Internal Revenue Bulletin: 2015-8

February 23, 2015


Highlights of This Issue

 

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

INCOME TAX

Notice 2015–12 Notice 2015–12

Solicits applications for allocations of the remaining available amount of the volume cap for new clean renewable energy bonds (“New CREBs”) under § 54C(a) of the Internal Revenue Code, and provides guidance on the application requirements and forms for requests for New CREBs volume cap allocations, and the method that the IRS will use to allocate the remaining volume cap.

Rev. Proc. 2015–18 Rev. Proc. 2015–18

Publication 1167, General Rules and Specifications for Substitute Forms and Schedules, provides guidelines and general requirements for the development, printing, and approval of substitute tax forms.

Rev. Proc. 2015–19 Rev. Proc. 2015–19

This revenue procedure provides the depreciation deduction limitations for owners of passenger automobiles (including trucks and vans) first placed in service during calendar year 2015 and amounts to be included in income by lessees of passenger automobiles first leased during calendar year 2015. This revenue procedure also provides revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles first placed in service or first leased during 2014 and to which the 50 percent additional first year depreciation deduction applies.

T.D. 9710 T.D. 9710

The final regulations provide guidance under section 909 addressing situations in which foreign income taxes have been separated from the related income.

EXEMPT ORGANIZATIONS

Announcement 2015–6 Announcement 2015–6

Revocation of IRC 501(c)(3) Organizations for failure to meet the code section requirements. Contributions made to the organizations by individual donors are no longer deductible under IRC 170(b)(1)(A).

ADMINISTRATIVE

Notice 2015–11 Notice 2015–11

This notice sets forth the maximum face amount of Qualified Zone Academy Bonds ("Bond" or "Bonds") that may be issued for each State for the calendar year 2014. For this purpose, "State" includes the District of Columbia and the possessions of the United States.

Preface

The IRS Mission

Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax 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.

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

T.D. 9710

Foreign Tax Credit Splitting Events

DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Final regulations and removal of temporary regulations.

SUMMARY:

This document contains final Income Tax Regulations with respect to a provision of the Internal Revenue Code (Code) that addresses situations in which foreign income taxes have been separated from the related income. These regulations are necessary to provide guidance on applying the statutory provision, which was enacted as part of legislation commonly referred to as the Education Jobs and Medicaid Assistance Act (EJMAA) on August 10, 2010. These regulations affect taxpayers claiming foreign tax credits or deducting foreign income taxes.

DATES:

Effective date: These regulations are effective on February 10, 2015.

Applicability dates: For dates of applicability, see §§ 1.704–1(b)(1)(ii)(b)(3), 1.909–1(e), 1.909–2(c), 1.909–3(c), 1.909–4(b), 1.909–5(c), and 1.909–6(h).

FOR FURTHER INFORMATION CONTACT:

Suzanne M. Walsh, (202) 317-6936 (not a toll-free call).

SUPPLEMENTARY INFORMATION:

 

Background

On February 14, 2012, a notice of proposed rulemaking by cross-reference to temporary regulations (REG–132736–11) under sections 909 and 704 of the Code and temporary regulations (TD 9577) (2012 temporary regulations) were published in the Federal Register at [77 FR 8184] and [77 FR 8127], respectively.

Section 1.909–6T of the 2012 temporary regulations set forth an exclusive list of splitter arrangements that applied to foreign income taxes paid or accrued by a section 902 corporation in a taxable year beginning on or before December 31, 2010, comprised of reverse hybrid structure splitter arrangements, foreign consolidated group splitter arrangements, group relief or other loss sharing regime splitter arrangements, and hybrid instrument splitter arrangements (pre-2011 splitter arrangements).

For foreign income taxes paid or accrued by any person in a taxable year beginning on or after January 1, 2011, § 1.909–5T of the 2012 temporary regulations adopted the same list of splitter arrangements as § 1.909–6T, but added partnership inter-branch payment splitter arrangements to the list.

For foreign income taxes paid or accrued by any person in a taxable year beginning on or after January 1, 2012, § 1.909–2T adopted the list of splitter arrangements applicable to prior taxable years with certain changes. Because regulations under section 901 were modified for taxable years beginning after February 14, 2012, to address the application of the legal liability rule to combined income regimes, consolidated group splitter arrangements were removed from the list (although § 1.909–5T applied the consolidated group splitter arrangement rules to foreign income taxes paid or accrued by any person in a taxable year beginning on or after January 1, 2012, and on or before February 14, 2012). In addition, the definitions of hybrid instrument splitter arrangements and loss-sharing splitter arrangements were expanded.

Sections 1.909–3T and 1.909–6T provided interim mechanical rules for tracking taxes paid or accrued with respect to a splitter arrangement (split taxes) as well as the related income with respect to such taxes.

The 2012 temporary regulations also removed the special rule for inter-branch payments previously set forth in § 1.704–1(b)(4)(viii)(d)(3).

A public hearing was not requested and none was held. However, the IRS and the Treasury Department received written comments in response to the notice of proposed rulemaking. After consideration of all the comments, the proposed regulations under section 909 are adopted as amended by this Treasury decision. The revisions are discussed in this preamble. This Treasury decision also adopts the proposed regulations under section 704 without amendment.

Explanation of Revisions and Summary of Comments

 

I. Splitter arrangements—in general

This Treasury decision makes clarifying changes to certain of the definitions of splitter arrangements in § 1.909–2T. It also makes a clarifying change to the interim mechanical rules for tracking split taxes and related income. Apart from this clarifying change, this Treasury decision does not address mechanical issues, which are still under consideration and will be addressed in future guidance.

II. Reverse hybrid splitter arrangements

Section 1.909–2T(b)(1) provides that a splitter arrangement exists with respect to a reverse hybrid entity when a payor pays or accrues foreign income taxes with respect to the income of the reverse hybrid. The split taxes are the taxes paid or accrued with respect to income of the reverse hybrid. The related income with respect to such split taxes is the earnings and profits of the reverse hybrid attributable to the activities of the reverse hybrid that gave rise to the foreign taxable income with respect to which the split taxes were paid or accrued.

A comment indicated that there is confusion regarding the amount of the related income with respect to a reverse hybrid splitter arrangement in the case in which the reverse hybrid subsequently incurs a loss, causing its earnings and profits to fluctuate over multiple taxable years. The final regulations include two new examples at § 1.909–2(b)(1)(v) that clarify how to determine the related income amount with respect to split taxes from a reverse hybrid splitter arrangement.

III. Loss-sharing splitter arrangements

Section 1.909–2T(b)(2) provides that a splitter arrangement exists to the extent that the “usable shared loss” of a “U.S. combined income group,” which is an individual or corporation and all the entities with which it combines items of income and expense under U.S. federal income tax law, is used to offset foreign taxable income of another U.S. combined income group. A usable shared loss is defined as a shared loss of a U.S. combined income group that could be used under foreign law to offset the group’s own income.

A comment requested that the definition of a usable shared loss be clarified to exclude any shared loss that could not be used within the U.S. combined income group in a current foreign taxable year but that could be used within a group by carrying the loss either forward or back to a different foreign taxable year. The Treasury Department and the IRS agree that the usable shared loss definition should not require a U.S. combined income group to carry forward losses because it will not necessarily be foreseeable whether the group will have sufficient foreign taxable income in a future taxable year to use a loss that cannot be used currently or carried back within the group. It would be too unpredictable to adopt a “wait and see” rule that required a taxpayer to forego the opportunity to use a loss to reduce an affiliate’s foreign tax liability in a current (or prior) foreign taxable year based on the speculation that it may be able to use the loss itself in a future foreign taxable year.

It is appropriate, however, that the usable shared loss definition include a shared loss that could be used to offset foreign taxable income of the group in a previous taxable year. Because taxpayers can know in a current foreign taxable year whether a loss can be carried back for foreign law purposes within the U.S. combined income group, they should not be permitted to share such a loss in a way that inappropriately separates foreign income taxes from the related income. Although this may require taxpayers to treat taxes previously paid or accrued as split taxes, this is an acceptable outcome in light of the policy concerns that the loss-sharing splitter rules are intended to address. Furthermore, taxpayers can avoid having to treat taxes as split taxes on a retroactive basis by carrying back the loss. Accordingly, the regulations modify the definition to clarify that a usable shared loss is a shared loss that could be used under foreign tax law to offset income of the U.S. combined income group in a current or previous foreign taxable year.

Another comment recommended that sharing a usable shared loss outside of a U.S. combined income group should give rise to a splitter arrangement only to the extent that the gross amount of such a usable shared loss shared away from the U.S. combined income group exceeds the gross amount of shared losses from other U.S. combined income groups that are received by the group. The Treasury Department and the IRS have determined that it is too burdensome to administer such a netting rule, particularly in light of the fact that the comment did not provide a reason why a U.S. combined income group would seek to use shared losses from another U.S. combined income group while sharing its own usable shared loss outside the group, rather than using its usable shared loss within the group. Therefore, the comment is not adopted.

A further comment recommended that a U.S. combined income group with split taxes resulting from sharing a usable shared loss away from the group in a prior year be treated as receiving a distribution of related income to the extent of any shared loss received by it from a different U.S. combined income group. The Treasury Department and the IRS have determined that it is too burdensome to administer such a rule, which would entail reconciling actual related income accounts with deemed distributions of related income resulting from the receipt of a shared loss from another U.S. combined income group. Therefore, the comment is not adopted.

A question has arisen about when references to “income” in § 1.909–2T(b)(2) are intended to refer to income for purposes of U.S. federal income tax law or to income for purposes of foreign tax law. The regulations clarify that the reference to the term “income” of that U.S. combined income group in § 1.909–2(b)(2)(v) refers to income for purposes of foreign tax law.

IV. Hybrid instrument splitter arrangements

Section 1.909–2T(b)(3)(i) provides that there is a U.S. equity hybrid instrument splitter arrangement if payments or accruals with respect to a U.S. equity hybrid instrument (i) give rise to foreign income taxes paid or accrued by the owner of such instrument, (ii) are deductible by the issuer under the laws of its foreign jurisdiction, and (iii) do not give rise to income for U.S. federal income tax purposes.

A question has arisen as to whether there is a splitter arrangement if an accrual for foreign law purposes with respect to a U.S. equity hybrid instrument does not give rise to income under U.S. law but a separate payment of the accrued amount is made that gives rise to income under U.S. law equal to all or a portion of the amount of the accrual. The reference to “payments or accruals” created confusion regarding the effect of a payment. The final regulations are clarified to provide that if an accrual under foreign law with respect to a U.S. equity hybrid instrument gives rise to a foreign-law deduction by the issuer, then regardless of whether a payment is made on the instrument, a splitter arrangement exists whenever an accrual gives rise to the imposition of foreign income taxes on the instrument owner without giving rise to income under U.S. federal income tax law. Any actual payment of the accrued amount, whether or not it is made periodically under the terms of the instrument, does not prevent the hybrid instrument from being a splitter arrangement. The payments, however, may be treated as a distribution of related income to the extent provided by § 1.909–3 and § 1.909–6(d). An example is added at § 1.909–2(b)(3)(i)(E) to illustrate the application of the rule.

V. Mechanical rules for tracking related income and split taxes.

A comment recommended that the regulations should generally provide additional mechanical rules for tracking related income. The Treasury Department and the IRS recognize that there are a number of mechanical issues related to tracking related income and split taxes that are not fully addressed in § 1.909–6T. Other mechanical issues are under consideration and will be addressed in future guidance.

One comment recommended revising § 1.909–6T(e)(3) to provide for the carryover of split taxes in the circumstance in which a payor of split taxes that is a section 902 corporation combines with a section 902 shareholder in a transaction that is described in section 381. Section 1.909–6T(e)(3) provides that split taxes that carry over to a foreign corporation under section 381, § 1.367(b)–7, or similar rules retain their character as split taxes and, consequently, the transferee corporation is treated as the payor of the split taxes. That provision does not, however, provide that split taxes carry over to a domestic corporation in the case of a foreign-to-U.S. liquidation or other inbound transaction described in section 381.

The Treasury Department and the IRS have determined that it is not appropriate to expand the scope of § 1.909–6T(e)(3) as recommended by the comment. A carryover rule for inbound section 381 transactions would create preferential treatment, in certain fact patterns, of split foreign income taxes that are maintained by a section 902 corporation in suspension accounts rather than included in post-1986 foreign income tax pools, such as when the section 902 corporation has a deficit in post-1986 undistributed earnings and profits. In addition, if suspended foreign income taxes are carried over to a domestic section 902 shareholder, currency exchange rate fluctuations could cause a disparity between the dollar amount of income included by the domestic section 902 shareholder in respect of the functional currency amount of earnings and profits used to make the suspended tax payment and the creditable dollar amount of the foreign income taxes that are unsuspended. This disparity is inconsistent with the inclusion that results from unsuspending split taxes at the level of the payor section 902 corporation, deeming such taxes to be paid by the section 902 shareholder, and including the dollar amount of taxes in the shareholder’s income under the section 78 gross-up. Moreover, taxpayers could choose to avoid permanent suspension of split taxes in an inbound transaction by, for example, causing a distribution of the related income to the payor of the split taxes before the payor of the split taxes is liquidated or otherwise combined with a domestic person. For these reasons, the final regulations do not modify § 1.909–6T(e)(3) to treat split taxes as a carryover attribute in inbound section 381 transactions.

Another comment addressed the fact pattern in which a covered person with the related income ceases to be a covered person with respect to the payor of split taxes and the payor does not take the related income into account before, or in connection with, the termination of the covered person relationship, resulting in the permanent suspension of split taxes. The comment recommended that, in this case, if the covered person is a direct or indirect subsidiary of the payor of the split taxes, the payor should be treated as having paid the split taxes on behalf of the covered person and as having made a capital contribution in the amount of the split taxes to the covered person directly or indirectly through a chain of subsidiaries, thereby stepping up basis in the covered person’s stock. The comment also recommended reducing the earnings and profits of the covered person by the amount of the split taxes as though the covered person had paid the split taxes. Stepping up the basis of the stock of the covered person by the amount of the permanently suspended split taxes and reducing its earnings and profits by the same amount would ensure that any inclusion attributable to the earnings and profits or appreciated assets of the departing or liquidating covered person is reduced by the amount of the split taxes, effectively converting the permanently suspended split taxes into a deduction for the payor of the split taxes.

Section 909 contemplates that split taxes may remain permanently suspended as a result of a disposition or liquidation of the covered person. Section 909 provides that split taxes are suspended until the related income is taken into account generally by the payor of the split tax or relevant section 902 shareholder, and does not provide for a deduction of split taxes in lieu of a credit. If the covered person does not distribute the full amount of related income prior to the liquidation or disposition of the covered person, and such liquidation or disposition does not result in the reflection of the related income in the earnings and profits of the payor of the split tax (or the relevant section 902 shareholder), then the related income is not taken into account as prescribed by section 909. The Treasury Department and the IRS, therefore, have concluded that it is appropriate for split taxes to remain suspended until and unless the related income is taken into account. Accordingly, the comment is not adopted.

VI. Taking related income into account as a result of a transaction under section 381

A comment incorrectly interpreted § 1.909–6T(d)(8)(ii) as providing that when a payor section 902 corporation with suspended split taxes combines with the covered person with the related income in a transaction described in section 381, all related income is treated as taken into account even if the full amount of related income is not reflected in the earnings and profits of the payor section 902 corporation (or surviving corporation) as a result of the transaction.

The Treasury Department and the IRS did not intend for a transaction described under section 381 to result in the unsuspension of split taxes if the transaction does not cause the payor of the split taxes to take into account earnings and profits of the covered person equal to the amount of related income specified in the relevant splitter arrangement definition. Accordingly, the final regulations clarify that split taxes are unsuspended only when the appropriate amount of related income is taken into account by the payor section 902 corporation either as a result of a distribution or inclusion out of the earnings and profits of the covered person or as a result of the combination of the payor section 902 corporation and the covered person in a transaction described in section 381.

VII. Additional splitter arrangement fact patterns

A comment recommended that the U.S. debt hybrid instrument splitter arrangement definition be expanded to include certain fact patterns in which the instrument owner is not related to the issuer of the instrument. The Treasury Department and the IRS have concluded that it is not appropriate at this time to extend the existing splitter arrangement list to include transactions between unrelated persons and do not adopt the comment. The Treasury Department and the IRS continue, however, to consider other arrangements that inappropriately separate foreign income taxes from the related income, and the circumstances under which a splitter arrangement described in regulations or other guidance under section 909 should be applied to arrangements between unrelated persons.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory 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. Pursuant to section 7805(f) of the Internal Revenue Code, the NPRM preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses.

Drafting Information

The principal author of these regulations is Suzanne M. Walsh of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.

* * * * *

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by adding an entry in numerical order to read as follows:

Authority: 26 U.S.C. 7805 * * *

Sections 1.909–1 through 1.906–6 also issued under 26 U.S.C. 909(e). * * *

Par. 2. Section 1.704–1 is amended as follows:

a. Paragraph (b)(0) is amended by adding entries for § 1.704–1(b)(1)(ii)(b)(3) and § 1.704–1(b)(4)(viii)(d)(3).

b. Paragraph (b)(1)(ii)(b)(3) is revised.

c. Paragraph (b)(4)(viii)(d)(3) is revised.

d. Paragraph (b)(5), Example 24, is revised.

The revisions read as follows:

§ 1.704–1. Partner’s distributive share.

* * * * *

(b) Determination of partner’s distributive share –(0) Cross-references.

Heading Section
* * * * * * *  
Special rules for certain interbranch payments. . . . . . . . 1.704–1(b)(1)(ii)(b)(3)
* * * * * * *  
Special rules for certain interbranch payments . . . . . . . . . 1.704–1(b)(4)(viii)(d)(3)
* * * * * * *  

(1) * * *

(ii) * * *

(b) * * *

(3) Special rules for certain inter-branch payments—(A) In general. The provisions of § 1.704–1(b)(4)(viii)(d)(3) apply for partnership taxable years ending after February 9, 2015. See 26 CFR 1.704–1T(b)(4)(viii)(d)(3) (revised as of April 1, 2014) for rules applicable to taxable years beginning on or after January 1, 2012, and ending on or before February 9, 2015.

(B) Transition rule. Transition relief is provided herein to partnerships whose agreements were entered into prior to February 14, 2012. In such cases, if there has been no material modification to the partnership agreement on or after February 14, 2012, then the partnership may apply the provisions of § 1.704–1(b)(4)(viii)(c)(3)(ii) and § 1.704–1(b)(4)(viii)(d)(3) (revised as of April 1, 2011). For purposes of this paragraph (b)(1)(ii)(b)(3), any change in ownership constitutes a material modification to the partnership agreement. This transition rule does not apply to any taxable year in which persons bearing a relationship to each other that is specified in section 267(b) or section 707(b) collectively have the power to amend the partnership agreement without the consent of any unrelated party (and all subsequent taxable years).

* * * * *

(4) * * *

(vii) * * *

(d) * * *

(3) Special rules for inter-branch payments. For rules relating to foreign tax paid or accrued in partnership taxable years beginning before January 1, 2012, in respect of certain inter-branch payments, see 26 CFR 1.704–1(b)(4)(viii)(d)(3) (revised as of April 1, 2011).

* * * * *

(b)

(5) * * *

Example 24. (i) The facts are the same as in Example 21, except that businesses M and N are conducted by entities (DE1 and DE2, respectively) that are corporations for country X and Y tax purposes and disregarded entities for U.S. Federal income tax purposes. Also, assume that DE1 makes payments of $75,000 during 2012 to DE2 that are deductible by DE1 for country X tax purposes and includible in income of DE2 for country Y tax purposes. As a result of such payments, DE1 has taxable income of $25,000 for country X purposes on which $10,000 of taxes are imposed and DE2 has taxable income of $125,000 for country Y purposes on which $25,000 of taxes are imposed. For U.S. Federal income tax purposes, $100,000 of AB’s income is attributable to the activities of DE1 and $50,000 of AB’s income is attributable to the activities of DE2. Pursuant to the partnership agreement, all partnership items from business M, excluding CFTEs paid or accrued by business M, are allocated 75% to A and 25% to B, and all partnership items from business N, excluding CFTEs paid or accrued by business N, are split evenly between A and B (50% each). Accordingly, A is allocated 75% of the income from business M ($75,000), and 50% of the income from business N ($25,000). B is allocated 25% of the income from business M ($25,000), and 50% of the income from business N ($25,000).

(ii) Because the partnership agreement provides for different allocations of the net income attributable to businesses M and N, the net income attributable to each of business M and business N is income in separate CFTE categories. See paragraph (b)(4)(viii)(c)(2) of this section. Under paragraph (b)(4)(viii)(c)(3) of this section, the $100,000 of net income attributable to business M is in the business M CFTE category and the $50,000 of net income attributable to business N is in the business N CFTE category. Under paragraph (b)(4)(viii)(d)(1) of this section, the $10,000 of country X taxes is allocated to the business M CFTE category and $10,000 of the country Y taxes is allocated to the business N CFTE category. The additional $15,000 of country Y tax imposed with respect to the inter-branch payment is assigned to the business M CFTE category because for U.S. Federal income tax purposes, the related $75,000 of income that country Y is taxing is in the business M CFTE category. Therefore, $25,000 of taxes ($10,000 of country X taxes and $15,000 of the country Y taxes) is related to the $100,000 of net income in the business M CFTE category and the other $10,000 of country Y taxes is related to the $50,000 of net income in the business N CFTE category. See paragraph (b)(4)(viii)(c)(1) of this section. The allocations of country X taxes will be in proportion to the distributive shares of income to which they relate and will be deemed to be in accordance with the partners’ interests in the partnership if such taxes are allocated 75% to A and 25% to B. The allocations of country Y taxes will be in proportion to the distributive shares of income to which they relate and will be deemed to be in accordance with the partners’ interests in the partnership if $15,000 of such taxes is allocated 75% to A and 25% to B and the other $10,000 of such taxes is allocated 50% to A and 50% to B. No inference is intended with respect to the application of other provisions to arrangements that involve disregarded payments.

(iii) Assume that the facts are the same as in paragraph (i) of this Example 24, except that in order to reflect the $75,000 payment from DE1 to DE2, the partnership agreement allocates $75,000 of the income attributable to business M equally between A and B (50% each). In order to prevent separating the CFTEs from the related foreign income, the $75,000 payment is treated as a divisible part of the business M activity and, therefore, a separate activity. See paragraph (b)(4)(viii)(c)(2)(iii) of this section. Because items from the disregarded payment and business N are both shared equally between A and B, the disregarded payment activity and the business N activity are treated as a single CFTE category. See paragraph (b)(4)(viii)(c)(2)(i) of this section. Accordingly, $25,000 of net income attributable to business M is in the business M CFTE category and $75,000 of income of business M attributable to the disregarded payment and the $50,000 of net income attributable to business N are in the business N CFTE category. Under paragraph (b)(4)(viii)(d)(1) of this section, the $10,000 of country X taxes is allocated to the business M CFTE category and all $25,000 of the country Y taxes is allocated to the business N CFTE category. The allocations of country X taxes will be in proportion to the distributive shares of income to which they relate and will be deemed to be in accordance with the partners’ interests in the partnership if such taxes are allocated 75% to A and 25% to B. The allocations of country Y taxes will be in proportion to the distributive shares of income to which they relate and will be deemed to be in accordance with the partners’ interests in the partnership if such taxes are allocated 50% to A and 50% to B.

* * * * *

§ 1.704–1T [Removed]

Par. 3. Section 1.704–1T is removed.

Par. 4. Section 1.909–0 is added to read as follows:

§ 1.909–0 Outline of regulation provisions for section 909.

This section lists the headings for §§ 1.909–1 through 1.909–6.

§ 1.909–1 Definitions and special rules.

(a) Definitions.

(b) Taxes paid or accrued by a partnership, S corporation or trust.

(c) Related income of a partnership, S corporation or trust.

(d) Application of section 909 to pre-1987 accumulated profits and pre-1987 foreign income taxes.

(e) Effective/applicability date.

§ 1.909–2 Splitter arrangements.

(a) Foreign tax credit splitting event.

(1) In general.

(2) Split taxes not taken into account.

(b) Splitter arrangements.

(1) Reverse hybrid splitter arrangements.

(i) In general.

(ii) Split taxes from a reverse hybrid splitter arrangement.

(iii) Related income from a reverse hybrid splitter arrangement.

(iv) Reverse hybrid.

(v) Examples.

(2) Loss-sharing splitter arrangements.

(i) In general.

(ii) U.S. combined income group.

(iii) Income and shared loss of a U.S. combined income group.

(iv) Split taxes from a loss-sharing splitter arrangement.

(v) Related income from a loss-sharing splitter arrangement.

(vi) Foreign group relief or other loss-sharing regime.

(vii) Examples.

(3) Hybrid instrument splitter arrangements.

(i) U.S. equity hybrid instrument splitter arrangement.

(ii) U.S. debt hybrid instrument splitter arrangement.

(4) Partnership inter-branch payment splitter arrangements.

(i) In general.

(ii) Split taxes from a partnership inter-branch payment splitter arrangement.

(iii) Related income from a partnership inter-branch payment splitter arrangement.

(c) Effective/applicability date.

§ 1.909–3 Rules regarding related income and split taxes.

(a) Interim rules for identifying related income and split taxes.

(b) Split taxes on deductible disregarded payments.

(c) Effective/applicability date.

§ 1.909–4 Coordination rules.

(a) Interim rules.

(b) Effective/applicability date.

§ 1.909–5 2011 and 2012 splitter arrangements.

(a) Taxes paid or accrued in taxable years beginning in 2011.

(b) Taxes paid or accrued in certain taxable years beginning in 2012 with respect to a foreign consolidated group splitter arrangement.

(c) Effective/applicability date.

§ 1.909–6 Pre-2011 foreign tax credit splitting events.

(a) Foreign tax credit splitting event.

(1) In general.

(2) Taxes not subject to suspension under section 909.

(3) Taxes subject to suspension under section 909.

(b) Pre-2011 splitter arrangements.

(1) Reverse hybrid structure splitter arrangements.

(2) Foreign consolidated group splitter arrangements.

(3) Group relief or other loss-sharing regime splitter arrangements.

(i) In general.

(ii) Split taxes and related income.

(4) Hybrid instrument splitter arrangements.

(i) In general.

(ii) U.S. equity hybrid instrument splitter arrangement.

(iii) U.S. debt hybrid instrument splitter arrangement.

(c) General rules for applying section 909 to pre-2011 split taxes and related income.

(1) Annual determination.

(2) Separate categories.

(d) Special rules regarding related income.

(1) Annual adjustments.

(2) Effect of separate limitation losses and deficits.

(3) Pro rata method for distributions out of earnings and profits that include both related income and other income.

(4) Alternative method for distributions out of earnings and profits that include both related income and other income.

(5) Distributions, deemed distributions, and inclusions out of related income.

(6) Carryover of related income.

(7) Related income taken into account by a section 902 shareholder.

(8) Related income taken into account by a payor section 902 corporation.

(9) Related income taken into account by an affiliated group of corporations that includes a section 902 shareholder.

(10) Distributions of previously-taxed earnings and profits.

(e) Special rules regarding pre-2011 split taxes.

(1) Taxes deemed paid pro rata out of pre-2011 split taxes and other taxes.

(2) Pre-2011 split taxes deemed paid in pre-2011 taxable years.

(3) Carryover of pre-2011 split taxes.

(4) Determining when pre-2011 split taxes are no longer treated as pre-2011 split taxes.

(f) Rules relating to partnerships and trusts.

(1) Taxes paid or accrued by partnerships.

(2) Section 704(b) allocations.

(3) Trusts.

(g) Interaction between section 909 and other Code provisions.

(1) Section 904(c).

(2) Section 905(a).

(3) Section 905(c).

(4) Other foreign tax credit provisions.

(h) Effective/applicability date.

§ 1.909–0T [Removed]

Par. 5. Section 1.909–0T is removed.

Par. 6. Sections 1.909–1 is added to read as follows:

§ 1.909–1 Definitions and special rules.

(a) Definitions. For purposes of section 909, this section, and §§ 1.909–2 through 1.909–5, the following definitions apply:

(1) The term section 902 corporation means any foreign corporation with respect to which one or more domestic corporations meet the ownership requirements of section 902(a) or (b).

(2) The term section 902 shareholder means any domestic corporation that meets the ownership requirements of section 902(a) or (b) with respect to a section 902 corporation.

(3) The term payor means a person that pays or accrues a foreign income tax within the meaning of § 1.901–2(f), and also includes a person that takes foreign income taxes paid or accrued by a partnership, S corporation, estate or trust into account pursuant to section 702(a)(6), section 901(b)(5) or section 1373(a).

(4) The term covered person means, with respect to a payor—

(i) Any entity in which the payor holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value);

(ii) Any person that holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value) in the payor; or

(iii) Any person that bears a relationship that is described in section 267(b) or 707(b) to the payor.

(5) The term foreign income tax means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any possession of the United States. A foreign income tax includes any tax paid or accrued in lieu of such a tax within the meaning of section 903.

(6) The term post-1986 foreign income taxes has the meaning provided in § 1.902–1(a)(8).

(7) The term post-1986 undistributed earnings has the meaning provided in § 1.902–1(a)(9).

