (1997)), effective
2000–12 I.R.B.837March 20, 2000

for any period for performing an act that
had not expired before August 5, 1997.
In general, section 7508 provides that
the time individuals serve in a “combat
zone’’ plus 180 days will be disregarded
in determining whether acts listed in sec-
tion 7508(a)(1), such as filing returns,
paying taxes, filing certain petitions with
the Tax Court, filing a claim for credit or
refund, bringing suit, and assessing tax,
are performed within the time prescribed.
Under section 7508(a)(1)(K), the Secre-
tary has the authority to provide by regu-
lation other acts to which section 7508
will apply.
Section 7508A provides that, in the
case of a taxpayer determined by the Sec-
retary to be affected by a Presidentially
declared disaster, the Secretary may post-
pone certain tax-related deadlines for up
to 90 days. The deadlines that may be
postponed are determined by cross-refer-
ence to section 7508(a)(1). Pursuant to
section 7508A(b), the provision does not
apply for purposes of determining interest
on any overpayment or underpayment (if
the underpayment arose prior to the disas-
ter). See also H.R. Rep. No. 148, 105th
Cong., 1st Sess. 397 (1997).
Explanation of Provisions
Under section 7508, the proposed regu-
lations provide that, in addition to the acts
described in section 7508(a)(1), the IRS
may postpone other acts specified in rev-
enue rulings, revenue procedures, notices,
or other guidance published in the Inter-
nal Revenue Bulletin.
Under section 7508A, the proposed
regulations provide that, for any tax,
penalty, additional amount, or addition to
the tax of an affected taxpayer in a Presi-
dentially declared disaster area, the IRS
may disregard up to 90 days in determin-
ing whether certain tax-related deadlines
described in section 7508(a)(1) were sat-
isfied and the amount of any credit or re-
fund. The proposed regulations apply to
taxpayer deadlines, such as the time for
filing returns and paying taxes relating to
most income taxes (including domestic
service employment taxes), estate taxes,
and gift taxes; filing certain court docu-
ments, including petitions filed in United
States Tax Court for redetermination of a
deficiency; and filing claims for refund.
In addition, under the authority in section
7508(a)(1)(K), the proposed regulations
provide that for purposes of section
7508A, the IRS may disregard up to 90
days in determining whether the deadlines
for filing returns and paying taxes relating
to certain excise taxes and employment
taxes have been met. Although the pro-
posed regulations do not apply to dead-
lines for depositing federal taxes pursuant
to section 6302 and the underlying regula-
tions, it is anticipated that the failure to
deposit penalty under section 6656 will be
waived in appropriate circumstances, and
thus section 7508A relief will not be nec-
essary.
The proposed regulations also provide
for the postponement of certain govern-
ment deadlines, such as the time for mak-
ing assessments, taking collection action,
and bringing suit. However, the IRS and
Treasury Department anticipate that the
authority to postpone government dead-
lines will only be used in limited circum-
stances when it is determined that such a
postponement is necessary and appropri-
ate.
The proposed regulations provide that
an affected taxpayer is (1) any individual
whose principal residence is located in a
covered disaster area; (2) any business
whose principal place of business is lo-
cated in a covered disaster area; (3) any
individual who is a relief worker affiliated
with a recognized government or philan-
thropic organization and who is assisting
in a covered disaster area; (4) any individ-
ual whose principal residence or any busi-
ness whose principal place of business is
located outside the disaster area, but
whose tax records necessary to meet cer-
tain tax-related deadlines are maintained
in a location, such as a practitioner’s of-
fice, in a covered disaster area; (5) any es-
tate or trust whose tax records necessary
to meet certain tax-related deadlines are
maintained in a location, such as a practi-
tioner’s office, in a covered disaster area;
(6) any individual who files a joint return
with an affected taxpayer; or (7) any other
person who is determined by the IRS to
be affected by a Presidentially declared
disaster. A covered disaster area means
the location of a Presidentially declared
disaster to which the IRS determines sec-
tion 7508A applies.
