- Highlights of This Issue
- Part III. Administrative, Procedural, and Miscellaneous
- Part IV. Items of General Interest
- Definition of Terms and Abbreviations
- Numerical Finding List
- Effect of Current Actions on Previously Published Items
Internal Revenue Bulletin: 2014-18
April 28, 2014
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.
Announcement 2014–17 provides guidance to foreign financial institutions (FFIs) in jurisdictions that have not signed an intergovernmental FATCA agreement, but that have reached an agreement in substance with the United States on the terms of an IGA. Announcement 2014–17 also provides that the GIIN of a registering FFI will be included on the June 2 IRS FFI List if the FFI's registration is finalized by May 5, 2014, rather than April 25, 2014, as originally announced In addition, Announcement 2014–17 provides that the GIIN of a registering FFI will be included on the July 1 FFI List if the FFI's registration is finalized by June 3, 2014.
This notice provides guidance regarding the treatment of United States persons that own stock of a PFIC through certain tax exempt organization and accounts.
This notice provides adjusted limitations on housing expenses for tax year 2014 for purpose of sections 911 of the code. This notice supersedes Notice 2006–87, 2006–2 C.B. 766, Notice 2007–25, 2007–1 C.B. 760, Notice 2007–77, 2007–2 C.B. 735, Notice 2008–107, 2008–2 C.B. 1266, Notice 2010–27, 2010–1 C.B. 531, Notice 2011–8, 2011–1 C.B. 503, Notice 2012–19, 2012–1 C.B. 440, and Notice 2013–31, 2013–1 C.B. 1099.
This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in April 2014; the 24-month average segment rates; the funding segment rates applicable for April 2014; and the minimum present value rates for March 2014. The rates in this notice reflect certain changes implemented by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP–21).
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The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all substantive 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 otherwise indicated. Procedures relating solely to matters of internal 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 published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—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 Other Related Items, 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 Subparts. Also included in this part are Bank Secrecy Act Administrative 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, disbarment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period.
This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by the Moving Ahead for Progress in the 21st Century Act, Public Law 112–141 (MAP–21). MAP–21 provides that for purposes of § 430(h)(2), the segment rates are limited by the applicable maximum percentage or the applicable minimum percentage based on the average of segment rates over a 25 year period.
Generally, except for certain plans under sections 104 and 105 of the Pension Protection Act of 2006, § 430 of the Code specifies the minimum funding requirements that apply to single employer plans pursuant to § 412. Section 430(h)(2) specifies the interest rates that must be used to determine a plan’s target normal cost and funding target. Under this provision, present value is generally determined using three 24-month average interest rates (“segment rates”), each of which applies to cash flows during specified periods. To the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable percentage of the 25-year average segment rates for the period ending September 30 of the year preceding the calendar year in which the plan year begins. However, an election may be made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.
Notice 2007–81, 2007–44 I.R.B. 899, provides guidelines for determining the monthly corporate bond yield curve, and the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Pursuant to Notice 2007–81, the monthly corporate bond yield curve derived from March 2014 data is in Table I at the end of this notice. The spot first, second, and third segment rates for the month of March 2014 are, respectively, 1.23, 4.23, and 5.31. For plan years beginning on or after January 1, 2012, the 24-month average segment rates determined under § 430(h)(2)(C)(iv) must be adjusted by the applicable percentage of the corresponding 25-year average segment rates. The 25-year average segment rates for plan years beginning in 2012, 2013, and 2014 were published in Notice 2012–55, 2012–36 I.R.B. 332, Notice 2013–11, 2013–11 I.R.B. 610, and Notice 2013–58, 2013–40 I.R.B. 294, respectively. The three 24-month average corporate bond segment rates applicable for April 2014 without adjustment, and the adjusted 24-month average segment rates taking into account the applicable percentages of the corresponding 25-year average segment rates, are as follows:
|For Plan Years Beginning In||24-Month Average Segment Rates Not Adjusted||Adjusted 24-Month Average Segment Rates, Based on Applicable Percentage of 25-Year Average Rates|
|Applicable Month||First Segment||Second Segment||Third Segment||First Segment||Second Segment||Third Segment|
Generally for plan years beginning after 2007, § 431 specifies the minimum funding requirements that apply to multiemployer plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in section 431(c)(6)(A), based on the plan’s current liability. Section 431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose must be no more than 5 percent above and no more than 10 percent below the weighted average of the rates of interest on 30-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year. Notice 88–73, 1988–2 C.B. 383, provides guidelines for determining the weighted average interest rate. The rate of interest on 30-year Treasury securities for March 2014 is 3.62 percent. The Service has determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in February 2044. The following rates were determined for plan years beginning in the month shown below.
