bulletin - internal revenue service

INCOME TAX

Rev. Rul. 97–43, page 00.LIFO; price indexes; department stores. The August1997 Bureau of Labor Statistics price indexes are acceptedfor use by department stores employing the retail inventoryand last-in, first-out inventory methods for valuing inventoriesfor tax years ended on, or with reference to, August 31,1997.

T.D. 8731, page 00.Final and temporary regulations under section 42 of theCode relate to the application of the low-income housing taxcredit to certain federal rental assistance programs.

T.D. 8732, page 00.Final regulations under section 42 of the Code provide rulesfor determining the treatment of low-income housing units.

EXEMPT ORGANIZATIONS

REG–246250–96, page 00.This proposed regulation relates to the public disclosurerequirements of section 6104(e) of the Code. A public hear-ing will be held on February 4, 1998.

Announcement 97–104, page 00.A list is provided of organizations now classified as privatefoundations.

Announcement 97–105, page 00.A list is provided of organizations that no longer qualify asorganizations for which contributions are deductible undersection 170 of the Code.

EXCISE TAXRev. Proc. 97–46, page 00.Rural airports. This procedure contains a list of “rural air-ports,” as defined in section 4261(e)(1)(B) of the Code, forpurposes of computing the tax on air transportation. Theprocedure also provides guidance on how to calculate thetax where at least one segment of multiple segment domes-tic transportation does not begin or end at a rural airport.

ADMINISTRATIVERev. Proc. 97–47, page 00.This procedure sets forth the requirements of the Form 941Electronic Filing (ELF) Program under which a taxpayer thatis a Reporting Agent may electronically file Form 941,Employer’s Quarterly Federal Tax Return.

Internal Revenue

bulletinBulletin No. 1997–42

October 20, 1997

HIGHLIGHTSOF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

Department of the Tr e a s u r yInternal Revenue Service

Finding Lists begin on page 00.Announcement of Disbarments and Suspensions begins on page 00.

Mission of the Service

The purpose of the Internal Revenue Service is to collectthe proper amount of tax revenue at the least cost; serv ethe public by continually improving the quality of our prod-

ucts and services; and perf o rm in a manner warr a n t i n gthe highest degree of public confidence in our integrity, eff i-c i e n c y, and fairn e s s .

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Statement of Principlesof Internal RevenueTax AdministrationThe function of the Internal Revenue Service is to adm i n i s-ter the Internal Revenue Code. Tax policy for raising re v e n u eis determined by Congre s s .

With this in mind, it is the duty of the Service to carry out thatpolicy by correctly applying the laws enacted by Congress;to determine the reasonable meaning of various Code provi-sions in light of the Congressional purpose in enacting them;and to perform this work in a fair and impartial manner, withneither a government nor a taxpayer point of view.

At the heart of administration is interpretation of the Code. Itis the responsibility of each person in the Service, chargedwith the duty of interpreting the law, to try to find the truemeaning of the statutory provision and not to adopt astrained construction in the belief that he or she is “protect-ing the revenue.” The revenue is properly protected onlywhen we ascertain and apply the true meaning of the statute.

The Service also has the responsibility of applying andadministering the law in a reasonable, practical manner.Issues should only be raised by examining officers whenthey have merit, never arbitrarily or for trading purposes.At the same time, the examining officer should never hesi-tate to raise a meritorious issue. It is also important thatc a re be exercised not to raise an issue or to ask a court toadopt a position inconsistent with an established Serv i c ep o s i t i o n .

Administration should be both reasonable and vigorous. Itshould be conducted with as little delay as possible andwith great courtesy and considerateness. It should nevert ry to overreach, and should be reasonable within thebounds of law and sound administration. It should, howev-e r, be vigorous in requiring compliance with law and itshould be relentless in its attack on unreal tax devices andf r a u d .

The Internal Revenue Bulletin is the authoritative instrumentof the Commissioner of Internal Revenue for announcing offi-cial rulings and procedures of the Internal Revenue Serviceand for publishing Treasury Decisions, Executive Orders, TaxConventions, legislation, court decisions, and other items ofgeneral interest. It is published weekly and may be obtainedf rom the Superintendent of Documents on a subscriptionbasis. Bulletin contents of a permanent nature are consoli-dated semiannually into Cumulative Bulletins, which are soldon a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform applicationof the tax laws, including all rulings that supersede, revoke,modify, or amend any of those previously published in theBulletin. All published rulings apply retroactively unless other-wise indicated. Procedures relating solely to matters of in-ternal management are not published; however, statementsof internal practices and pro c e d u res that affect the rightsand duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service onthe application of the law to the pivotal facts stated in therevenue ruling. In those based on positions taken in rulingsto taxpayers or technical advice to Service field off i c e s ,identifying details and information of a confidential natureare deleted to prevent unwarranted invasions of privacy andto comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not havethe force and effect of Tre a s u ry Department Regulations,but they may be used as precedents. Unpublished ru l i n g swill not be relied on, used, or cited as precedents by Servicepersonnel in the disposition of other cases. In applying pub-lished rulings and procedures, the effect of subsequent leg-islation, regulations, court decisions, rulings, and pro c e-

dures must be considered, and Service personnel and oth-ers concerned are cautioned against reaching the same con-clusions in other cases unless the facts and circumstancesare substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.This part includes rulings and decisions based on provisionsof the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A,Tax Conventions, and Subpart B, Legislation and RelatedCommittee Reports.