It is anticipated that the IRS’s authority
to grant extensions of time to file tax re-
turns under section 6081 and to pay tax
with respect to such returns under section
6161 will provide taxpayers with the nec-
essary relief in the case of many Presiden-
tially declared disasters. However, if the
IRS determines that section 7508A ap-
plies, it will publish guidance to inform
taxpayers of the counties included in the
covered disaster area, the taxpayer and
government deadlines to which section
7508A applies, and the period to be disre-
garded (up to 90 days). Guidance will be
published as soon as practicable after the
declaration of a Presidentially declared
disaster.
Section 6404(h) provides that in the
case of a Presidentially declared disaster,
if there is an extension of time to file in-
come tax returns under section 6081 and
an extension of time to pay income tax
with respect to such returns under section
6161, interest will be abated during the
extension period. The proposed regula-
tions clarify that if, in addition to an ex-
tension under sections 6081 and 6161,
there is a postponement of tax-related
deadlines under section 7508A, interest
will be abated under section 6404(h) for
the period of time disregarded under sec-
tion 7508A in addition to the period of
time covered by the extensions of time to
file and pay. The abatement of interest
only applies in the case of underpayments
of income tax that arise during the exten-
sion period.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Exec-
utive Order 12866. Therefore, a regula-
tory assessment is not required. It also has
been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regula-
tions, and because these regulations do
not impose a collection of information on
small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Pursuant to section 7805(f) of the Code,
this notice of proposed rulemaking will be
submitted to the Chief Counsel for Advo-
cacy of the Small Business Administra-
tion for comment on its impact on small
business.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any electronic or
March 20, 20008382000–12 I.R.B.

written comments (a signed original and 8
copies) that are submitted timely to the
IRS. The IRS and Treasury Department
specifically request comments on the clar-
ity of the proposed regulations and how
they can be made easier to understand. All
comments will be available for public in-
spection and copying. A public hearing
may be scheduled if requested by any per-
son who timely submits comments. If a
public hearing is scheduled, notice of the
date, time, and place for the hearing will
be published in the Federal Register.
Drafting Information
The principal author of these regula-
tions is Beverly A. Baughman, Office of
Assistant Chief Counsel (Income Tax &
Accounting). However, other personnel
from the IRS and Treasury Department
participated in their development.
* * * * *
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 is amended by adding entries in
numerical order to read in part as follows:
Authority: 26 U.S.C. 7805 * * *.
Section 301.7508-1 also issued under
26 U.S.C. 7508(a)(1)(K).
Section 301.7508A-1 also issued under
26 U.S.C. 7508(a)(1)(K) and 7508A(a). *
* *
Par. 2. Section 301.7508-1 is added to
read as follows:
Sec. 301.7508-1 Time for performing
certain acts postponed by reason of ser-
vice in a combat zone.
(a) General rule. The period of time
that may be disregarded for performing
certain acts pursuant to section 7508 ap-
plies to acts described in section
7508(a)(1) and to other acts specified in a
revenue ruling, revenue procedure, no-
tice, or other guidance published in the
Internal Revenue Bulletin (see Sec.
601.601(d)(2) of this chapter).
(b) Effective date. This section applies
to any period for performing an act that
has not expired before December 30,
1999.
Par. 3. Section 301.7508A-1 is added
to read as follows:
Sec. 301.7508A-1 Postponement of cer-
tain tax-related deadlines by reason of
Presidentially declared disaster.
(a) Scope. This section prescribes rules
by which the Internal Revenue Service
(IRS) may postpone deadlines for per-
forming certain acts with respect to taxes
other than taxes not administered by the
IRS such as taxes imposed for firearms
(chapter 32, section 4181); harbor mainte-
nance (chapter 36, section 4461); and al-
cohol and tobacco (subtitle E).
(b) Postponed deadlines. For any tax,
penalty, additional amount, or addition to
the tax of an affected taxpayer (defined in
paragraph (d)(1) of this section), the IRS
may disregard a period of up to 90 days in
determining, under the internal revenue
laws—
(1) Whether any or all of the acts de-
scribed in paragraph (c) of this section
were performed within the time pre-
scribed; and
(2) The amount of any credit or refund.