(8) The term disregarded entity means an entity that is disregarded as an entity separate from its owner, as provided in § 301.7701–2(c)(2)(i) of this chapter.

(9) The term hybrid partnership means a partnership that is subject to income tax in a foreign country as a corporation (or otherwise at the entity level) on the basis of residence, place of incorporation, place of management or similar criteria.

(b) Taxes paid or accrued by a partnership, S corporation or trust. Under section 909(c)(1), section 909 applies at the partner level, and similar rules apply in the case of an S corporation or trust. Accordingly, in the case of foreign income taxes paid or accrued by a partnership, S corporation or trust, taxes allocated to one or more partners, shareholders or beneficiaries (as the case may be) will be treated as split taxes to the extent such taxes would be split taxes if the partner, shareholder or beneficiary had paid or accrued the taxes directly on the date such taxes are taken into account by the partner under sections 702 and 706(a), by the shareholder under section 1373(a), or by the beneficiary under section 901(b)(5). Any such split taxes will be suspended in the hands of the partner, shareholder or beneficiary.

(c) Related income of a partnership, S corporation or trust. For purposes of determining whether related income is taken into account by a covered person, related income of a partnership, S corporation or trust is considered to be taken into account by the partner, shareholder or beneficiary to whom the related income is allocated.

(d) Application of section 909 to pre-1987 accumulated profits and pre-1987 foreign income taxes. Section 909 and §§ 1.909–1 through 1.909–5 will apply to pre-1987 accumulated profits (as defined in § 1.902–1(a)(10)(i)) and pre-1987 foreign income taxes (as defined in § 1.902–1(a)(10)(iii)) of a section 902 corporation attributable to taxable years beginning on or after January 1, 2012.

(e) Effective/applicability date. This section applies to taxable years ending after February 9, 2015. See 26 CFR 1.909–1T (revised as of April 1, 2014) for rules applicable to taxable years beginning on or after January 1, 2011, and ending on or before February 9, 2015.

§ 1.909–1T [Removed]

Par. 7. Section 1.909–1T is removed.

Par. 8. Section 1.909–2 is added to read as follows:

§ 1.909–2 Splitter arrangements.

(a) Foreign tax credit splitting event—(1) In general. There is a foreign tax credit splitting event with respect to foreign income taxes paid or accrued if and only if, in connection with an arrangement described in paragraph (b) of this section (a splitter arrangement) the related income was, is or will be taken into account for U.S. Federal income tax purposes by a person that is a covered person with respect to the payor of the tax. Foreign income taxes that are paid or accrued in connection with a splitter arrangement are split taxes to the extent provided in paragraph (b) of this section. Income (or, as appropriate, earnings and profits) that was, is or will be taken into account by a covered person in connection with a splitter arrangement is related income to the extent provided in paragraph (b) of this section.

(2) Split taxes not taken into account. Split taxes will not be taken into account for U.S. Federal income tax purposes before the taxable year in which the related income is taken into account by the payor or, in the case of split taxes paid or accrued by a section 902 corporation, by a section 902 shareholder of such section 902 corporation. Therefore, in the case of split taxes paid or accrued by a section 902 corporation, split taxes will not be taken into account for purposes of sections 902 or 960, or for purposes of determining earnings and profits under section 964(a), before the taxable year in which the related income is taken into account by the payor section 902 corporation, a section 902 shareholder of the section 902 corporation, or a member of the section 902 shareholder’s consolidated group. See § 1.909–3(a) for rules relating to when split taxes and related income are taken into account.

(b) Splitter arrangements. The arrangements set forth in this paragraph (b) are splitter arrangements.

(1) Reverse hybrid splitter arrangements—(i) In general. A reverse hybrid is a splitter arrangement when a payor pays or accrues foreign income taxes with respect to income of a reverse hybrid. A reverse hybrid splitter arrangement exists even if the reverse hybrid has a loss or a deficit in earnings and profits for a particular year for U.S. Federal income tax purposes (for example, due to a timing difference).

(ii) Split taxes from a reverse hybrid splitter arrangement. The foreign income taxes paid or accrued with respect to income of the reverse hybrid are split taxes.

(iii) Related income from a reverse hybrid splitter arrangement. The related income with respect to split taxes from a reverse hybrid splitter arrangement is the earnings and profits (computed for U.S. Federal income tax purposes) of the reverse hybrid attributable to the activities of the reverse hybrid that gave rise to income included in the payor’s foreign tax base with respect to which the split taxes were paid or accrued. Accordingly, related income of the reverse hybrid includes items of income or expense attributable to a disregarded entity owned by the reverse hybrid only to the extent that the income attributable to the activities of the disregarded entity is included in the payor’s foreign tax base.

(iv) Reverse hybrid. The term reverse hybrid means an entity that is a corporation for U.S. Federal income tax purposes but is a fiscally transparent entity (under the principles of § 1.894–1(d)(3)) or a branch under the laws of a foreign country imposing tax on the income of the entity.

(v) Examples. The following examples illustrate the rules of paragraph (b)(1) of this section.

Example 1. (i) Facts. USP, a domestic corporation, wholly owns DE, a disregarded entity for U.S. federal income tax purposes that is organized in country A and treated as a corporation for country A tax purposes. DE wholly owns RH, a corporation for U.S. Federal income tax purposes that is organized in country A and treated as a fiscally transparent entity for country A tax purposes. Country A imposes an income tax at the rate of 30% on DE with respect to the items of income earned by RH. Prior to year 1, RH had no income for country A purposes and had no post-1986 earnings and profits for U.S. Federal income tax purposes. In year 1, RH earns 200u of income on which DE pays 60u of country A tax. Pursuant to § 1.901–2(f)(4)(ii), USP is treated as legally liable for the 60u of country A taxes paid by DE. DE has no other income. In year 2, RH earns no income and incurs no losses or expenses. At the end of year 2, RH distributes 100u to DE.

(ii) Result. (A) Split taxes and related income. Pursuant to § 1.909–2(b)(1)(iv), RH is a reverse hybrid because it is a corporation for U.S. Federal income tax purposes and a fiscally transparent entity for country A purposes. Pursuant to § 1.909–2(b)(1), RH is a covered person with respect to USP because USP wholly owns RH for U.S. Federal income tax purposes. Pursuant to § 1.909–2(b)(1)(i), there is a splitter arrangement with respect to RH because USP paid country A tax with respect to the income of RH. All 60u of taxes paid by USP in year 1 with respect to the income of RH are split taxes pursuant to § 1.909–2(b)(1)(ii). The post-1986 earnings and profits of RH are 200u as of the end of year 1. Pursuant to § 1.909–2(b)(1)(iii), the related income in year 1 is the 200u of RH’s earnings and profits that are attributable to the activities that gave rise to the split taxes. No additional split taxes or related income arise in year 2.

(B) Distribution. Because DE is a disregarded entity, the 100u distribution by RH at the end of year 2 is treated as a dividend to USP. Pursuant to § 1.909–6(d)(7) and § 1.909–3(a), 100u of the 200u of related income of RH, or 50%, is taken into account by USP by reason of the 100u dividend. Accordingly, pursuant to § 1.909–6(e)(4) and § 1.909–3(a), a ratable portion of the split taxes, or 30u of taxes (50% of 60u), is no longer treated as split taxes and is taken into account by USP for U.S. Federal income tax purposes.

Example 2. (i) Facts. The facts are the same as in Example 1, except that in year 2, RH has a 100u loss for U.S. Federal income tax purposes as well as for country A tax purposes. For country A tax purposes, DE takes the 100u loss into account in year 2 and may not carry back the 100u loss to offset its country A taxable income for year 1. At the end of year 2, RH distributes 100u to DE.

(ii) Result. (A) Split taxes and related income. The split taxes and related income for year 1 are the same as in Example 1. Pursuant to § 1.909–2(b)(1)(iii), § 1.909–6(d)(1) and § 1.909–3(a), the total related income of RH is reduced to 100u (200u – 100u) in year 2 because RH incurred a 100u loss in year 2 attributable to the activities that are included in DE’s country A tax base.

(B) Distribution. Because DE is a disregarded entity, the 100u distribution by RH at the end of year 2 is treated as a dividend to USP. Pursuant to § 1.909–6(d)(7) and § 1.909–3(a), 100u of the 100u of related income of RH, or 100%, is taken into account by USP by reason of the 100u dividend. Accordingly, pursuant to § 1.909–6(e)(4) and § 1.909–3(a), a ratable portion of the split taxes, or 60u of taxes (100% of 60u), is no longer treated as split taxes and is taken into account by USP for U.S. Federal income tax purposes.

(2) Loss-sharing splitter arrangements—(i) In general. A foreign group relief or other loss-sharing regime is a loss-sharing splitter arrangement to the extent that a shared loss of a U.S. combined income group could have been used to offset income of that group in the current or in a prior foreign taxable year (usable shared loss) but is used instead to offset income of another U.S. combined income group.

(ii) U.S. combined income group. The term U.S. combined income group means an individual or a corporation and all entities (including entities that are fiscally transparent for U.S. Federal income tax purposes under the principles of § 1.894–1(d)(3)) that for U.S. Federal income tax purposes combine any of their respective items of income, deduction, gain or loss with the income, deduction, gain or loss of such individual or corporation. A U.S. combined income group can arise, for example, as a result of an entity being disregarded or, in the case of a partnership or hybrid partnership and a partner, as a result of the allocation of income or any other item of the partnership to the partner. For purposes of this paragraph (b)(2)(ii), a branch is treated as an entity, all members of a U.S. affiliated group of corporations (as defined in section 1504) that file a consolidated return are treated as a single corporation, and two or more individuals that file a joint return are treated as a single individual. A U.S. combined income group may consist of a single individual or corporation and no other entities, but cannot include more than one individual or corporation. In addition, an entity may belong to more than one U.S. combined income group. For example, a hybrid partnership with two corporate partners that do not combine any of their items of income, deduction, gain or loss for U.S. Federal income tax purposes is in a separate U.S. combined income group with each of its partners.

(iii) Income and shared loss of a U.S. combined income group—(A) Income. Except as otherwise provided in this paragraph (b)(2)(iii)(A), the income of a U.S. combined income group is the aggregate amount of taxable income recognized or taken into account for foreign tax purposes by those members that have positive taxable income for foreign tax purposes. In the case of an entity that is fiscally transparent (under the principles of § 1.894–1(d)(3)) for foreign tax purposes and that is a member of more than one U.S. combined income group, the foreign taxable income of the entity is allocated between or among the groups under foreign tax law. In the case of an entity that is not fiscally transparent for foreign tax purposes and that is a member of more than one U.S. combined income group, the foreign taxable income of the entity is allocated between or among those groups based on U.S. Federal income tax principles. For example, in the case of a hybrid partnership, the foreign taxable income of the partnership is allocated between or among the groups in the manner the partnership allocates the income under section 704(b). To the extent the foreign taxable income would be income under U.S. Federal income tax principles in another year, the income is allocated between or among the groups based on how the hybrid partnership would allocate the income if the income were recognized for U.S. Federal income tax purposes in the year in which the income is recognized for foreign tax purposes. To the extent the foreign taxable income would not constitute income under U.S. Federal income tax principles in any year, the income is allocated between or among the groups in the same manner as the partnership items attributable to the activity giving rise to the foreign taxable income.

(B) Shared loss. The term shared loss means a loss of one entity for foreign tax purposes that, in connection with a foreign group relief or other loss-sharing regime, is taken into account by one or more other entities. Except as otherwise provided in this paragraph (b)(2)(iii)(B), the amount of shared loss of a U.S. combined income group is the sum of the shared losses of all members of the U.S. combined income group. In the case of an entity that is fiscally transparent (under the principles of § 1.894–1(d)(3)) for foreign tax purposes and that is a member of more than one U.S. combined income group, the shared loss of the entity is allocated between or among the groups under foreign tax law. In the case of an entity that is not fiscally transparent for foreign tax purposes and that is a member of more than one U.S. combined income group, the shared loss of the entity will be allocated between or among those groups based on U.S. Federal income tax principles. For example, in the case of a hybrid partnership, the shared loss of the partnership will be allocated between or among the groups in the manner the partnership allocates the loss under section 704(b). To the extent the shared loss would be a loss under U.S. Federal income tax principles in another year, the loss is allocated between or among the groups based on how the partnership would allocate the loss if the loss were recognized for U.S. Federal income tax purposes in the year in which the loss is recognized for foreign tax purposes. To the extent the shared loss would not constitute a loss under U.S. Federal income tax principles in any year, the loss is allocated between or among the groups in the same manner as the partnership items attributable to the activity giving rise to the shared loss.

(iv) Split taxes from a loss-sharing splitter arrangement. Split taxes from a loss-sharing splitter arrangement are foreign income taxes paid or accrued by a member of the U.S. combined income group with respect to income from the current foreign taxable year, or, in the case of a foregone carryback loss, from the prior foreign taxable year, equal to the amount of the usable shared loss of that group that offsets income of another U.S. combined income group.

(v) Related income from a loss-sharing splitter arrangement. The related income with respect to split taxes from a loss-sharing splitter arrangement is an amount of income of the individual or corporate member of the U.S. combined income group equal to the amount of income under foreign tax law of that U.S. combined income group that is offset by the usable shared loss of another U.S. combined income group.

(vi) Foreign group relief or other loss-sharing regime. A foreign group relief or other loss-sharing regime exists when an entity may surrender its loss to offset the income of one or more other entities. A foreign group relief or other loss-sharing regime does not include an allocation of loss of an entity that is a partnership or other fiscally transparent entity (under the principles of § 1.894–1(d)(3)) for foreign tax purposes or regimes in which foreign tax is imposed on combined income (such as a foreign consolidated regime), as described in § 1.901–2(f)(3).

(vii) Examples. The following examples illustrate the rules of paragraph (b)(2) of this section.

Example 1. (i) Facts. USP, a domestic corporation, wholly owns CFC1, a corporation organized in country A. CFC1 wholly owns CFC2 and CFC3, both corporations organized in country A. CFC2 wholly owns DE, an entity organized in country A. DE is a corporation for country A tax purposes and a disregarded entity for U.S. Federal income tax purposes. Country A has a loss-sharing regime under which a loss of CFC1, CFC2, CFC3 or DE may be used to offset the income of one or more of the others. Country A imposes an income tax at the rate of 30% on the taxable income of corporations organized in country A. In year 1, before any loss sharing, CFC1 has no income, CFC2 has income of 50u, CFC3 has income of 200u, and DE has a loss of 100u. Under the provisions of country A’s loss-sharing regime, the group decides to use DE’s 100u loss to offset 100u of CFC3’s income. After the loss is shared, for country A’s tax purposes, CFC2 still has 50u of income on which it pays 15u of country A tax. CFC3 has income of 100u (200u less the 100u shared loss) on which it pays 30u of country A tax. For U.S. Federal income tax purposes, the loss sharing with CFC3 is not taken into account. Because DE is a disregarded entity, its 100u loss is taken into account by CFC2 and reduces its earnings and profits for U.S. Federal income tax purposes. Accordingly, before application of section 909, CFC2 has a loss for earnings and profits purposes of 65u (50u income less 15u taxes paid to country A less 100u loss of DE). CFC2 also has the U.S. dollar equivalent of 15u of foreign income taxes to add to its post-1986 foreign income taxes pool. CFC3 has earnings and profits of 170u (200u income less 30u of taxes) and the dollar equivalent of 30u of foreign income taxes to add to its post-1986 foreign income taxes pool.

(ii) Result. Pursuant to § 1.909–2(b)(2)(ii), CFC2 and DE constitute one U.S. combined income group, while CFC1 and CFC3 each constitute separate U.S. combined income groups. Pursuant to § 1.909–2(b)(2)(iii)(A), the income of the CFC2 U.S. combined income group is 50u (CFC2’s country A taxable income of 50u). The income of the CFC3 U.S. combined income group is 200u (CFC3’s country A taxable income of 200u). Pursuant to § 1.909–2(b)(2)(iii)(B), the shared loss of the CFC2 U.S. combined income group includes the 100u of shared loss incurred by DE. The usable shared loss of the CFC2 U.S. combined income group is 50u, the amount of the group’s shared loss that could have otherwise offset CFC2’s 50u of country A taxable income that is included in the income of the CFC2 U.S. combined income group. There is a splitter arrangement because the 50u usable shared loss of the CFC2 U.S. combined income group was used instead to offset income of CFC3, which is included in the CFC3 U.S. combined income group. Pursuant to § 1.909–2(b)(2)(iv), the split taxes are the 15u of country A income taxes paid by CFC2 on 50u of income, an amount of income of the CFC2 U.S. combined income group equal to the amount of usable shared loss of that group that was used to offset income of the CFC3 U.S. combined income group. Pursuant to § 1.909–2(b)(2)(v), the related income is the 50u of CFC3’s income that equals the amount of income of the CFC3 U.S. combined income group that was offset by the usable shared loss of the CFC2 U.S. combined income group.

Example 2. (i) Facts. USP, a domestic corporation, wholly owns CFC1, a corporation organized in country B. CFC1 wholly owns CFC2 and CFC3, both corporations organized in country B. CFC2 wholly owns DE, an entity organized in country B. DE is a corporation for country B tax purposes and a disregarded entity for U.S. Federal income tax purposes. CFC2 and CFC3 each own 50% of HP1, an entity organized in country B. HP1 is a corporation for country B tax purposes and a partnership for U.S. Federal income tax purposes. All items of income and loss of HP1 are allocated for U.S. Federal income tax purposes equally between CFC2 and CFC3, and all entities use the country B currency “u” as their functional currency. Country B has a loss-sharing regime under which a loss of any of CFC1, CFC2, CFC3, DE, and HP1 may be used to offset the income of one or more of the others. Country B imposes an income tax at the rate of 30% on the taxable income of corporations organized in country B. In year 1, before any loss sharing, CFC2 has income of 100u, CFC1 and CFC3 have no income, DE has a loss of 100u, and HP1 has income of 200u. Under the provisions of country B’s loss-sharing regime, the group decides to use DE’s 100u loss to offset 100u of HP1’s income. After the loss is shared, for country B tax purposes, CFC2 has 100u of income on which it pays 30u of country B income tax, and HP1 has 100u of income (200u less the 100u shared loss) on which it pays 30u of country B income tax. For U.S. Federal income tax purposes, the loss sharing with HP1 is not taken into account, and, because DE is a disregarded entity, its 100u loss is taken into account by CFC2 and reduces CFC2’s earnings and profits for U.S. Federal income tax purposes. The 200u income of HP1 is allocated 50/50 to CFC2 and CFC3, as is the 30u of country B income tax paid by HP1. Accordingly, before application of section 909, for U.S. Federal income tax purposes, CFC2 has earnings and profits of 55u (100u income plus 100u share of HP1’s income less 100u loss of DE less 30u country B income tax paid by CFC2 less 15u share of HP1’s country B income tax) and the dollar equivalent of 45u of country B income tax to add to its post-1986 foreign income taxes pool. CFC3 has earnings and profits of 85u (100u share of HP1’s income less 15u share of HP1’s country B income taxes) and the dollar equivalent of 15u of country B income tax to add to its post-1986 foreign income taxes pool.

(ii) U.S. combined income groups. Pursuant to § 1.909–2(b)(2)(ii), because the income and loss of HP1 are combined in part with the income and loss of both CFC2 and CFC3, it belongs to both of the separate CFC2 and CFC3 U.S. combined income groups. DE is a member of the CFC2 U.S. combined income group.

(iii) Income of the U.S. combined income groups. Pursuant to § 1.909–2(b)(2)(iii)(A), the income of the CFC2 U.S. combined income group is the 200u country B taxable income of the members of the group with positive taxable incomes (CFC2’s country B taxable income of 100u plus 50% of HP1’s country B taxable income of 200u, or 100u). Because DE does not have positive taxable income for country B tax purposes, its 100u loss is not included in the income of the CFC2 U.S. combined income group. The income of the CFC3 U.S. combined income group is 100u (50% of HP1’s country B taxable income of 200u, or 100u).

(iv) Shared loss of the U.S. combined income groups. Pursuant to § 1.909–2(b)(2)(iii)(B), the shared loss of the CFC2 U.S. combined income group is the 100u loss incurred by DE that is used to offset 100u of HP1’s income. The CFC3 U.S. combined income group has no shared loss. Pursuant to § 1.909–2(b)(2)(i), the usable shared loss of the CFC2 U.S. combined income group is 100u, the full amount of the group’s 100u shared loss that could have been used to offset income of the CFC2 U.S. combined income group had the loss been used to offset 100u of CFC2’s country B taxable income.

(v) Income offset by shared loss. The shared loss of the CFC2 combined income group is used to offset 100u country B taxable income of HP1. Because the taxable income of HP1 is allocated 50/50 between the CFC2 and CFC3 U.S. combined income groups, the shared loss is treated as offsetting 50u of the CFC2 U.S. combined income group’s income and 50u of the CFC3 U.S. combined income group’s income.

(vi) Splitter arrangement. There is a splitter arrangement because 50u of the 100u usable shared loss of the CFC2 U.S. combined income group was used to offset income of the CFC3 U.S. combined income group. Pursuant to § 1.909–2(b)(2)(iv), the split taxes are the 15u of country B income tax paid by CFC2 on 50u of its income, which is equal to the amount of the CFC2 U.S. combined income group’s usable shared loss that was used to offset income of another U.S. combined income group. Pursuant to § 1.909–2(b)(2)(v), the related income is the 50u of CFC3’s income that was offset by the usable shared loss of the CFC2 U.S. combined income group.

(3) Hybrid instrument splitter arrangements—(i) U.S. equity hybrid instrument splitter arrangement—(A) In general. A U.S. equity hybrid instrument is a splitter arrangement if:

(1) Under the laws of a foreign jurisdiction in which the instrument owner is subject to tax, the instrument gives rise to income includible in the instrument owner’s income and such inclusion results in foreign income taxes paid or accrued by the instrument owner;

(2) Under the laws of a foreign jurisdiction in which the issuer is subject to tax, the instrument gives rise to deductions that are incurred or otherwise taken into account by the issuer; and

(3) The events that give rise to income includible in the instrument owner’s income for foreign tax purposes as described in paragraph (b)(3)(i)(A)(1) of this section, and to deductions for the issuer for foreign tax purposes as described in paragraph (b)(3)(i)(A)(2) of this section, do not result in an inclusion of income for the instrument owner for U.S. federal income tax purposes.

(B) Split taxes from a U.S. equity hybrid instrument splitter arrangement. Split taxes from a U.S. equity hybrid instrument splitter arrangement equal the total amount of foreign income taxes paid or accrued by the owner of the hybrid instrument less the amount of foreign income taxes that would have been paid or accrued had the owner of the U.S. equity hybrid instrument not been subject to foreign tax on income from the instrument with respect to the events described in § 1.909–2(b)(3)(i)(A).

(C) Related income from a U.S. equity hybrid instrument splitter arrangement. The related income with respect to split taxes from a U.S. equity hybrid instrument splitter arrangement is income of the issuer of the U.S. equity hybrid instrument in an amount equal to the amounts giving rise to the split taxes that are deductible by the issuer for foreign tax purposes, determined without regard to the actual amount of the issuer’s income or earnings and profits for U.S. Federal income tax purposes.

(D) U.S. equity hybrid instrument. The term U.S. equity hybrid instrument means an instrument that is treated as equity for U.S. Federal income tax purposes but for foreign income tax purposes either is treated as indebtedness or otherwise entitles the issuer to a deduction with respect to such instrument.

(E) Example. (i) Facts. USP, a domestic corporation, wholly owns CFC1, which wholly owns CFC2. Both CFC1 and CFC2 are corporations organized in country A. CFC2 issues an instrument to CFC1 that is treated as indebtedness for country A tax purposes but equity for U.S. Federal income tax purposes. Under country A’s income tax laws, the instrument accrues interest at the end of each month, which results in a deduction for CFC2 and an income inclusion and tax liability for CFC1 in country A. The accrual of interest does not result in an inclusion of income for CFC1 for U.S. Federal income tax purposes. Pursuant to the terms of the instrument, CFC2 makes a distribution at the end of the year equal to the amounts of interest that have accrued during the year, and such payment is treated as a dividend that is included in the income of CFC1 for U.S. Federal income tax purposes.

(ii) Result. Pursuant to § 1.909–2(b)(3)(i)(D), because the instrument is treated as equity for U.S. Federal income tax purposes but is treated as indebtedness for country A tax purposes, it is a U.S. equity hybrid instrument. Pursuant to § 1.909–2(b)(3)(i)(A)(3), because the accrual of interest under foreign law does not result in an inclusion of income of CFC1 for U.S. Federal income tax purposes, there is a splitter arrangement. The fact that the payment of the accrued amount at the end of the year pursuant to the terms of the instrument gives rise to a dividend that is included in income of CFC1 for U.S. Federal income tax purposes does not change the result because it is the accrual of interest and not the payment that gives rise to income or deductions under foreign law. The payments will be treated as a distribution of related income to the extent provided by § 1.909–3 and § 1.909–6(d).

(ii) U.S. debt hybrid instrument splitter arrangement—(A) In general. A U.S. debt hybrid instrument is a splitter arrangement if foreign income taxes are paid or accrued by the issuer of a U.S. debt hybrid instrument with respect to income in an amount equal to the interest (including original issue discount) paid or accrued on the instrument that is deductible for U.S. Federal income tax purposes but that does not give rise to a deduction under the laws of a foreign jurisdiction in which the issuer is subject to tax.

(B) Split taxes from a U.S. debt hybrid instrument splitter arrangement. Split taxes from a U.S. debt hybrid instrument splitter arrangement are the foreign income taxes paid or accrued by the issuer on the income that would have been offset by the interest paid or accrued on the U.S. debt hybrid instrument had such interest been deductible for foreign tax purposes.

(C) Related income from a U.S. debt hybrid instrument splitter arrangement. The related income from a U.S. debt hybrid instrument splitter arrangement is the gross amount of the interest income recognized for U.S. Federal income tax purposes by the owner of the U.S. debt hybrid instrument, determined without regard to the actual amount of the owner’s income or earnings and profits for U.S. Federal income tax purposes.

(D) U.S. debt hybrid instrument. The term U.S. debt hybrid instrument means an instrument that is treated as equity for foreign tax purposes but as indebtedness for U.S. Federal income tax purposes.

(4) Partnership inter-branch payment splitter arrangements—(i) In general. An allocation of foreign income tax paid or accrued by a partnership with respect to an inter-branch payment as described in § 1.704–1(b)(4)(viii)(d)(3) (revised as of April 1, 2011) (the inter-branch payment tax) is a splitter arrangement to the extent the inter-branch payment tax is not allocated to the partners in the same proportion as the distributive shares of income in the CFTE category to which the inter-branch payment tax is or would be assigned under § 1.704–1(b)(4)(viii)(d) without regard to § 1.704–1(b)(4)(viii)(d)(3).

(ii) Split taxes from a partnership inter-branch payment splitter arrangement. The split taxes from a partnership inter-branch splitter arrangement equal the excess of the amount of the inter-branch payment tax allocated to a partner under the partnership agreement over the amount of the inter-branch payment tax that would have been allocated to the partner if the inter-branch payment tax had been allocated to the partners in the same proportion as the distributive shares of income in the CFTE category referred to in paragraph (b)(4)(i) of this section.

(iii) Related income from a partnership inter-branch payment splitter arrangement. The related income from a partnership inter-branch payment splitter arrangement equals the amount of income allocated to a partner that exceeds the amount of income that would have been allocated to the partner if income in the CFTE category referred to in paragraph (b)(4)(i) of this section in the amount of the inter-branch payment had been allocated to the partners in the same proportion as the inter-branch payment tax was allocated under the partnership agreement.

(c) Effective/applicability date. This section applies to foreign income taxes paid or accrued in taxable years ending after February 9, 2015. However, a taxpayer may choose to apply the provisions of § 1.909–2T (as contained in 26 CFR part 1, revised as of April 1, 2014) in lieu of this section to foreign income taxes paid or accrued in its first taxable year ending after February 9, 2015, and in taxable years of foreign corporations with respect to which the taxpayer is a domestic shareholder (as defined in § 1.902–1(a)) that end with or within that first taxable year. See 26 CFR 1.909–2T (revised as of April 1, 2014) for rules applicable to foreign income taxes paid or accrued in taxable years beginning on or after January 1, 2012, and ending on or before February 9, 2015.

§ 1.909–2T [Removed]

Par. 9. Section 1.909–2T is removed.

Par.10. Section 1.909–3 is added to read as follows:

§ 1.909–3 Rules regarding related income and split taxes.

(a) Interim rules for identifying related income and split taxes. The principles of paragraphs (d) through (f) of § 1.909–6 apply to related income and split taxes in taxable years beginning on or after January 1, 2011, except that the alternative method for identifying distributions of related income described in § 1.909–6(d)(4) applies only to identify the amount of pre-2011 split taxes of a section 902 corporation that are suspended as of the first day of the section 902 corporation’s first taxable year beginning on or after January 1, 2011.

(b) Split taxes on deductible disregarded payments. Split taxes include taxes paid or accrued in taxable years beginning on or after January 1, 2011, with respect to the amount of a disregarded payment that is deductible by the payor of the disregarded payment under the laws of a foreign jurisdiction in which the payor of the disregarded payment is subject to tax on related income from a splitter arrangement. The amount of the deductible disregarded payment to which this paragraph (b) applies is limited to the amount of related income from such splitter arrangement.