P a rt III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross re f e rences tothese subjects are contained in the other Parts and Sub-parts. Also included in this part are Bank Secrecy Act Admin-istrative Rulings. Bank Secrecy Act Administrative Rulingsare issued by the Department of the Treasury’s Office of theAssistant Secretary (Enforcement).

Part IV.—Items of General Interest.With the exception of the Notice of Proposed Rulemakingand the disbarment and suspension list included in this part,none of these announcements are consolidated in the Cumu-lative Bulletins.

The first Bulletin for each month includes a cumulative indexfor the matters published during the preceding months.These monthly indexes are cumulated on a quarterly andsemiannual basis, and are published in the first Bulletin of thesucceeding quarterly and semiannual period, re s p e c t i v e l y.

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Introduction

The contents of this publication are not copyrighted and may be reprinted freely.Acitation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

October 20, 1997 4 1997–42 I.R.B.

Section 42.—Low-IncomeHousing Credit

26 CFR 1.42–15: Available unit rule.

T.D. 8732

D E PA RTMENT OF THE TREASURYInternal Revenue Service26 CFR Part 1

Available Unit Rule

A G E N C Y: Internal Revenue Service(IRS), Treasury.

ACTION: Final regulations.

S U M M A RY: This document containsfinal regulations concerning the treatmentof low-income housing units in a buildingthat are occupied by individuals whose in-comes increase above 140 percent of theincome limitation applicable under sec-tion 42(g)(1). These regulations aff e c towners of those buildings who claim thelow-income housing tax credit.

D ATES: These regulations are eff e c t i v eSeptember 26, 1997.

For dates of applicability of these regu-lations, see §1.42–15(i).

FOR FURTHER INFORMATION CON-TACT: David Selig, (202) 622-3040 (nota toll-free number).

SUPPLEMENTARYINFORMATION:

Background

On May 30, 1996, the IRS published anotice of proposed rulemaking in the Fed-eral Register (PS–29–95 at 61 FR 27036[1997–1 C.B. 862]) proposing amend-ments to the Income Tax Regulations (26CFR part 1) under section 42(g)(2)(D) ofthe Internal Revenue Code. A p u b l i chearing was scheduled for September 17,1996, pursuant to a notice of public hear-ing published simultaneously with the no-tice of proposed rulemaking. However,the IRS received no requests to speak atthe public hearing, and no public hearingwas held. Written comments respondingto the notice were received. After consid-eration of all the comments, the proposedregulations are adopted as revised by thisTreasury decision.

Explanation of Revisions and Summaryof Comments

The general rule in section 42(g)(2)-(D)(i) provides that if the income of anoccupant of a low-income unit increasesabove the income limitation applicableunder section 42(g)(1), the unit continuesto be treated as a low-income unit. Thisgeneral rule only applies if the occupant’sincome initially met the income limitationand the unit continues to be rent-re-stricted. Section 42(g)(2)(D)(ii), how-ever, provides an exception to the generalrule in section 42(g)(2)(D)(i). Under thisexception, the unit ceases being treated asa low-income unit when two conditionsoccur. The first condition is that the occu-p a n t ’s income increases above 140 per-cent of the income limitation applicableunder section 42(g)(1), or above 170 per-cent for a deep rent skewed project de-scribed in section 142(d)(4)(B) (applica-ble income limitation). When this occurs,the unit becomes an over-income unit.The second condition is that a new occu-pant, whose income exceeds the applica-ble income limitation (nonqualified resi-dent), occupies any residential unit in thebuilding of a comparable or smaller size(comparable unit).

Rules and Definitions

One commentator suggested that theavailable unit rule under the proposedregulations did not clearly indicatewhether the aggregate income of all occu-pants of a unit is taken into account. Ac-cordingly, the final regulations clarify thatan over-income unit means a low-incomeunit in which the aggregate income of theoccupants of the unit increases above 140percent of the applicable income limita-tion under section 42(g)(1), or above 170percent of the applicable income limita-tion for deep rent skewed projects de-scribed in section 142(d)(4)(B).

Commentators requested that the finalregulations specify whether a comparableunit is measured by floor space or numberof bedrooms. The final regulations pro-vide that a comparable unit must be mea-sured by the same method the taxpayerused to determine qualified basis for thecredit year in which the comparable unitbecame available.