(c) Acts for which a period may be disre-
garded—(1) Acts performed by taxpayers.
Paragraph (b) of this section applies to the
following acts performed by taxpayers—
(i) Filing any return of income, estate,
gift, excise (other than taxes imposed for
firearms (chapter 32, section 4181); har-
bor maintenance (chapter 36, section
4461); and alcohol and tobacco (subtitle
E)) or employment tax (including income
tax withheld at source and income tax im-
posed by subtitle C or any law superseded
thereby);
(ii) Payment of any income, estate, gift,
excise (other than taxes imposed for
firearms (chapter 32, section 4181); har-
bor maintenance (chapter 36, section
4461); and alcohol and tobacco (subtitle
E)) or employment tax (including income
tax withheld at source and income tax im-
posed by subtitle C or any law superseded
thereby) or any installment thereof (in-
cluding payment under section 6159 relat-
ing to installment agreements) or of any
other liability to the United States in re-
spect thereof, but not including deposits
of taxes pursuant to section 6302 and the
regulations thereunder;
(iii) Filing a petition with the Tax Court
for redetermination of a deficiency, or for
review of a decision rendered by the Tax
Court;
(iv) Allowance of a credit or refund of
any tax;
(v) Filing a claim for credit or refund of
any tax;
(vi) Bringing suit upon a claim for
credit or refund of any tax; and
(vii) Any other act specified in a rev-
enue ruling, revenue procedure, notice, or
other guidance published in the Internal
Revenue Bulletin (see Sec. 601.601(d)(2)
of this chapter).
(2) Acts performed by the government.
Paragraph (b) of this section applies to the
following acts performed by the govern-
ment—
(i) Assessment of any tax;
(ii) Giving or making any notice or de-
mand for the payment of any tax, or with
respect to any liability to the United
States in respect of any tax;
(iii) Collection by the Secretary, by
levy or otherwise, of the amount of any li-
ability in respect of any tax;
(iv) Bringing suit by the United States,
or any officer on its behalf, in respect of
any liability in respect of any tax; and
(v) Any other act specified in a revenue
ruling, revenue procedure, notice, or other
guidance published in the Internal Rev-
enue Bulletin (see Sec. 601.601(d)(2) of
this chapter).
(d) Definitions—(1) Affected taxpayer
means—
(i) Any individual whose principal resi-
dence (for purposes of section
1033(h)(4)) is located in a covered disas-
ter area;
(ii) Any business whose principal place
of business is located in a covered disaster
area;
(iii) Any individual who is a relief
worker affiliated with a recognized gov-
ernment or philanthropic organization and
who is assisting in a covered disaster area;
(iv) Any individual whose principal
residence (for purposes of section
1033(h)(4)) or any business whose princi-
pal place of business is not located in a
covered disaster area, but whose records
necessary to meet a deadline for an act
specified in paragraph (c) of this section
are maintained in a location, such as a
practitioner’s office, in a covered disaster
area;
(v) Any estate or trust whose tax
records necessary to meet a deadline for
an act specified in paragraph (c) of this
section are maintained in a location, such
2000–12 I.R.B.839March 20, 2000

as a practitioner’s office, in a covered dis-
aster area;
(vi) The spouse of an affected taxpayer,
solely with regard to a joint return of the
husband and wife; or
(vii) Any other person determined by
the IRS to be affected by a Presidentially
declared disaster (within the meaning of
section 1033(h)(3)).
(2) Covered disaster area means an area
of a Presidentially declared disaster
(within the meaning of section
1033(h)(3)) to which the IRS has deter-
mined paragraph (b) of this section ap-
plies.
(e) Notice of postponement of certain
acts. If any tax-related deadline is post-
poned pursuant to section 7508A and this
section, the IRS will publish a revenue
ruling, revenue procedure, notice, an-
nouncement, news release, or other guid-
ance (see Sec. 601.601(d)(2) of this chap-
ter) describing the acts postponed, the
number of days disregarded with respect
to each act, the time period to which the
postponement applies, and the location of
the covered disaster area. Guidance under
this paragraph (e) will be published as
soon as practicable after the declaration of
a Presidentially declared disaster.