(c) Effective/applicability date. This section applies to taxable years ending after February 9, 2015. See 26 CFR 1.909–3T (revised as of April 1, 2014) for rules applicable to taxable years beginning on or after January 1, 2011, and ending on or before February 9, 2015.

§ 1.909–3T [Removed]

Par. 11. Section 1.909–3T is removed.

Par. 12. Section 1.909–4 is added to read as follows:

§ 1.909–4 Coordination rules.

(a) Interim rules. The principles of paragraph (g) of § 1.909–6 apply to taxable years beginning on or after January 1, 2011.

(b) Effective/applicability date. This section applies to taxable years ending after February 9, 2015. See 26 CFR 1.909–4T (revised as of April 1, 2014) for rules applicable to taxable years beginning on or after January 1, 2011, and ending on or before February 9, 2015.

§ 1.909–4T [Removed]

Par. 13. Section 1.909–4T is removed.

Par. 14. Section 1.909–5 is added to read as follows:

§ 1.909–5 2011 and 2012 splitter arrangements.

(a) Taxes paid or accrued in taxable years beginning in 2011. (1) Foreign income taxes paid or accrued by any person in a taxable year beginning on or after January 1, 2011, and before January 1, 2012, in connection with a pre-2011 splitter arrangement (as defined in § 1.909–6(b)), are split taxes to the same extent that such taxes would have been treated as pre-2011 split taxes if such taxes were paid or accrued by a section 902 corporation in a taxable year beginning on or before December 31, 2010. The related income with respect to split taxes from such an arrangement is the related income described in § 1.909–6(b), determined as if the payor were a section 902 corporation.

(2) Foreign income taxes paid or accrued by any person in a taxable year beginning on or after January 1, 2011, and before January 1, 2012, in connection with a partnership inter-branch payment splitter arrangement described in § 1.909–2(b)(4) are split taxes to the extent that such taxes are identified as split taxes in § 1.909–2(b)(4)(ii). The related income with respect to the split taxes is the related income described in § 1.909–2(b)(4)(iii).

(b) Taxes paid or accrued in certain taxable years beginning in 2012 with respect to a foreign consolidated group splitter arrangement. Foreign income taxes paid or accrued by any person in a taxable year beginning on or after January 1, 2012, and on or before February 14, 2012, in connection with a foreign consolidated group splitter arrangement described in § 1.909–6(b)(2) are split taxes to the same extent that such taxes would have been treated as pre-2011 split taxes if such taxes were paid or accrued by a section 902 corporation in a taxable year beginning on or before December 31, 2010. The related income with respect to split taxes from such an arrangement is the related income described in § 1.909–6(b)(2), determined as if the payor were a section 902 corporation.

(c) Effective/applicability date. The rules of this section apply to foreign income taxes paid or accrued in taxable years beginning on or after January 1, 2011, and on or before February 14, 2012.

§ 1.909–5T [Removed]

Par. 15. Section 1.909–5T is removed.

Par. 16. Sections 1.909–6 is added to read as follows:

§ 1.909–6 Pre-2011 foreign tax credit splitting events.

(a) Foreign tax credit splitting event—(1) In general. This section provides rules for determining whether foreign income taxes paid or accrued by a section 902 corporation (as defined in section 909(d)(5)) in taxable years beginning on or before December 31, 2010 (pre-2011 taxable years and pre-2011 taxes) are suspended under section 909 in taxable years beginning after December 31, 2010, (post-2010 taxable years) of a section 902 corporation. Paragraph (b) of this section identifies an exclusive list of arrangements that will be treated as giving rise to foreign tax credit splitting events in pre-2011 taxable years (pre-2011 splitter arrangements). Paragraphs (c), (d), and (e) of this section provide rules for determining the related income and pre-2011 split taxes paid or accrued with respect to pre-2011 splitter arrangements. Paragraph (f) of this section provides rules concerning the application of section 909 to partnerships and trusts. Paragraph (g) of this section provides rules concerning the interaction between section 909 and other Internal Revenue Code (Code) provisions.

(2) Taxes not subject to suspension under section 909. Pre-2011 taxes that will not be suspended under section 909 or paragraph (a) of this section are:

(i) Any pre-2011 taxes that were not paid or accrued in connection with a pre-2011 splitter arrangement identified in paragraph (b) of this section;

(ii) Any pre-2011 taxes that were paid or accrued in connection with a pre-2011 splitter arrangement identified in paragraph (b) of this section (pre-2011 split taxes) but that were deemed paid under section 902(a) or 960 on or before the last day of the section 902 corporation’s last pre-2011 taxable year;

(iii) Any pre-2011 split taxes if either the payor section 902 corporation took the related income into account in a pre-2011 taxable year or a section 902 shareholder (as defined in § 1.909–1(a)(2)) of the relevant section 902 corporation took the related income into account on or before the last day of the section 902 corporation’s last pre-2011 taxable year; and

(iv) Any pre-2011 split taxes paid or accrued by a section 902 corporation in taxable years of such section 902 corporation beginning before January 1, 1997.

(3) Taxes subject to suspension under section 909. To the extent that the section 902 corporation paid or accrued pre-2011 split taxes that are not described in paragraph (a)(2) of this section, section 909 and the regulations under that section will apply to such pre-2011 split taxes for purposes of applying sections 902 and 960 in post-2010 taxable years of the section 902 corporation. Accordingly, these taxes will be removed from the section 902 corporation’s pools of post-1986 foreign income taxes and suspended under section 909 as of the first day of the section 902 corporation’s first post-2010 taxable year. There is no increase to a section 902 corporation’s earnings and profits for the amount of any pre-2011 taxes to which section 909 applies that were previously deducted in computing earnings and profits in a pre-2011 taxable year.

(b) Pre-2011 splitter arrangements. The arrangements set forth in this paragraph (b) are pre-2011 splitter arrangements.

(1) Reverse hybrid structure splitter arrangements. A reverse hybrid structure exists when a section 902 corporation owns an interest in a reverse hybrid. A reverse hybrid is an entity that is a corporation for U.S. Federal income tax purposes but is a pass-through entity or a branch under the laws of a foreign country imposing tax on the income of the entity. As a result, the owner of the reverse hybrid is subject to tax on the income of the entity under foreign law. A pre-2011 splitter arrangement involving a reverse hybrid structure exists when pre-2011 taxes are paid or accrued by a section 902 corporation with respect to income of a reverse hybrid that is a covered person with respect to the section 902 corporation. A pre-2011 splitter arrangement involving a reverse hybrid structure may exist even if the reverse hybrid has a deficit in earnings and profits for a particular year (for example, due to a timing difference). Such taxes paid or accrued by the section 902 corporation are pre-2011 split taxes. The related income is the earnings and profits (computed for U.S. Federal income tax purposes) of the reverse hybrid attributable to the activities of the reverse hybrid that gave rise to income included in the foreign tax base with respect to which the pre-2011 split taxes were paid or accrued. Accordingly, related income of the reverse hybrid would not include any item of income or expense attributable to a disregarded entity (as defined in § 301.7701–2(c)(2)(i) of this chapter) owned by the reverse hybrid if income attributable to the activities of the disregarded entity is not included in the foreign tax base.

(2) Foreign consolidated group splitter arrangements. A foreign consolidated group exists when a foreign country imposes tax on the combined income of two or more entities. Tax is considered imposed on the combined income of two or more entities even if the combined income is computed under foreign law by attributing to one such entity the income of one or more entities. A foreign consolidated group is a pre-2011 splitter arrangement to the extent that the taxpayer did not allocate the foreign consolidated tax liability among the members of the foreign consolidated group based on each member’s share of the consolidated taxable income included in the foreign tax base under the principles of § 1.901–2(f)(3) (revised as of April 1, 2011). A pre-2011 splitter arrangement involving a foreign consolidated group may exist even if one or more members has a deficit in earnings and profits for a particular year (for example, due to a timing difference). Pre-2011 taxes paid or accrued with respect to the income of a foreign consolidated group are pre-2011 split taxes to the extent that taxes paid or accrued by one member of the foreign consolidated group are imposed on a covered person’s share of the consolidated taxable income included in the foreign tax base. The related income is the earnings and profits (computed for U.S. Federal income tax purposes) of such other member attributable to the activities of that other member that gave rise to income included in the foreign tax base with respect to which the pre-2011 split taxes were paid or accrued. No inference should be drawn from the treatment of foreign consolidated groups under section 909 as to the determination of the person who paid the foreign income tax for U.S. Federal income tax purposes.

(3) Group relief or other loss-sharing regime splitter arrangements—(i) In general. A foreign group relief or other loss-sharing regime exists when one entity with a loss permits the loss to be used to offset the income of one or more entities (shared loss). A pre-2011 splitter arrangement involving a shared loss exists when the following three conditions are met:

(A) There is an instrument that is treated as indebtedness under the laws of the jurisdiction in which the issuer is subject to tax and that is disregarded for U.S. Federal income tax purposes (disregarded debt instrument). Examples of a disregarded debt instrument include a debt obligation between two disregarded entities that are owned by the same section 902 corporation, two disregarded entities that are owned by a partnership with one or more partners that are section 902 corporations, a section 902 corporation and a disregarded entity that is owned by that section 902 corporation, or a partnership in which the section 902 corporation is a partner and a disregarded entity that is owned by such partnership.

(B) The owner of the disregarded debt instrument pays a foreign income tax attributable to a payment or accrual on the instrument.

(C) The payment or accrual on the disregarded debt instrument gives rise to a deduction for foreign tax purposes and the issuer of the instrument incurs a shared loss that is taken into account under foreign law by one or more entities that are covered persons with respect to the owner of the instrument.

(ii) Split taxes and related income. In situations described in paragraph (b)(3)(i) of this section, pre-2011 taxes paid or accrued by the owner of the disregarded debt instrument with respect to amounts paid or accrued on the instrument (up to the amount of the shared loss) are pre-2011 split taxes. The related income of a covered person is an amount equal to the shared loss, determined without regard to the actual amount of the covered person’s earnings and profits.

(4) Hybrid instrument splitter arrangements—(i) In general. A hybrid instrument for purposes of this paragraph (b)(4) is an instrument that either is treated as equity for U.S. Federal income tax purposes but is treated as indebtedness for foreign tax purposes (U.S. equity hybrid instrument), or is treated as indebtedness for U.S. Federal income tax purposes but is treated as equity for foreign tax purposes (U.S. debt hybrid instrument).

(ii) U.S. equity hybrid instrument splitter arrangement. If the issuer of a U.S. equity hybrid instrument is a covered person with respect to a section 902 corporation that is the owner of the U.S. equity hybrid instrument, there is a pre-2011 splitter arrangement with respect to the portion of the pre-2011 taxes paid or accrued by the owner section 902 corporation with respect to the amounts on the instrument that are deductible by the issuer as interest under the laws of a foreign jurisdiction in which the issuer is subject to tax but that do not give rise to income for U.S. Federal income tax purposes. Pre-2011 split taxes paid or accrued by the section 902 corporation equal the total amount of pre-2011 taxes paid or accrued by the section 902 corporation less the amount of pre-2011 taxes that would have been paid or accrued had the section 902 corporation not been subject to tax on income from the U.S. equity hybrid instrument. The related income of the issuer of the U.S. equity hybrid instrument is an amount equal to the amounts that are deductible by the issuer for foreign tax purposes, determined without regard to the actual amount of the issuer’s earnings and profits.

(iii) U.S. debt hybrid instrument splitter arrangement. If the owner of a U.S. debt hybrid instrument is a covered person with respect to a section 902 corporation that is the issuer of the U.S. debt hybrid instrument, there is a pre-2011 splitter arrangement with respect to the portion of the pre-2011 taxes paid or accrued by the section 902 corporation on income in an amount equal to the interest (including original issue discount) paid or accrued on the instrument that is deductible for U.S. Federal income tax purposes but that does not give rise to a deduction under the laws of a foreign jurisdiction in which the issuer is subject to tax. Pre-2011 split taxes are the pre-2011 taxes paid or accrued by the section 902 corporation on the income that would have been offset by the interest paid or accrued on the U.S. debt hybrid instrument had such interest been deductible for foreign tax purposes. The related income with respect to a U.S. debt hybrid instrument is the gross amount of the interest income recognized for U.S. Federal income tax purposes by the owner of the U.S. debt hybrid instrument, determined without regard to the actual amount of the owner’s earnings and profits.

(c) General rules for applying section 909 to pre-2011 split taxes and related income—(1) Annual determination. The determination of related income, other income, pre-2011 split taxes, and other taxes, and the portion of these amounts that were distributed, deemed paid or otherwise transferred or eliminated must be made on an annual basis beginning with the first taxable year of the section 902 corporation beginning after December 31, 1996 (post-1996 taxable year) in which the section 902 corporation paid or accrued a pre-2011 tax with respect to a pre-2011 splitter arrangement and ending with the section 902 corporation’s last pre-2011 taxable year. Annual amounts of related income and pre-2011 split taxes are aggregated for each separate pre-2011 splitter arrangement.

(2) Separate categories. The determination of annual and aggregate amounts of related income and pre-2011 split taxes with respect to each pre-2011 splitter arrangement must be made for each separate category as defined in § 1.904–4(m) of the section 902 corporation, each covered person, and any other person that succeeds to the related income and pre-2011 split taxes. In the case of a pre-2011 splitter arrangement involving a shared loss (as described in paragraph (b)(3) of this section), the amount of the related income in each separate category of the covered person is equal to the amount of income in that separate category that was offset by the shared loss for foreign tax purposes. In the case of a pre-2011 splitter arrangement involving a U.S. equity hybrid instrument (as described in paragraph (b)(4)(ii) of this section), the related income is assigned to the issuer’s separate categories in the same proportions as the pre-2011 split taxes. Earnings and profits, including related income, are assigned to separate categories under the rules of §§ 1.904–4, 1.904–5, and 1.904–7. Foreign income taxes, including pre-2011 split taxes, are assigned to separate categories under the rules of § 1.904–6. A section 902 shareholder must consistently apply methodologies for determining pre-2011 split taxes and related income with respect to all pre-2011 splitter arrangements.

(d) Special rules regarding related income—(1) Annual adjustments. In the case of each pre-2011 splitter arrangement involving a reverse hybrid or a foreign consolidated group (as described in paragraphs (b)(1) and (2) of this section, respectively), a covered person’s aggregate amount of related income must be adjusted each year by the net amount of income and expense attributable to the activities of the covered person that give rise to income included in the foreign tax base, even if the net amount is negative and regardless of whether the section 902 corporation paid or accrued any pre-2011 split taxes in such year.

(2) Effect of separate limitation losses and deficits. Related income is determined without regard to the application of § 1.960–1(i)(4) (relating to the effect of separate limitation losses on earnings and profits in another separate category) or section 952(c)(1) (relating to certain earnings and profits deficits).

(3) Pro rata method for distributions out of earnings and profits that include both related income and other income. If the earnings and profits of a covered person include amounts attributable to both related income and other income, including earnings and profits attributable to taxable years beginning before January 1, 1997, then distributions, deemed distributions, and inclusions out of earnings and profits (for example, under sections 301, 304, 367(b), 951(a), 964(e), 1248, or 1293) of the covered person are considered made out of related income and other income on a pro rata basis. Any reduction of a covered person’s earnings and profits that results from a payment on stock that is not treated as a dividend for U.S. Federal income tax purposes (for example, pursuant to section 312(n)(7)) will also reduce related income and other income on a pro rata basis.

(4) Alternative method for distributions out of earnings and profits that include both related income and other income. Solely for purposes of identifying the amount of pre-2011 split taxes of a section 902 corporation that are suspended as of the first day of the section 902 corporation’s first post-2010 taxable year, in lieu of the rule set forth in paragraph (d)(3) of this section, a section 902 shareholder may choose to treat all distributions, deemed distributions, and inclusions out of earnings and profits of a covered person as attributable first to related income. A section 902 shareholder may choose to use this alternative method on a timely filed original income tax return for the first post-2010 taxable year in which the shareholder computes an amount of foreign income taxes deemed paid with respect to a section 902 corporation that paid or accrued pre-2011 split taxes. Such choice by a section 902 shareholder is evidenced by employing the method on its income tax return; the section 902 shareholder need not file a separate statement. A section 902 shareholder that chooses this alternative method must consistently apply it with respect to all pre-2011 splitter arrangements.

(5) Distributions, deemed distributions, and inclusions of related income. Distributions, deemed distributions, and inclusions of related income (including indirectly through a partnership) to persons other than the payor section 902 corporation retain their character as related income with respect to the associated pre-2011 split taxes.

(6) Carryover of related income. Related income carries over to other corporations in the same manner as earnings and profits carry over under section 381, § 1.367(b)–7, or similar rules, and retains its character as related income with respect to the associated pre-2011 split taxes.

(7) Related income taken into account by a section 902 shareholder. Related income will be considered taken into account by a section 902 shareholder to the extent that the related income is recognized as gross income by the section 902 shareholder, or by an affiliated corporation described in paragraph (d)(9) of this section, upon a distribution, deemed distribution, or inclusion (such as under section 951(a)) out of the earnings and profits of the covered person attributable to such related income.

(8) Related income taken into account by a payor section 902 corporation. Related income will be considered taken into account by a payor section 902 corporation to the extent that:

(i) The related income is reflected in the earnings and profits of such section 902 corporation for U.S. Federal income tax purposes by reason of a distribution, deemed distribution, or inclusion out of the earnings and profits of the covered person attributable to such related income; or

(ii) The related income is reflected as a positive adjustment to the earnings and profits of such section 902 corporation for U.S. Federal income tax purposes by reason of the section 902 corporation and the covered person combining in a transaction described in section 381(a)(1) or (a)(2).

(9) Related income taken into account by an affiliated group of corporations that includes a section 902 shareholder. A section 902 shareholder will be considered to have taken related income into account if one or more members of an affiliated group of corporations (as defined in section 1504) that files a consolidated Federal income tax return that includes the section 902 shareholder takes the related income into account.

(10) Distributions of previously-taxed earnings and profits. Distributions and deemed distributions described in paragraph (d) of this section (including in the case of a section 902 shareholder that has chosen the alternative method described in paragraph (d)(4) of this section) do not include distributions of amounts described in section 959(c)(1) or (c)(2), which are distributed before amounts described in section 959(c)(3).

(e) Special rules regarding pre-2011 split taxes—(1) Taxes deemed paid pro-rata out of pre-2011 split taxes and other taxes. If the pre-2011 taxes of a section 902 corporation include both pre-2011 split taxes and other taxes, then foreign income taxes deemed paid under section 902 or 960 or otherwise removed from post-1986 foreign income taxes in pre-2011 taxable years will be treated as attributable to pre-2011 split taxes and other taxes on a pro-rata basis.

(2) Pre-2011 split taxes deemed paid in pre-2011 taxable years. Pre-2011 split taxes deemed paid in pre-2011 taxable years in connection with a dividend paid to a shareholder described in section 902(b) retain their character as pre-2011 split taxes. The section 902(b) shareholder will be treated as the payor section 902 corporation with respect to those pre-2011 split taxes.

(3) Carryover of pre-2011 split taxes. Pre-2011 split taxes that carry over to another foreign corporation, including under section 381, § 1.367(b)–7 or similar rules, retain their character as pre-2011 split taxes. The transferee foreign corporation will be treated as the payor section 902 corporation with respect to those pre-2011 split taxes.

(4) Determining when pre-2011 split taxes are no longer treated as pre-2011 split taxes. For each pre-2011 splitter arrangement, as related income is taken into account by the payor section 902 corporation or a section 902 shareholder as provided in paragraph (d) of this section, a ratable portion of the associated pre-2011 split taxes will no longer be treated as pre-2011 split taxes. In the case of a pre-2011 splitter arrangement involving a reverse hybrid or a foreign consolidated group (as described in paragraphs (b)(1) and (2) of this section, respectively), if aggregate related income is reduced to zero (other than as a result of a distribution, deemed distribution, or inclusion described in paragraph (d) of this section) or less than zero, pre-2011 split taxes will retain their character as pre-2011 split taxes until the amount of aggregate related income is positive and the related income is taken into account by the payor section 902 corporation or a section 902 shareholder as provided in paragraph (d) of this section.

(f) Rules relating to partnerships and trusts—(1) Taxes paid or accrued by partnerships. In the case of foreign income taxes paid or accrued by a partnership, the taxes will be treated as pre-2011 split taxes to the extent such taxes are allocated to one or more section 902 corporations and would be pre-2011 split taxes if the partner section 902 corporation had paid or accrued the taxes directly on the date such taxes are included by the section 902 corporation under sections 702 and 706(a). Further, any foreign income taxes subject to section 909 will be suspended in the hands of the partner section 902 corporation.

(2) Section 704(b) allocations. Partnership allocations that satisfy the requirements of section 704(b) and the regulations thereunder will not constitute pre-2011 splitter arrangements except to the extent the arrangement is otherwise described in paragraph (b) of this section (for example, a payment or accrual on a disregarded debt instrument that gives rise to a shared loss).

(3) Trusts. Rules similar to the rules of paragraph (f)(1) of this section will apply in the case of any trust with one or more beneficiaries that is a section 902 corporation.

(g) Interaction between section 909 and other Code provisions—(1) Section 904(c). Section 909 does not apply to excess foreign income taxes that were paid or accrued in pre-2011 taxable years and carried forward and deemed paid or accrued under section 904(c) in a post-2010 taxable year.

(2) Section 905(a). For purposes of determining in post-2010 taxable years the allowable deduction for foreign income taxes paid or accrued under section 164(a), the carryover of excess foreign income taxes under section 904(c), and the extended period for claiming a credit or refund under section 6511(d)(3)(A), foreign income taxes to which section 909 applies are first taken into account and treated as paid or accrued in the year in which the related income is taken into account, and not in the earlier year to which the tax relates (determined without regard to section 909).

(3) Section 905(c). If a redetermination of foreign income taxes claimed as a direct credit under section 901 occurs in a post-2010 taxable year and the foreign tax redetermination relates to a pre-2011 taxable year, to the extent such foreign tax redetermination increased the amount of foreign income taxes paid or accrued with respect to the pre-2011 taxable year (for example, due to an additional assessment of foreign tax or a payment of a previously accrued tax not paid within two years), section 909 will not apply to such taxes. If a redetermination of foreign tax paid or accrued by a section 902 corporation occurs in a post-2010 taxable year and increases the amount of foreign income taxes paid or accrued by the section 902 corporation with respect to a pre-2011 taxable year (for example, due to an additional assessment of foreign tax or a payment of a previously accrued tax not paid within two years), such taxes will be treated as pre-2011 taxes. Section 909 will apply to such taxes if they are pre-2011 split taxes and the taxes will be suspended in the post-2010 taxable year in which they would otherwise be taken into account as a prospective adjustment to the section 902 corporation’s pools of post-1986 foreign income taxes.

(4) Other foreign tax credit provisions. Section 909 does not affect the applicability of other restrictions or limitations on the foreign tax credit under existing law, including, for example, the substantiation requirements of section 905(b).

(h) Effective/applicability date. This section applies to foreign income taxes paid or accrued by section 902 corporations in pre-2011 taxable years for purposes of computing foreign income taxes deemed paid with respect to distributions or inclusions out of earnings and profits of section 902 corporations in taxable years of the section 902 corporation ending after February 9, 2015. See 26 CFR 1.909–6T (revised as of April 1, 2014) for rules applicable to foreign income taxes paid or accrued by section 902 corporations in pre-2011 taxable years for purposes of computing foreign income taxes deemed paid with respect to distributions or inclusions out of earnings and profits of section 902 corporations in taxable years of the section 902 corporation beginning after December 31, 2010, and ending on or before February 9, 2015.

§ 1.909–6T [Removed]

Par. 17. Section 1.909–6T is removed.

Rosemary Sereti, Acting Deputy Commissioner for Services and Enforcement.

Approved: February 4, 2015.

Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy).

Part III. Administrative, Procedural, and Miscellaneous

Notice 2015–11

Qualified Zone Academy Bond Allocations for 2014

SECTION 1. PURPOSE

This notice sets forth the maximum face amount of Qualified Zone Academy Bonds (“QZABs”) that may be issued for each State for the calendar year 2014 under § 54E(c)(2) of the Internal Revenue Code. Under § 54A(e)(3), the term State includes the District of Columbia and any possession of the United States.

SECTION 2. BACKGROUND

 

.01 INTRODUCTION

Section 313 of the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, Div. C of Pub. L. No. 110–343, 122 Stat. 3765 (2008) (“Act”) added new § 54E, which provides revised program provisions for QZABs in lieu of the existing provisions under § 1397E, effective for obligations issued after October 3, 2008. The Act amended § 54A(d)(1) to provide that the term qualified tax credit bond (“QTCB”) means, in part, a qualified zone academy bond which is part of an issue that meets the requirements of §§ 54A(d)(2), (3), (4), (5), and (6) regarding expenditures of bond proceeds, information reporting, arbitrage, maturity limitations, and prohibitions against financial conflicts of interest. The Act also amended § 54A(d)(2)(C) to provide that, for purposes of § 54A(d)(2), the term “qualified purpose” for a QZAB means a purpose specified in § 54E(a)(1), described below.

The Act added § 54E(c)(1) to provide a national zone academy bond limitation authorization for QZABs of $400 million for each of calendar years 2008 and 2009. Section 1522 of Title I of Division B of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111–5, 123 Stat. 115 (2009) (“2009 Act”) amended § 54E(c)(1) to provide an increased national zone academy bond limitation authorization for QZABs of $1.4 billion for each of calendar years 2009 and 2010. Section 758 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Public L. No. 111–312, 124 Stat. 3296 (2010) (“2010 Act”) amended § 54E(c)(1) to provide an authorization for QZABs of $400 million for calendar year 2011. Section 310 of the American Taxpayer Relief Act of 2012, Public L. No. 112–240, 126 Stat. 2313 (2012) (“2012 Act”) amended § 54E(c)(1) to provide authorization for QZABs of $400 million for each of calendar years 2012 and 2013. Section 120 of the Tax Increase Prevention Act of 2014, Public L. No. 113–295 (2014) (“2014 Act”) amended § 54E(c)(1) to provide authorization for QZABs of $400 million for calendar year 2014. The amendment made by § 120 of the 2014 Act applies to obligations issued after December 31, 2013. Section 202 of the 2014 Act also amended § 6431(f)(3)(A)(iii) to provide that the direct-pay subsidy option does not apply to any national zone academy bond limitation for years after 2010 or any carryforward of any such limitation.

.02 QUALIFIED ZONE ACADEMY BOND UNDER § 54E

Section 54E(d) defines “qualified zone academy” as any public school (or academic program within a public school) which is established by and operated under the supervision of an eligible local education agency to provide education or training below the postsecondary level provided: (A) the public school or program is designed in cooperation with business to enhance the academic curriculum, increase graduation and employment rates and prepare students for college and the workforce; (B) students will be subject to the same academic standards and assessments as other students educated by the eligible local education agency; (C) the comprehensive education plan is approved by the eligible local education agency; and (D)(i) such public school is located in an empowerment zone or enterprise community including such designated after October 3, 2008; or (ii) there is a reasonable expectation (as of the date of bond issuance) that at least 35 percent of the students will be eligible for free or reduced cost lunches under the school lunch program established under the National School Lunch Act.

Section 54E(a) provides that a “qualified zone academy bond” or QZAB means any bond issued as part of an issue if: (1) 100 percent of the available project proceeds of such issue are to be used for a qualified purpose with respect to a qualified zone academy established by an eligible local education agency; (2) the bond is issued by a State or local government within the jurisdiction of which such academy is located, and (3) the issuer: (A) designates such bond for purposes of this section; (B) certifies that it has written assurances that the private business contribution requirement of § 54E(b) will be met; and, (C) certifies that it has the written approval of the eligible local education agency for such bond issuance.

Section 54E(d)(3) provides that a qualified purpose with respect to each academy means: (A) rehabilitating or repairing the public school facility; (B) providing equipment; (C) developing course materials; and, (D) training teachers and other school personnel. The private business contribution requirement of § 54E(b) is met if the eligible local education agency that established the qualified zone academy has written commitments from private entities to make qualified contributions having a present value (as of the date of issuance of the issue) of not less than 10 percent of the proceeds of the issue. Section 54E(d)(4) defines “qualified contributions” as any contribution (of a type and quality acceptable to the eligible local education agency) of: (A) equipment for use in the qualified zone academy (including state-of-the-art technology and vocational equipment); (B) technical assistance in developing curriculum or in training teachers to promote appropriate market driven technology in the classroom; (C) employees’ services as volunteer mentors; (D) internships, field trips, or other educational opportunities outside the academy; or (E) any other property or service specified by the eligible education agency. Section 54E(d)(2) defines “eligible local education agency” as any local educational agency as defined in § 9101 of the Elementary and Secondary Education Act of 1965.

Section 54E(c)(2) provides that the Department of the Treasury shall allocate the national zone academy bond limitation among the States on the basis of their respective populations of individuals below the poverty line (as defined by the Office of Management and Budget). The limitation amount allocated to a State under the preceding sentence shall be allocated by the State education agency to qualified zone academies within such State.