Some commentators stated that the pro-vision in the proposed regulations that allavailable comparable units (not just the“next available” unit) must be rented toqualified residents to continue treating anover-income unit as a low-income unit isinconsistent with the title of section42(g)(2)(D)(ii). Although the title of thatprovision uses the term next availableunit, the text of the rule provides that ifany available comparable unit is occupiedby a nonqualified resident, the over- i n-come unit ceases to be treated as a low-in-come unit. This means that if a buildinghas more than one over-income unit, rent-ing any available comparable unit (a com-parably sized or smaller unit) to a quali-fied resident preserves the status of allo v e r-income units as low-income units.S i m i l a r l y, if any available comparableunit is rented to a nonqualified resident,all over-income units for which the avail-able unit was a comparable unit lose theirstatus as low-income units; thus, compa-rably sized or larger over-income unitswould lose their status as low-incomeunits. In operation, this means that theowner must continue to rent any availablecomparable unit to a qualified residentuntil the percentage of low-income unitsin a building (excluding the over-incomeunits) is equal to the percentage of low-in-come units on which the credit is based.At that point, failure to maintain the over-income units as low-income units has noimmediate significance. (However, thefailure to maintain an over-income unit asa low-income unit may affect the owner’sdecision of whether or not to rent a partic-ular available unit at market rate at a latertime.) Consequently, the final regulationsprovide that all available comparableunits in the building, not only the nextavailable comparable unit, must be rentedto qualified residents to retain the low-in-come status of the over-income units.

Application of Rules on a Building byBuilding Basis

The proposed regulations provide thatin a project containing more than onelow-income building, the available unitrule applies separately to each building.Some commentators suggested that theregulations should permit residents ofo v e r-income units to move to available

P a rt I. Rulings and Decisions Under the Internal Revenue Code of 1986

units in different buildings within thesame low-income housing project withoutviolating the available unit rule. How-ever, because the requirements under sec-tion 42 must be satisfied on a building bybuilding basis, the final regulations pro-vide that the available unit rule only per-mits a current resident to move to anotherunit within the same building of a low-in-come housing project.

In addition, in response to requestsfrom several commentators, the final reg-ulations make clear that when a currentresident moves to a different unit withinthe same low-income building, the unitsexchange status. (See example 2 of§1.42–15(g) of the proposed regulationsand §1.42–15(h) of the final regulations.)Thus, the newly occupied unit adopts thestatus of the vacated unit, and the vacatedunit assumes the status the newly occu-pied unit had immediately prior to its oc-cupancy by the qualifying residents.

Timing Issues

The methods of committing rental unitsto tenants varies in different jurisdictions.H o w e v e r, it is a common rental practiceto have some form of preliminary reserva-tion for a unit prior to the date on which alease is signed or the unit is occupied.Thus, several commentators have re-quested clarification that once a unit is re-served for a prospective tenant, it is nolonger treated as available for purposes ofthe available unit rule. A c c o r d i n g l y, thefinal regulations provide that a unit is notavailable for purposes of the availableunit rule when the unit is no longer avail-able for rent due to a reservation that isbinding under local law.

F i n a l l y, financing arrangements usingobligations that purport to be exempt fa-cility bonds under section 142 must meetthe requirements of sections 103 and 141through 150 for interest on the obligationsto be excluded from gross income undersection 103(a). The requirements undersection 142(d) may differ from thoseunder section 42. A c c o r d i n g l y, the finalregulations provide that the rules underthe final regulations are not intended as aninterpretation of the applicable rulesunder section 142.

Special Analyses

It has been determined that this Tr e a-sury decision is not a significant regula-

tory action as defined in EO 12866.Therefore, a regulatory assessment is notrequired. It also has been determined thatsection 553(b) of the Administrative Pro-cedure Act (5 U.S.C. chapter 5) does notapply to these regulations, and, becausethese regulations do not impose on smallentities a collection of information re-quirement, the Regulatory Flexibility Act(5 U.S.C. chapter 6) does not apply.Therefore, a Regulatory FlexibilityAnalysis is not required. Pursuant to sec-tion 7805(f) of the Internal RevenueCode, the notice of proposed rulemakingpreceding these regulations was submit-ted to the Chief Counsel for Advocacy ofthe Small Business Administration forcomment on its impact on small business.

Drafting Information

The principal author of these regulationsis David Selig, Office of the A s s i s t a n tChief Counsel (Passthroughs and SpecialIndustries), IRS. However, other person-nel from the IRS and Treasury Departmentparticipated in their development.

* * * * *

Adoption of Amendments to theRegulations

Accordingly, 26 CFR part 1 is amendedas follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 is amended by adding an entry innumerical order to read as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.42-15 is also issued under 26U.S.C. 42(n); * * *

Par. 2. Section 1.42-15 is added to readas follows:

§1.42–15 Available unit rule.

(a) D e f i n i t i o n s . The following defini-tions apply to this section:

Applicable income limitation means thelimitation applicable under section42(g)(1) or, for deep rent skewed projectsdescribed in section 142(d)(4)(B), 40 per-cent of area median gross income.

Available unit ru l e means the rule insection 42(g)(2)(D)(ii).