(f) Abatement of interest under sec-
tion 6404(h). In the case of a Presi-
dentially declared disaster, if there is
an extension of time to file income tax
returns under section 6081 and an ex-
tension of time to pay income tax with
respect to such return under section
6161, and, in addition, a postpone-
ment of tax-related deadlines under
section 7508A, interest on an under-
payment of income tax that arises dur-
ing such period will be abated under
section 6404(h) for the period of time
disregarded under section 7508A in
addition to the period of time covered
by the extension of time to file and the
extension of time to pay.
(g) Examples. The rules of this sec-
tion are illustrated by the following
examples:
Example 1. (i) Corporation M, a calendar year
taxpayer, has its principal place of business in
County A in State X. Pursuant to a timely filed re-
quest for extension of time to file, Corporation M’s
1999 Form 1120, “U.S. Corporation Income Tax Re-
turn,’’ is due on September 15, 2000. Also due on
September 15, 2000, is Corporation M’s third quar-
ter estimated tax payment for 2000. Corporation M’s
2000 third quarter Form 720, “Quarterly Federal Ex-
cise Tax Return,’’ and third quarter Form 941, “Em-
ployer’s Quarterly Federal Tax Return,’’ are due on
October 31, 2000. In addition, Corporation M has an
employment tax deposit due on September 15, 2000.
(ii) On September 1, 2000, a hurricane strikes
County A. On September 6, 2000, the President de-
clares that County A is a disaster area within the
meaning of section 1033(h)(3). The IRS determines
that County A in State X is a covered disaster area
and publishes guidance informing taxpayers that for
acts described in paragraph (c) of this section that
are required to be performed within the period be-
ginning on September 1, 2000, and ending on No-
vember 6, 2000, 90 days will be disregarded in de-
termining whether the acts are performed timely.
(iii) Because Corporation M’s principal place of
business is in County A, Corporation M is an af-
fected taxpayer. Accordingly, Corporation M’s 1999
Form 1120 will be filed timely if filed on or before
December 14, 2000. Corporation M’s 2000 third
quarter estimated tax payment will be made timely if
paid on or before December 14, 2000. In addition,
because excise and employment tax returns are de-
scribed in paragraph (c) of this section, Corporation
M’s 2000 third quarter Form 720 and third quarter
Form 941 will be filed timely if filed on or before
January 29, 2001. However, because deposits of
taxes are excluded from the scope of paragraph (c)
of this section, Corporation M’s employment tax de-
posit is due on September 15, 2000.
Example 2. The facts are the same as in Example
1, except that during 2000, Corporation M’s 1996
Form 1120 is being examined by the IRS. Pursuant
to a timely filed request for extension of time to file,
Corporation M timely filed its 1996 Form 1120 on
September 15, 1997. Without application of this sec-
tion, the statute of limitations on assessment for
1996 income tax will expire on September 15, 2000.
However, pursuant to paragraph (c) of this section,
assessment of tax is one of the government acts for
which up to 90 days may be disregarded. The IRS
determines that an extension of the statute of limita-
tions is necessary and appropriate under these cir-
cumstances. Because the September 15, 2000, expi-
ration date of the statute of limitations on
assessment falls within the period of the disaster as
described in the IRS’s published guidance, the 90
day period disregarded under paragraph (b) of this
section begins on September 16, 2000, and ends on
December 14, 2000. Accordingly, the statute of limi-
tations on assessment for Corporation M’s 1996 in-
come tax will expire on December 14, 2000.
Example 3. The facts are the same as in Example
2, except that the examination of the 1996 taxable
year was completed earlier in 2000, and on July 28,
2000, the IRS mailed a statutory notice of deficiency
to Corporation M. Without application of this sec-
tion, Corporation M has 90 days (or until October
26, 2000) to file a petition with the Tax Court. How-
ever, pursuant to paragraph (c) of this section, filing
a petition with the Tax Court is one of the taxpayer
acts for which up to 90 days may be disregarded.
Because Corporation M is an affected taxpayer, Cor-
poration M’s petition to the Tax Court will be filed
timely if filed on or before January 24, 2001.