Under § 54E(c)(3), the maximum aggregate face amount of bonds issued during any calendar year which may be designated as QZABs with respect to any qualified zone academy shall not exceed the limitation amount allocated to such academy for such calendar year. However, under § 54E(c)(4)(A), if for any calendar year the limitation amount for any State exceeds the amount of bonds issued during such year which are designated QZABs with respect to qualified zone academies within such State, the limitation amount for such State for the following calendar year shall be increased by the amount of such excess. Under § 54E(c)(4)(B), however, any carryforward of a limitation amount may be carried only to the first 2 years following the unused limitation year. For these purposes, the limitation amount shall be treated as used on a first-in first-out basis.

Sections 1.1397E–1 (the “Final Regulations”) sets forth regulations that were issued under § 1397E. For other guidance concerning the applicability of the regulations issued under § 1397E, the credit rate, and the sinking fund yield see § 1.397E–1(m), and Notice 2009–15, 2009–6 I.R.B. 449, Notice 2009–30, 2009–16 I.R.B. 852, Notice 2010–22, 2010–10 I.R.B. 435, and Rev. Proc. 2011–19, 2011–6 I.R.B. 465.

SECTION 3. NATIONAL ZONE ACADEMY BOND LIMITATION FOR 2014

The national limitation for QZABs issued under § 54E for calendar year 2014 is $400 million. This amount is allocated among the States as follows:

Qualified Zone Academy Bond Allocations (in dollars) by State or Territory, 2014
State or Territory QZAB Allocation
Alabama $7,035,000
Alaska $575,000
Arizona $9,550,000
Arkansas $4,410,000
California $50,069,000
Colorado $5,264,000
Connecticut $2,954,000
Delaware $916,000
DC $911,000
Florida $25,858,000
Georgia $14,637,000
Hawaii $1,214,000
Idaho $1,952,000
Illinois $14,574,000
Indiana $7,979,000
Iowa $2,983,000
Kansas $3,099,000
Kentucky $6,354,000
Louisiana $7,099,000
Maine $1,435,000
Maryland $4,680,000
Massachusetts $6,100,000
Michigan $13,024,000
Minnesota $4,688,000
Mississippi $5,476,000
Missouri $7,349,000
Montana $1,260,000
Nebraska $1,857,000
Nevada $3,428,000
New Hampshire $911,000
New Jersey $7,876,000
New Mexico $3,465,000
New York $24,276,000
North Carolina $13,540,000
North Dakota $641,000
Ohio $14,191,000
Oklahoma $4,939,000
Oregon $5,044,000
Pennsylvania $13,355,000
Rhode Island $1,173,000
South Carolina $6,793,000
South Dakota $904,000
Tennessee $8,930,000
Texas $35,854,000
Utah $2,849,000
Vermont $585,000
Virginia $7,446,000
Washington $7,620,000
West Virginia $2,624,000
Wisconsin $5,963,000
Wyoming $491,000
American Samoa $247,000
Guam $287,000
Northern Mariana Islands $211,000
Puerto Rico $12,872,000
U.S. Virgin Islands $183,000
Total Allocation $400,000,000

 

SECTION 4. EFFECTIVE DATE OF NATIONAL ZONE ACADEMY BOND LIMITATIONS

The national limitation allocated in section 3 for calendar year 2014 is effective for QZABs issued after December 31, 2013.

SECTION 5. DRAFTING INFORMATION

The principal authors of this notice are James A. Polfer and David E. White of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this notice contact David White or James Polfer at (202) 317-6980 (not a toll-free call).

Notice 2015–12

New Clean Renewable Energy Bonds

SECTION 1. PURPOSE

This Notice solicits applications for allocations of the remaining available amount of the national limitation (volume cap) for new clean renewable energy bonds (“New CREBs”) under § 54C(a) of the Internal Revenue Code (“Code”). The available amounts include forfeited amounts previously allocated under Notice 2009–33, 2009–1 C.B. 865 (April 27, 2009), and Announcement 2010–54, 2010–2 C.B. 386 (September 20, 2010). This Notice also provides related guidance on the following: (1) application requirements and forms for requests for volume cap allocations; and (2) the method that the Department of the Treasury and the Internal Revenue Service (IRS) will use to allocate the remaining volume cap.

SECTION 2. BACKGROUND

Section 107(a) of the Energy Improvement and Extension Act of 2008, Division B of Pub. L. No. 110–343, 122 Stat. 3765 (2008) (“2008 Act”), added § 54C to the Code to provide for a volume cap of $800 million for New CREBs to finance qualified renewable energy facilities. Section 1111 of Title I of Division B of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111–5, 123 Stat. 115 (2009) (“2009 Act”), amended § 54C to increase the volume cap for New CREBs by $1.6 billion to a total of $2.4 billion.

Section 54C(a) provides that a “new clean renewable energy bond” or New CREB means any bond issued as part of an issue if: (1) 100 percent of the available project proceeds of such issue are to be used for capital expenditures incurred by qualified owners, including governmental bodies, public power providers, or cooperative electric companies, for one or more qualified renewable energy facilities; (2) the bond is issued by a qualified issuer; and (3) the issuer designates such bond for purposes of § 54C.

Section 54C(c)(2) provides that the Secretary shall allocate not more than one third of the volume cap to qualified projects to be owned by public power providers, governmental bodies, and cooperative electric companies, respectively. Section 54C(c)(3)(A) provides that with respect to public power providers, after the Secretary identifies the qualified projects of public power providers that are appropriate for receiving an allocation of the New CREBs volume cap, the Secretary shall, to the maximum extent practicable, make allocations among such projects in such manner that the amount allocated to each such project bears the same ratio to the cost of such project as the portion of the New CREBs volume cap that may be allocated to public power providers bears to the cost of all such projects. Section 54C(c)(3)(B) provides that with respect to governmental bodies and cooperative electric companies, the Secretary shall make allocations of the respective New CREBs volume cap among qualified projects of governmental bodies and cooperative electric companies in such manner as the Secretary determines appropriate.

In Notice 2009–33, the Treasury Department and the IRS solicited applications for allocations of New CREBs volume cap and set forth administrative procedures for the initial allocations of the $2.4 billion volume cap. In October 2009 and January 2010, the IRS allocated the entire volume cap designated for projects to be owned by governmental bodies and public power providers. At that time, $609,204,555 of the available $800 million in volume cap designated for projects to be owned by cooperative electric companies was allocated. In Announcement 2010–54, the IRS solicited applications for the remaining $190,795,445 in volume cap available for allocation to qualified projects to be owned by cooperative electric companies, referring to the application and allocation process and the guidance in Notice 2009–33. In March 2011, the IRS awarded the remaining volume cap under that Announcement.

Section 9(j) of Notice 2009–33 provides that allocations under that Notice must be used or relinquished no later than three years after the date of the letter issuing the allocation. Similarly, unused allocations made under Announcement 2010–54 revert back to the IRS no later than three years after the date of the letter issuing the allocation. Thus, any unused allocations under Notice 2009–33 and Announcement 2010–54 expired and reverted back to the IRS by no later than March 4, 2014.

Section 9(j) of Notice 2009–33 provides that the IRS plans to announce a process to reallocate any unallocated volume cap and any allocated volume cap that has been relinquished and has reverted to the IRS. Additionally, the Notice provides that, consistent with allocation requirements under § 54C(c)(2), any relinquished or reverted volume cap will be reallocated only for a qualified project owned or to be owned by the same category of qualified owner as the owner that originally received the relinquished or reverted allocation.

Public power providers have reported to the IRS the issuance of New CREBs in the amount of $283,434,308.65; governmental bodies have reported to the IRS the issuance of New CREBs in the amount of $202,865,036.40; and cooperative electric companies have reported to the IRS the issuance of New CREBs in the amount of $519,221,531. Based on these reports, the passage of the deadlines described above for issuing New CREBs, and other information provided to the IRS, the IRS has identified $516,565,691.35 of volume cap available for reallocation for projects to be owned by public power providers, $597,134,963.60 of volume cap available for reallocation for projects to be owned by governmental bodies, and $280,778,469 of volume cap available for reallocation for projects to be owned by cooperative electric companies.

SECTION 3. SCOPE AND GENERAL APPLICATION REQUIREMENTS

.01 Scope. This Notice solicits applications for volume cap allocations for projects to be owned by governmental bodies, cooperative electric companies, and public power providers. Allocations that the IRS makes under this Notice for projects to be owned by governmental bodies and cooperative electric companies and that the issuer forfeits or that otherwise revert to the IRS will be available for reallocation under this Notice. Allocations under this Notice for projects to be owned by public power providers and that the issuer forfeits or that otherwise revert to the IRS are expected to be reallocated as part of an allocation process to be announced by the IRS in future administrative guidance that generally follows the process set forth in this Notice, subject to such changes or modifications that are announced by the IRS in such future administrative guidance. For a similar supplemental announcement regarding reallocations of volume cap, see Announcement 2010–54, 2010–2 C.B. 386 (September 20, 2010).

.02 Application Requirements. Each application for an allocation of the New CREBs volume cap under § 54C submitted pursuant to this Notice (Application) must be prepared and submitted in accordance with this section 3.02. By submitting an Application, the applicant agrees to comply with the requirements of this Notice. For an Application to comply with this Notice, among other things, the Application must be prepared in substantially the same format as the form (including exhibits thereto) attached to this Notice as Appendix A. This Notice, including Appendix A, may be found electronically under the link “TEB Published Guidance” on the IRS web site at http://www.irs.gov/Tax-Exempt-Bonds.

a. Qualified issuer. The Application must be submitted by a qualified issuer (Applicant) within the meaning of § 54C(d)(6). For this purpose, a “qualified issuer” includes a “public power provider,” a “cooperative electric company,” a “governmental body,” a “clean renewable energy bond lender,” and a “not-for-profit electric utility which has received a loan or loan guarantee under the Rural Electrification Act.” For further information on these definitions, see Section 2 of the Application included in Appendix A to this Notice. The Application must identify the Applicant, including the Applicant’s Federal tax identification number, and include a certification that the Applicant is a qualified issuer within the meaning of § 54C(d)(6).

b. Signatures. The Application must be signed and dated by an authorized official of the Applicant. For purposes of the Application, the term “authorized official of the Applicant” means an officer, board member, employee, or other official of the Applicant who is duly authorized to execute legal documents on behalf of the Applicant in connection with incurring debt of the Applicant (for example, a mayor, chairperson of a city council, chairperson of a board of directors, county or city administrator or manager, chief executive officer, or chief financial officer) similar to the kind of duly authorized official who would be authorized to execute documents in connection with an issuer’s declaration of official intent to reimburse expenditures from the proceeds of a borrowing under § 1.150–2(e) of the Income Tax Regulations.

c. Contact person. The Application must designate one or more persons with knowledge of the project that the Applicant duly authorizes to discuss with the IRS any information relating to the Application. The designation must include the designee’s name, title, telephone number, fax number, and mailing address. If a designee is not an official or officer of the Applicant, the Application must include an executed Form 8821 (Taxpayer Information Authorization) or Form 2848 (Power of Attorney and Declaration of Representative) authorizing the disclosure of taxpayer information specifically relating to the Application to the designee.

d. Address for submissions. The Application must be submitted by hard copy accompanied by a copy of the Application in PDF format on a CD and sent (by U.S. Postal Service or designated private delivery services) to the Internal Revenue Service (IRS), SE:T:GE:TEB:CPM, Attention: Kenneth Stengel, 1122 Town & Country Commons, Chesterfield, MO 63017.

e. Project description. The Application must contain the information required by this section 3.02.e. Applicants receiving an allocation of volume cap may use proceeds of the New CREBS (proposed bonds) only to finance the costs of the project (as defined in section 3.02.e.(i) of this Notice) described in the Application and related eligible expenditures (as permitted under §§ 54A and 54C)) with certain permitted deviations (as provided in section 7 of this Notice).

(i) Qualified project. The Application must describe in reasonable detail the qualified renewable energy facility or facilities constituting the project to be financed with the proceeds of the New CREBs. The Application must include a certification that each facility in the project will constitute a “qualified renewable energy facility” under § 54C(d)(1). The Application must indicate the expected date that the acquisition or construction of each facility in the project will commence and the expected date that each facility in the project will be placed in service. Property owned by a qualified owner that is functionally related and subordinate (as determined under § 1.103–8(a)(3)) to any qualified renewable energy facility described in § 54C(d)(1) may be financed as part of the facility.

(ii) Certification of engineer. The Application must contain a certification by an independent, licensed engineer that each facility in the project will meet the requirements for a “qualified facility” under the applicable provisions of § 45(d) (but without regard to § 45(d)(8) and (10) and without regard to any placed in service date), and that each facility, upon being placed in service, is reasonably expected to produce electricity.

(iii) Qualified owner—(A) In general. Each Application must identify the expected owner of the project and include a certification with respect to the project stating whether the entity that will own the project is a public power provider, governmental body, or cooperative electric company. For purposes of this Notice, the term “qualified owner” means a public power provider, a governmental body, or a cooperative electric company within the meaning of § 54C(d)(2), (3), and (4), respectively. For purposes of this Notice, a “qualified owner” includes any entities that are members of the same controlled group (within the meaning of § 1.150–1(e)) as the qualified owner. Joint ownership of qualified renewable energy facilities financed with New CREBs will be recognized in a manner similar to the recognition of joint ownership of output projects under the private activity bond restrictions on tax-exempt bonds under § 141. Applications for volume cap for projects to be owned by governmental bodies or cooperative electric companies must include a certification that the expected qualified owner of the project is not a public power provider under § 54C(d)(2).

(B) Entities eligible under multiple owner categories. Except as otherwise provided in section 3.02.e.(iii)(C) of this Notice, if the expected qualified owner of the project is described in more than one category of qualified owners under § 54C(d)(2), (3) or (4), the Application must identify only one such category for which it is seeking volume cap for the project.

(C) Public power providers ineligible for volume cap designated for governmental bodies or cooperative electric companies. An entity that is a “public power provider” under § 54C(d)(2) is ineligible to receive volume cap designated for projects to be owned by governmental bodies or cooperative electric companies.

(iv) Project cost. The Application must describe the reasonably expected costs of the project. The Applicant must certify that none of the reasonably expected costs of the project to be financed with New CREBs issued pursuant to the allocation were included in a previous application or, if the costs were included in a previous application, that (1) the IRS has been notified that such application has been withdrawn, or (2) that any previous allocation for those costs reverted to the IRS.

(v) Location of project. The Application must identify the location of the project.

(vi) Approvals. The Application must state that all required Federal, State, and local approvals (regulatory and otherwise) for the project, the proposed bonds, and any other required financing for the project have been obtained or, if any approvals have not yet been obtained, the Application must include a certification that the Applicant reasonably expects to receive all required approvals in time to permit issuance of the proposed bonds before the expiration of the volume cap allocation set forth in section 5.e. of this Notice. The Application must identify any required approvals that have not been obtained and must describe the Applicant’s plan and expected time frame for obtaining such approvals.

f. Plan of financing. The Application must contain a reasonably detailed description of the plan of financing for the project, including (1) the amount of New CREBs expected to be issued together with a description of how proceeds of such bonds will be allocated to the project, (2) any other reasonably expected sources of financing for the project together with a description of how such financing will be allocated to the project, and (3) documentation from an independent third party who is knowledgeable about the marketability of municipal bonds evidencing that the proposed bonds are reasonably expected to be marketed prior to the expiration of the volume cap allocation set forth in section 5.e. of this Notice. Documentation that may be used to meet requirement (3) under this section 3.02.f. includes the following: a bond purchase commitment letter from an investor; a credit enhancement commitment letter from a financial institution; a letter from an underwriter or financial advisor to the effect that the sale of the proposed bonds is likely to be completed in time to permit issuance of the proposed bonds before the expiration of the volume cap allocation for the proposed bonds; documentation similar to the foregoing documentation; or a combination of the foregoing documentation. If the owner expects to use the proceeds of New CREBs to reimburse amounts that the owner paid with respect to a qualified project, the Application must include a certification that the requirements under § 54A(d)(2)(D) will be met before any such reimbursement is made.

g. Compliance with Federal tax laws. The Application must include a certification that the Applicant reasonably expects that the proposed bonds will meet the applicable requirements of §§ 54A and 54C and that the Applicant has engaged bond counsel to render an opinion to the effect that the proposed bonds will meet those requirements.

h. Dollar amount of allocation requested. The Application must specify the dollar amount of the volume cap requested, not to exceed the amount of the proposed bonds.

i. Demonstration of readiness to issue. The Application must include a certification that the Applicant reasonably expects to issue the proposed bonds prior to the expiration of the volume cap allocation described in section 5.e. of this Notice.

j. Certain forfeitures of volume cap. The IRS may take into account whether volume cap previously allocated to the Applicant under this Notice was forfeited or expired. The Application must include either (1) a certification that no previous forfeitures or expirations of volume cap occurred with respect to volume cap allocated under this Notice or (2) identify any allocation of volume cap previously received by the Applicant under this Notice and, if such allocation, or any part thereof, was forfeited or expired, provide an explanation of the reasons for such forfeiture or expiration.

k. Required declaration in application. The Application and all subsequent submissions made in connection with the Application must include the following declaration signed and dated by an authorized official of the Applicant (described in section 3.02.b. of this Notice):

I hereby certify that I am an authorized officer or official of the Applicant, that I am duly authorized to execute legal documents on behalf of the Applicant in connection with incurring debt, and that I am duly authorized to execute legal documents on behalf of the Applicant in making this Application. Under penalties of perjury, I declare that (i) I have knowledge of the relevant facts and circumstances relating to this Application and the project(s) described herein, and (ii) I have examined this Application and the supporting documents, including any supplemental submission, and to the best of my knowledge and belief, all of the facts contained in this Application, any supplemental submission, and the supporting documents are true, correct, and complete.

 

SECTION 4. SUBMISSION DATES AND DUE DATES; INCOMPLETE APPLICATIONS

a. Submission date and incomplete Applications. Each Application will be treated as submitted on the later of the day the IRS receives the Application, or if the IRS requests any additional information or supporting documents, the day the additional information and supporting documents are received by the IRS (submission date). To be treated as submitted, the Application, additional information, and supporting documents must satisfy all of the applicable requirements of this Notice, including without limitation, those described in section 3 of this Notice. The IRS may request additional information to support any of the requirements of this Notice, including additional information and certifications to demonstrate that the proposed project will qualify for New CREBs financing under § 54C and to demonstrate the Applicant’s readiness to issue the proposed bonds. Except as otherwise stated in this Notice, an Application will not satisfy the requirements of this Notice until the IRS receives information satisfying all of the applicable requirements of this Notice, including any requested additional information.

b. Due date for Applications for volume cap designated for public power providers. Applicants for projects to be owned by public power providers must submit complete Applications for an allocation of volume cap under this Notice on or before June 3, 2015. Applications with a submission date after this due date will not be processed.

c. Timing for Applications for volume cap designated for governmental bodies and cooperative electric companies. Applicants for projects to be owned by governmental bodies and cooperative electric companies may submit Applications for an allocation of volume cap under this Notice beginning March 5, 2015. Applications submitted before that date will be treated as being submitted on that date.

SECTION 5. GENERAL ALLOCATION PROCESS AND METHODOLOGY

a. Allocation methods. New CREBs volume cap under § 54C will be allocated in accordance with this section 5.

(i) Allocation methodology for public power providers. Up to one-third of the total volume cap will be allocated to qualified projects owned by public power providers using the pro-rata allocation method. Except as otherwise provided in this section 5, the IRS will allocate an amount of New CREBs volume cap for projects to be owned by public power providers in an amount equal to the amount requested in the Application. If the aggregate amount of volume cap requested for all qualified projects to be owned by public power providers exceeds the actual amount of volume cap available for allocation to such projects, the amount of volume cap allocated to a project for a public power provider will bear the same proportion to the available volume cap allocated to public power providers as the amount of volume cap requested for that project bears to the total amount of volume cap requested for all projects to be owned by public power providers.

(ii) Allocation methodology for governmental bodies and cooperative electric companies. Up to one-third of the total volume cap will be allocated to qualified projects owned by governmental bodies and up to an additional one-third of the total volume cap will be allocated to qualified projects owned by cooperative electric companies. Except as otherwise provided in this section 5, the IRS will allocate an amount of New CREBs volume cap for projects to be owned by governmental bodies and cooperative electric companies in an amount equal to the amount requested in the Application on a first-come, first-served basis by order of submission date (as defined in section 4.a. of this Notice).

b. Limit on allocation to any one Applicant for projects to be owned by governmental bodies or cooperative electric companies. No qualified owner (including any entities that are members of the same controlled group within the meaning of § 1.150–1(e)) that is a governmental body or cooperative electric company will receive an aggregate allocation of volume cap under this Notice to exceed the published Volume Cap Limit (taking into account all allocations under this Notice that have not reverted to the IRS) in effect for the period that includes the submission date. The published Volume Cap Limit for any period is the greater of: (1) 20 percent of the amount of available volume cap for projects to be owned by governmental bodies or cooperative electric companies, as applicable, as of the first day of such period (determined based on information available to the IRS, including allocation data and reports of bonds issued); or (2) $40 million. The IRS will update the Volume Cap Limit and the available amounts approximately every sixty days until the applicable volume cap is fully allocated. The IRS plans to publish these updates on the IRS website at http://www.irs.gov/Tax-Exempt-Bonds or at such other location as the IRS may provide in future administrative guidance. An Application will be treated as complete only if the amount of volume cap requested is within the applicable Volume Cap Limit and the Application otherwise meets the requirements of this Notice.

c. Insufficient available volume cap. The rules set forth in this section 5.c. apply if an Applicant requests volume cap in an amount that is within the published Volume Cap Limit under section 5.b. above but that exceeds the amount of volume cap that is then available for allocation on the submission date (based on application activity since the most recent publication of the Volume Cap Limit and information then available to the IRS).

(i) Governmental bodies and cooperative electric companies. If an Application for volume cap for a project to be owned by a governmental body or cooperative electric company requests more volume cap than is available on the Application submission date for such category of qualified owner, then the Applicant will have the opportunity to receive an allocation of volume cap up to the available volume cap. Further, if two or more Applications for the same category of qualified owner have the same submission date and allocation of the requested amounts would cause the available volume cap to be exceeded, then each such Applicant will have the opportunity to receive a portion of the available volume cap in the proportion that each amount requested has to the sum of the amounts requested. In any circumstance in which available volume cap is in an amount less than the amount requested, the IRS will notify the Applicant and the Applicant will have 30 days from the date the IRS contacts the Applicant to notify the IRS (at the address specified in section 3.02.d. of this Notice) of its decision to either (1) immediately accept the allocation in the lesser amount, or (2) delay the allocation for up to 90 days from the submission date to determine if additional volume cap might become available. If the Applicant decides to accept an allocation in a lesser amount, the Applicant will notify the IRS by submitting a notice to the IRS in substantially the same form as attached to this Notice as Appendix C. If the Applicant decides to delay receiving its allocation, the Applicant will notify the IRS by submitting notice in substantially the same form as attached to this Notice as Appendix D. If the Applicant decides to delay receiving its allocation and the full amount requested does not become available before the end of the period designated by the Applicant, after such period the IRS will notify the Applicant of the amount it can allocate to the Applicant. The Applicant will have 30 days from the date the IRS notifies the Applicant of such available amount to accept the lesser amount by submitting a notice to the IRS in substantially the same form as attached to this Notice as Appendix C. If the Applicant decides not to accept the lesser amount, the Application will be treated as withdrawn.

(ii) Public power providers. If the aggregate amount of volume cap requested for all qualified projects to be owned by public power providers exceeds the actual amount of volume cap available for allocation to such projects, each Applicant will be notified by the IRS of the amount of the pro-rata allocation it would receive pursuant to section 5.a. of this Notice and given 30 days to notify the IRS (at the address specified in section 3.02.d. of this Notice) whether it will accept or decline the reduced amount. If the Applicant decides not to accept the lesser amount, the Application will be treated as withdrawn. See section 5.f. of this Notice for information on effect of withdrawals.

(iii) Supplemental certifications and information for partial allocations. If the Applicant accepts an amount that is less than the amount requested in the Application, the Applicant must provide along with its decision (1) a certification in substantially the same format as the form attached to this Notice as Appendix C (A) confirming its decision to accept the allocation in the lesser amount, and (B) either (I) certifying, based on the lesser amount accepted, that the information included in the Application pursuant to section 3.02.e. of this Notice is accurate (subject to provisions of section 7.a. of this Notice relating to insubstantial deviations), or (II) submitting revised information required under section 3.02.e. of this Notice based on the lesser amount accepted and certifying that such revised information meets the requirements of this Notice, and (2) a revised plan of financing as described in section 3.02.f. of this Notice based on the lesser amount. The IRS may require the Applicant to supplement the Application to demonstrate that the requirements of this Notice are met based on the reduced allocation.

(iv) Effect of supplemental certifications on submission date. For purposes of section 4 of this Notice, the submission date for an Application for which insufficient volume cap exists will not change if the Applicant submits within 30 days of the notification from the IRS any supplemental information required under this section 5.c.

(v) Failure to notify IRS of decision. If the Applicant does not notify the IRS of its decision within the applicable time frames specified in sections 5.c.(i) and (ii) of this Notice, the Application will be treated as withdrawn.

d. Confirmation of allocation. The IRS will send Applicants letters confirming allocations of volume cap (allocation letter). An allocation of New CREB volume cap by the IRS under this Notice is not a determination that any bonds issued pursuant to the allocation are new clean renewable energy bonds under § 54C. The Service may upon examination determine that the applicable requirements of the Code, including §§ 54A, 54C, or 6431, and any applicable administrative or regulatory guidance, such as this Notice, are not met with respect to any bond issued pursuant to the volume cap allocation.

e. Expiration of allocation. Applicants have 180 days from the date of the allocation letter to issue the proposed bonds. Allocations with respect to any portion of the proposed bonds not issued during that time will be treated as forfeited and revert to the IRS and will be available for reallocation. The IRS does not expect to grant extensions to this expiration date.

f. Effect of forfeitures and withdrawals. A governmental body or a cooperative electric company that has withdrawn or is deemed to have withdrawn its Application, or that received an allocation that expired or was forfeited, may file a new Application for volume cap that meets all the requirements of this Notice, including the information described in section 3.02.j. of this Notice, and that Application will be subject to the submission provisions of section 4 and the applicable limits set forth in section 5 of this Notice in effect on the submission date of the new Application. A public power provider that has withdrawn or is deemed to have withdrawn its Application, or that received an allocation that expired or was forfeited, may not reapply for an allocation pursuant to this Notice. See section 3.01 of this Notice for information on reallocations.

g. Notice of voluntary forfeiture. If an Applicant determines that it does not intend to use any part of its allocation of volume cap (including in circumstances in which the Applicant determines to finance the project with financing other than the proposed bonds), it must notify the IRS in writing at the address set forth in section 3.02.d. of this Notice of its intention to forfeit such part of the allocation and, when the IRS receives this notice from the Applicant, the IRS will treat that allocated amount as forfeited and reverting to the IRS. The forfeited amount will be available for reallocation.

SECTION 6. CONSENT TO DISCLOSURE OF ALLOCATION

To provide the public with information on how the volume cap has been allocated and to facilitate oversight of the New CREBs program, the IRS intends to publish on the IRS web site at http://www.irs.gov/Tax-Exempt-Bonds certain data regarding the results of the allocation process. The data will be most useful to the public if it identifies the specific allocations awarded. Pursuant to § 6103, consent is required for the IRS to disclose identifying information with respect to Applicants awarded an allocation. Therefore, the IRS seeks the Applicants’ consent for the IRS to disclose the name of the issuer, the name of the qualified renewable energy facility owner (if other than the issuer), the type and location of the facility that is the subject of the Application, and the amount of volume cap allocation awarded to that Applicant. To provide valid consent, the consent must be in the form set forth in Appendix B. This consent to disclosure of an Applicant’s information is optional; an Applicant is not required to sign the consent to receive an allocation. The IRS will not publish identifying information on Applications that are not awarded an allocation of volume cap or pending Applications, but may publish the aggregate amount of allocation requests.

SECTION 7. DEVIATIONS FROM INFORMATION IN APPLICATION

a. Insubstantial deviations—(i) In general. An allocation of volume cap is valid for § 54C if the proposed bonds are issued and the proceeds of such bonds are allocated to expenditures in a manner that does not substantially deviate from the information submitted in the Application. For this purpose, whether a deviation from the information submitted in the Application constitutes an insubstantial deviation is determined based on all the facts and circumstances using criteria similar to those used under § 5f.103–2(f)(2) of the regulations, as amended, regarding insubstantial deviations in the information required for public approval of tax-exempt private activity bonds under § 147(f) of the Code. IRS approval is not required for insubstantial deviations, and the IRS will not provide advice or rule on whether a deviation is insubstantial.

(ii) Notice of insubstantial deviation—(1) Deviations before the submission of Notice of Issuance. If the insubstantial deviation occurs before the Applicant submits the Notice of Issuance described in section 8.b. of this Notice, the Notice of Issuance must include a description of the insubstantial deviation.