Comparable unit means a residentialunit in a low-income building that is com-parably sized or smaller than an over-in-

come unit or, for deep rent skewed pro-jects described in section 142(d)(4)(B),any low-income unit. For purposes of de-termining whether a residential unit iscomparably sized, a comparable unit mustbe measured by the same method used todetermine qualified basis for the credityear in which the comparable unit becameavailable.

Current resident means a person who isliving in the low-income building.

Low-income unit is defined by section42(i)(3)(A).

Nonqualified resident means a new oc-cupant or occupants whose aggregate in-come exceeds the applicable income limi-tation.

Over-income unit means a low-incomeunit in which the aggregate income of theoccupants of the unit increases above 140percent of the applicable income limita-tion under section 42(g)(1), or above 170percent of the applicable income limita-tion for deep rent skewed projects de-scribed in section 142(d)(4)(B).

Qualified re s i d e n t means an occupanteither whose aggregate income (com-bined with the income of all other occu-pants of the unit) does not exceed the ap-plicable income limitation and who isotherwise a low-income resident undersection 42, or who is a current resident.

(b) General section 42(g)(2)(D)(i) rule.Except as provided in paragraph (c) ofthis section, notwithstanding an increasein the income of the occupants of a low-income unit above the applicable incomelimitation, if the income of the occupantsinitially met the applicable income limita-tion, and the unit continues to be rent-restricted—

(1) The unit continues to be treated as alow-income unit; and

(2) The unit continues to be included inthe numerator and the denominator of theratio used to determine whether a projectsatisfies the applicable minimum set-aside requirement of section 42(g)(1).

(c) E x c e p t i o n . A unit ceases to betreated as a low-income unit if it becomesan over-income unit and a nonqualifiedresident occupies any comparable unitthat is available or that subsequently be-comes available in the same low-incomebuilding. In other words, the owner of alow-income building must rent to quali-fied residents all comparable units that areavailable or that subsequently become

1997–42 I.R.B. 5 October 20, 1997

available in the same building to continuetreating the over-income unit as a low-in-come unit. Once the percentage of low-income units in a building (excluding theover-income units) equals the percentageof low-income units on which the credit isbased, failure to maintain the over-incomeunits as low-income units has no immedi-ate significance. The failure to maintainthe over-income units as low-incomeunits, however, may affect the decision ofwhether or not to rent a particular avail-able unit at market rate at a later time. Aunit is not available for purposes of theavailable unit rule when the unit is nolonger available for rent due to contrac-tual arrangements that are binding underlocal law (for example, a unit is not avail-able if it is subject to a preliminary reser-vation that is binding on the owner underlocal law prior to the date a lease is signedor the unit is occupied).

(d) Effect of current resident movingwithin building. When a current residentmoves to a different unit within the build-ing, the newly occupied unit adopts thestatus of the vacated unit. Thus, if a cur-rent resident, whose income exceeds theapplicable income limitation, moves froman over-income unit to a vacant unit in thesame building, the newly occupied unit istreated as an over-income unit. The va-cated unit assumes the status the newlyoccupied unit had immediately before itwas occupied by the current resident.

(e) Available unit rule applies sepa -rately to each building in a project. In aproject containing more than one low-in-come building, the available unit rule ap-plies separately to each building.

(f) Result of noncompliance with avail -able unit rule. If any comparable unit thatis available or that subsequently becomesavailable is rented to a nonqualified resi-dent, all over-income units for which theavailable unit was a comparable unitwithin the same building lose their statusas low-income units; thus, comparablysized or larger over-income units wouldlose their status as low-income units.

(g) Relationship to tax-exempt bondp ro v i s i o n s . Financing arrangements thatpurport to be exempt-facility bonds undersection 142 must meet the requirementsof sections 103 and 141 through 150 forinterest on the obligations to be excludedfrom gross income under section 103(a).This section is not intended as an interpre-tation under section 142.

(h) Examples. The following examplesillustrate this section:

Example 1. This example illustrates noncompli-ance with the available unit rule in a low-incomebuilding containing three over-income units. OnJanuary 1, 1998, a qualified low-income housingproject, consisting of one building containing tenidentically sized residential units, received a hous-ing credit dollar amount allocation from a statehousing credit agency for five low-income units.By the close of 1998, the first year of the credit pe-riod, the project satisfied the minimum set-aside re-quirement of section 42(g)(1)(B). Units 1, 2, 3, 4,and 5 were occupied by individuals whose incomesdid not exceed the income limitation applicableunder section 42(g)(1) and were otherwise low-in-come residents under section 42. Units 6, 7, 8, and9 were occupied by market-rate tenants. Unit 10was vacant. To avoid recapture of credit, the pro-ject owner must maintain five of the units as low-in-come units. On November 1, 1999, the certificatesof annual income state that annual incomes of theindividuals in Units 1, 2, and 3 increased above 140percent of the income limitation applicable undersection 42(g)(1), causing those units to becomeo v e r-income units. On November 30, 1999, Units 8and 9 became vacant. On December 1, 1999, theproject owner rented Units 8 and 9 to qualified resi-dents who were not current residents at rates meet-ing the rent restriction requirements of section42(g)(2). On December 31, 1999, the project ownerrented Unit 10 to a market-rate tenant. BecauseUnit 10, an available comparable unit, was leased toa market-rate tenant, Units 1, 2, and 3 ceased to betreated as low-income units. On that date, Units 4,5, 8, and 9 were the only remaining low-incomeunits. Because the project owner did not maintainfive of the residential units as low-income units, thequalified basis in the building is reduced, and creditmust be recaptured. If the project owner had rentedUnit 10 to a qualified resident who was not a cur-rent resident, eight of the units would be low-in-come units. At that time, Units 1, 2, and 3, the over-income units, could be rented to market-rate tenantsbecause the building would still contain five low-in-come units.