|For Plan Years Beginning in||30-Year Treasury Weighted Average||Permissible Range|
In general, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average. Notice 2007–81 provides guidelines for determining the minimum present value segment rates. Pursuant to that notice, the minimum present value segment rates determined for March 2014 are as follows:
|First Segment||Second Segment||Third Segment|
The principal author of this notice is Tony Montanaro of the Employee Plans, Tax Exempt and Government Entities Division. Mr. Montanaro may be e-mailed at RetirementPlanQuestions@irs.gov.
|Monthly Yield Curve for March 2014|
|Derived from March 2014 Data|
This notice announces that the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) will amend the regulations under section 1291 of the Internal Revenue Code (Code) to provide guidance concerning the treatment of United States persons (U.S. persons) that own stock of a passive foreign investment company within the meaning of section 1297(a) (PFIC) through: an organization or an account that is exempt from tax under section 501(a) because it is described in section 501(c), 501(d), or 401(a); a state college or university described in section 511(a)(2)(B); a plan described in section 403(b) or 457(b); an individual retirement plan or annuity as defined in section 7701(a)(37); or a qualified tuition program described in section 529 or 530.
Section 1291 imposes a special tax and interest charge on a U.S. person that is a shareholder of a PFIC and receives an excess distribution (within the meaning of section 1291(b)) from the PFIC or recognizes gain derived from a disposition of the PFIC that is treated as an excess distribution (within the meaning of section 1291(a)(2)). Section 1298(a) sets forth attribution rules that treat a U.S. person as the owner of PFIC stock that is owned by another person. The section 1298(a) attribution rules will not apply to treat stock owned (or treated as owned) by a U.S. person as owned by any other person, except to the extent provided in regulations. Section 1298(a)(1)(B). Section 1298(f) provides that a U.S. person that is a shareholder of a PFIC must file an annual report containing the information required by the Secretary. Section 1298(g) provides that the Secretary shall provide such regulations as may be necessary or appropriate to carry out the purposes of sections 1291 through 1298.
On December 31, 2013, the Treasury Department and the IRS published temporary and proposed regulations under sections 1291 and 1298 (2014–3 I.R.B. 394) that defined the terms shareholder and indirect shareholder for purposes of section 1291. See § 1.1291–1T(b)(7) and (8). These definitions are cross-referenced in the definition of shareholder and indirect shareholder in the section 1298(f) information reporting regulations, as well as in other PFIC regulations. See §§ 1.1291–9T(j) 1.1298–1T(a). Under § 1.1291–1T(b)(7), the term shareholder means any U.S. person that owns stock of a PFIC directly or indirectly. Section 1.1291–1T(b)(8) defines the term indirect shareholder as a U.S. person that indirectly owns stock of a PFIC, and provides rules for attributing ownership of PFIC stock through domestic and foreign corporations, partnerships, S corporations, estates, and trusts. For example, § 1.1291–1T(b)(8)(iii)(C) provides that, in general, each beneficiary of a foreign or domestic nongrantor trust that directly or indirectly owns stock of a PFIC is considered to own a proportionate amount of the PFIC stock and, thus, each beneficiary that is a U.S. person is an indirect shareholder of the PFIC.
In general, § 1.1291–1(e) provides that section 1291 applies to a PFIC shareholder that is an organization exempt from tax under chapter 1 of the Code only if a dividend from the PFIC owned by the organization would be taxable to the organization under subchapter F of Subtitle A of the Code (sections 501 through 530) (subchapter F). Section 1.1298–1T(c)(1) provides that a PFIC shareholder that is an organization exempt from tax under section 501(a) because it is described in section 501(c), 501(d), or 401(a), a state college or university described in section 511(a)(2)(B), a plan described in section 403(b) or 457(b), an individual retirement plan or annuity as defined in section 7701(a)(37), or a qualified tuition program described in section 529 or 530 (each a tax exempt organization or account) is required to file an annual report under section 1298(f) with respect to a PFIC only if income derived with respect to the PFIC would be taxable to the organization or account under subchapter F.