(2) Deviations after the submission of the Notice of Issuance. If the insubstantial deviation occurs after the Applicant submits the Notice of Issuance required under section 8.b. of this Notice, the Applicant must submit a supplement to the Notice of Issuance that describes the insubstantial deviation. The supplement should contain a copy of the Notice of Issuance as well as the details of the deviation and should be sent to the same address as the Notice of Issuance.

b. Substantial deviations—(i) Substantial deviations before issuance. Other than as provided in section 7.b.(ii) below, an allocation of volume cap under an Application is invalid for purposes of § 54C if there is a change relating to the issuance of the proposed bonds or the allocation of the proceeds of such bonds to expenditures that substantially deviates from the information submitted in the Application. In the event of such a change prior to the issuance of its proposed bonds, the Applicant may notify the IRS that it does not intend to use the original allocation of bond volume cap and may submit a new Application under this Notice or future administrative guidance, as applicable, reflecting the modified information.

(ii) Certain post-issuance deviations. A substantial deviation that occurs after the proposed bonds are issued and prior to the allocation of proceeds of such bonds to expenditures under the general rule set forth in § 1.148–6(d)(1)(iii) will not invalidate the allocation of volume cap under the Application if, and only if, the substantial deviation does not change the category of qualified owner for the project and the Applicant submits a supplement to the Notice of Issuance (as defined in section 8.b. of this Notice) to the IRS. The supplement must (1) include a statement demonstrating that the Applicant, at the time of the issuance of the bonds, reasonably expected that the issuance of the proposed bonds and the allocation of the proceeds of such bonds to expenditures would not substantially deviate from the information provided in the Application; (2) describe in detail the substantial deviation and the surrounding circumstances by reference to the information submitted in the Application and the actual information subsequent to the bond issuance; and (3) include a certification that the Applicant has received an opinion from bond counsel to the effect that the change will not cause the bonds to fail to meet the requirements of §§ 54A and 54C (including any applicable regulatory and administrative guidance published under those Code sections). The Applicant must send this supplement to the address set forth in section 8.b. of this Notice within 90 days of the date that the Applicant reasonably expected that there would be a deviation and the supplement must be accompanied by a declaration, subject to the penalty of perjury, in substantially the same form as the declaration under section 3.02.k. of this Notice.

SECTION 8. INFORMATION REPORTING

a. Information reporting. Section 54A(d)(3) requires issuers of New CREBs to submit information reporting returns to the IRS similar to those required to be submitted under § 149(e) for tax-exempt State or local governmental bonds. These information reporting returns are required to be submitted at the same time and in the same manner as those under § 149(e) on forms prescribed by the IRS. Subject to updated IRS information reporting forms or procedures, an issuer of New CREBs should file Form 8038–TC. For this Notice, the term “issue” has the meaning used for tax-exempt bond purposes in § 1.150–1(c).

b. Notice of issuance. Not later than 15 days after the proposed bonds are issued, the Applicant shall send to the IRS a notice of issuance (Notice of Issuance) for the bonds, which shall include the following information: (1) the Applicant’s name and taxpayer identification number; (2) the issue price of the bonds issued; (3) the issue date of the bonds; and (4) a description of the project financed with the bonds. If the IRS has not received a Notice of Issuance within 15 days of the scheduled expiration of an allocation, the IRS may request that the Applicant submit the Notice of Issuance or confirm that the allocation was forfeited. If the Applicant fails to submit the Notice of Issuance within 15 days of this request or fails to confirm that the allocation was forfeited, the IRS, in its discretion, may treat the allocation as forfeited and as having reverted back to the IRS and available for reallocation. The Notice of Issuance or written confirmation that the allocation was forfeited should be sent to: Internal Revenue Service, SE:T:GE:TEB:CPM, Attention: Kenneth Stengel, 1122 Town & Country Commons, Chesterfield, MO 63017. See section 7.b. of this Notice for requirements when there are substantial deviations.

SECTION 9. RELIANCE ON NOTICE AND INTERIM GUIDANCE

Taxpayers may rely on the interim guidance provided in this Notice, Notice 2009–33, and Notice 2010–35, 2010–19 I.R.B. 660 (May 10, 2010), and, to the extent not inconsistent with §§ 54A and 54C, taxpayers may also rely on Notice 2006–7, 2006–1 C.B. 559 (March 6, 2006), and Notice 2007–26, 2007–14 I.R.B. 870 (April 2, 2007).

SECTION 10. EFFECT ON OTHER DOCUMENTS

To the extent not amended by the 2008 Act and the 2009 Act, references to § 54 of the Code in Notice 2006–7 and Notice 2007–26 apply as if the references were to corresponding provisions of §§ 54A and 54C.

For the application requirements for Tribal Economic Development Bonds, see Notice 2012–48, 2012–31 I.R.B. 102 (July 30, 2012). Differences in the application requirements between this Notice and Notice 2012–48 are generally based upon the differences between the Tribal Economic Development Bond and the New Clean Renewable Energy Bond programs.

SECTION 11. EFFECTIVE DATE

This Notice is effective as of February 3, 2015.

SECTION 12. PAPERWORK REDUCTION ACT

The collections of information contained in this Notice have been reviewed and approved by the Office of Management and Budget in accordance with the paperwork Reduction Act (44 U.S.C. 3507) under control number 1545–2160.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collections of information in this Notice are in sections 3, 5, 6, 7, and 8.b. of this Notice. This information is required to implement and administer the New Clean Renewable Energy Bond (New CREBs) program under § 54C of the Code. Information collected under sections 3, 5, 7, and 8.b. of this Notice will be used by the IRS to determine (1) an Applicant’s eligibility to receive an allocation of volume cap for New CREBs and (2) the amount of available volume cap that may be allocated to each Applicant. Information collected under section 6 of this Notice will be used by the IRS to provide the public with information on how the volume cap has been allocated and to facilitate oversight of the New CREBs program. The collections of information are voluntary under section 6 of this Notice and required to obtain a benefit under sections 3, 5, 7, and 8.b. The likely respondents are state or local governments, certain public electric utilities, and certain mutual or cooperative electric companies.

The estimated total annual reporting and/or recordkeeping burden is 900 hours.

The estimated burden per collection per respondent/recordkeeper varies from 0.5 hours to 4 hours, depending on the type of collection and individual circumstances, with an estimated average of 2.25 hours. The estimated number of respondents and/or recordkeepers is 400.

The estimated annual frequency of responses (used for reporting requirements only) is 100.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by section 6103.

SECTION 13. DRAFTING INFORMATION

The principal authors of this Notice are Debbie Cho of the IRS Office of Tax Exempt Bonds and Zoran Stojanovic of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this Notice contact Ms. Cho at 714-347-9431(not a toll-free call) or Mr. Stojanovic at 202-317-4564 (not a toll-free call). For further information about submitted Applications, contact Kenneth Stengel at (636) 255-1286 (not a toll-free call).

APPENDIX A

 

APPLICATION FOR ALLOCATION OF NEW CLEAN RENEWABLE ENERGY BOND VOLUME CAP

Internal Revenue Service

SE:T:GE:TEB:CPM

Attention: Kenneth Stengel

1122 Town & Country Commons

Chesterfield, MO 63017

Dear Sir or Madam:

The following constitutes the application (Application) of (Name) (Applicant) for allocation of new clean renewable energy bond (New CREB) volume cap under § 54C(a) of the Internal Revenue Code (Code) (unless otherwise noted, section references herein are to the Code) to finance the project described below. (If a single Application is used to request New CREB volume cap for more than one qualified renewable energy facility, then all of the required information in the Application must be provided separately for each facility.)

1. Applicant/issuer.

Name ________________________________________

Street Address ________________________________________

City _________________________ State ___________________ Zip _______

Telephone Number _____________________

Fax Number _____________________

Taxpayer Identification Number

2. Status of issuer. (Select as appropriate)

The Applicant/Issuer is a “qualified issuer” under § 54C(d)(6) because it is —

(i) a “clean renewable energy bond lender” that is a cooperative owned by, or has outstanding loans to, 100 or more cooperative electrical companies and was in existence on February 1, 2002, or is an affiliate that is owned by such a lender, as demonstrated by the attached documents included as Exhibit C.

(ii) a “cooperative electric company” that is a mutual or cooperative electric company described in § 501(c)(12) or § 1381(a)(2)(C), as demonstrated by the attached documents included as Exhibit C, including a copy of the determination letter previously obtained from the IRS, if any (or other relevant documents).

(iii) a “governmental body” that is a State, a possession of the United States, the District of Columbia, an Indian tribal government, or any political subdivision of the foregoing, as demonstrated by the attached documents included as Exhibit C. (Supporting documents are not required to be attached for governmental bodies that are general purpose governmental entities with substantial taxing, eminent domain, and police powers such as a county, city, municipality, township, or borough.)

(iv) a “public power provider” that is a State utility with a service obligation, as such terms are defined in § 217 of the Federal Power Act (as in effect on October 3, 2008), as demonstrated by the attached documents included as Exhibit C.

(v) a “not-for-profit electric utility which has received a loan or loan guarantee under the Rural Electrification Act,” as demonstrated by the attached documents included as Exhibit C. For this purpose, supporting documents should include copies of the articles of incorporation and bylaws of the not-for-profit electric utility, and of the loan or loan guarantee documents.

3. Name of Qualified Renewable Energy Facility.

______________________________________________________________________

4. Detailed Description of the Qualified Renewable Energy Facility. A reasonably detailed description of the qualified renewable energy facility or facilities (the “Project”) is set forth below or in attached Exhibit A, including reasonably expected costs of components, such as land, site preparation, equipment, installation, other dedicated facilities such as transmission, facility capacity, and projected or expected use of the power produced at the facility.

5. Project Cost. Include in the attached Exhibit B a description of the reasonably expected costs of the Project and a certification that none of the reasonably expected costs of the Project to be financed with New CREBs pursuant to the allocation were included in a previous application unless the IRS has been notified that such application has been withdrawn or that any previous allocation for those costs reverted to the IRS.

6. Qualified Renewable Energy Facility Owner

Name ________________________________________

Street Address ________________________________________

City _________________________ State ___________________ Zip _______

Telephone Number _____________________

Fax Number _____________________

Taxpayer Identification Number

7. Status of Owner(Select as appropriate the category with respect to which the allocation is requested)

The project is owned by a qualified entity under § 54C(d)(1) because the owner is —

(i) a qualified owner under § 54C(d)(4) that is a mutual or cooperative electric company under § 501(c)(12) or § 1381(a)(2)(C), as demonstrated by the attached documents included as Exhibit C, including a copy of the determination letter previously obtained from the IRS, if any (or other relevant documents). Also, the project owner is not a public power provider under § 54C(d)(2).

(ii) a qualified owner under § 54C(d)(3) that is a “governmental body” and is a State, a possession of the United States, the District of Columbia, an Indian tribal government, or any political subdivision of the foregoing, as demonstrated by the attached documents included as Exhibit C, and not a public power provider under § 54C(d)(2). (Supporting documents are not required to be attached for governmental bodies that are general purpose governmental entities with substantial taxing, eminent domain, and police powers such as generally a county, city, municipality, township, or borough.)

(iii) a qualified owner under § 54C(d)(2) that is a “public power provider” and is a State utility with a service obligation, as such terms are defined in § 217 of the Federal Power Act (as in effect on October 3, 2008), as demonstrated by the attached documents included as Exhibit C. For this purpose, supporting documents should include copies of the articles of incorporation and bylaws of the electric utility.

If the expected qualified owner of the project is described in more than one category of qualified owners under § 54C(d)(2), (3), or (4), the Applicant must identify only one such category for which it is seeking volume cap for the project.

An Application for a project to be owned by a governmental body or cooperative electric company must include:

(i) a certification that the expected qualified owner of the project is not a public power provider under section § 54C(d)(2).

(ii) a statement that the aggregate amount of New CREB volume cap requested along with allocations previously received by it and members of the same controlled group, as defined in Treasury Regulation § 1.150–1(e), does not exceed the Volume Cap Limit in effect as of the submission date of the Application.

Each Application must state that the Applicant and members of the same controlled group are not seeking separate allocations for the same project costs.

8. Qualified Renewable Energy Facility. The Project is one or more qualified renewable energy facilities within the meaning of § 54C(d)(1) of the Code because it is a “qualified facility” (as determined under § 45(d) of the Code without regard to § 45(d)(8) and (10) and without regard to any placed in service date) that is (select as appropriate)—

(1) a wind facility – a facility using wind to produce electricity;

(2) a closed-loop biomass facility – a facility using closed-loop biomass (as defined in § 45(c)) to produce electricity or, if owned by the taxpayer prior to January 1, 2008, a facility using closed-loop biomass to produce electricity which is modified to use closed-loop biomass to co-fire with coal, with other biomass, or with both, but only if the modification is approved under the Biomass Power for Rural Development Programs or is part of a pilot project of the Commodity Credit Corporation;

(3) an open-loop biomass facility – a facility using open-loop biomass (as defined in § 45(c)) to produce electricity and in the case of a facility using agricultural livestock waste nutrients, the nameplate capacity rating of which is not less than 150 kilowatts;

(4) a geothermal or solar energy facility – a facility using geothermal energy (as defined in § 45(c)) or solar energy to produce electricity (not including a facility described in § 48(a)(3) the basis of which is taken into account by the taxpayer for purposes of determining the energy credit under § 48 of the Code);

(5) a small irrigation power facility – a facility using small irrigation power (as defined in § 45(c)) to produce electricity;

(6) a landfill gas facility – a facility producing electricity from gas derived from the biodegradation of municipal solid waste (as defined in § 45(c));

(7) a trash combustion facility – a facility that burns municipal solid waste (as defined in § 45(c)) to produce electricity;

(8) a qualified hydropower facility – a facility engaged in qualified hydropower production (as defined in § 45(c)); or

(9) a marine and hydrokinetic renewable energy facility – a facility producing electricity from marine and hydrokinetic renewable energy (as defined in § 45(c)) with a nameplate capacity of at least 150 kilowatts.

9. Construction Commencement Date and Placed in Service Date. (If the Application is for more than one facility, a separate statement must be included for each facility.) The construction, installation and equipping of the facility began or is expected to begin on ______________________. The facility is expected to be placed into service on or before _________________.

10. Independent Engineer’s Certificate (If the Application is for more than one facility, a separate certificate must be included for each facility.) Attached as Exhibit D hereto is a certification by an independent, licensed engineer to the effect that each facility in the Project will meet the requirements for a “qualified facility” (as determined under § 45(d) of the Code (without regard to § 45(d)(8) and (10) and without regard to any placed in service date), and that each facility, upon being placed in service, is reasonably expected to produce electricity.

11. Location of the Project.

Project address or physical location (do not include postal box numbers or mailing address) __________________________________________________

City _________________________ State ___________________ Zip _______

County where Project is located ___________________

12. Individual to contact for more information about the Project.

Name ________________________________________

Title ________________________________________

Company Name ________________________________________

Street Address ________________________________________

City _________________________ State ___________________ Zip _______

Telephone Number _____________________

Fax Number _____________________

(Include as appropriate) The contact person is not an authorized official or officer of the Applicant and a properly executed Form 8821 (or Form 2848) is included with this Application that authorizes the disclosure by the IRS of information that relates to this Application and the Project(s) described above to the contact person.

13. Approvals. Include in the attached Exhibit E a certification that all required Federal, State, and local approvals (regulatory and otherwise) for the Project, the proposed New CREBs, and any other required financing for the Project have been obtained or, if any approvals have not yet been obtained, a certification that the Applicant reasonably expects to receive all required approvals in time to permit issuance of the proposed bonds before the expiration of the volume cap allocation. In addition, include in the attached Exhibit E any required approvals that have not been obtained and describe the Applicant’s plan and expected time frame for obtaining such approvals.

14. Plan of financing. Include in the attached Exhibit F a plan of financing for the Project which includes: a reasonably detailed description of the plan of financing which includes (1) the amount of New CREBs expected to be issued together with a description of how proceeds of such bonds will be allocated to the project, (2) any other reasonably expected sources of financing for the project together with a description of how such financing will be allocated to the project, and (3) documentation from an independent third party who is knowledgeable about the marketability of municipal bonds evidencing that the proposed bonds are reasonably expected to be marketed prior to the expiration of the volume cap allocation set forth in section 5.e. of Notice 2015–12. Documentation that may be used to meet this requirement for the proposed bonds includes the following: a bond purchase commitment letter from an investor; a credit enhancement commitment letter from a financial institution; a letter from an underwriter or financial advisor to the effect that the sale of the proposed bonds is likely to be completed in time to permit issuance of the proposed bonds before the expiration of the volume cap allocation for the proposed bonds; documentation similar to the foregoing documentation; or a combination of the foregoing documentation.

15. Compliance with federal tax laws. Include in the attached Exhibit G a certification that the Applicant reasonably expects that the proposed bonds will meet the applicable requirements of §§ 54A and 54C and that the Applicant has engaged bond counsel to render an opinion to the effect that the proposed bonds will meet those requirements.

16. Certification of readiness to issue. Include in the attached Exhibit H a certification that the Applicant reasonably expects to use the volume cap allocation by issuing New CREBs prior to the expiration of the volume cap allocation.

17. Certain forfeitures. The Applicant must either (i) include in the attached Exhibit I a certification that no previous forfeitures or expirations of volume cap occurred with respect to volume cap allocated under Notice __________; or (ii) if the Applicant previously received an allocation of volume cap under Notice __________ that was forfeited or expired and reverted to the IRS (in whole or in part), then the Applicant must include in the attached Exhibit I an identification of such previous allocation and explain the reasons for such prior forfeiture or expiration.

18. Reimbursements. (For reimbursements, include the following statement.) The owner of the Project intends to use the proceeds of New CREBs to reimburse amounts that the owner paid with respect to the Project in accordance with § 54A(d)(2)(D). The Applicant certifies that the requirements of § 54A(d)(2)(D) will be met with respect to any such reimbursement.

19. Dollar amount of allocation requested for the Project. The Applicant hereby requests a New CREBs volume cap allocation in the amount of $________________.

20. Penalty of perjury statement and signatures.

I hereby certify that I am an authorized officer or official of the Applicant, that I am duly authorized to execute legal documents on behalf of the Applicant in connection with incurring debt, and that I am duly authorized to execute legal documents on behalf of the Applicant in making this Application. Under penalties of perjury, I declare that (i) I have knowledge of the relevant facts and circumstances relating to this Application and the Project(s) described herein, and (ii) I have examined this Application and the supporting documents, and to the best of my knowledge and belief, all of the facts contained in this Application, any supplemental submission, and the supporting documents are true, correct, and complete.

By: ________________

Name: ________________

Title: ________________

Date: ________________

Exhibit A

 

Description of the Project (Response to Question 4 of the Application)

 

Exhibit B

 

Description of Project Costs (response to question 5 of the application)

 

Exhibit C

 

Documents describing Qualified Issuers and Qualified Owner’s organizational status (Response to questions 2 and 7 of the Application)

 

Exhibit D

 

Engineer’s Certificate (response to question 10 of the application)

Dated: ___________

This certificate is being provided to the Internal Revenue Service (“IRS”) in connection with an application (the “Application”) by [Name of Applicant Issuer ___________________________] (the “Issuer”) to the IRS requesting an allocation of volume cap authority to issue new clean renewable energy bonds (“New CREBs”) under § 54C of the Internal Revenue Code, as amended (the “Code”). The New CREBs are being issued to finance the costs of a [insert type of qualified renewable energy facility described in Code § 45(d), or a portion thereof,] owned by [Name of qualified renewable energy facility owner ______________________________] described more particularly in the Application (the “Project”). The undersigned hereby certifies as follows:

  1. I am an independent, licensed engineer, duly qualified to practice the profession of engineering under the laws of the State of ______________, and I am not an officer or employee of the Issuer.

  2. I have reviewed the Application for a New CREBs volume cap allocation (including the exhibits thereto) of the Issuer of even date herewith describing the Project. To the best of my knowledge, information, and belief, the facility will meet the requirements to be a “qualified renewable energy facility” under section 54C(d)(1) of the Code and correspondingly a “qualified facility” under § 45(d) of the Code (determined without regard to § 45(d)(8) and (10) and to any placed in service date).

  3. To the best of my knowledge, information and belief, the facility, upon being placed in service, is reasonably expected to produce electricity.

 

IN WITNESS WHEREOF, I have hereunto affixed my official signature on the date of this Engineer’s Certificate.

By: _________________________________

Seal and/or License number:

Name:________________________________

Title: ________________________________

Company:____________________________

Exhibit E

 

Approvals (response to Question 13 of the Application)

 

Exhibit F

 

Plan of Financing (response to Question 14 of the Application)

 

Exhibit G

 

Compliance with Federal Tax Laws (response to Question 15 of the Application)

 

Exhibit H

 

Statement of Readiness to Issue (response to Question 16 of the application)

 

I hereby certify that I am an authorized officer or official of the Applicant, that I am duly authorized to execute legal documents on behalf of the Applicant in connection with incurring debt, and that I am duly authorized to execute legal documents on behalf of the Applicant in making this Application. I certify that the Applicant reasonably expects to issue the New Clean Renewable Energy Bonds pursuant to the allocation of volume cap for those bonds to be received pursuant to the Application prior to the expiration date of the volume cap allocation.

By: ____________________________________

Name: __________________________________

Title: ____________________________________

Date: ____________________________________

Exhibit I

 

Certain Forfeitures (response to Question 17 of the application)

 

APPENDIX B

 

CONSENT TO PUBLIC DISCLOSURE OF CERTAIN NEW CLEAN RENEWABLE ENERGY BOND APPLICATION INFORMATION

In the event that the Application of [Name of Applicant _________________________] (Applicant) for an allocation of authority to issue new clean renewable energy bonds (New CREBs) under § 54C of the Internal Revenue Code (Code) is approved, the undersigned authorized representative of the Applicant hereby consents to the disclosure by the Internal Revenue Service through publication of a public release on the IRS web site at http://www.irs.gov/Tax-Exempt-Bonds of the name of Applicant (issuer), the name of the qualified renewable energy facility owner (if other than the issuer), the type and location of the facility that is the subject of the Application, and the amount of the allocation, if any, of volume cap authority to issue New CREBs for such facility. The undersigned understands that this information might be published, broadcast, discussed, or otherwise disseminated in the public record.

This authorization shall become effective upon the execution hereof. Except to the extent disclosure is authorized herein, the returns and return information of the undersigned taxpayer are confidential and are protected by law under the § 6103 of the Code.

I certify that I have the authority to execute this consent to disclose on behalf of the taxpayer named below.

Date: __________________ Signature: _________________________

Print name: _________________________

Title: _________________________

Name of Applicant-Taxpayer: ___________________________________

Taxpayer Identification Number: _________________________________

Taxpayer’s Address: ____________________________________________

____________________________________________

____________________________________________

Note: Income Tax Regulations require that the Internal Revenue Service must receive this consent within 60 days after it is signed and dated.

APPENDIX C

 

CONFIRMATION OF ACCEPTANCE OF LESSER ALLOCATION AMOUNT AND CERTIFICATION OF ACCURACY OF APPLICATION INFORMATION BASED ON THE LESSER ALLOCATION AMOUNT

This certificate is being provided to the Internal Revenue Service (“IRS”) in connection with an application (the “Application”) by [Name of Applicant: ___________________________] (the “Applicant”) to the IRS requesting an allocation of volume cap authority to issue new clean renewable energy bonds (“New CREBs”) under § 54C of the Internal Revenue Code, as amended (the “Code”). The New CREBs are being issued to finance costs of certain qualified renewable energy facility or facilities described more particularly in the Application (the “Project”). The undersigned hereby certifies as follows:

  1. The Applicant requested volume cap pursuant to the Application in the amount of $__________. Because the amount of volume cap requested in applications satisfying the requirements of Notice _______ exceeds the amount of volume cap available for allocation, the Applicant was notified by the IRS that it could receive an allocation of $_________.

  2. The Applicant confirms its decision to accept the allocation in the amount of $__________.

  3. The Applicant certifies that the certifications and other information included in the Application pursuant to section 3.02.e. of Notice ______, and supplemented as necessary in attachments to this certification, are accurate (subject to provisions of section 7.a. of the Notice relating to insubstantial deviations) based on an amount of allocation requested that is equal to the reduced allocation amount.

 

I hereby certify that I am an authorized officer or official of the Applicant, that I am duly authorized to execute legal documents on behalf of the Applicant in connection with incurring debt, and that I am duly authorized to execute legal documents on behalf of the Applicant with respect to this certificate and the underlying Application.

Under penalties of perjury, I declare that (i) I have knowledge of the relevant facts and circumstances relating to this certificate, the underlying Application and the Project(s), and (ii) I have examined this certificate, the underlying Application, and the supporting documents, and, to the best of my knowledge and belief, all of the facts contained in this certificate, and the supporting documents are true, correct, and complete.

By: __________________________________

Name: _______________________________

Title: ________________________________

Date: ____________________________________

APPENDIX D

 

CONFIRMATION OF DELAYING DECISION ON WHETHER TO ACCEPT LESSER ALLOCATION

This certificate is being provided to the Internal Revenue Service (“IRS”) in connection with an application (the “Application”) by [Name of Applicant: ___________________________] (the “Applicant”) to the IRS requesting an allocation of volume cap authority to issue new clean renewable energy bonds (“New CREBs”) under § 54C of the Internal Revenue Code, as amended (the “Code”). The New CREBs are being issued to finance costs of certain qualified renewable energy facility or facilities described more particularly in the Application (the “Project”). The undersigned hereby certifies as follows:

The Applicant requests to delay its decision on whether to accept the proposed lesser amount until not later than _____________[insert date that is no later than 90 days from the submission date]. The Applicant understands that an allocation in the full amount of its request may be made if sufficient volume cap for its request becomes available prior to such date.

 

I hereby certify that I am an authorized officer or official of the Applicant, that I am duly authorized to execute legal documents on behalf of the Applicant in connection with incurring debt, and that I am duly authorized to execute legal documents on behalf of the Applicant with respect to this certificate and the underlying Application. Under penalties of perjury, I declare that (i) I have knowledge of the relevant facts and circumstances relating to this certificate, the underlying Application and the Project(s), and (ii) I have examined this certificate, the underlying Application, and the supporting documents, and, to the best of my knowledge and belief, all of the facts contained in this certificate, and the supporting documents are true, correct, and complete.

By: __________________________________

Name: _______________________________

Title: ________________________________

Date: ____________________________________

Rev. Proc. 2015–18

NOTE. This revenue procedure will be reproduced as the next revision of IRS Publication 1167, General Rules and Specifications for Substitute Forms and Schedules.

TABLE OF CONTENTS        
Part 1 – INTRODUCTION TO SUBSTITUTE FORMS 643        
Section 1.1 – Overview of Revenue Procedure 2015–18 643        
Section 1.2 – IRS Contacts 644        
Section 1.3 – What’s New 644        
Section 1.4 – Definitions 645        
Section 1.5 – Agreement 646        
Part 2 – GENERAL GUIDELINES FOR SUBMISSIONS AND APPROVALS 647        
Section 2.1 – General Specifications for Approval 647        
Section 2.2 – Highlights of Permitted Changes and Requirements 648        
Section 2.3 – Vouchers 649        
Section 2.4 – Restrictions on Changes 651        
Section 2.5 – Guidelines for Obtaining IRS Approval 651        
Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms 654        
Part 3 – PHYSICAL ASPECTS AND REQUIREMENTS 655        
Section 3.1 – General Guidelines for Substitute Forms 655        
Section 3.2 – Paper 656        
Section 3.3 – Printing 657        
Section 3.4 – Margins 658        
Section 3.5 – Examples of Approved Formats 658        
Section 3.6 – Miscellaneous Information for Substitute Forms 659        
Part 4 – ADDITIONAL RESOURCES 659        
Section 4.1 – Guidance From Other Revenue Procedures 659        
Section 4.2 – Electronic Tax Products 660        
Section 4.2 – System Requirements and Ordering Forms and Instructions 660        
Part 5 – REQUIREMENTS FOR SPECIFIC TAX RETURNS 660        
Section 5.1 – Tax Returns (Forms 1040, 1040A, 1120, etc.) 660        
Section 5.2 – Changes Permitted to Graphics (Forms 1040A and 1040) 661        
Section 5.3 – Changes Permitted to Form 1040A Graphics 662        
Section 5.4 – Changes Permitted to Form 1040 Graphics 662        
Part 6 – FORMAT AND CONTENT OF SUBSTITUTE RETURNS 663        
Section 6.1 – Acceptable Formats for Substitute Forms and Schedules 663        
Section 6.2 – Additional Instructions for All Forms 664        
Part 7 – MISCELLANEOUS FORMS AND PROGRAMS 665        
Section 7.1 – Specifications for Substitute Schedules K–1 665        
Section 7.2 – Guidelines for Substitute Forms 8655 670        
Part 8 – ADDITIONAL INFORMATION 670        
Section 8.1 – Forms for Electronically Filed Returns 670        
Section 8.2 – Effect on Other Documents 671        

Part 1 Introduction to Substitute Forms

 

Section 1.1 – Overview of Revenue Procedure 2015–18

 

1.1.1 Purpose

The purpose of this revenue procedure is to provide guidelines and general requirements for the development, printing, and approval of substitute tax forms. Approval will be based on these guidelines. After review and approval, submitted forms will be accepted as substitutes for official IRS forms.

1.1.2 Unique Forms

Certain unique specialized forms require the use of other additional publications to supplement this publication. See Part 4.