Example 4. (i) H and W, individual calendar year
taxpayers, intend to file a joint Form 1040, “U.S. In-
dividual Income Tax Return,’’ for the 2001 taxable
year and are required to file a Schedule H, “House-
hold Employment Taxes.’’ The joint return is due on
April 15, 2002. H and W fully and timely paid all
taxes for the 2001 taxable year, including domestic
service employment taxes, through withholding and
estimated tax payments. H and W’s principal resi-
dence is in County B in State Y.
(ii) On April 2, 2002, a severe ice storm strikes
County B. On April 5, 2002, the President declares
that County B is a disaster area within the meaning
of section 1033(h)(3). The IRS determines that
County B in State Y is a covered disaster area and
publishes guidance informing taxpayers that for acts
described in paragraph (c) of this section that are re-
quired to be performed within the period beginning
on April 2, 2002, and ending on April 19, 2002, 90
days will be disregarded in determining whether the
acts are performed timely.
(iii) Because H and W’s principal residence is in
County B, H and W are affected taxpayers. Because
April 15, 2002, the due date of H and W’s 2001
Form 1040 and Schedule H, falls within the period
of the disaster as described in the IRS’s published
guidance, the 90 day period disregarded under para-
graph (b) of this section begins on April 16, 2002,
and ends on July 14, 2002, a Sunday. Pursuant to
section 7503, if the last day for performing an act
falls on Saturday, Sunday, or a legal holiday, the per-
formance of the act shall be considered timely if it is
performed on the next succeeding day that is not a
Saturday, Sunday, or legal holiday. Accordingly, H
and W’s 2001 Form 1040 will be filed timely if filed
on or before July 15, 2002. In addition, the Schedule
H will be filed timely if filed on or before July 15,
2002.
Example 5. The facts are the same as in Example
4, except H and W want to file an amended return to
request a refund of 1998 taxes. H and W timely filed
their 1998 income tax return on April 15, 1999.
Without application of this section, H and W’s
amended 1998 tax return must be filed on or before
April 15, 2002. However, pursuant to paragraph (c)
of this section, filing a claim for refund of a tax is
one of the taxpayer acts for which up to 90 days may
be disregarded. Ninety days are disregarded under
paragraph (b) of this section beginning on April 16,
2002, and ending on July 14, 2002. Accordingly, H
and W’s claim for refund for 1998 taxes will be filed
timely if filed, as in Example 4, on or before July 15,
2002.
Example 6. (i) L is an unmarried, calendar year
taxpayer whose principal residence is located in
County R in State T. L does not timely file a 2001
Form 1040, ``U.S. Individual Income Tax Return,’’
which is due on April 15, 2002, and does not timely
pay tax owed on that return. Absent reasonable
cause, L is subject to the failure to file and failure to
pay penalties under section 6651 beginning on April
16, 2002.
(ii) On May 10, 2002, a tornado strikes County
R. On May 14, 2002, the President declares that
County R is a disaster area within the meaning of
section 1033(h)(3). The IRS determines that County
R in State T is a covered disaster area and publishes
guidance informing taxpayers that for acts described
in paragraph (c) of this section that are required to
be performed within the period beginning on May
10, 2002, and ending on June 27, 2002, 90 days will
be disregarded in determining whether the acts are
timely.
March 20, 20008402000–12 I.R.B.

(iii) On May 31, 2002, L files a 2001 Form 1040,
``U.S. Individual Income Tax Return,’’ and pays the
tax owed for 2001.
(iv) Because L’s principal residence is in County
R, L is an affected taxpayer. For purposes of penal-
ties under section 6651, 90 days are disregarded
under paragraph (b) of this section beginning on
May 10, 2002. Because L files the return on May 31,
2002, the penalties under section 6651 will run from
April 16, 2002, until May 10, 2002. However, be-
cause the underpayment arose prior to the extension
period, L will be liable for underpayment interest for
the entire period of April 16, 2002, through May 31,
2002.