Neither the Code nor the section 1291 regulations provide specific guidance on the application of section 1291 to a U.S. person that owns stock of a PFIC through a tax exempt organization or account, other than an employees’ trust described in section 401(a) that is exempt from tax under section 501(a) (section 401(a) trust). The attribution rules that generally apply to treat a U.S. beneficiary of a nongrantor trust as owning PFIC stock owned by the trust do not apply to a U.S. person that owns an interest in a section 401(a) trust. § 1.1291–1T(b)(8)(iii)(C). Thus, a U.S. person that is a beneficiary of a section 401(a) trust is not treated as an indirect shareholder with respect to any PFIC stock held by the trust for purposes of section 1291.
Although § 1.1291–1(e) provides that organizations exempt from tax under chapter 1 of the Code generally are not subject to section 1291 with respect to their direct or indirect ownership of PFIC stock, a U.S. person that is a beneficiary of or has an interest in a tax exempt organization or account may be treated as a direct or indirect shareholder of the PFIC stock owned by the organization or account under § 1.1291–1T(b)(7) and (8), and thus may be subject to taxation under section 1291.
The Treasury Department and the IRS believe that the application of the PFIC rules to a U.S. person treated as owning stock of a PFIC through a tax exempt organization or account described in § 1.1298–1T(c)(1) would be inconsistent with the tax policies underlying the PFIC rules and the tax provisions applicable to tax exempt organizations and accounts. For example, applying the PFIC rules to a U.S. person that is treated as a shareholder of a PFIC through the U.S. person’s ownership of an individual retirement account (IRA) described in section 408(a) that owns stock of a PFIC would be inconsistent with the principle of deferred taxation provided by IRAs. Accordingly, the Treasury Department and the IRS will amend the definition of shareholder in the section 1291 regulations to provide that a U.S. person that owns stock of a PFIC through a tax exempt organization or account (as described in § 1.1298–1T(c)(1)) is not treated as a shareholder of the PFIC. This amendment will affect all regulations that cross-reference the § 1.1291–1T(b)(7) and (8) definitions of shareholder and indirect shareholder, including § 1.1298–1T(a).
The regulations incorporating the guidance described in this notice will be effective for taxable years of U.S. persons that own stock of a PFIC through a tax exempt organization or account ending on or after December 31, 2013.
This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code (Code) for specific locations for 2014. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States.
Section 911(a) of the Code allows a qualified individual to elect to exclude from gross income the foreign earned income and housing cost amount of such individual. Section 911(c)(1) defines the term “housing cost amount” as an amount equal to the excess of (A) the housing expenses of an individual for the taxable year to the extent such expenses do not exceed the amount determined under section 911(c)(2), over (B) 16 percent of the exclusion amount (computed on a daily basis) in effect under section 911(b)(2)(D) for the calendar year in which such taxable year begins ($271.78 per day for 2014, or $99,200 for the full year), multiplied by the number of days of that taxable year within the applicable period described in section 911(d)(1). The applicable period is the period during which the individual meets the tax home requirement of section 911(d)(1) and either the bona fide residence requirement of section 911(d)(1)(A) or the physical presence requirement of section 911(d)(1)(B). Assuming that the entire taxable year of a qualified individual is within the applicable period, the section 911(c)(1)(B) amount for 2014 is $15,872 ($99,200 x .16).
Section 911(c)(2)(A) of the Code limits the housing expenses taken into account in section 911(c)(1)(A) to an amount equal to (i) 30 percent (adjusted as may be provided under the Secretary’s authority under section 911(c)(2)(B)) of the amount in effect under section 911(b)(2)(D) for the calendar year in which the taxable year of the individual begins, multiplied by (ii) the number of days of that taxable year within the applicable period described in section 911(d)(1). Thus, under this general limitation, a qualified individual whose entire taxable year is within the applicable period is limited to maximum housing expenses of $29,760 ($99,200 x .30) in 2014.
Section 911(c)(2)(B) of the Code authorizes the Secretary to issue regulations or other guidance to adjust the percentage under section 911(c)(2)(A)(i) based on geographic differences in housing costs relative to housing costs in the United States. Pursuant to this authority, the Internal Revenue Service (IRS) and the Treasury Department published Notice 2006–87, 2006–2 C.B. 766, and Notice 2007–25, 2007–1 C.B. 760, for 2006, Notice 2007–77, 2007–2 C.B. 735, for 2007, Notice 2008–107, 2008–2 C.B. 1266, for 2008 and 2009, Notice 2010–27, 2010–1 C.B. 531, for 2009 and 2010, Notice 2011–8, 2011–1 C.B. 503, for 2010 and 2011, Notice 2012–19, 2012–1 C.B. 440 for 2011 and 2012, and Notice 2013–31, 2013–1 C.B. 1099, for 2012 and 2013, to provide adjustments to the limitation on housing expenses for qualified individuals incurring housing expenses in countries with high housing costs relative to housing costs in the United States.