Example 2. This example illustrates the provi-sions of paragraph (d) of this section. A l o w - i n-come project consists of one six-floor building.The residential units in the building are identicallysized. The building contains two over-income unitson the sixth floor and two vacant units on the firstf l o o r. The project owner, desiring to maintain theo v e r-income units as low-income units, wants torent the available units to qualified residents. J, aresident of one of the over-income units, wishes tooccupy a unit on the first floor. J’s income has re-cently increased above the applicable income limi-tation. The project owner permits J to move intoone of the units on the first floor. Despite J’s in-come exceeding the applicable income limitation, Jis a qualified resident under the available unit rulebecause J is a current resident of the building. T h eunit newly occupied by J becomes an over- i n c o m eunit under the available unit rule. The unit vacatedby J assumes the status the newly occupied unit hadimmediately before J occupied the unit. The over-income units in the building continue to be treatedas low-income units.

(i) Effective date. This section appliesto leases entered into or renewed on andafter September 26, 1997.

Michael P. Dolan,Acting Commissioner of

Internal Revenue.

Approved August 28, 1997.

Donald C. Lubick,Acting Assistant Secretary of

the Treasury.

(Filed by the Office of the Federal Register on Sep-tember 25, 1997, 8:45 a.m., and published in theissue of the Federal Register for September 26,1997, 62 F.R. 50503)

26 CFR 1.42–16: Eligible basis reduced by federalgrants.

T.D. 8731

D E PA RTMENT OF THE TREASURYInternal Revenue Service26 CFR Part 1

Section 42(d)(5) Federal Grants


ACTION: Final and temporary regula-tions.

S U M M A RY: This document containsfinal regulations with respect to the low-income housing tax credit relating to theapplication of section 42(d)(5) to certainrental assistance programs under section42(g)(2)(B)(i). The regulations clarifythat certain types of federal rental assis-tance payments do not result in a reduc-tion in the eligible basis of a low-incomehousing building. DATES: These regula-tions are effective September 26, 1997.

For date of applicability for these regu-lations, see §1.42–16(d).

FOR FURTHER INFORMATION CON-TACT: Christopher J. Wilson, (202) 622-3040 (not a toll-free call).


Background

Temporary regulations (TD 8713[1997–14 I.R.B. 4]) and a notice of pro-posed rulemaking cross-referencing the

October 20, 1997 6 1997–42 I.R.B.

temporary regulations were published inthe Federal Register for January 27,1997 (62 FR 3792, 3848 [REG–254394–96 I.R.B. 14]). Those regulations providethat certain federal rental assistance pay-ments made to the owner of a building onbehalf of low-income tenants are not fed-eral grants with respect to a building or itsoperation that require a reduction in theb u i l d i n g ’s eligible basis under section42(d)(5) of the Internal Revenue Code(Code). These payments include rentalassistance payments made under section 8of the United States Housing Act of 1937(Act) (42 U.S.C. 1437f), certain paymentsmade under section 9 of the Act, and pay-ments made under such other programs ormethods of rental assistance as may bedesignated in the Federal Register or theInternal Revenue Bulletin. The notice ofproposed rulemaking indicated that com-ments would be considered on those areasaddressed in the temporary regulations.Written comments responding to the no-tice of proposed rulemaking were re-ceived. There was no request for a publichearing, and no public hearing was held.After consideration of all the written com-ments, the proposed regulations havebeen adopted, without change, by thisTreasury decision.

Summary of Comments

One commenter suggested that the finalregulations provide additional guidancefor state agencies to use in determiningwhether similar programs beyond thosedescribed in the regulations should beconsidered grants that cause a reductionin a building’s eligible basis under section42(d)(5) of the Code. The final regula-tions do not adopt this suggestion. T h escope of this regulation is limited to spec-ified rental assistance payments that arenot grants requiring a reduction in a build-i n g ’s eligible basis and any additionalpayments the Secretary may designate inthe future.