Example 7. The facts are the same as in Example
6, except L does not file the 2001 Form 1040 until
November 25, 2002. Ninety days are disregarded
under paragraph (b) of this section beginning on
May 10, 2002, and ending on August 8, 2002.
Therefore, the section 6651 penalties will run from
April 16, 2002, until May 10, 2002, and from Au-
gust 9, 2002, until November 25, 2002. However,
because the underpayment arose prior to the exten-
sion period, L will be liable for underpayment inter-
est for the entire period of April 16, 2002, through
November 25, 2002.
Example 8. (i) H and W, individual calendar year
taxpayers, intend to file a joint Form 1040, ``U.S.
Individual Income Tax Return,’’ for the 2001 taxable
year. The joint return is due on April 15, 2002. After
credits for withholding under section 31 and esti-
mated tax payments, H and W owe tax for the 2001
taxable year. H and W’s principal residence is in
County C in State Z.
(ii) On March 1, 2002, severe flooding strikes
County C. On March 5, 2002, the President declares
that County C is a disaster area within the meaning
of section 1033(h)(3). The IRS determines that
County C in State Z is a covered disaster area and
publishes guidance informing taxpayers that for acts
described in paragraph (c) of this section that are re-
quired to be performed within the period beginning
on March 1, 2002, and ending on April 25, 2002, 90
days will be disregarded in determining whether the
acts are performed timely. The guidance also grants
affected taxpayers an additional 6 month extension
of time to file returns under section 6081 and an ad-
ditional 6 month extension of time to pay under sec-
tion 6161.
(iii) Because H and W’s principal residence is in
County C, H and W are affected taxpayers. Pursuant
to the published guidance, H and W have until Janu-
ary 13, 2003, to file their return and pay the tax. This
date is computed as follows: Under sections 6081
and 6161, H and W will have an additional 6
months, until October 15, 2002, to file and pay the
tax. Further, under paragraph (f) of this section, 90
days are disregarded in determining the period of the
extension. Therefore, H and W’s return and payment
of tax will be timely if filed and paid on or before
January 13, 2003. In addition, under section
6404(h), underpayment interest under section 6601
is abated for the entire period, from April 16, 2002,
until January 13, 2003.
(h) Effective date. This section applies
to disasters declared after December 30,
1999.
Robert E. Wenzel,
Deputy Commissioner
of Internal Revenue.
2000–12 I.R.B.841March 20, 2000

March 20, 2000i2000–12 I.R.B.
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
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is 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 ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes 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
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished 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 published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

2000–12 I.R.B.iiMarch 20, 2000
Numerical Finding List
1
Bulletins 2000–1 through 2000–11