The following table provides adjusted limitations on housing expenses (in lieu of the otherwise applicable limitation of $29,760) for 2014.
|Country||Location||Limitation on Housing Expenses (full year)||Limitation on Housing Expenses (daily)|
|Australia||Darwin, Northern Country||30,600||83.84|
|Bahamas, The||Grand Bahama Island||30,900||84.66|
|Brazil||Rio de Janeiro||35,100||96.16|
|Cayman Islands||Grand Cayman||48,000||131.51|
|Colombia||All cities other than Bogota||49,400||135.34|
|Costa Rica||San Jose||32,000||87.67|
|Dominican Republic||Santo Domingo||45,500||124.66|
|Germany||Frankfurt am Main||44,000||120.55|
|Germany||All cities other than Augsburg, Babenhausen, Bad Aibling, Bad Kreuznach, Bad Nauheim, Baumholder, Berchtesgaden, Berlin, Birkenfeld, Boeblingen, Bonn, Bremen, Bremerhaven, Butzbach, Cologne, Darmstadt, Delmenhorst, Duesseldorf, Erlangen, Flensburg, Frankfurt am Main, Friedberg, Fuerth, Garlstedt, Garmisch-Partenkirchen, Geilenkirchen, Gelnhausen, Germersheim, Giebelstadt, Giessen, Grafenwoehr, Grefrath, Greven, Gruenstadt, Hamburg, Hanau, Handorf, Hannover, Heidelberg, Heilbronn, Herongen, Idar-Oberstein, Ingolstadt, Kaiserslautern, Landkreis, Kalkar, Karlsruhe, Kerpen, Kitzingen, Koblenz, Leimen, Leipzig, Ludwigsburg, Mainz, Mannheim, Mayen, Moenchen-Gladbach, Muenster, Munich, Nellingen, Neubruecke, Noervenich, Nuernberg, Ober Ramstadt, Oberammergau, Osterholz-Scharmbeck, Pirmasens, Rheinau, Rheinberg, Schwabach, Schwetzingen, Seckenheim, Sembach, Stuttgart, Twisteden, Vilseck, Wahn, Wertheim, Wiesbaden, Worms, Wuerzburg, Zirndorf and Zweibruecken||41,400||113.42|
|Holy See, The||Holy See, The||57,300||156.99|
|Italy||All cities other than Avellino, Brindisi, Catania, Florence, Gaeta, Genoa, Gioia Tauro, La Spezia, Leghorn, Milan, Mount Vergine, Naples, Nettuno, Parma, Pisa, Pordenone-Aviano, Rome, Sardinia, Sigonella, Turin, Verona, and Vicenza||35,000||95.89|
|Korea||Ammo Depot #9||30,100||82.47|
|Korea||All cities other than Ammo Depot #9, Camp Carroll, Camp Colbern, Camp Market, Camp Mercer, Changwon, Chinhae, Chunchon, K-16, Kimhae, Kimpo Airfield, Kunsun, Kwangju, Munsan, Osan AB, Pusan, Pyongtaek, Seoul, Suwon, Taegu, Tongduchon, Uijongbu, and Waegwan||33,000||90.41|
|Kuwait||All cities other than Kuwait City||57,700||158.08|
|Malaysia||All cities other than Kuala Lumpur||33,700||92.33|
|Mexico||All cities other than Ciudad Juarez, Cuernavaca, Guadalajara, Hermosillo, Matamoros, Mazatlan, Merida, Metapa, Mexico City, Monterrey, Nogales, Nuevo Laredo, Reynosa, Tapachula, Tijuana, Tuxtla Gutierrez, and Veracruz||39,400||107.95|
|Netherlands||All cities other than Amsterdam, Aruba, Brunssum, Coevorden, Eygelshoven, The Hague, Heerlen, Hoensbroek, Hulsberg, Kerkrade, Landgraaf, Maastricht, Margraten, Papendrecht, Rotterdam, Schaesburg, Schinnen, Schiphol, and Ypenburg||40,600||111.23|
|Norway||All cities other than Oslo and Stavanger||37,700||103.29|
|Qatar||All cities other than Doha||32,400||88.77|
|Spain||All cities other than Barcelona, Madrid, Rota, Seville, Seville Province, and Valencia||30,300||83.01|
|Switzerland||All cities other than Bern, Geneva and Zurich||32,900||90.14|
|Tanzania||Dar Es Salaam||44,000||120.55|
|Trinidad and Tobago||Port of Spain||54,500||149.32|
|United Arab Emirates||Abu Dhabi||49,687||136.13|
|United Arab Emirates||Dubai||57,174||156.64|
|United Kingdom||High Wycombe||62,100||170.14|
|United Kingdom||Menwith Hill||47,400||129.86|
|United Kingdom||All cities other than Basingstoke, Bath, Belfast, Birmingham, Bracknell, Bristol, Brookwood, Brough, Cambridge, Caversham, Chelmsford, Cheltenham, Chicksands, Croughton, Dunstable, Edinburgh, Edzell, Fairford, Farnborough, Felixstowe, Ft. Halstead, Gibraltar, Glenrothes, Greenham Common, Harrogate, High Wycombe, Hythe, Kemble, Lakenheath, Liverpool, London, Loudwater, Menwith Hill, Mildenhall, Nottingham, Oxfordshire, Plymouth, Portsmouth, Reading, Rochester, Samlesbury, Southampton, Surrey, Waterbeach, Welford, West Byfleet, and Wiltshire||44,200||121.10|