1.1.3 Scope

The IRS accepts quality substitute tax forms that are consistent with the official forms and have no adverse impact on our processing. The IRS Substitute Forms Unit administers the formal acceptance and processing of these forms nationwide. While this program deals with paper documents, it also reviews for approval other processing and filing forms such as those used in electronic filing.

Only those substitute forms that comply fully with these requirements are acceptable. This revenue procedure is updated as required to reflect pertinent tax year form changes and to meet processing and/or legislative requirements.

1.1.4 Forms Covered by This Revenue Procedure

The following types of forms are covered by this revenue procedure:

  • IRS tax forms and their related schedules,

  • Worksheets as they appear in instruction packages,

  • Applications for permission to file returns electronically and forms used as required documentation for electronically filed returns,

  • Powers of Attorney,

  • Over-the-counter estimated tax payment vouchers, and

  • Forms and schedules relating to partnerships, exempt organizations, and employee plans.

 

1.1.5 Forms Not Covered by This Revenue Procedure

The following types of forms are not covered by this revenue procedure:

  • W–2 and W–3 (see Publication 1141 for information on these forms),

  • W–2c and W–3c (see Publication 1223 for information on these forms),

  • 941, Schedule B (Form 941), Schedule D (Form 941), and Schedule R (Form 941) (see Publication 4436 for information on these forms),

  • 1096, 1097–BTC, 1098 series, 1099 series, 3921, 3922, 5498 series, W–2G, 1042–S, and 8935 (see Publication 1179 for information on these forms),

  • 8027 (see Publication 1239 for information on this form),

  • Forms 1040–ES (OCR) and 1041–ES (OCR), which may not be reproduced,

  • Forms 5500 (for more information on these forms, see the Department of Labor website at www.efast.dol.gov),

  • Forms 5300, 5307, 8717, and 8905, bar-coded forms requiring separate approval,

  • Requests for information or documentation initiated by the IRS,

  • Forms used internally by the IRS,

  • State tax forms,

  • Forms developed outside the IRS, and

  • General Instructions and Specific Instructions (these are not reviewed by the Substitute Forms Program Unit).

Section 1.2 – IRS Contacts

 

1.2.1 Where To Send Substitute Forms

Send your substitute forms for approval to the following offices (do not send forms with taxpayer data):

Form Office and Address
5500 Check EFAST2 information at the Department of Labor’s website at www.efast.dol.gov
5300, 5307, 8717, and 8905 Sandra.K.Barnes@irs.gov
Software developer vouchers (see Sections 2.3.7 – 2.3.9) Internal Revenue Service Attn: Doris Bethea, C5-226 5000 Ellin Road Lanham, MD 20706 Doris.E.Bethea@irs.gov
All others (except W–2, W–2c, W–3, W–3c, 941, Schedules B and R (Form 941), 1096, 1097–BTC, 1098, 1099, 3921, 3922, 5498, W–2G, 1042–S, 8027, and 8935) covered by this publication Internal Revenue Service Attn: Substitute Forms Program 5000 Ellin Road, C6–440 Lanham, MD 20706

 

In addition, the Substitute Forms Program Unit can be contacted via email at substituteforms@irs.gov. Please include “PDF Submissions” on the subject line.

For questions about Forms W–2 and W–3, refer to IRS Publication 1141, General Rules and Specifications for Substitute Forms W–2 and W–3. For Forms W–2c and W–3c, refer to IRS Publication 1223, General Rules and Specifications for Substitute Forms W–2c and W–3c. For Form 941 and Schedules B, D, and R (Form 941), refer to IRS Publication 4436, General Rules and Specifications for Substitute Form 941, Schedule B (Form 941) and Schedule R (Form 941). For Forms 1096, 1097–BTC, 1098, 1099, 3921, 3922, 5498, W–2G, 1042–S, and 8935, refer to IRS Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. For Form 8027, refer to IRS Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, Electronically.

Section 1.3 – What’s New

 

1.3.1 What’s New

The following changes have been made to this year’s revenue procedure.

  • .01 Substitute Forms Program address change. The mailing address for the Substitute Forms Program has changed to:

    Internal Revenue Service

    Attn: Substitute Forms Program

    5000 Ellin Road, C6–440 Lanham, MD 20706

  • .02 FinCEN Forms. All references to FinCEN forms have been removed from this Publication. Since all BSA forms are electronically filed and only accessible through the BSA E-Filing System, substitute forms cannot be used or approved. The BSA forms are the BCTR, BSAR, Registration of Money Services Business (RMSB), the Designation of Exempt Person (DOEP), Form 8300, and the FBAR.

  • .03 Editorial Changes. We made editorial changes throughout and redundancies were eliminated as much as possible.

 

Section 1.4 – Definitions

 

1.4.1 Substitute Form

A tax form (or related schedule) that differs in any way from the official version and is intended to replace the form that is printed and distributed by the IRS. This term also covers those approved substitute forms exhibited in this revenue procedure.

1.4.2 Printed/ Preprinted Form

A form produced using conventional printing processes, or a printed form which has been reproduced by photocopying or a similar process.

1.4.3 Preprinted Pin-Fed Form

A printed form that has marginal perforations for use with automated and high-speed printing equipment.

1.4.4 Computer Prepared Substitute Form

A preprinted form in which the taxpayer’s tax entry information has been inserted by a computer, computer printer, or other computer-type equipment.

1.4.5 Computer Generated Substitute Tax Return or Form

A tax return or form that is entirely designed and printed using a computer printer on plain white paper. This return or form must conform to the physical layout of the corresponding IRS form, although the typeface may differ. The text should match the text on the officially printed form as closely as possible. Condensed text and abbreviations will be considered on a case-by-case basis.

Exception. All jurats (perjury statements) must be reproduced verbatim.

1.4.6 Manually Prepared Form

A preprinted reproduced form in which the taxpayer’s tax entry information is entered by an individual using a pen, pencil, typewriter, or other non-automated equipment.

1.4.7 Graphics

Parts of a printed tax form that are not tax amount entries or required text. Examples of graphics are line numbers, captions, shadings, special indicators, borders, rules, and strokes created by typesetting, photographics, photocomposition, etc.

1.4.8 Acceptable Reproduced Form

A legible photocopy or an exact replica of an original form.

1.4.9 Supporting Statement (Supplemental Schedule)

A document providing detailed information to support a line entry on an official or approved substitute form and filed with (attached to) a tax return.

Note. A supporting statement is not a tax form and does not take the place of an official form.

1.4.10 Specific Form Terms

The following specific terms are used throughout this revenue procedure in reference to all substitute forms: format, sequence, line reference, item caption, and data entry field.

1.4.11 Format

The overall physical arrangement and general layout of a substitute form.

1.4.12 Sequence

Sequence is an integral part of the total format requirement. The substitute form should show the same numeric and logical placement order of data, as shown on the official form.

1.4.13 Line Reference

The line numbers, letters, or alphanumerics used to identify each captioned line on an official form. These line references are printed to the immediate left of each caption and/or data entry field.

1.4.14 Item Caption

The text on each line of a form, which identifies the data required.

1.4.15 Data Entry Field

Designated areas for the entry of data such as dollar amounts, quantities, responses, and checkboxes.

1.4.16 Advance Draft

A draft version of a new or revised form may be posted to the IRS website (www.irs.gov/ap/picklist/list/draftTaxForms.html) for information purposes. Substitute forms may be submitted based on these advance drafts, but any submitter that receives forms approval based on these early drafts is responsible for monitoring and revising forms to mirror any revisions in the final forms provided by the IRS.

1.4.17 Approval

Generally, approval could be in writing or assumed after 20 business days from our receipt for forms that have not been substantially changed by the IRS. Also, this does not apply to newly created or substantially revised IRS forms.

Section 1.5 – Agreement

 

1.5.1 Important Stipulation of This Revenue Procedure

Any person or company who uses substitute forms and makes all or part of the changes specified in this revenue procedure agrees to the following stipulations.

  • The IRS presumes that any required changes are made in accordance with these procedures and will not be disruptive to the processing of the tax return.

  • Should any of the changes be disruptive to the IRS’s processing of the tax return, the person or company agrees to accept the determination of the IRS as to whether the form may continue to be filed.

  • The person or company agrees to work with the IRS in correcting noted deficiencies. Notification of deficiencies may be made by any combination of letter, email, or phone contact and may include the request for the re-submission of unacceptable forms.

1.5.2 Response Policy and Stipulations

The Substitute Forms Unit (the Unit) will email confirmation of receipt of your forms submission, if possible. Even if you do not receive emailed confirmation of receipt, you will receive an emailed “submission receipt,” which will provide feedback on your submission. Your submission can be considered approved if you do not receive a response from the Unit within 20 business days of the receipt date. If the Unit anticipates problems in completing the review of your submission within the 20 business day period, the Unit will send an interim email notifying you of the extended period for review.

Once the substitute forms have been approved by the Substitute Forms Unit, you can release them after the final versions of the forms have been issued by the IRS. Before releasing the forms, you are responsible for updating forms approved as draft and for making form changes we requested.

The policy has the following stipulations.

  • This 20-day policy applies to electronic submissions only. It does not apply to substitute forms submitted for approval by paper.

  • The policy applies to submissions of 15 (optimal) or fewer items and submissions containing 75 pages or less. Submissions of more than 15 items may require additional review time.

  • If you send a large number of submissions within a short period of time, processing may be delayed.

  • Delays in processing could occur if the Unit finds significant errors in your submission or has experienced an increase in submissions. The Unit will send you an interim email in this case.

  • Any anticipated problems in processing your submission within the 20-day period will generate an interim email on or about the 15th business day.

  • If any significant inaccuracies are discovered after the 20-day period, the Unit reserves the right to inform you and will require that changes be made to correct the inaccuracies.

  • The policy does not apply to substantially revised forms or to new forms created by the IRS for which you have already made an initial submission.

Part 2 General Guidelines for Submissions and Approvals

 

Section 2.1 – General Specifications for Approval

 

2.1.1 Overview

If you produce any tax forms following only those changes specifically outlined by the Substitute Forms Unit, you can generate your own substitute forms without further approval. If your changes are more extensive, you must get IRS approval before using substitute forms. More extensive changes can include the use of typefaces and sizes other than those found on the official form and the condensing of line item descriptions to save space.

Note. The 20-day turnaround policy may not apply to extensive changes.

2.1.2 Email Submissions

The Substitute Forms Program accepts substitute forms submissions via email. The email address is substituteforms@irs.gov. Please include the term “PDF Submissions” on the subject line.

Follow these guidelines.

  • Your submission should include all the forms you wish to submit in one attached PDF file. Do not email each form individually. Do not attach each individual form to an email.

  • The emailed submission should include a maximum of 3 PDFs to include: a check sheet, a cover letter or accompanying statement, and a single PDF that includes all of the forms listed on your check sheet, cover letter, or accompanying statement.

  • A submission should contain a maximum of 15 forms.

  • An approval check sheet listing the forms you are submitting should always be included in the PDF file along with the forms. Excluding the check sheet can slow the reviewing process down, which can result in a delayed response to your submission. See a sample check sheet in Exhibit D.

  • Optimize PDF files before submitting.

  • The maximum allowable email attachment is 2.5 megabytes.

  • The Substitute Forms Unit accepts zip files.

  • To alleviate delays during the peak time of September through December, submit advance draft forms as early as possible.

If the guidelines are not followed, you may need to resubmit.

Emailing PDF submissions will not expedite review and approval. Submitting your substitute forms package via email is the preferred and suggested method for submitting forms for review. If, for some reason, you are not able to email your submission(s), you can mail your submission(s) to:

  • Internal Revenue Service

  • Attn: Substitute Forms Program

  • SE:W:CAR:MP:P:TP

  • 5000 Ellin Road, C6–440

  • Lanham, MD 20706

 

2.1.3 Expediting the Process

Follow these basic guidelines for expediting the process:

  • Always include a check sheet for the Substitute Forms Unit’s response.

  • Include an accompanying statement identifying most, if not all, of the deviations your substitute forms may include which the official IRS version of the form does not.

  • Follow the guidance in this publication for general substitute form guidelines. Follow the guidance in specialized publications produced by the Substitute Forms Unit for other specific forms.

  • To spread out the workload, send in draft versions of substitute forms when they are posted. Note. Be sure to make any changes to approved drafts before releasing final versions.

2.1.4 Schedules

Schedules are considered to be an integral part of a complete tax return. A schedule may be included as part of a form or printed separately.

2.1.5 Examples of Schedules That Must Be Submitted with the Return

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is an example of this situation. Its Schedules A through U have pages numbered as part of the basic return. For Form 706 to be considered for approval, the entire form, including Schedules A through PC, must be submitted.

2.1.6 Examples of Schedules That Can Be Submitted Separately

However, Schedules C, D, E, and Form 1040 are examples of schedules that can be submitted separately. Although printed by the IRS as a supplement to Form 1040, none of these schedules are required to be filed with Form 1040. These schedules may be separated from Form 1040 and submitted as substitute forms.

2.1.7 Use and Distribution of Unapproved Forms

The IRS is continuing a program to identify and contact tax return preparers, forms developers, and software publishers who use or distribute unapproved forms that do not conform to this revenue procedure. The use of unapproved forms hinders the processing of the returns.

Section 2.2 – Highlights of Permitted Changes and Requirements

 

2.2.1 Methods of Reproducing Internal Revenue Service Forms

There are methods of reproducing IRS printed tax forms suitable for use as substitutes without prior approval:

  • You can photocopy most tax forms and use them instead of the official ones. The entire substitute form, including entries, must be legible.

  • You can reproduce any current tax form as cut sheets, snap sets, and marginally punched, pin-fed forms as long as you use an official IRS version as the master copy.

  • You can reproduce a form that requires a signature as a valid substitute form. Many tax forms (including returns) have a taxpayer signature requirement as part of the form layout. The jurat/perjury statement/signature line areas must be retained and worded exactly as on the official form. The requirement for a signature, by itself, does not prohibit a tax form from being properly computer-generated.

Section 2.3 – Vouchers

 

2.3.1 Overview

All payment vouchers (Forms 940–V, 941–V, 943–V, 945–V, 1040–ES, 1040–V, 1041–V, and 2290–V) must be reproduced in conjunction with their forms. Substitute vouchers must be the same size as the officially printed vouchers. Vouchers that are prepared for printing on a laser printer may include a scan line.

2.3.2 Scan Line Specifications

 

  NNNNNNNNN AA XXXX NN N NNNNNN NNN
Item: A B C D E F G
A. Social Security Number/Employer Identification Number (SSN/EIN) has 9 numeric (N) spaces.  
B. Check Digits have 2 alpha (A) spaces.  
C. Name Control has 4 alphanumeric (X) spaces.  
D. Master File Tax (MFT) Code has 2 numeric (N) spaces (see below).  
E. Taxpayer Identification Number (TIN) Type has 1 numeric (N) space (see below).  
F. Tax Period has 6 numeric (N) spaces in year/month format (YYYYMM).  
G. Transaction Code has 3 numeric (N) spaces.  

2.3.3 MFT Code

Code Number for Forms:

  • 1040 (family) – 30,

  • 940 – 10,

  • 941 – 01,

  • 943 – 11,

  • 944 – 14,

  • 945 – 16,

  • 1041–V – 05,

  • 2290 – 60, and

  • 4868 – 30.

2.3.4 TIN Type

Type Number for:

  • Form 1040 (family), 4868 – 0, and

  • Forms 940, 941, 943, 944, 945, 1041–V, and 2290 – 2.

2.3.5 Voucher Size

The voucher size must be exactly 8.0″ × 3.25″ (Forms 1040–ES and 1041–ES must be 7.625″ × 3.0″). The document scan line must be vertically positioned 0.25 inches from the bottom of the scan line to the bottom of the voucher. The last character on the right of the scan line must be placed 3.5 inches from the right leading edge of the document. The minimum required horizontal clear space between characters is .014 inches. The line to be scanned must have a clear band 0.25 inches in height from top to bottom of the scan line, and from border to border of the document. “Clear band” means no printing except for dropout ink.

2.3.6 Print and Paper Weight

Vouchers must be imaged in black ink using OCR A, OCR B, or Courier 10. These fonts may not be mixed in the scan line. The horizontal character pitch is 10 CPI. The preferred paper weight is 20 to 24 pound OCR bond.

2.3.7 Specifications for Software Developers

Certain vouchers may be reproduced for use in the IRS lockbox system. These include the 1040–V, 1040–ES, 1041–V, the 940 family, and 2290 vouchers. Software developers must follow these specific guidelines to produce scannable vouchers strictly for lockbox purposes. Also see Exhibit C:

  • The total depth must be 3.25 inches.

  • The scan line must be .5 inches from the bottom edge and 1.75 inches from the left edge of the voucher and left-justified.

  • Software developers vouchers must be 8.5 inches wide (instead of 8 inches with a cut line). Therefore, no vertical cut line is required.

  • Scan line positioning must be exact.

  • Do not use the over-the-counter format voucher and add the scan line to it.

  • All scanned data must be in 12-point OCR A font.

  • The 4-digit NACTP ID code should be placed under the payment indicator arrow.

  • Windowed envelopes must not display the scan line in order to avoid disclosure and privacy issues.

Note. All software developers must ensure that their software uses OCR A font so taxpayers will be able to print the vouchers in the correct font.

2.3.8 Specific Line Positions

Follow these line specifications for entering taxpayer data in the lockbox vouchers.

  Start Row Start Column Width End Column
Line Specifications for Taxpayer Data:        
Taxpayer Name 56 6 36 41
Taxpayer Address, Apt. 57 6 36 41
Taxpayer City, State, ZIP 58 6 36 41
Foreign Country Name 59 6 36 41
Foreign Province/ Country 60 6 17 22
Foreign Postal Code 60 26 16 41
Line Specifications for        
Mail To Data:        
Mail Name 56 43 38 80
Mail Address 57 43 38 80
Mail City, State, ZIP 58 43 38 80
Line Specifications for:        
Scan Line 63 26 n/a n/a

2.3.9 How to Get Approval

To receive approval, please send in 25 voucher samples yearly for each form type or scenarios, by December 12, 2014, for testing to the following address.

  • Internal Revenue Service

  • Attn: Doris Bethea, C5-226

  • 5000 Ellin Road

  • Lanham, MD 20706

 

For further information, contact Doris Bethea, Doris.E.Bethea@irs.gov, at 240-613-5922.

Section 2.4 – Restrictions on Changes

 

2.4.1 What You Cannot Do to Forms Suitable for Substitute Tax Forms

You cannot, without prior IRS approval, change any IRS tax form or use your own (non-approved) versions including graphics, unless specifically permitted by this revenue procedure. See Sections 2.5.7 to 2.5.11.

You cannot adjust any of the graphics on Forms 1040, 1040A, and 1040EZ (except in those areas specified in Part 5 of this revenue procedure) without prior approval from the IRS Substitute Forms Unit.

You cannot re-arrange or re-distribute data entry fields, and/or allow data entry fields to flow from one page onto the next (i.e., each page of a substitute form must contain the exact number of data entry fields as there are on the official IRS form). The order and flow of information on the substitute form must be identical to the IRS version of the form.

Note. The 20-day turnaround policy may not apply to extensive changes.

Section 2.5 – Guidelines for Obtaining IRS Approval

 

2.5.1 Basic Requirements

Preparers who submit substitute privately designed, privately printed, computer generated, or computer prepared tax forms must develop these substitutes using the guidelines established in this part. These forms, unless there is an exception outlined by the revenue procedure, must be approved by the IRS before being filed.

2.5.2 Conditional Approval Based on Advanced Drafts

The IRS cannot grant final approval of your substitute form until the official form has been published. However, the IRS posts advance draft forms on its website at: www.irs.gov/app/picklist/list/draftTaxForms.html.

We encourage submission of proposed substitutes of these advance draft forms and will grant conditional approval based solely on these early drafts. These advance drafts are subject to significant change before forms are finalized. If these advance drafts are used as the basis for your substitute forms, you will be responsible for subsequently updating your final forms to agree with the final official version. These revisions need not be resubmitted for further approval.

Note. Approval of forms based on advance drafts will not be granted after the final version of an official form is published.

2.5.3 Submission Procedures

Follow these general guidelines when submitting substitute forms for approval.

  • Any alteration of forms must be within the limits acceptable to the IRS. It is possible that, from one filing period to another, a change in law or a change in internal need (processing, audit, compliance, etc.) may change the allowable limits for the alteration of the official form.

  • When approval of any substitute form (other than those exceptions specified in Part 1, Section 1.2 – IRS Contacts) is requested, a sample of the proposed substitute form should be forwarded for consideration via email or by letter to the Substitute Forms Unit at the address shown in Section 1.2.1.

  • Schedules and forms (for example, Forms 3468, 4136, etc.) that can be used with more than one type of return (for example, 1040, 1041, 1120, etc.) should be submitted only once for approval, regardless of the number of different tax returns with which they may be associated. Also, all pages of multi-page forms or returns should be submitted in the same package.

2.5.4 Approving Offices

Because only the Substitute Forms Unit is authorized to approve substitute forms, unnecessary delays may occur if forms are sent to the wrong office. You may receive an interim letter about the delay. The Substitute Forms Unit may then coordinate the response with the originator responsible for revising that particular form. Such coordination may include allowing the originator to officially approve the form. No IRS office is authorized to allow deviations from this revenue procedure.

2.5.5 IRS Review of Software Programs, etc.

The IRS does not review or approve the logic of specific software programs, nor does the IRS confirm the calculations on the forms produced by these programs. The accuracy of the program remains the responsibility of the software package developer, distributor, or user.

The Substitute Forms Unit is primarily concerned with the pre-filing quality review of the final forms that are expected to be processed by IRS field offices. For this purpose, you should submit forms without including any taxpayer information such as names, addresses, monetary amounts, etc.

2.5.6 When To Send Proposed Substitutes

Proposed substitutes, which are required to be submitted per this revenue procedure, should be sent as much in advance of the filing period as possible. This is to allow adequate time for analysis and response.

2.5.7 Accompanying Statement

When submitting sample substitutes, you should include an accompanying statement that lists each form number and its changes from the official form (position, arrangement, appearance, line numbers, additions, deletions, etc.). With each of the items you should include a detailed reason for the change.

When requesting approval, please include a check sheet. Check sheets expedite the approval process. The check sheet may look like the example in Exhibit D displayed in the back of this procedure or may be one of your own design. Please include your email address on the check sheet. If the Unit will need to fax the check sheet, the number will be requested at that time.

2.5.8 Approval/Non-Approval Notice

The Substitute Forms Unit will email the check sheet or an approval letter to the originator, unless:

  • The requester has asked for a faxed response or for a formal letter, or

  • Significant corrections to the submitted forms are required.

 

Notice of approval may impose qualifications before using the substitutes. Notices of unapproved forms may specify the changes required for approval and require re-submission of the form(s) in question. When appropriate, you will be contacted by telephone.

2.5.9 Duration of Approval

Most signature tax returns and many of their schedules and related forms have the tax (liability) year printed in the upper right corner. Approvals for these annual forms are usually good for one calendar year (January through December of the year of filing). Quarterly tax forms in the 94X series and Form 720 require approval for any quarter in which the form has been revised.

Because changes are usually made to an annual form every year, each new filing season generally requires a new submission of a substitute form. Very rarely is updating the preprinted year the only change made to an annual form.

2.5.10 Limited Continued Use of an Approved Change

Limited changes approved for one tax year may be allowed for the same form in the following tax year. Examples are the use of abbreviated words, revised form spacing, compressed text lines, and shortened captions, etc., which do not change the integrity of lines or text on the official forms.

If substantial changes are made to the form, new substitutes must be submitted for approval. If only minor editorial changes are made to the form, it is not subject to review. It is the responsibility of each vendor who has been granted permission to use substitute forms to monitor and revise forms to mirror any revisions to official forms made by the Service. If there are any questions, please contact the Substitute Forms Unit.

2.5.11 When Approval Is Not Required

If you received approval for a specific change on a form last year, you may make the same change this year if the item is still present on the official form:

  • The new substitute form does not have to be submitted to the IRS and approval based on that change is not required.

  • However, the new substitute form must conform to the official current year IRS form in other respects: date, Office of Management and Budget (OMB) approval number, attachment sequence number, Paperwork Reduction Act Notice statement, arrangement, item caption, line number, line reference, data sequence, etc.

  • The new substitute form must also comply with changes to the guidelines in this revenue procedure. The procedure may have eliminated, added to, or otherwise changed the guideline(s) that affected the change approved in the prior year.

  • An approved change is authorized only for the period from a prior tax year substitute form to a current tax year substitute form.

Exception. Forms with temporary, limited, or interim approvals (or with approvals that state a change is not allowed in any other tax year) are subject to review in subsequent years.

2.5.12 Continuous-Use Forms

Forms without preprinted tax years are called “continuous-use” forms. Continuous-use forms are revised when a legislative change affects the form or a change will facilitate processing. These forms frequently have revision dates that are valid for longer than one year.

2.5.13 Required Copies

Generally, you must send us one copy of each form being submitted for approval. However, if you are producing forms for different computer systems (for example, Microsoft compatible vs. Apple) or different types of printers and these forms differ significantly in appearance, submit one copy for each type of system or printer.

2.5.14 Requestor’s Responsibility

Following receipt of an initial approval for a substitute forms package or a software output program to print substitute forms, it is the responsibility of the originator (designer or distributor) to provide client firms or individuals with forms that meet the IRS’s requirements for continuing acceptability. Examples of this responsibility include:

  • Using the prescribed print paper, font size, legibility, state tax data deletion, etc., and

  • Informing all users of substitute forms of the legal requirements of the Paperwork Reduction Act Notice, which is generally found in the instructions for the official IRS forms.

2.5.15 Source Code

The Substitute Forms Unit will assign a unique source code to each firm that submits substitute paper forms for approval. This source code will be a permanent identifier that must be used on every submission by a particular firm.

The source code consists of three alpha characters and should generally be printed at the bottom left margin area on the first page of every approved substitute form.

Section 2.6 – Office of Management and Budget (OMB) Requirements for All Substitute Forms

 

2.6.1 OMB Requirements for All Substitute Forms

There are legal requirements of the Paperwork Reduction Act of 1995 (the Act). Public Law 104–13 requires the following.

  • OMB approves all IRS tax forms that are subject to the Act.

  • Each IRS form contains (in the upper right corner) the OMB number, if assigned.

  • Each IRS form (or its instructions) states why the IRS needs the information, how it will be used, and whether or not the information is required to be furnished to the IRS.

This information must be provided to every user of official or substitute IRS forms or instructions.

2.6.2 Application of the Paperwork Reduction Act

On forms that have been assigned OMB numbers:

  • All substitute forms must contain in the upper right corner the OMB number that is on the official form, and

  • The required format is: OMB No. 1545-XXXX (Preferred) or OMB # 1545-XXXX (Acceptable).

2.6.3 Required Explanation to Users

You must inform the users of your substitute forms of the IRS use and collection requirements stated in the instructions for official IRS forms.

  • If you provide your users or customers with the official IRS instructions, each form must retain either the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and 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).

  • This notice reads, in part, “We ask for tax return information to carry out the tax laws of the United States....”

Note. If no IRS instructions are provided to users of your forms, the exact text of the Paperwork Reduction Act Notice (or Disclosure, Privacy Act, and Paperwork Reduction Act Notice) must be furnished separately or on the form.

2.6.4 Finding the OMB Number and Paperwork Reduction Act Notice

The OMB number and the Paperwork Reduction Act Notice, or references to it, may be found printed on an official form (or its instructions). The number and the notice are included on the official paper format and in other formats produced by the IRS.

Part 3 Physical Aspects and Requirements

 

Section 3.1 – General Guidelines for Substitute Forms

 

3.1.1 General Information

The official form is the standard. Because a substitute form is a variation from the official form, you should know the requirements of the official form for the year of use before you modify it to meet your needs. The IRS provides several means of obtaining the most frequently used tax forms. These include IRS.gov and ordering products by calling 1-800-TAX-FORMS (1-800-829-3676).

3.1.2 Design

Each 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 Information Prohibited

Generally, state tax information must not appear on the federal tax return, associated form, or schedule that is filed with the IRS. Exceptions occur when amounts are claimed on, or required by, the federal return (for example, state and local income taxes, on Schedule A of Form 1040).

3.1.4 Vertical Alignment of Amount Fields

 

3.1.5 Attachment Sequence Number

Many individual income tax forms have a required “attachment sequence number” located just below the year designation in the upper right corner of the form. The IRS uses this number to indicate the order in which forms are to be attached to the tax return for processing. Some of the attachment sequence numbers may change from year to year.

The following applies to computer prepared forms.

  • The sequence number may be printed in no less than 12-point boldface type and centered below the form’s year designation.

  • The sequence number may also be placed following the year designation for the tax form and separated with an asterisk.

  • The actual number may be printed without labeling it the “Attachment Sequence Number.”

3.1.6 Assembly of Forms

When developing software or forms for use by others, please inform your customers/clients that the order in which the forms are arranged may affect the processing of the package. A return must be arranged in the order indicated below.

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 the IRS in order, processing may be delayed.

3.1.7 Paid Preparer’s Information and Signature Area

On Forms 1040EZ, 1040A, 1040, and 1120, etc., the “Paid Preparer Use Only” area may not be rearranged or relocated. You may, however, add three extra lines to the paid preparer’s address area without prior approval. This applies to other tax forms as well.