Another commenter suggested that§1.42–16(c)(3) should be deleted if it isintended to impose conditions beyond therestrictions under section 9 of the Act, be-cause the IRS is improperly infringingupon the Department of Housing andUrban Development’s (HUD) authority toprovide subsidies under section 9. T h efinal regulations do not adopt this sugges-tion. Section 1.42–16 does not interpret

H U D ’s authority for paying subsidiesunder section 9; it describes the extent towhich section 9 payments may be madewithout a reduction in a building’s eligiblebasis under section 42(d)(5) of the Code.The conditions imposed on section 9 pay-ments in §1.42–16(c)(3) serve to diff e r e n-tiate section 9 assistance for operating ex-penses that function in a manner similar torental assistance payments under section 8of the Act from section 9 assistance that isapplied to uses more closely associatedwith operational expenses requiring a re-duction in a building’s eligible basis undersection 42(d)(5).

This commenter also suggested that if§1.42–16(c)(3) were to be retained, itshould be clarified to provide that actualoperating costs be determined by HUDand/or the appropriate public housinga g e n c y. The commenter reasons thatHUD is already making this determinationin the context of deciding the properamount of assistance to make under sec-tion 9 of the Act, and that precedent al-ready exists for allowing HUD to makecertain interpretations relating to the sec-tion 42 program. The final regulations donot adopt this suggestion. The IRS andTreasury believe they should retain theability to determine what costs are appro-priately characterized as operating coststhat require a reduction in a building’s eli-gible basis under section 42(d)(5) of theC o d e .

Special Analyses

It has been determined that this Tr e a-sury decision is not a significant regula-tory action as defined in EO 12866.Therefore, a regulatory assessment is notrequired. It also has been determined thatsection 553(b) of the Administrative Pro-cedure Act (5 U.S.C. chapter 5) does notapply to these regulations and, becausethese regulations do not impose on smallentities a collection of information re-quirement, the Regulatory Flexibility Act(5 U.S.C. chapter 6) does not apply.Therefore, a Regulatory FlexibilityAnalysis is not required. Pursuant to sec-tion 7805(f) of the Internal RevenueCode, the notice of proposed rulemakingpreceding these regulations was submit-ted to the Chief Counsel for Advocacy ofthe Small Business Administration forcomment on its impact on small business.


The principal author of these regulationsis Christopher J. Wilson, Office of A s s i s t-ant Chief Counsel (Passthroughs and Spe-cial Industries). However, other personnelfrom the IRS and Treasury Departmentparticipated in their development.

* * * * *

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amendedas follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 is amended by removing the entryfor §1.42–16T and adding an entry in nu-merical order to read as follows:

Authority: 26 U.S.C. 7805 * * *Section 1.42–16 also issued under 26U.S.C. 42(n); * * *

P a r. 2. Section 1.42–16 is added toread as follows:

§1.42–16 Eligible basis reduced by federal grants.

(a) In general. If, during any taxableyear of the compliance period (describedin section 42(i)(1)), a grant is made withrespect to any building or the operationthereof and any portion of the grant isfunded with federal funds (whether or notincludible in gross income), the eligiblebasis of the building for the taxable yearand all succeeding taxable years is re-duced by the portion of the grant that is sofunded.

(b) Grants do not include certain rentalassistance payments. A federal rental as-sistance payment made to a buildingowner on behalf or in respect of a tenantis not a grant made with respect to abuilding or its operation if the payment ismade pursuant to—

(1) Section 8 of the United StatesHousing Act of 1937;

(2) A qualifying program of rental as-sistance administered under section 9 ofthe United States Housing Act of 1937; or

(3) A program or method of rental as-sistance as the Secretary may designateby publication in the Federal Register orin the Internal Revenue Bulletin (see§601.601(d)(2) of this chapter).

(c) Qualifying rental assistance pro -

1997–42 I.R.B. 7 October 20, 1997

g r a m . For purposes of paragraph (b)(2)of this section, payments are made pur-suant to a qualifying rental assistance pro-gram administered under section 9 of theUnited States Housing Act of 1937 to theextent that the payments—

(1) Are made to a building owner pur-suant to a contract with a public housingauthority with respect to units the ownerhas agreed to maintain as public housingunits (PH-units) in the building;

(2) Are made with respect to units oc-cupied by public housing tenants, pro-vided that, for this purpose, units may beconsidered occupied during periods ofshort term vacancy (not to exceed 60days); and

(3) Do not exceed the difference be-tween the rents received from a building’sPH-unit tenants and a pro rata portion ofthe building’s actual operating costs thatare reasonably allocable to the PH-units(based on square footage, number of bed-rooms, or similar objective criteria), andprovided that, for this purpose, operatingcosts do not include any developmentcosts of a building (including developer’sfees) or the principal or interest of anydebt incurred with respect to any part of

the building. (d) Effective date. This section is effec-

tive September 26, 1997.

§1.42–16T [Removed]

Par. 3. Section 1.42–16T is removed.


Internal Revenue.

Approved August 26, 1997.

Donald C. Lubick,Acting Assistant Secretary of

the Treasury.


Section 472.—Last-in, First-outInventories 26 CFR 1.472-1: Last-in, first-out inventories.

LIFO; price indexes; depart m e n tstores. The August 1997 Bureau of LaborStatistics price indexes are accepted foruse by department stores employing the

retail inventory and last-in, first-out in-ventory methods for valuing inventoriesfor tax years ended on, or with referenceto, August 31, 1997.