|Vietnam||Ho Chi Minh City||42,000||115.07|
For some locations, the limitation on housing expenses provided in section 3 of this notice may be higher than the limitation on housing expenses provided in the “Table of Adjusted Limitations for 2013” in Notice 2013–31. A qualified individual incurring housing expenses in such a location during 2013 may apply the adjusted limitation on housing expenses provided in section 3 of this notice in lieu of the amounts provided in the “Table of Adjusted Limitations for 2013” in Notice 2013–31 (and as set forth in the Instructions to Form 2555 (2013)).
Treasury and the IRS anticipate that future annual notices providing adjustments to housing expense limitations will make a similar election available to qualified individuals that incur housing expenses in the immediately preceding year. For example, when adjusted housing expense limitations for 2015 are issued, it is expected that taxpayers will be permitted to apply those adjusted limitations to the 2014 taxable year.
This notice supersedes Notice 2006–87, 2006–2 C.B. 766, Notice 2007–25, 2007–1 C.B. 760, Notice 2007–77, 2007–2 C.B. 735, Notice 2008–107, 2008–2 C.B. 1266, Notice 2010–27, 2010–1 C.B. 531, Notice 2011–8, 2011–1 C.B. 503, Notice 2012–19, 2012–1 C.B. 440, and Notice 2013–31, 2013–1 C.B. 1099.
This notice is effective for taxable years beginning on or after January 1, 2014. However, as provided in section 4, a taxpayer may elect to apply the 2014 adjusted housing limitations contained in section 3 of this notice to his or her taxable year beginning in 2013.
Since the 2012 release of the Model 1 and Model 2 intergovernmental agreements (IGAs) to implement the Foreign Account Tax Compliance Act (FATCA), there has been robust and growing interest from jurisdictions worldwide to enter into IGAs. To date, the United States has signed IGAs with 26 jurisdictions and has reached agreements in substance or is in advanced discussions with many others. Foreign financial institutions (FFIs) and other stakeholders continue to express strong support for a broad IGA network as a way to facilitate FATCA compliance while avoiding legal conflicts, and to more effectively and efficiently implement cross-border tax information reporting. They have also expressed practical concerns about the status of FFIs in jurisdictions that are known to be in an advanced stage of concluding an IGA, but have not yet signed an agreement. For this reason, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) are issuing this announcement to provide FFIs in jurisdictions that already have reached an agreement in substance on the terms of an IGA with the clarity they need to prepare to comply with FATCA. This announcement also addresses stakeholders’ practical concerns by allowing an FFI ten additional days to register in preparation for FATCA implementation on July 1 and still ensure that its Global Intermediary Identification Number (GIIN) will appear on the first public list of GIINs.
The final regulations provide that the IRS will publish a list identifying all countries that are treated as having a Model 1 or Model 2 IGA in effect. Reg. §§ 1.1471–1(b)(78) and (79). Notice 2013–43, 2013–31 I.R.B. 113, provides that this list is maintained on the Treasury website at http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx. A link to the list is also available on the IRS website at http://www.irs.gov/Businesses/Corporations/Information-for-Foreign-Financial-Institutions. Notice 2013–43 further provides that Treasury and the IRS intend to include on this list jurisdictions that have signed, but may not yet have brought into force, an IGA.