3.1.8 Some Common Reasons for Requiring Changes to Substitute Forms

Some reasons that substitute form submissions may require changes include the following.

  • Failing to preprint certain amounts in entry spaces.

  • Shading areas incorrectly.

  • Failing to include a reference to the location of the Paperwork Reduction Act Notice.

  • Not including parentheses for losses.

  • Not including “Attach Statement” when appropriate.

  • Including line references or entry spaces that do not match the official form.

  • Printing text that is different from the official form.

  • Altering the jurat (perjury statement).

Section 3.2 – Paper

 

3.2.1 Paper Content

The paper must be:

  • Chemical wood writing paper that is equal to or better than the quality used for the official form,

  • At least 18 pound (17″ × 22″, 500 sheets), or

  • At least 50 pound offset book (25″ × 38″, 500 sheets).

3.2.2 Paper with Chemical Transfer Properties

There are several kinds of paper prohibited for substitute forms. These are:

1. Carbon-bonded paper, and

2. Chemical transfer paper except when the following specifications are met:

a. Each ply within the chemical transfer set of forms must be labeled, and

b. Only the top ply (ply one and white in color), the one that contains chemical on the back only (coated back), may be filed with the IRS.

3.2.3 Example

A set containing three plies would be constructed as follows: ply one (coated back), “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 boldface type.

It is not mandatory, but recommended, that the file designation “Federal Return, File with IRS” be printed in a contrasting ink for visual emphasis.

3.2.4 Paper and Ink Color

It is preferred that the color and opacity of paper substantially duplicates that of the original form. This means that your substitute must be printed in black ink and may be on white or on the colored paper the IRS form is printed on. Forms 1040A and 1040 substitute reproductions may be in black ink without the colored shading. The only exception to this rule is Form 1041–ES, which should be printed with a PMS 100 yellow shading in the color screened area. This is necessary to assist us in expeditiously separating this form from the very similar Form 1040–ES.

3.2.5 Page Size

Substitute or reproduced forms and computer prepared/generated substitutes may be the same size as the official form or they may be the standard commercial size (8 ½″ × 11″). The thickness of the stock cannot be less than .003 inches.

Section 3.3 – Printing

 

3.3.1 Printing Medium

The private printing of all substitute tax forms must be by conventional printing processes, photocopying, computer graphics, or similar reproduction processes.

3.3.2 Legibility

All forms must have a high standard of legibility as to printing, reproduction, and fill-in matter. Entries of taxpayer data may be no smaller than eight points. The IRS reserves the right to reject those with poor legibility. The ink and printing method used must ensure that no part of a form (including text, graphics, data entries, etc.) develops “smears” or similar quality deterioration. This standard must be followed for any subsequent copies or reproductions made from an approved master substitute form, either during preparation or during IRS processing.

3.3.3 Type Font

Many federal tax forms are printed using “Helvetica” as the basic type font. It is preferred that you use this type font when composing substitute forms.

3.3.4 Print Spacing

Substitute forms should be printed using a 6 lines/inch vertical print option. They should also be printed horizontally in 10 pitch pica (that is, 10 print characters per inch) or 12 pitch elite (that is, 12 print positions per inch).

3.3.5 Image Size

The image size of a printed substitute form should be as close as possible to that of the official form. You may omit any text on both computer-prepared and computer-generated forms that is solely instructional.

3.3.6 Title Area Changes

To allow a large top margin for marginal printing and more lines per page, the title line(s) for all substitute forms (not including the form’s year designation and sequence number, when present), may be photographically reduced 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 Remove Government Printing Office Symbol and IRS Catalog Number

When privately printing substitute tax forms, the Government Printing Office (GPO) symbol and/or jacket number must be removed. In the same place using the same type size, print the Employer Identification Number (EIN) of the printer or designer or the IRS assigned source code. (We prefer this last number be printed in the lower left area of the first page of each form.) Also, remove the IRS Catalog Number (Cat. No.) and the recycle symbol if the substitute is not produced on recycled paper.

3.3.8 Printing on One Side of Paper

Even though the IRS uses both sides of the paper for printing official paper forms or schedules, the IRS will accept your forms if only one side of the paper is used.

3.3.9 Photocopy Equipment

The IRS does not undertake to approve or disapprove the specific equipment or process used in reproducing official forms. Photocopies of forms must be entirely legible and satisfy the conditions stated in this and other revenue procedures.

3.3.10 Reproductions

Reproductions of official forms and substitute forms that do not meet the requirements of this revenue procedure may not be filed instead of the official forms. Illegible photocopies are subject to being returned to the filer for re-submission of legible copies.

3.3.11 Removal of Instructions

Generally, you may remove references to instructions. No prior approval is needed. However, in some instances, you may be requested to include references to instructions.

Exception. The words “For Paperwork Reduction Act Notice, see instructions” must be retained, or a similar statement indicating the location of the Notice, must be provided on each form.

Section 3.4 – Margins

 

3.4.1 Margin Size

The format of a reproduced tax form when printed on the page must have margins on all sides at least as large as the margins on the official form. This allows room for IRS employees to make necessary entries on the form during processing.

  • A ½-inch to ¼-inch margin must be maintained across the top, bottom, and both sides of all substitute forms.

  • The marginal, perforated strips containing pin-fed holes must be removed from all forms prior to filing with the IRS.

3.4.2 Marginal Printing

Prior approval is not required for the marginal printing allowed when printed on an official form or on a photocopy of an official form.

  • With the exception of the actual tax forms (for example, Forms 1040, 1040A, 1040EZ, 1120, 940, 941, etc.), you may print in the left vertical margin and in the left half of the bottom margin.

  • Printing is never allowed in the top right margin of the tax form (for example, Forms 1040, 1040A, 1040EZ, 1120, 940, 941, etc.). The Service uses this area to imprint a Document Locator Number for each return. There are no exceptions to this requirement.

Section 3.5 – Examples of Approved Formats

 

3.5.1 Examples of Approved Formats From the Exhibits

Two sets of exhibits (Exhibits A–1 and 2; B–1 and 2) at the end of this revenue procedure are examples of how these guidelines may be used. Vertical spacing is six (6) lines to the inch. A combination of upper-case and lower-case print font is acceptable in producing substitute forms.

The same logic may be applied to any IRS form that is normally reproducible as a substitute form, with the exception of the tax return forms as discussed elsewhere.

Note. These exhibits may be from a prior year and are not to be used as current substitute forms.

Section 3.6 – Miscellaneous Information for Substitute Forms

 

3.6.1 Filing Substitute Forms

To be acceptable for filing, a substitute form must print out in a format that will allow the filer to follow the same instructions that accompany official forms. The form must be legible, must be on the appropriately sized paper, and must include a jurat (perjury statement) where one appears on the published form.

3.6.2 Caution to Software Publishers

The IRS has received returns produced by software packages with approved output where either the form heading was altered or the lines were spaced irregularly. This produces an illegible or unrecognizable return or a return with the wrong number of pages. We realize that many of these problems are caused by individual printer differences but they may delay input of return data and, in some cases, generate correspondence to the taxpayer. Therefore, in the instructions to the purchasers of your product, both individual and professional, please stress that their returns will be processed more efficiently if they are properly formatted. This includes:

  • Having the correct form numbers and titles at the top of the return, and

  • Submitting the same number of pages as if the form were an official IRS form with the line items on the proper pages.

3.6.3 Caution to Producers of Software Packages

If you are producing a software package that generates name and address data onto the tax return, do not under any circumstances program either the IRS preprinted check digits or a practitioner derived name control to appear on any return prepared and filed with the IRS.

3.6.4 Programming to Print Forms

Whenever applicable:

  • Use only the following label information format for single filers: JOHN Q. PUBLIC 310 OAK DRIVE HOMETOWN, STATE 94000

  • Use only the following information for joint filers: JOHN Q. PUBLIC MARY I. PUBLIC 310 OAK DRIVE HOMETOWN, STATE 94000

Part 4 Additional Resources

 

Section 4.1 – Guidance From Other Revenue Procedures

 

4.1.1 General

The IRS publications listed below provide guidance for substitute tax forms not covered in this revenue procedure. These publications are available on the IRS website. Identify the requested document by the IRS publication number.

  • Publication 1141, General Rules and Specifications for Substitute Forms W–2 and W–3.

  • Publication 1179, Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, W–2G, and 1042–S.

  • Publication 1187, Specifications for Electronic Filing of Form 1042–S, Foreign Person’s U.S. Source Income Subject to Withholding.

  • Publication 1220, Specifications for Electronic Filing of Form 1098,1099, 5498, and W2–G.

  • Publication 1223, General Rules and Specifications for Substitute Forms W–2c and W–3c.

  • Publication 1239, Specifications for Electronic Filing of Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips.

  • Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns.

  • Publication 4436, General Rules and Specifications for Substitute Form 941, Schedule B (Form 941).

Section 4.2 – Electronic Tax Products

 

4.2.1 The IRS Website

Copies of tax forms with instructions, publications, draft forms, fillable forms, prior year forms and publications, and other tax-related information may be found on the IRS website at IRS.gov.

4.2.2 System Requirements and Ordering Forms and Instructions

For system requirements, contact the National Technical Information Service (NTIS) at www.ntis.gov. Prices are subject to change.

You can order IRS forms and other tax material, online at IRS.gov. Click on the Forms and Pubs link and then the Order Forms and Pubs link, or by calling 1-800-TAX-FORM (1-800-829-3676).

Part 5 Requirements for Specific Tax Returns

 

Section 5.1 – Tax Returns (Forms 1040, 1040A, 1120, etc.)

 

5.1.1 Acceptable Forms

Tax forms (such as Forms 1040, 1040A, and 1120) require a signature and establish tax liability. Computer-generated versions are acceptable under the following conditions.

  • These substitute forms must be printed on plain white paper.

  • Substitute 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. Caution. All jurats (perjury statements) must be reproduced verbatim. No text can be added, deleted, or changed in meaning.

  • Various computer graphic print media such as laser printing, inkjet printing, etc., may be used to produce the substitute forms.

  • The substitute form must be the same number of pages and contain the same line text as the official form.

  • All substitute forms must be submitted for approval prior to their original use. You do not need approval for a substitute form if its only change is the preprinted year and you had received a prior year approval letter. Exception. If the approval letter specifies a one-time exception for your form, the next year’s form must be approved.

5.1.2 Prohibited Forms

The following are prohibited.

  • Computer-generated tax forms (for example, Form 1040, etc.) on lined or color barred paper.

  • Tax forms that differ from the official IRS forms in a manner that makes them non-standard or unable to process.

5.1.3 Changes Permitted to Forms 1040 and 1040A

Certain changes (listed in Sections 5.2 through 5.4) are permitted to the graphics of the form without prior approval, but these changes apply to only acceptable preprinted forms. Changes not requiring prior approval are good only for the annual filing period, which is the current tax year. Such changes are valid in subsequent years only if the official form does not change.

5.1.4 Other Changes Not Listed

All changes not listed in Sections 5.2 through 5.4 require approval from the IRS before the form can be filed.

Section 5.2 – Changes Permitted to Graphics (Forms 1040A and 1040)

 

5.2.1 Adjustments

You may make minor vertical and horizontal spacing adjustments to allow for computer or word processing printing. This includes widening the amount columns or tax entry areas if the adjustments comply with other provisions stated in revenue procedures. No prior approval is needed for these changes.

5.2.2 Name and Address Area

The horizontal rules and instructions within the name and address area may be removed and the entire area left blank. No line or instruction can remain in the area. The heavy ruled border (when present) that outlines the name, address area, and social security number must not be removed, relocated, expanded, or contracted.

5.2.3 Required Format

When the name and address area is left blank, the following format must be used when printing the taxpayer’s name and address.

  • 1st name line (35 characters maximum).

  • 2nd name line (35 characters maximum).

  • In-care-of name line (35 characters maximum).

  • City, state (25 characters maximum), one blank character, and ZIP code.

5.2.4 Conventional Name and Address Data

When there is no in-care-of name line, the name and address will consist of only three lines (single filer) or four lines (joint filer). Name 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 of In-Care-Of Name Line

Name and address (single filer) with in-care-of name line:

JOHN Z. JONES

C/O THOMAS A. JONES

4311 SOMEWHERE AVE.

SAMETOWN, STATE 54345

5.2.6 SSN and Employer Identification Number (EIN) Area

The broken vertical lines separating the format arrangement of the SSN/EIN may be removed. When the vertical lines are removed, the SSN and EIN formats must be 000-00-0000 or 00-0000000, respectively.

5.2.7 Cents Column

 

  • You may remove the vertical rule that separates the dollars from the cents.

  • All entries in the amount column should have a decimal point following the whole dollar amounts whether or not the vertical line that separates the dollars from the cents is present.

  • You may omit printing the cents, but all amounts entered on the form must follow a consistent format. You are strongly urged to round off the figures to whole dollar amounts, following the official form instructions.

  • When several amounts are summed together, the total should be rounded off after addition (that is, individual amounts should not be rounded off for computation purposes).

  • When printing money amounts, you must use one of the following formats: (a) 0,000,000.; (b) 0,000,000.00.

  • When there is no entry for a line, leave the line blank.

 

5.2.8 “Paid Preparer’s Use Only” Area

On all forms, the paid preparer’s information area may not be rearranged or relocated. You may add three lines and remove the horizontal rules in the preparer’s address area.

Section 5.3 – Changes Permitted to Form 1040A Graphics

 

5.3.1 General

No prior approval is needed for the following changes (for use with computer-prepared forms only).

5.3.2 Line 4 of Form 1040A

This line may be compressed horizontally (to allow for same line entry for the name of the qualifying child) by using the following caption: “Head of household; child’s name” (name field).

5.3.3 Other Lines

Any line with text that takes up two or more vertical lines may be compressed to one line by using contractions, etc., and by removing instructional references.

5.3.4 Page 2 of Form 1040A

All lines must be present and numbered in the order shown on the official form. These lines may also be compressed.

5.3.5 Color Screening

It is not necessary to duplicate the color screening used on the official form. A substitute Form 1040A may be printed in black and white only with no color screening.

5.3.6 Other Changes Prohibited

No other changes to the Form 1040A graphics are allowed without prior approval except for the removal of instructions and references to instructions.

Section 5.4 – Changes Permitted to Form 1040 Graphics

 

5.4.1 General

No prior approval is needed for the following changes (for use with computer-prepared forms only). Specific line numbers in the following headings may have changed due to tax law changes.

5.4.2 Line 4 of Form 1040

This line may be compressed horizontally (to allow for a larger entry area for the name of the qualifying child) by using the following caption: “Head of household; child’s name” (name field).

5.4.3 Line 6c of Form 1040

The vertical lines separating columns (1) through (4) may be removed. The captions may be shortened to allow a one-line caption for each column.

5.4.4 Other Lines

Any other line with text that takes up two or more vertical lines may be compressed to one line by using contractions, etc., and by removing instructional references.

5.4.5 Line 21 – Other Income

The fill-in portion of this line may be expanded vertically to three lines. The amount entry box must remain a single entry.

5.4.6 Line 44 of Form 1040 – Tax

You may change the line caption to read “Tax” and computer print the words “Total includes tax from” and either “Form(s) 8814” or “Form 4972” or “962 election.” If both forms are used, print both form numbers. This specific line number may have changed.

5.4.7 Line 54 of Form 1040 – Other Credits

You may change the caption to read: “Other credits from Form” and computer print only the form(s) that apply.

5.4.8 Color Screening

It is not necessary to duplicate the color screening used on the official form. A substitute Form 1040 may be printed in black and white only with no color screening.

5.4.9 Other Changes Prohibited

No other changes to the Form 1040 graphics are permitted without prior approval except for the removal of instructions and references to instructions.

Part 6 Format and Content of Substitute Returns

 

Section 6.1 – Acceptable Formats for Substitute Forms and Schedules

 

6.1.1 Exhibits and Use of Acceptable Formats

Exhibits of acceptable formats for Schedule A, usually attached to the Form 1040, and Form 2106–EZ are shown in the exhibits section of this revenue procedure.

  • If your computer-generated forms appear exactly like the exhibits, no prior authorization is needed.

  • You may computer-generate forms not shown here, but you must design them by following the manner and style of those in the exhibits section.

  • Take care to observe other requirements and conditions in this revenue procedure. The IRS encourages the submission of all proposed forms covered by this revenue procedure.

6.1.2 Instructions

The format of each substitute form or schedule must follow the format of the official form or schedule as to item captions, line references, line numbers, sequence, form arrangement and format, etc. Basically, try to make the form look like the official one, with readability and consistency being primary factors. You may use periods and/or other similar special characters to separate the various parts and sections of the form. Do not use alpha or numeric characters for these purposes. All line numbers and items must be printed even though an amount is not entered on the line.

6.1.3 Line Numbers

When 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 text of each line and immediately preceding the data entry field, even if no reference code precedes the data entry field on the official form. If an entry field contains multiple lines and shows the line references once on the left and right side of the form, use the same number of line references on the substitute form.

In addition, the reference code that is immediately before the data field must either be 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 Section 6.1.4.)

6.1.4 Decimal Points

A decimal point (that is, a period) should be used for each money amount regardless of whether the amount is reported in dollars and cents or in whole dollars, or whether or not the vertical line that separates the dollars from the cents is present. The decimal points must be vertically aligned when possible.

Example:

5 STATE & LOCAL INC. TAXES............... 5. 495.00
6 REAL ESTATE TAXES............................ 6.  
7 PERSONAL PROPERTY TAXES............ 7. 198.00  
  or    
5 STATE & LOCAL INC. TAXES............... (5) 495.00
6 REAL ESTATE TAXES............................. (6)  
7 PERSONAL PROPERTY TAXES............. (7) 198.00  

6.1.5 Multi-Page Forms

When submitting a multi-page form, send all its pages in the same package.

Exception. If you will not be producing certain pages, please note that in your cover letter.

Section 6.2 – Additional Instructions for All Forms

 

6.2.1 Use of Your Own Internal Control Numbers and Identifying Symbols

You may show the computer-prepared internal control numbers and identifying symbols on the substitute if using such numbers or symbols is acceptable to the taxpayer and the taxpayer’s representative. Such information must not be printed in the top ½ inch clear area of any form or schedule requiring a signature. Except for the actual tax return form (Forms 1040, 11ID Number on 20, 940, 941, etc.), you may print in the left vertical and bottom left margins. The bottom left margin you may use extends 3½ inches from the left edge of the form.

6.2.2 Required Software ID Number (Source Code) on Computer- Prepared Substitutes

In the February 2009 Government Accountability Office (GAO) report, “Many Taxpayers Rely on Tax Software and IRS Needs to Assess Associated Risks” (GAO-09-297), GAO recommended that IRS require a software identification number on all individual returns to specifically identify the software package used to prepare each tax return. IRS already has this capability for all e-filed returns. In addition, many tax preparation software firms already print an IRS-issued 3-letter Source Code on paper returns that are generated by their individual tax software. This Source Code was assigned when the firms were seeking substitute forms approval under this current Publication.

In order to respond properly to this GAO recommendation, the IRS will require all tax preparation software firms to include the 3-letter Source Code on all paper tax returns created by their individual tax preparation software. The many firms that currently have and display their Source Code on paper returns generated from their software should continue to do so, and no change is necessary.

We have reviewed all software companies that passed PATS testing last filing season and have determined that some firms do not currently have a Source Code. To save you the burden of contacting us and for your convenience, we have assigned Source Codes to those firms.

You should program your Source Code to be placed in the bottom left-hand corner of page one of each paper form that will be generated by your individual tax return package. You do not need to apply for a new Source Code annually.

If you already use a 3-letter Source Code and we have issued you one in error, you are unsure if you were ever issued one, or have other questions or concerns, you may contact Tax Forms and Publications Special Services Section at substituteforms@irs.gov.

6.2.3 Descriptions for Captions, Lines, etc.

Descriptions for captions, lines, etc., appearing on the substitute forms may be limited to one print line by using abbreviations and contractions, and by omitting articles, prepositions, etc. However, sufficient key words must be retained to permit ready identification of the caption, line, or item.

6.2.4 Determining Final Totals

Explanatory detail and/or intermediate calculations for determining final line totals may be included on the substitute. We prefer that such calculations be submitted in the form of a supporting statement. If intermediate calculations are included on the substitute, the line on which they appear may not be numbered or lettered. Intermediate calculations may not be printed in the right column. This column is reserved only for official numbered and lettered lines that correspond to the ones on the official form. Generally, you may choose the format for intermediate calculations or subtotals on supporting statements to be submitted.

6.2.5 Instructional Text on the Official Form

Text on the official form, which is solely instructional (for example, “See instructions.” etc.), may generally be omitted from the substitute form.

6.2.6 Mixing Forms on the Same Page Prohibited

You may not show more than one form or schedule on the same printout page. Both sides of the paper may be printed for multi-page official forms, but it is unacceptable to intermix single page schedules of forms.

For instance, Schedule E can be printed on both sides of the paper because the official form is multi-page, with page 2 continued on the back. However, do not print Schedule E on the front page and Schedule SE on the back, or Schedule A on the front and Form 8615 on the back, etc. Both pages of a substitute form must match the official form. The back page may be left blank if the back page of the official form contains only the instructions.

6.2.7 Identifying Substitutes

Identify all computer-prepared substitutes clearly. Print the form designation ½ inch from the top margin and ½ inches from the left margin. Print the title centered on the first line of print. Print the taxable year and, where applicable, the sequence number on the same line ½ inch to 1 inch from the right margin. Include the taxpayer’s name and SSN on all forms and attachments. Also, print the OMB number as reflected on the official form.

6.2.8 NegativeAmounts

Negative (or loss) amount entries should be enclosed in brackets or parentheses or include a minus sign. This assists in accurate computation and input of form data. The IRS pre-prints parentheses in negative data fields on many official forms. These parentheses should be retained or inserted on printouts of affected substitute forms.

Part 7 Miscellaneous Forms and Programs

 

Section 7.1 – Specifications for Substitute Schedules K–1

 

7.1.1 Requirements for Schedules K–1 That Accompany Forms 1041, 1065, 1065–B, and 1120S

Because of significant changes to improve processing, prior approval is now required for substitute Schedules K–1 that accompany Form 1041 (for estates and trusts), Form 1065 (for partnerships), Form 1065–B (for electing large partnerships), or Form 1120S (for S corporations). Substitute Schedules K–1 should be as close as possible to exact replicas of copies of the official IRS schedules and follow the same process for submitting other substitute forms and schedules. Before releasing their substitute forms, software vendors are responsible for making any subsequent changes that have been made to the final official IRS forms after the draft forms have been posted.

You must include all information on the form. Submit Schedules K–1 to the IRS at substituteforms@irs.gov with “Attn: PDF Submissions” on the subject line or at:

  • Internal Revenue Service

  • Attn: Substitute Forms Program

  • 5000 Ellin Road, C6–440

  • Lanham, MD 20706

 

Include the 6-digit form ID code in the upper right of Schedules K-1 of Forms 1041, 1065, and 1120S. Please allow white space around the 6-digit code.

  • 661114 for Form 1041,

  • 651114 for Form 1065, and

  • 671114 for Form 1120S.

Schedules K–1 that accompany Forms 1041, 1065, 1065–B, or 1120S must meet all specifications. The specifications include, but are not limited to, the following requirements.

  • You will no longer be able to produce Schedules K–1 that contain only those lines or boxes that taxpayers are required to use. All lines must be included.

  • The words “*See attached statement for additional information.” must be preprinted in the lower right–hand side on Schedules K–1 of Forms 1041, 1065, and 1120S.

  • All K–1s that are filed with the IRS should be printed on standard 8.5″ × 11″ paper (the international standard (A4) of 8.27″ × 11.69″ may be substituted).

  • Each recipient’s information must be on a separate sheet of paper. Therefore, you must separate all continuously printed substitutes, by recipient, before filing with the IRS.

  • No carbon copies or pressure-sensitive copies will be accepted.

  • The Schedule K–1 must contain the name, address, and SSN or EIN of both the entity (estate, trust, partnership, or S corporation) and the recipient (beneficiary, partner, or shareholder).

  • The Schedule K–1 must contain the tax year, the OMB number, the schedule number (K–1), the related form number (1041, 1065, 1065–B, or 1120S), and the official schedule name in substantially the same position and format as shown on the official IRS schedule.

  • The Schedule K–1 must contain all the line items as shown on the official form, except for the instructions, if any are printed on the back of the official Schedule K–1.

  • The line items or boxes must be in the same order and arrangement as those on the official form.

  • The amount of each recipient’s share of each item must be shown. A partial percent should be reflected as a decimal (example: 50 ½% should be 50.5%). Furnishing a total amount of each item and a percentage (or decimal equivalent) to be applied to such total amount by the recipient does not satisfy the law and the specifications of this revenue procedure.

  • State or local tax-related information may not be included on the Schedules K–1 filed with the IRS.

  • The entity may have to pay a penalty if substitute Schedules K–1 are filed that do not conform to specifications.

  • Additionally, the IRS may consider the Schedules K–1 that do not conform to specifications as not being able to be processed and may return Forms 1041, 1065, 1065–B, or 1120S to the filer to be filed correctly.

Schedules K–1 that are 2-D bar-coded will continue to require prior approval from the IRS (see Sections 7.1.3 through 7.1.5).

7.1.2 Special Requirements for Recipient Copies of Schedules K–1

Standardization for reporting information is required for recipient copies of substitute Schedules K–1 of Forms 1041, 1065, 1065–B, and 1120S. Uniform visual standards are provided to increase compliance by allowing recipients and practitioners to more easily recognize a substitute Schedule K–1. The entity must furnish to each recipient a copy of Schedule K–1 that meets the following requirements.

  • Include the 6-digit form ID code in the upper right of Schedules K–1 of Forms 1041, 1065, and 1120S. Please allow white space around the 6-digit code.

    • 661114 for Form 1041,

    • 651114 for Form 1065, and

    • 671114 for Form 1120S.

     

  • You will no longer be able to produce Schedules K–1 that contain only those lines or boxes that taxpayers are required to use. All lines must be included.

  • The words “*See attached statement for additional information.” must be preprinted in the lower right-hand side on Schedules K–1 of Forms 1041, 1065, and 1120S.

  • The Schedule K–1 must contain the name, address, and SSN or EIN of both the entity and recipient.

  • The Schedule K–1 must contain the tax year, the OMB number, the schedule number (K–1), the related form number (1041, 1065, 1065–B, or 1120S), and the official schedule name in substantially the same position and format as shown on the official IRS schedule.

  • All applicable amounts and information required to be reported must be titled and numbered in the same manner as shown on the official IRS schedule. The line items or boxes must be in the same order and arrangement and must be numbered like those on the official IRS schedule.

  • The Schedule K–1 must contain all items required for use by the recipient. The instructions to the schedule must identify the line or box number and code, if any, for each item as shown in the official IRS schedule.

  • The amount of each recipient’s share of each item must be shown. A partial percent should be reflected as a decimal (example 50 ½% should be 50.5%). Furnishing a total amount of each line item and a percentage (or decimal equivalent) to be applied to such total amount by the recipient does not satisfy the law and the specifications of this revenue procedure.

  • Instructions to the recipient that are substantially similar to those on or accompanying the official IRS schedule must be provided to aid in the proper reporting of the items on the recipient’s income tax return. Where items are not reported to a recipient because they do not apply, the related instructions may be omitted.

  • The quality of the ink or other material used to generate recipients’ schedules must produce clearly legible documents. In general, black chemical transfer inks are preferred.

  • In order to assure uniformity of substitute Schedules K–1, the paper size should be standard 8.5″ × 11″ (the international standard (A4) of 8.27″ × 11.69″ may be substituted.)

  • The paper weight, paper color, font type, font size, font color, and page layout must be such that the average recipient can easily decipher the information on each page. The preferred font is “Helvetica” and a minimal of 10pt. font.

  • State or local tax-related information may be included on recipient copies of substitute Schedules K–1. All non-tax-related information should be separated from the tax information on the substitute schedule to avoid confusion for the recipient.

  • The legend “Important Tax Return Document Enclosed” must appear in a bold and conspicuous manner on the outside of the envelope that contains the substitute recipient copy of Schedule K–1.

  • The entity may have to pay a penalty if a substitute Schedule K–1 furnished to any recipient does not conform to the specifications of this revenue procedure and results in impeding processing.

7.1.3 Requirements for Schedules K–1 with Two- Dimensional (2-D) Bar Codes

Electronic filing is now and will continue to be the preferred method of filing; however, 2-D bar code is the best alternative method for paper processing.

In an effort to improve efficiency and at the same time increase data accuracy, the IRS partnered with the tax software development community on a two-dimensional bar code project in 2003. Certain tax software packages have been modified to generate 2-D bar codes on Schedules K–1. As a result, when K–1s are printed using these programs, a bar code will print on the page.

Rather than manually transcribe information from the Schedule K–1, the IRS will scan the bar code and electronically upload the information from the K–1. The results will be more efficient operation within the IRS and fewer transcription errors for your clients.

Note. If software vendors do not want to produce bar-coded Schedules K–1, they may produce the official IRS Schedules K–1 but cannot use the expedited process for approving bar-coded K–1s and their parent returns as outlined in Section 7.1.6.