Rev. Rul. 97–43

The following Department Store Inven-tory Price Indexes for August 1997 wereissued by the Bureau of Labor Statisticson September 16, 1997. The indexes areaccepted by the Internal Revenue Service,under § 1.472-1(k) of the Income Ta xRegulations and Rev. Proc. 86-46, 1986-2C.B. 739, for appropriate application toinventories of department stores employ-ing the retail inventory and last-in, first-out inventory methods for tax years endedon, or with reference to, August 31, 1997.

The Department Store InventoryPrice Indexes are prepared on a nationalbasis and include (a) 23 major groups ofdepartments, (b) three special combina-tions of the major groups - soft goods,durable goods, and miscellaneous goods,and (c) a store total, which covers all de-partments, including some not listed sepa-r a t e l y, except for the following: candy,foods, liquor, tobacco, and contract de-partments.

October 20, 1997 8 1997–42 I.R.B.

BUREAU OF LABOR STATISTICS, DEPARTMENT STOREINVENTORYPRICE INDEXES BY DEPARTMENT GROUPS

(January 1941 = 100, unless otherwise noted)

Percent ChangeGroups Aug. Aug. from Aug. 1996

1996 1997 to Aug. 19971

1. Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .524.3 509.3 –2.92. Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .642.6 652.8 1.63. Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . .640.3 644.1 0.64. Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .895.9 895.6 0.05. Infants’Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .610.3 621.2 1.86. Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .525.8 548.8 4.47. Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .287.5 301.6 4.98. Women’s and Girls’Accessories . . . . . . . . . . . . . . . . . . . . . . . .546.2 539.7 –1.29. Women’s Outerwear and Girls’Wear . . . . . . . . . . . . . . . . . . . . .381.2 397.4 4.2

10. Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .611.7 621.2 1.611. Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .567.9 584.8 3.012. Boys’Clothing and Furnishings . . . . . . . . . . . . . . . . . . . . . . . . .485.4 492.2 1.413. Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1023.8 1008.6 –1.514. Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .770.0 793.8 3.115. Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .885.1 904.7 2.216. Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .669.2 661.0 –1.217. Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .588.7 598.8 1.718. Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .810.6 806.1 –0.619. Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244.8 242.8 –0.820. Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78.8 75.4 –4.3

DRAFTING INFORMATION

The principal author of this revenueruling is Stan Michaels of the Office ofAssistant Chief Counsel (Income Tax andAccounting). For further information re-garding this revenue ruling, contact Mr.Michaels on (202) 622-4970 (not a toll-free call).

Section 3504.—Acts To BePerformed by Agents26 CFR 31.3504–1: Acts to be performed by agents.

Requirements of the Form 941 Electronic Filing(ELF) Program are provided. See Rev. Proc. 97–47,page 00.

Section 4261.—Imposition ofTax

26 CFR 49.4261–1: Imposition of Tax; in general.

This revenue procedure provides a list of “ruralairports” as that term is defined in § 4261(e)(1)(B)of the Internal Revenue Code, for purposes of com-puting the tax on air transportation. The revenueprocedure also provides guidance on how to calcu-late the tax where at least one segment of multiplesegment domestic transportation does not begin orend at a rural airport. See Rev. Proc. 97–46, page 00.

Section 6011.—GeneralRequirements of Return,Statement, or List26 CFR 31.6011(a)–7: Execution of returns.


Section 6061.—Signing ofReturns and Other Documents26 CFR 31.6061–1: Signing of returns.

Requirements of the Form 941 Electronic Filing

(ELF) Program are provided. See Rev. Proc. 97–47,page 00.

26 CFR 301.6061–1: Signing of returns and otherdocuments.


Section 6071.—Time for FilingReturns and Other Documents26 CFR 31.6071(a)(1): Time for filing returns andother documents.


1997–42 I.R.B. 9 October 20, 1997

BUREAU OF LABOR STATISTICS, DEPARTMENT STOREINVENTORYPRICE INDEXES BYDEPARTMENT GROUPS—Continued

(January 1941 = 100, unless otherwise noted)

Percent ChangeGroups Aug. Aug. from Aug. 1996

1996 1997 to Aug. 19971

21. Recreation and Education2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112.1 110.1 –1.822.Home Improvements2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.9 132.3 5.123. Auto Accessories2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107.2 108.4 1.1

Groups 1 – 15: Soft Goods- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .582.9 594.5 2.0

Groups 16 – 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . .469.2 463.1 –1.3

Groups 21 – 23: Misc. Goods2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113.1 112.6 –0.4

Store Total3- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .544.0 549.3 1.0

1Absence of a minus sign before percentage change in this column signifies price increase. 2Indexes on a January 1986=100 base.3The store total index covers all departments, including some not listed separately, except for the following: candy, foods, liquor, to-bacco, and contract departments.