The final regulations generally provide that, in order for withholding not to apply, a withholding agent must obtain an FFI’s GIIN for payments made after June 30, 2014, and must confirm that the GIIN appears on the IRS FFI List. A special rule, however, provides that a withholding agent does not need to obtain a reporting Model 1 FFI’s GIIN for payments made before January 1, 2015. See Reg. § 1.1471–3(d)(4)(iv)(A). Notice 2013–43 and Announcement 2014–1, 2014–2 I.R.B. 393, indicate that FFIs must register on the FATCA registration website by April 25, 2014 (GMT -5), to ensure they are included on the first IRS FFI List, which is expected to be electronically available on June 2, 2014 (GMT -5).
Stakeholders generally have expressed concerns that FFIs located in jurisdictions that are expected to sign an IGA, but have not yet signed the agreement, are unable to plan effectively and efficiently for the July 1 implementation of FATCA given the uncertainty regarding when the relevant IGA may be signed and therefore treated as being in effect. More specifically, stakeholders have expressed concern that certain jurisdictions will not have signed an IGA by April 25, 2014, and accordingly that FFIs in those jurisdictions will not be able to timely register consistent with their expected IGA status. For example, some FFIs that expect to be reporting Model 2 FFIs may not be able to register by April 25 if legal impediments would prevent them from agreeing to the terms of the FFI Agreement that would apply absent the modifications applicable to reporting Model 2 FFIs under a signed Model 2 IGA. Some FFIs that expect to be reporting Model 1 FFIs and therefore to rely on the special rule providing that withholding agents do not need to obtain GIINs of reporting Model 1 FFIs before January 1, 2015, are concerned about missing the April 25 deadline in case the relevant IGA is not in fact signed, and therefore treated as being in effect, by July 1. Other FFIs that expect to be reporting Model 1 FFIs wish to ensure their inclusion on the first IRS FFI List in order to simplify the documentation of their status with withholding agents (even though withholding agents should not require reporting Model 1 FFIs to provide GIINs until January 1, 2015), but are concerned that they will not be able to register as reporting Model 1 FFIs before April 25 if their jurisdiction’s IGA is not signed, and therefore treated as being in effect, by that date.
This announcement aims to address these concerns by providing that the jurisdictions listed on the Treasury and IRS websites as jurisdictions that are treated as having an IGA in effect will also include jurisdictions that, before July 1, 2014, have reached agreements in substance with the United States on the terms of an IGA and have consented to be included on the Treasury and IRS list, even if those agreements have not yet been signed. Such jurisdictions will be treated as having an IGA in effect from the date that the jurisdiction provides its consent (or April 2, 2014, the date of the public release of this announcement, if later) until December 31, 2014, the date by which the IGA must be signed in order for this status to continue without interruption. Treasury expects to add jurisdictions to this list in the coming weeks as additional jurisdictions consent to inclusion on the list and additional agreements in substance are reached. Jurisdictions that reach agreements in substance on or after July 1, 2014, will not be included in the list of jurisdictions that are treated as having an IGA in effect until the IGA is signed.
The text of the agreements in substance that are treated as being in effect will not be published by the IRS or Treasury until the IGA is signed. Instead, the list will specify only whether the relevant IGA is a Model 1 or a Model 2 IGA. Until the IGA is signed, the jurisdiction will be treated as having in effect the relevant model provisions. This means that an FFI resident in, or organized under the laws of, a jurisdiction that is listed on the Treasury and IRS websites as having reached an agreement in substance will be permitted to register on the FATCA registration website consistent with its treatment under the relevant model IGA and will be permitted to certify its status to a withholding agent consistent with that treatment. Treasury generally has a policy of not deviating from the model text except in limited circumstances in Annex II. Any modifications made in the relevant IGA to the model Annex II categories of exempt beneficial owners, deemed compliant FFIs, and accounts excluded from the definition of financial accounts will therefore not be applicable until the IGA is signed.
A jurisdiction may be removed from the list of jurisdictions that are treated as having an IGA in effect if Treasury determines that the jurisdiction is not taking the steps necessary to bring the IGA into force within a reasonable period of time, and, as noted above, a jurisdiction will be removed from the list if the jurisdiction fails to sign the IGA by December 31, 2014. If a jurisdiction is removed from the list, FFIs that are resident in, or organized under the laws of, that jurisdiction, and branches that are located in that jurisdiction, will, from the first day of the month following the month of removal, no longer be entitled to the status that would be provided under the IGA, and will be required to update their status on the FATCA registration website accordingly.