In addition to the requirements in Sections 7.1.1 and 7.1.2, the bar-coded Schedules K–1 must meet the following specifications.

  • The bar code should print in the space labeled “For IRS Use Only” on each Schedule K–1. The entire bar code must print within the “For IRS Use Only” box surrounded by a white space of at least ¼ inch.

  • Bar codes must print in PDF 417 format.

  • The bar codes must always be in the specified format with every field represented by at least a field delimiter (carriage return). Leaving out a field in a bar code will cause every subsequent field to be misread.

  • Be sure to include the 6-digit form ID code in the upper right of Schedules K–1 of Forms 1041, 1065, and 1120S. Please allow white space around the 6-digit code.

    • 661114 for Form 1041,

    • 651114 for Form 1065, and

    • 671114 for Form 1120S.

     

7.1.4 2-D Bar Code Specifications for Schedules K–1

Follow these general specifications for preparing all 2-D bar-coded Schedules K–1:

  • Numeric fields –

    • Do not include leading zeros (except Taxpayer Identification Numbers, Zip Codes, and percentages).

    • If negative value, the minus sign “–” must be present immediately to the left of the number and part of the 12 position field.

    • Do not use non-numeric characters except that the literal “STMT” can be put in money fields.

    • All money fields should be rounded to the nearest whole dollar amount – if a money amount ends in 00 to 49 cents, drop the cents; if it ends in 50 to 99 cents, truncate the cents and increment the dollar amount by one. Use the same rounding technique for the bar-coded and the printed K–1s.

    • All numeric-only fields are right justified (except Taxpayer Identification Numbers and Zip Codes).

     

  • All field lengths are expressed as maximum lengths. If the value in the field has fewer positions or the software program does not support that many positions, put in the bar code only those positions actually used.

  • Alpha fields –

    • Do not include leading blanks (left justified).

    • Do not include trailing blanks.

    • Use uppercase alpha characters only.

     

  • Variable fields –

    • Do not include leading blanks (left justified).

    • Do not include trailing blanks.

    • Use uppercase alpha characters, numerics, and special characters as defined in each field.

     

  • Delimit each field with a carriage return.

  • Express percentages as 6-digit numbers without the percent sign. Left justify with leading zero(s) (for percentages less than 100%) and no decimal point (decimal point is assumed between 3rd and 4th positions).

  • Examples: 25.32% expressed as “025320”; 105% expressed as “105000”; 8.275% expressed as “008275”; 10.24674% expressed as “010247”.

  • It is vital that the print routine reinitialize the bar code prior to printing each succeeding K–1. Failure to do this will result in each K–1 for a parent return having the same bar code as the document before it.

7.1.5 Approval Process for Bar-Coded Schedules K–1

Prior to releasing commercially available tax software that creates bar-coded Schedules K–1, the printed schedule and the bar code must both be tested. If your company is creating bar-coded Schedules K–1, you must receive certification for both the printed K–1, as well as the bar code before offering your product for sale. Bar-code testing must be done using the final official IRS Schedule K–1. Bar-code approval requests must be resubmitted for any subsequent changes to the official IRS form that would affect the bar code. Below are instructions and a sequence of events that will comprise the testing process.

  • The IRS has released the final Schedule K–1 bar-code specifications by publishing them on the IRS.gov website (see www.irs.gov/uac/Schedule- K-1,-Two-Dimensional-Bar-Code-Specifications-and-Certification- Process).

  • The IRS will publish a set of test documents that will be used to test the ability of tax preparation software to create bar codes in the correct format.

  • Software developers will submit two identical copies of the test documents – one to the IRS and one to a contracted testing vendor.

  • The IRS will use one set to ensure the printed schedules comply with standard substitute forms specifications.

  • If the printed forms fail to meet the substitute form criteria, the IRS will inform the software developer of the reason for noncompliance.

  • The software developer must resubmit the Schedule(s) K–1 until they pass the substitute forms criteria.

  • The testing vendor will review the bar codes to ensure they meet the published bar-code specifications.

  • If the bar code(s) does not meet published specifications, the testing vendor will contact the software developer directly informing them of the reason for noncompliance.

  • Software developers must submit new bar-coded schedules until they pass the bar-code test.

  • When the bar code passes, the testing vendor will inform the IRS that the developer has passed the bar-code test and the IRS will issue an overall approval for both the substitute form and the bar code.

  • After receiving this consolidated response, the software vendor is free to release software for tax preparation as long as any subsequent revisions to the schedules do not change the fields.

  • Find the mailing address for the testing vendor below. Separate and simultaneous mailings to the IRS and the vendor will reduce testing time.

7.1.6 Procedures for Reducing Testing Time

In order to help provide incentives to the software development community to participate in the Schedule K–1 2-D project, the IRS has committed to expediting the testing of bar-coded Schedules K–1 and their associated parent returns. To receive this expedited service, follow the instructions below.

  • Mail the parent returns (Forms 1065, 1120S, 1041) and associated

    bar-coded Schedule(s) K–1 to the appropriate address below in a separate package from all other approval requests.

    Internal Revenue Service

    Attn: Bar-Coded K–1

    SE:W:CAR:MP:T:M:S, IR 6526

    1111 Constitution Avenue, NW

    Washington, DC 20224

  • Mail one copy of the parent form(s) and Schedule(s) K–1 to the IRS and another copy to the testing vendor at the address below.

    Northrop Grumman Information Systems

    Attn: Cecilia Siamundo/Elizabeth Ragonese

    7555 Colshire Drive

    McLean, VA 22102

    Phone: 703-556-3619

  • Include multiple email and phone contact points in the packages.

  • While the IRS can expedite bar-coded Schedules K–1 and their associated parent returns, it cannot expedite the approval of non-associated tax returns.

  • Vendors should comply with all NACTP guidelines especially in regards to mil size and error-correction level.

  • Submissions should include vendor ID code printed and in the bar code.

  • If a change is made to the bar code after approval, be sure to increment the version number.

Section 7.2 – Guidelines for Substitute Forms 8655

 

7.2.1 Increased Standardization for Forms 8655

Increased standardization for reporting information on substitute Forms 8655 is now required to aid in processing and for compliance purposes. Please follow the guidelines in Section 7.2.2.

7.2.2 Requirements for Substitute Forms 8655

Please follow these specific requirements when producing substitute Forms 8655.

  • The first line of the title must be “Reporting Agent Authorization.”

  • If you want to include a reference to “State Limited Power of Attorney,” it can be in parentheses under the title. “State” must be the first word within the parentheses.

  • You must include “Form 8655” on the form.

  • While the line numbers do not have to match the official form, the sequence of the information must be in the same order.

  • The size of any variable data must be printed in a font no smaller than 10-point.

  • For adequate disclosure checks, the following must be included for each taxpayer:

    • Name,

    • EIN, and

    • Address.

     

  • At this time, Form 944 will not be required if Form 941 is checked. Only those forms that the reporting agent company supports need to be listed. The jurat (perjury statement) must be identical with the exception of references to line numbers.

  • A contact name and number for the reporting agent is not required.

  • You must include line 17, or the equivalent line, and it must include two checkboxes.

  • Any state information included should be contained in a separate section of the substitute form. Preferably this information will be in the same area as line 19 of the official form.

  • All substitute Forms 8655 must be approved by the Substitute Forms Unit as outlined in the Form 8655 specifications in this current Publication.

  • If you have not already been assigned a 3-letter Source Code, you will be given one when your substitute form is submitted for approval. This Source Code should be included in the lower left corner of the form.

  • The 20-day assumed approval policy does not apply to Form 8655 approvals.

Part 8 Additional Information

 

Section 8.1 – Forms for Electronically Filed Returns

 

8.1.1 Electronic Filing Program

Electronic filing is a method by which authorized providers transmit tax return information to an IRS Service Center in the format of the official IRS forms. The IRS accepts both refund and balance due forms that are filed electronically.

8.1.2 Applying to Participate in IRS e-file

Anyone wishing to participate in IRS e-file of tax returns must submit an e-file application. The application can be completed and submitted electronically on the IRS website at IRS.gov after first registering for e-services on the website.

8.1.3 Obtaining the Taxpayer Signature/ Submission of Required Paper Documents

Taxpayers choosing to electronically prepare and file their return will be required to use the Self-Select PIN method as their signature.

Electronic Return Originators (EROs) can e-file individual income tax returns only if the returns are signed electronically using either the Self-Select or Practitioner PIN method.

Taxpayers must use Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, to send supporting documents that are required to be submitted to the IRS.

For specific information about electronic filing, refer to Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns.

8.1.4 Guidelines for Preparing Substitute Forms in the Electronic Filing Program

A participant in the electronic filing program who wants to develop a substitute form should follow the guidelines throughout this publication and send a sample form for approval to the Substitute Forms Unit at the address in Part 1. If you do not prepare Substitute Form 8453 using a font in which all IRS wording fits on a single page, the form will not be accepted.

Note. Use of unapproved forms could result in suspension of the participant from the electronic filing program.

Section 8.2 – Effect on Other Documents

 

8.2.1 Effect on Other Documents

This revenue procedure supersedes Revenue Procedure 2013–17, 2013–11, I.R.B. 612.

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Rev. Proc. 2015–19

SECTION 1. PURPOSE

This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2015, including separate tables of limitations on depreciation deductions for trucks and vans; (2) amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2015, including a separate table of inclusion amounts for lessees of trucks and vans; and (3) revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles that were first placed in service or first leased by the taxpayer, respectively, during 2014 and to which the 50 percent additional first year depreciation deduction under § 168(k)(1)(A) of the Internal Revenue Code applies as extended by § 125(a) of the Tax Increase Prevention Act of 2014, Pub. L. No. 113–295, ___ Stat. ___ (December 19, 2014) (the “Act”). The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7).

SECTION 2. BACKGROUND

.01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. This change reflects the higher rate of price inflation for trucks and vans since 1988.

.02 Section 125(a) of the Act extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property (as defined in § 168(k)(2)) acquired by the taxpayer after December 31, 2007, and before January 1, 2015, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2015. Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Accordingly, this revenue procedure updates Rev. Proc. 2014–21, 2014–11 I.R.B. 641, to provide tables for passenger automobiles placed in service during calendar year 2014 for which the § 168(k) additional first year depreciation deduction applies.

.03 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Under § 1.280F–7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased.

SECTION 3. SCOPE

.01 The limitations on depreciation deductions in section 4.01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2015, and continue to apply for each taxable year that the passenger automobile remains in service.

.02 The tables in section 4.02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2015. Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. See Rev. Proc. 2010–18, 2010–09 I.R.B. 427, as amplified and modified by section 4.03 of Rev. Proc. 2011–21, 2011–12 I.R.B. 560, for passenger automobiles first leased during calendar year 2010; Rev. Proc. 2011–21, for passenger automobiles first leased during calendar year 2011; Rev. Proc. 2012–23, 2012–14 I.R.B. 712, for passenger automobiles first leased during calendar year 2012; Rev. Proc. 2013–21, 2013–12 I.R.B. 660, for passenger automobiles first leased during calendar year 2013; and Rev. Proc. 2014–21, 2014–11 I.R.B. 641, as amplified and modified by section 4.03 of this revenue procedure, for passenger automobiles first leased during calendar year 2014.

SECTION 4. APPLICATION

.01 Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the inflation adjustment.

(a) Passenger automobiles (other than trucks or vans). Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. The new car component of the CPI was 115.2 for October 1987 and 144.131 for October 2014. The October 2014 index exceeded the October 1987 index by 28.931. Therefore, the automobile price inflation adjustment for 2015 for passenger automobiles (other than trucks and vans) is 25.1 percent (28.931/115.2 × 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.251, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2015. This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2015.

(b) Trucks and vans. To determine the dollar limitations for trucks and vans first placed in service during calendar year 2015, the Service uses the new truck component of the CPI instead of the new car component. The new truck component of the CPI was 112.4 for October 1987 and 153.902 for October 2014. The October 2014 index exceeded the October 1987 index by 41.502. Therefore, the automobile price inflation adjustment for 2015 for trucks and vans is 36.9 percent (41.502/112.4 × 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.369, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. This adjustment applies to all trucks and vans that are first placed in service in calendar year 2015.

(2) Amount of the limitation. Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2015. Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2015.

REV. PROC. 2015–19 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2015
Tax Year Amount
1st Tax Year $ 3,160
2nd Tax Year $ 5,100
3rd Tax Year $ 3,050
Each Succeeding Year $ 1,875
REV. PROC. 2015–19 TABLE 2
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2015
Tax Year Amount
1st Tax Year $ 3,460
2nd Tax Year $ 5,600
3rd Tax Year $ 3,350
Each Succeeding Year $ 1,975

.02 Inclusions in Income of Lessees of Passenger Automobiles.

A taxpayer must follow the procedures in § 1.280F–7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2015. In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 3 of this revenue procedure, while lessees of trucks and vans should use Table 4 of this revenue procedure.

REV. PROC. 2015–19 TABLE 3
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2015
Fair Market Value of Passenger Automobile Tax Year During Lease  
Over Not Over 1st 2nd 3rd 4th 5th & later
$17,500 $18,000 3 6 9 10 11
18,000 18,500 4 7 11 13 15
18,500 19,000 4 9 14 15 18
19,000 19,500 5 11 15 19 21
19,500 20,000 6 12 18 22 24
20,000 20,500 6 14 20 25 27
20,500 21,000 7 15 23 27 31
21,000 21,500 8 17 25 30 34
21,500 22,000 9 18 28 32 38
22,000 23,000 10 21 31 37 42
23,000 24,000 11 24 36 42 49
24,000 25,000 12 27 41 48 55
25,000 26,000 14 30 45 54 62
26,000 27,000 15 34 49 60 68
27,000 28,000 17 37 54 65 75
28,000 29,000 18 40 59 71 81
29,000 30,000 20 43 64 76 87
30,000 31,000 21 46 69 81 95
31,000 32,000 23 49 73 88 100
32,000 33,000 24 52 78 93 107
33,000 34,000 25 56 82 99 114
34,000 35,000 27 59 87 104 120
35,000 36,000 28 62 92 110 126
36,000 37,000 30 65 96 116 133
37,000 38,000 31 68 102 121 139
38,000 39,000 33 71 106 127 146
39,000 40,000 34 75 110 132 153
40,000 41,000 35 78 115 138 159
41,000 42,000 37 81 120 143 166
42,000 43,000 38 84 125 149 172
43,000 44,000 40 87 129 155 179
44,000 45,000 41 90 134 161 185
45,000 46,000 43 93 139 166 191
46,000 47,000 44 97 143 172 198
47,000 48,000 45 100 148 177 205
48,000 49,000 47 103 153 183 210
49,000 50,000 48 106 158 188 218
50,000 51,000 50 109 162 194 224
51,000 52,000 51 112 167 200 230
52,000 53,000 53 115 172 205 237
53,000 54,000 54 119 176 211 243
54,000 55,000 56 122 180 217 250
55,000 56,000 57 125 186 222 256
56,000 57,000 58 128 191 227 263
57,000 58,000 60 131 195 234 269
58,000 59,000 61 135 199 239 276
59,000 60,000 63 137 205 244 283
60,000 62,000 65 142 212 253 292
62,000 64,000 68 149 220 265 304
64,000 66,000 71 155 230 275 318
66,000 68,000 73 162 239 287 331
68,000 70,000 76 168 249 298 343
70,000 72,000 79 174 258 309 357
72,000 74,000 82 180 268 320 370
74,000 76,000 85 186 277 332 383
76,000 78,000 88 193 286 343 396
78,000 80,000 91 199 296 354 408
80,000 85,000 96 210 312 374 431
85,000 90,000 103 226 335 402 464
90,000 95,000 110 242 359 430 496
95,000 100,000 117 258 382 458 529
100,000 110,000 128 281 418 500 577
110,000 120,000 142 313 464 556 643
120,000 130,000 157 344 511 613 707
130,000 140,000 171 376 558 668 772
140,000 150,000 185 408 604 725 837
150,000 160,000 200 439 651 781 902
160,000 170,000 214 470 699 837 966
170,000 180,000 228 502 745 894 1,031
180,000 190,000 243 533 792 950 1,096
190,000 200,000 257 565 839 1,006 1,161
200,000 210,000 271 597 886 1,061 1,226
210,000 220,000 286 628 933 1,118 1,290
220,000 230,000 300 660 979 1,174 1,356
230,000 240,000 315 691 1,026 1,231 1,420
240,000 and over 329 723 1,073 1,286 1,485
REV. PROC. 2015–19 TABLE 4
DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2015
Fair Market Value of Truck or Van Tax Year During Lease  
Over Not Over 1st 2nd 3rd 4th 5th & later
$18,500 $19,000 2 4 6 8 9
19,000 19,500 3 6 8 11 12
19,500 20,000 4 7 11 13 16
20,000 20,500 4 9 13 16 19
20,500 21,000 5 11 15 19 22
21,000 21,500 6 12 18 22 25
21,500 22,000 6 14 20 25 28
22,000 23,000 7 16 24 29 33
23,000 24,000 9 19 29 34 40
24,000 25,000 10 23 33 40 46
25,000 26,000 12 25 38 46 53
26,000 27,000 13 29 42 51 60
27,000 28,000 15 32 47 57 65
28,000 29,000 16 35 52 62 73
29,000 30,000 18 38 56 68 79
30,000 31,000 19 41 61 74 85
31,000 32,000 20 45 66 79 91
32,000 33,000 22 48 70 85 98
33,000 34,000 23 51 75 91 104
34,000 35,000 25 54 80 96 111
35,000 36,000 26 57 85 101 118
36,000 37,000 28 60 89 108 124
37,000 38,000 29 63 94 113 131
38,000 39,000 30 67 98 119 137
39,000 40,000 32 70 103 124 144
40,000 41,000 33 73 108 130 150
41,000 42,000 35 76 113 135 157
42,000 43,000 36 79 118 141 163
43,000 44,000 38 82 122 147 169
44,000 45,000 39 85 127 153 176
45,000 46,000 40 89 131 158 183
46,000 47,000 42 92 136 163 189
47,000 48,000 43 95 141 169 195
48,000 49,000 45 98 145 175 202
49,000 50,000 46 101 151 180 208
50,000 51,000 48 104 155 186 215
51,000 52,000 49 108 159 192 221
52,000 53,000 51 110 165 197 228
53,000 54,000 52 114 169 203 234
54,000 55,000 53 117 174 208 241
55,000 56,000 55 120 178 214 248
56,000 57,000 56 123 183 220 254
57,000 58,000 58 126 188 225 261
58,000 59,000 59 130 192 231 267
59,000 60,000 61 133 197 236 273
60,000 62,000 63 137 204 245 283
62,000 64,000 66 144 213 256 296
64,000 66,000 68 150 223 268 308
66,000 68,000 71 157 232 278 322
68,000 70,000 74 163 241 290 335
70,000 72,000 77 169 251 301 348
72,000 74,000 80 175 261 312 361
74,000 76,000 83 182 269 324 374
76,000 78,000 86 188 279 335 386
78,000 80,000 89 194 288 346 400
80,000 85,000 94 205 305 366 422
85,000 90,000 101 221 328 394 455
90,000 95,000 108 237 351 422 488
95,000 100,000 115 253 375 450 519
100,000 110,000 126 276 410 492 569
110,000 120,000 140 308 457 548 633
120,000 130,000 155 339 504 604 698
130,000 140,000 169 371 551 660 763
140,000 150,000 183 403 597 717 827
150,000 160,000 198 434 644 773 893
160,000 170,000 212 466 691 829 957
170,000 180,000 226 497 738 885 1,023
180,000 190,000 241 528 785 942 1,087
190,000 200,000 255 560 832 997 1,152
200,000 210,000 269 592 878 1,054 1,217
210,000 220,000 284 623 925 1,110 1,282
220,000 230,000 298 655 972 1,166 1,346
230,000 240,000 312 687 1,019 1,222 1,411
240,000 and over 327 718 1,066 1,278 1,476

.03 Revised Amounts for Passenger Automobiles Placed in Service During 2014.

(1) Calculation of the Revised Amount. The revised depreciation limits provided in this section 4.03 were calculated by increasing the existing limitations on the first year allowance in Rev. Proc. 2014–21 by $8,000 as provided in § 168(k)(2)(F)(i).

(2) Amount of the Revised Limitation. For passenger automobiles (that are not trucks or vans) placed in service by the taxpayer in calendar year 2014 for which the § 168(k) additional first year depreciation deduction applies, Table 5 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. For trucks or vans placed in service by the taxpayer in calendar year 2014 for which the § 168(k) additional first year depreciation deduction applies, Table 6 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. If the § 168(k) additional first year depreciation deduction does not apply to a passenger automobile placed in service by the taxpayer in calendar year 2014, the depreciation limitations for each taxable year in Tables 1 and 2 of Rev. Proc. 2014–21 apply.

REV. PROC. 2015–19 TABLE 5
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2014 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES
Tax Year Amount
1st Tax Year $ 11,160
2nd Tax Year $ 5,100
3rd Tax Year $ 3,050
Each Succeeding Year $ 1,875

 

REV. PROC. 2015–19 TABLE 6
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2014 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES
Tax Year Amount
1st Tax Year $11,460
2nd Tax Year $ 5,500
3rd Tax Year $ 3,350
Each Succeeding Year $ 1,975

(3) Modification to lease inclusion amounts for 2014. The lease inclusion amounts in Tables 3 and 4 of Rev. Proc. 2014–21 are modified by striking the first line of the inclusion amounts in each table. Consequently, Table 3 of Rev. Proc. 2014–21 applies to passenger automobiles (other than trucks and vans) that are first leased by the taxpayer in calendar year 2014 with a fair market value over $19,000, and Table 4 of Rev. Proc. 2014–21 applies to trucks and vans that are first leased by the taxpayer in calendar year 2014 with a fair market value over $19,500.

SECTION 5. EFFECTIVE DATE

This revenue procedure, with the exception of section 4.03, applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2015. Section 4.03 of this revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2014.

SECTION 6. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2014–21 is amplified and modified.

SECTION 7. DRAFTING INFORMATION

The principal author of this revenue procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Harvey at (202) 317-7005 (not a toll-free number).

Part IV. Items of General Interest

Announcement 2015–6

Deletions From Cumulative List of Organizations, Contributions to Which are Deductible Under Section 170 of the Code

The Internal Revenue Service has revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and 170(c)(2) of the Internal Revenue Code of 1986.

Generally, the IRS 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 IRS is not precluded from disallowing a deduction for any contributions made after an organization ceases to qualify under section 170(c)(2) if the organization has not timely filed a suit for declaratory judgment under section 7428 and if the contributor (1) had knowledge of the revocation 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 omissions of the organization that brought about this revocation.

If on the other hand a suit for declaratory judgment has been timely filed, contributions from individuals and organizations described in section 170(c)(2) that are otherwise allowable will continue to be deductible. Protection under section 7428(c) would begin on February 23, 2015 and would end on the date the court first determines the organization is not described in section 170(c)(2) as more particularly set for in section 7428(c)(1). For individual contributors, the maximum deduction protected is $1,000, with a husband and wife treated as one contributor. This benefit is not extended to any individual, in whole or in part, for the acts or omissions of the organization that were the basis for revocation.

NAME OF ORGANIZATION Effective Date of Revocation LOCATION
ELC Foundation January 1, 2008 Honolulu, HI
Organization for Entrepreneurial Development January 1, 2009 Rockaway, NJ

Definition of Terms and Abbreviations

Definition of Terms

Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the 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.

Abbreviations

The following abbreviations in current use and formerly 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 Contributions 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.—Statement of Procedural 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.

Numerical Finding List

Numerical Finding List

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2014–27 through 2014–52 is in Internal Revenue Bulletin 2014–52, dated December 28, 2014.

Bulletin 2015–1 through 2015–8

Announcements:

Article Issue Link Page
2015-2 2015-3 I.R.B. 2015-3 324
2015-3 2015-3 I.R.B. 2015-3 328
2015-4 2015-5 I.R.B. 2015-5 565
2015-5 2015-7 I.R.B. 2015-7 602
2015-6 2015-8 I.R.B. 2015-8 xxx

 

Proposed Regulations:

Article Issue Link Page
REG-109187-11 2015-2 I.R.B. 2015-2 277
REG-132751-14 2015-2 I.R.B. 2015-2 279
REG-145878-14 2015-2 I.R.B. 2015-2 290
REG-153656-3 2015-5 I.R.B. 2015-5 566

 

 

Notices:

Article Issue Link Page
2015-1 2015-2 I.R.B. 2015-2 249
2015-2 2015-4 I.R.B. 2015-4 334
2015-3 2015-6 I.R.B. 2015-6 583
2015-4 2015-5 I.R.B. 2015-5 407
2015-5 2015-5 I.R.B. 2015-5 408
2015-6 2015-5 I.R.B. 2015-5 412
2015-7 2015-6 I.R.B. 2015-6 585
2015-8 2015-6 I.R.B. 2015-6 589
2015-9 2015-6 I.R.B. 2015-6 590
2015-11 2015-8 I.R.B. 2015-8 xxx
2015-12 2015-8 I.R.B. 2015-8 xxx

 

Revenue Procedures:

Article Issue Link Page
2015-1 2015-1 I.R.B. 2015-1 1
2015-2 2015-1 I.R.B. 2015-1 105
2015-3 2015-1 I.R.B. 2015-1 129
2015-4 2015-1 I.R.B. 2015-1 144
2015-5 2015-1 I.R.B. 2015-1 186
2015-6 2015-1 I.R.B. 2015-1 194
2015-7 2015-1 I.R.B. 2015-1 231
2015-8 2015-1 I.R.B. 2015-1 235
2015-9 2015-2 I.R.B. 2015-2 249
2015-10 2015-2 I.R.B. 2015-2 261
2015-12 2015-2 I.R.B. 2015-2 265
2015-13 2015-5 I.R.B. 2015-5 419
2015-14 2015-5 I.R.B. 2015-5 450
2015-15 2015-5 I.R.B. 2015-5 564
2015-16 2015-7 I.R.B. 2015-7 596
2015-17 2015-7 I.R.B. 2015-7 599
2015-18 2015-8 I.R.B. 2015-8 xxx
2015-19 2015-8 I.R.B. 2015-8 xxx

 

Revenue Rulings:

Article Issue Link Page
2015-1 2015-4 I.R.B. 2015-4 331
2015-2 2015-3 I.R.B. 2015-3 321
2015-3 2015-6 I.R.B. 2015-6 580

 

Treasury Decisions:

Article Issue Link Page
9707 2015-2 I.R.B. 2015-2 247
9708 2015-5 I.R.B. 2015-5 337
9709 2015-7 I.R.B. 2015-7 593
9710 2015-8 I.R.B. 2015-8 xxx

 

Effect of Current Actions on Previously Published Items

Finding List of Current Actions on Previously Published Items

A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2014–27 through 2014–52 is in Internal Revenue Bulletin 2014–52, dated December 28, 2014.

Bulletin 2015–1 through 2015–8

Announcements:

Old Article Action New Article Issue Link Page
2010-3 Amplified by Ann. 2015-3 2015-3 I.R.B. 2015-3 328

 

Revenue Procedures:

Old Article Action New Article Issue Link Page
2014-01 Superseded by Rev. Proc. 2015-01 2015-01 I.R.B. 2015-1 1
2014-02 Superseded by Rev. Proc. 2015-02 2015-01 I.R.B. 2015-1 105
2014-03 Superseded by Rev. Proc. 2015-03 2015-01 I.R.B. 2015-1 129
2014-04 Superseded by Rev. Proc. 2015-04 2015-01 I.R.B. 2015-1 144
2014-05 Superseded by Rev. Proc. 2015-05 2015-01 I.R.B. 2015-1 186
2014-06 Superseded by Rev. Proc. 2015-06 2015-01 I.R.B. 2015-1 194
2014-07 Superseded by Rev. Proc. 2015-07 2015-01 I.R.B. 2015-1 231
2014-08 Superseded by Rev. Proc. 2015-08 2015-01 I.R.B. 2015-1 235
2014-10 Superseded by Rev. Proc. 2015-10 2015-2 I.R.B. 2015-2 261
2003-63 Superseded by Rev. Proc. 2015-12 2015-2 I.R.B. 2015-2 265
2011-14 Modified by Rev. Proc. 2015-12 2015-2 I.R.B. 2015-2 265
2011-14 Modified by Rev. Proc. 2015-13 2015-5 I.R.B. 2015-5 419
2011-14 Amplified by Rev. Proc. 2015-13 2015-5 I.R.B. 2015-5 419
2011-14 Clarified by Rev. Proc. 2015-13 2015-5 I.R.B. 2015-5 419
1997-27 Clarified by Rev. Proc. 2015-13 2015-5 I.R.B. 2015-5 419
1997-27 Modified by Rev. Proc. 2015-13 2015-5 I.R.B. 2015-5 419
2012-11 Superseded by Rev. Proc. 2015-17 2015-7 I.R.B. 2015-7 599
2015-9 Modified by Rev. Proc. 2015-17 2015-7 I.R.B. 2015-7 599

 

 

Revenue Rulings:

Old Article Action New Article Issue Link Page
92-19 Supplemented by Rev. Rul. 2015-02 2015-3 I.R.B. 2015-3 321

 

INTERNAL REVENUE BULLETIN

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/.

We Welcome Comments About the Internal Revenue Bulletin

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