Announcements:
2000–1, 2000–2 I.R.B. 294
2000–2, 2000–2 I.R.B. 295
2000–3, 2000–2 I.R.B. 296
2000–4, 2000–3 I.R.B. 317
2000–5, 2000–4 I.R.B. 427
2000–6, 2000–4 I.R.B. 428
2000–7, 2000–6 I.R.B. 586
2000–8, 2000–6 I.R.B. 586
2000–9, 2000–9 I.R.B. 733
2000–10, 2000–9 I.R.B. 733
2000–11, 2000–10 I.R.B. 739
2000–13, 2000–11 I.R.B. 771
2000–14, 2000–11 I.R.B. 772
Notices:
2000–1, 2000–2 I.R.B. 288
2000–2, 2000–9 I.R.B. 727
2000–3, 2000–4 I.R.B. 413
2000–4, 2000–3 I.R.B. 313
2000–5, 2000–3 I.R.B. 314
2000–6, 2000–3 I.R.B. 315
2000–7, 2000–4 I.R.B. 419
2000–8, 2000–4 I.R.B. 420
2000–9, 2000–5 I.R.B. 449
2000–10, 2000–5 I.R.B. 451
2000–11, 2000–6 I.R.B. 572
2000–12, 2000–9 I.R.B. 727
2000–13, 2000–9 I.R.B. 732
2000–14, 2000–10 I.R.B. 737
Proposed Regulations:
REG–208280–86, 2000–8 I.R.B. 654
REG–209135–88, 2000–8 I.R.B. 681
REG–208254–90, 2000–6 I.R.B. 577
REG–100276–97, 2000–8 I.R.B. 682
REG–101492–98, 2000–3 I.R.B. 326
REG–106012–98, 2000–2 I.R.B. 290
REG–110311–98, 2000–11 I.R.B. 767
REG–103831–99, 2000–5 I.R.B. 452
REG–103882–99, 2000–8 I.R.B. 706
REG–105089–99, 2000–6 I.R.B. 580
REG–105279–99, 2000–8 I.R.B. 707
REG–105606–99, 2000–4 I.R.B. 421
REG–111119–99, 2000–5 I.R.B. 455
REG–113572–99, 2000–7 I.R.B. 624
REG–116048–99, 2000–6 I.R.B. 584
REG–116567–99, 2000–5 I.R.B. 463
REG–116704–99, 2000–3 I.R.B. 325
REG–100163–00, 2000–7 I.R.B. 633
REG–103735–00, 2000–11 I.R.B. 770
REG–103736–00, 2000–11 I.R.B. 768
Railroad Retirement Quarterly Rate:
2000–9, I.R.B. 721
Revenue Procedures:
2000–1, 2000–1 I.R.B. 4
2000–2, 2000–1 I.R.B. 73
2000–3, 2000–1 I.R.B. 103
2000–4, 2000–1 I.R.B. 115
2000–5, 2000–1 I.R.B. 158
2000–6, 2000–1 I.R.B. 187
2000–7, 2000–1 I.R.B. 227
Revenue Procedures—continued:
2000–8, 2000–1 I.R.B. 230
2000–9, 2000–2 I.R.B. 280
2000–10, 2000–2 I.R.B. 287
2000–11, 2000–3 I.R.B. 309
2000–12, 2000–4 I.R.B. 387
2000–13, 2000–6 I.R.B. 515
2000–15, 2000–5 I.R.B. 447
2000–16, 2000–6 I.R.B. 518
2000–17, 2000–11 I.R.B. 766
2000–18, 2000–9 I.R.B. 722
2000–20, 2000–6 I.R.B. 553
Revenue Rulings:
2000–1, 2000–2 I.R.B. 250
2000–2, 2000–3 I.R.B. 305
2000–3, 2000–3 I.R.B. 297
2000–4, 2000–4 I.R.B. 331
2000–5, 2000–5 I.R.B. 436
2000–6, 2000–6 I.R.B. 512
2000–7, 2000–9 I.R.B. 712
2000–8, 2000–7 I.R.B. 617
2000–9, 2000–6 I.R.B. 497
2000–10, 2000–8 I.R.B. 643
2000–11, 2000–10 I.R.B. 734
2000–12, 2000–11 I.R.B. 744
Treasury Decisions:
8849, 2000–2 I.R.B. 245
8850, 2000–2 I.R.B. 265
8851, 2000–2 I.R.B. 275
8852, 2000–2 I.R.B.253
8853, 2000–4 I.R.B.377
8854, 2000–3 I.R.B.306
8855, 2000–4 I.R.B.374
8856, 2000–3 I.R.B.298
8857, 2000–4 I.R.B.365
8858, 2000–4 I.R.B.332
8859, 2000–5 I.R.B.429
8860, 2000–5 I.R.B.437
8861, 2000–5 I.R.B.441
8862, 2000–6 I.R.B.466
8863, 2000–6 I.R.B.488
8864, 2000–7 I.R.B.614
8865, 2000–7 I.R.B.589
8866, 2000–6 I.R.B.495
8867, 2000–7 I.R.B.620
8868, 2000–6 I.R.B.491
8869, 2000–6 I.R.B.498
8870, 2000–8 I.R.B.647
8871, 2000–8 I.R.B.641
8872, 2000–8 I.R.B.639
8873, 2000–9 I.R.B.713
8874, 2000–8 I.R.B.644
8875, 2000–11 I.R.B.761
8876, 2000–11 I.R.B.753
8877, 2000–11 I.R.B.747
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 1999–27 through
1999–52 is in Internal Revenue Bulletin 2000–1,
dated January 3, 2000.