As described in Notice 2013–43, FFIs resident in, or organized under the laws of, a jurisdiction that is treated as having an IGA in effect, which, pursuant to this announcement includes jurisdictions listed on the Treasury and IRS websites as having reached agreements in substance on IGAs before July 1, 2014, should register on the FATCA registration website as a registered deemed-compliant FFI (which would include all reporting Model 1 FFIs) or a participating FFI (which would include all reporting Model 2 FFIs), as applicable. Importantly, withholding agents are still not required to obtain the GIINs of FFIs that are treated as reporting Model 1 FFIs before January 1, 2015.
Based on the IRS experience with the registration system and GIIN generation process to date, the IRS now believes that it can ensure registering FFIs that their GIINs will be included on the June 2 IRS FFI List if their registrations are finalized by May 5, 2014 (GMT -5), rather than April 25, 2014, as originally announced. Further, the IRS believes it can ensure registering FFIs that their GIINs will be included on the July 1 IRS FFI List if their registrations are finalized by June 3, 2014 (GMT -5). FFIs that finalize their registrations after May 5 or June 3 may still be included on the June 2 or July 1 IRS FFI List, respectively; however, the IRS cannot provide assurance that this will be the case. The IRS will continue processing registrations in the order received; however, processing times may increase as the May 5 and June 3 dates approach.
Finally, Treasury and the IRS remind all withholding agents that, in accordance with Reg. § 1.1471–3(e)(3), a withholding agent that receives a Form W–8 from a payee with a GIIN that does not yet appear on the published IRS FFI List has 90 days to verify that the GIIN appears on the list before the withholding agent will be treated as having reason to know that the chapter 4 status of the payee is unreliable or incorrect. In addition, a withholding agent that receives a Form W–8 from a payee indicating that the payee has applied for a GIIN has 90 days to obtain the GIIN from the payee and verify it against the IRS FFI List before the withholding agent will be treated as having reason to know that the chapter 4 status of the payee is unreliable or incorrect.
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 published 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 confusion. It is not used where a position in a prior ruling is being changed.
Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential 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 applies 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 published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted.
Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a 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 period 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 published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded.
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 published 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.
The following abbreviations in current use and formerly used will appear in material published in the Bulletin.
B.T.A.—Board of Tax Appeals.
CFR—Code of Federal Regulations.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
ERISA—Employee Retirement Income Security Act.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
FUTA—Federal Unemployment Tax Act.
G.C.M.—Chief Counsel’s Memorandum.
I.R.B.—Internal Revenue Bulletin.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T.I.R.—Technical Information Release.
U.S.C.—United States Code.
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2013–27 through 2013–52 is in Internal Revenue Bulletin 2013–52, dated December 23, 2013.
Bulletins 2014–1 through 2014–18
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2013–27 through 2013–52 is in Internal Revenue Bulletin 2013–52, dated December 23, 2013.
Bulletins 2014–1 through 2014–18
|Old Article||Action||New Article||Issue||Link||Page|
|2003-37||Obsoleted by||REG-163195-05||2014-15 I.R.B.||2014-15||930|
|2006-87, 2006-2 C.B. 766||Superseded by||Notice 2014-29||2014-18 I.R.B.||2014-18||991|
|2006-109||Modified by||Notice 2014-4||2014-2 I.R.B.||2014-2||274|
|2007-25, 2007-1 C.B. 760||Superseded by||Notice 2014-29||2014-18 I.R.B.||2014-18||991|
|2007-59||Obsoleted by||REG-163195-05||2014-15 I.R.B.||2014-15||930|
|2007-77, 2007-2 C.B. 735||Superseded by||Notice 2014-29||2014-18 I.R.B.||2014-18||991|
|2008-107, 2008-2 C.B. 1266||Superseded by||Notice 2014-29||2014-18 I.R.B.||2014-18||991|
|2009-78||Superseded by||T.D. 9654||2014-6 I.R.B.||2014-6||461|
|2010-27, 2010-1 C.B. 531||Superseded by||Notice 2014-29||2014-18 I.R.B.||2014-18||991|
|2013-1||Superseded by||Notice 2014-22||2014-16 I.R.B.||2014-16||940|
|2013-1||Modified by||Notice 2014-22||2014-16 I.R.B.||2014-16||940|
|2013-13||Obsoleted by||REG-163195-05||2014-15 I.R.B.||2014-15||930|
|2013-17||Amplified by||Notice 2014-1||2014-2 I.R.B.||2014-2||270|
|Old Article||Action||New Article||Issue||Link||Page|
|2003-49||Modified and superseded by||Rev. Proc. 2014-14||2014-2 I.R.B.||2014-2||295|
|2004-42||Obsoleted by||REG-163195-05||2014-15 I.R.B.||2014-15||930|
|2004-43||Obsoleted by||REG-163195-05||2014-15 I.R.B.||2014-15||930|
|2011-4||Modified by||Rev. Proc. 2014-17||2014-12 I.R.B.||2014-12||661|
|2011-14||Modified by||Rev. Proc. 2014-16||2014-9 I.R.B.||2014-9||606|
|2011-14||Clarified by||Rev. Proc. 2014-16||2014-9 I.R.B.||2014-9||606|
|2011-14||Modified by||Rev. Proc. 2014-17||2014-12 I.R.B.||2014-12||661|
|2011-44||Modified and Superseded by||Rev. Proc. 2014-11||2014-3 I.R.B.||2014-3||411|
|2011-49||Modified by||Rev. Proc. 2014-6||2014-1 I.R.B.||2014-1||198|
|2012-14||Modified by||Rev. Proc. 2014-17||2014-12 I.R.B.||2014-12||661|
|2012-19||Modified by||Rev. Proc. 2014-16||2014-9 I.R.B.||2014-9||606|
|2012-19||Superseded by||Rev. Proc. 2014-16||2014-9 I.R.B.||2014-9||606|
|2012-20||Modified by||Rev. Proc. 2014-17||2014-12 I.R.B.||2014-12||661|
|2012-20||Superseded by||Rev. Proc. 2014-17||2014-12 I.R.B.||2014-12||661|
|2013-1||Superseded by||Rev. Proc. 2014-1||2014-1 I.R.B.||2014-1||1|
|2013-2||Superseded by||Rev. Proc. 2014-2||2014-1 I.R.B.||2014-1||90|
|2013-3||Superseded by||Rev. Proc. 2014-3||2014-1 I.R.B.||2014-1||111|
|2013-4||Superseded by||Rev. Proc. 2014-4||2014-1 I.R.B.||2014-1||125|
|2013-5||Superseded by||Rev. Proc. 2014-5||2014-1 I.R.B.||2014-1||169|
|2013-6||Superseded by||Rev. Proc. 2014-6||2014-1 I.R.B.||2014-1||198|
|2013-7||Superseded by||Rev. Proc. 2014-7||2014-1 I.R.B.||2014-1||238|
|2013-8||Superseded by||Rev. Proc. 2014-8||2014-1 I.R.B.||2014-1||242|
|2013-9||Superseded by||Rev. Proc. 2014-9||2014-2 I.R.B.||2014-2||281|
|2013-10||Superseded by||Rev. Proc. 2014-10||2014-2 I.R.B.||2014-2||293|
|2013-22||Modified by||Rev. Proc. 2014-28||2014-16 I.R.B.||2014-16||944|
|2013-24||Obsoleted by||Rev. Proc. 2014-23||2014-12 I.R.B.||2014-12||685|
|2013-27||Obsoleted by||Rev. Proc. 2014-23||2014-12 I.R.B.||2014-12||685|
|2013-32||Superseded in part by||Rev. Proc. 2014-1, and||2014-1 I.R.B.||2014-1||1|
|Rev. Proc. 2014-3||2014-1 I.R.B.||2014-1||111|
|2014-1||Amplified by||Rev. Proc. 2014-18||2014-7 I.R.B.||2014-7||513|
|2014-1 I.R.B. 111||Amplified by||Rev. Proc. 2014-24||2014-13 I.R.B.||2014-13||879|
|2014-3||Amplified by||Rev. Proc. 2014-18||2014-7 I.R.B.||2014-7||513|
|2014-3 I.R.B 111||Amplified by||Rev. Proc. 2014-24||2014-13 I.R.B.||2014-13||879|
|2014-4||Modified by||Rev. Proc. 2014-19||2014-10 I.R.B.||2014-10||619|
|Old Article||Action||New Article||Issue||Link||Page|
|209054-87||A portion withdrawn by||REG-113350-13||2014-3 I.R.B.||2014-3||440|
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletins are available at www.irs.gov/irb/.
The contents of the weekly Bulletins were consolidated semiannually into permanent, indexed, Cumulative Bulletins through the 2008–2 edition.
Internal Revenue Bulletins are available annually as part of Publication 1796 (Tax Products CD-ROM). The CD-ROM can be purchased from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders (discount for online orders) or by calling 1-877-233-6767. The first release is available in mid-December and the final release is available in late January.
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page (www.irs.gov) or write to theIRS Bulletin Unit, SE:W:CAR:MP:P:SPA, Washington, DC 20224.