March 20, 2000iii2000–12 I.R.B.
Finding List of Current Actions on
Previously Published Items
1
Bulletins 2000–1 through 2000–11
Announcements:
99–50
Modified by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
Notices:
88–125
Obsoleted by
T.D. 8870, 2000–8 I.R.B. 647
92–48
Obsoleted by
Notice 2000–11, 2000–6 I.R.B. 572
97–19
Modified by
Rev. Proc. 2000–1, 2000–1 I.R.B. 4
98–22
Obsoleted by
T.D. 8870, 2000–8 I.R.B. 647
98–52
Modified by
Notice 2000–3, 2000–4 I.R.B. 413
98–61
Modified and superseded by
Rev. Proc. 2000–15, 2000–5 I.R.B. 447
99–8
Obsoleted by
Rev. Proc. 2000–12, 2000–4 I.R.B. 387
Revenue Procedures:
80–18
Modified by
Rev. Proc. 2000–13, 2000–6 I.R.B. 515
89–9
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
89–13
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
90–21
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
91–66
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
92–13
Modified, amplified, and superseded by
Rev. Proc. 2000–11, 2000–3 I.R.B. 309
92–13A
Modified, amplified, and superseded by
Rev. Proc. 2000–11, 2000–3 I.R.B. 309
92–41
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
93–9
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
Revenue Procedures—Continued:
93–10
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
94–12
Modified, amplified, and superseded by
Rev. Proc. 2000–11, 2000–3 I.R.B. 309
95–42
Superseded by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
96–13
Modified by
Rev. Proc. 2000–1, 2000–1 I.R.B. 4
98–22
Modified and superseded by
Rev. Proc. 2000–16, 2000–6 I.R.B. 518
98–27
Superseded by
Rev. Proc. 2000–12, 2000–4 I.R.B. 387
98–64
Superseded by
Rev. Proc. 2000–9, 2000–2 I.R.B. 280
99–1
Superseded by
Rev. Proc. 2000–1, 2000–1 I.R.B. 4
99–2
Superseded by
Rev. Proc. 2000–2, 2000–1 I.R.B. 73
99–3
Superseded by
Rev. Proc. 2000–3, 2000–1 I.R.B. 103
99–4
Superseded by
Rev. Proc. 2000–4, 2000–1 I.R.B. 115
99–5
Superseded by
Rev. Proc. 2000–5, 2000–1 I.R.B. 158
99–6
Superseded by
Rev. Proc. 2000–6, 2000–1 I.R.B. 187
99–7
Superseded by
Rev. Proc. 2000–7, 2000–1 I.R.B. 227
99–8
Superseded by
Rev. Proc. 2000–8, 2000–1 I.R.B. 230
99–13
Modified and superseded by
Rev. Proc. 2000–16, 2000–6 I.R.B. 518
99–31
Modified and superseded by
Rev. Proc. 2000–16, 2000–6 I.R.B. 518
99–49
Modified and amplified by
Rev. Rul. 2000–4, 2000–4 I.R.B. 331
Rev. Rul. 2000–7, 2000–9 I.R.B. 712
Notice 2000–4, 2000–3 I.R.B. 313
99–51
Superseded by
Rev. Proc. 2000–3, 2000–1 I.R.B. 103
Revenue Procedures—Continued:
2000–6
Modified by
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
2000–8
Modified by
Rev. Proc. 2000–16, 2000–6 I.R.B. 518
Rev. Proc. 2000–20, 2000–6 I.R.B. 553
Revenue Rulings:
88–36
Modified by
Rev. Proc. 2000–6, 2000–6 I.R.B. 512
98–30
Amplified and superseded by
Rev. Rul. 2000–8, 2000–7, I.R.B. 617
Treasury Decisions:
8734
Modified by
T.D. 8856, 2000–3, I.R.B. 298
8804
Modified by
T.D. 8856, 2000–3, I.R.B. 298
8847
Corrected by
Announcement 2000–13, 2000–11 I.R.B. 771
1
A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
1999–27 through 1999–52 is in Internal Revenue
Bulletin 2000–1, dated January 3, 2000.

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