CODE LOCATION* AIRPORT NAME COUNTRYYAC CAT LAKE, ONTARIO CATLAKE CANADAYAG FORT FRANCES, ONTARIO FORT FRANCES MUNI CANADAYAM SAULTSTE. MARIE, ONTARIO SAULTSTE MARIE CANADAYAZ TOFINO, B.C. TOFINO CANADAYBC BAIE COMEAU, QUEBEC BAIE COMEAU CANADAYBG SAGUENAY, QUEBEC BAGOTVILLE CANADAYBL CAMPBELLRIVER, B.C. CAMPBELL RIVER CANADAYBR BRAN WN, MANITOBA BRANDON CANADAYBV BERENS RIVER MANITOBA BERENS RIVER CANADAYCF CORTES BAY, B.C. CORTES BAY CANADAYCG CASTLEGAR/NELSON/TRAIL,B.C. CASTLEGAR CANADAYCL CHARLO, NEW BRUNSWICK CHARLO CANADAYDN DAUPHIN, MANITOBA DAUPHIN CANADAYDS DESOLATION SOUND, B.C. DESOLATION SOUND CANADAYEL ELLIOT LAKE, ONTARIO ELLIOT LAKE MUNI CANADAYFC FREDERICTON, NEW BRUNSWICK FREDERICTON CANADAYGE GORGE HARBOR, B.C. GORGE HARBOR CANADAYGK KINGSTON, ONTARIO KINGSTON CANADAYGN GREENWAYSOUND, B.C. GREENWAYSOUND CANADAYGP GASPE, QUEBEC GASPE CANADAYGQ GERALDTON, ONTARIO GERALDTON CANADAYHD DRYDEN, ONTARIO DRYDEN MUNICIPAL CANADAYHH CAMPBELL RIVER, B.C. HARBOR SPB CANADAYHN HORNEPAYNE, ONTARIO HORNEPAYNE CANADA

October 20, 1997 10 1997–42 I.R.B.

26 CFR 601.102: Classification of taxes col-lected by the Internal Revenue Serv i c e .(Also Part I, §4261.)

Rev. Proc. 97–46

SECTION 1. PURPOSE

This revenue procedure provides a listof “rural airports” as that term is definedin § 4261(e)(1)(B) of the Internal Rev-enue Code, for purposes of computing thetax on air transportation. The revenueprocedure also provides guidance on howto calculate the tax in certain circum-stances.

SECTION 2. BACKGROUND

Section 1031 of the Taxpayer ReliefAct of 1997, Pub. L. No. 105–34, (theAct) extends and modifies the tax im-posed by § 4261 on amounts paid for thetransportation of persons by air. The newrules relating to domestic air transporta-tion apply to amounts paid after Septem-ber 30, 1997, for transportation beginningafter that date. The Act generally pro-vides a tax rate of 7.5 percent of theamount paid for taxable transportation.H o w e v e r, the rate is 9 percent for trans-portation beginning after September 30,

1997, and before October 1, 1998, and 8percent for transportation beginning afterSeptember 30, 1998, and before October1, 1999. The 7.5 percent rate is effectivefor transportation beginning after Septem-ber 30, 1999.

In addition, the Act subjects each do-mestic segment of taxable transportationto a segment tax. The initial tax rate is$1.00 per domestic segment for segmentsbeginning after September 30, 1997, andbefore October 1, 1998. The segment taxincreases to a fully phased in rate of $3.00per domestic segment for segments begin-ning during calendar year 2002. A f t e rcalendar year 2002, the $3.00 segment taxwill be indexed for inflation.

Transportation segments beginning orending at a rural airport are not subject tothe temporary 9 percent and 8 percentrates and are exempt from the segmenttax. Thus, transportation segments begin-ning or ending at a rural airport are sub-ject only to a 7.5 percent rate on theamount paid for the transportation seg-ments.

An airport is a rural airport, as definedin § 4261(e)(1)(B), for a calendar year if -

(i) fewer than 100,000 commercial pas-sengers departed by air during the secondpreceding calendar year from that airport,

and (ii) the airport is either (A) not located

within 75 miles of another airport fromwhich 100,000 or more commercial pas-sengers departed during the second pre-ceding calendar year, or (B) receiving es-sential air service subsidies as of August5, 1997.

SECTION 3. SCOPE

This revenue procedure lists, based oninformation supplied by the Office of A i r-line Information at the Department ofTransportation, airports that will be treatedas rural airports for calendar year 1997. Asubsequent revenue procedure will providea similar list of rural airports for calendaryear 1998. For calendar year 1997, the listin this revenue procedure may be reliedupon unless and until modified or super-seded by a subsequent revenue procedure.In addition, any airport not listed in thisrevenue procedure is, nevertheless, a ruralairport if it meets the requirements of §4261(e)(1)(B) set forth above.

SECTION 4. PROCEDURE

.01 The following airports will betreated as rural airports for calendar year1997:

Part III. Administrative, Procedural, and Miscellaneous

1997–42 I.R.B. 11 October 20, 1997

YIB ATIKOKAN, ONTARIO ATIKOKAN MUNICIPAL CANADAYIG BIG BAYMARINA, B.C. BIG BAY MARINA CANADAYKX KIRKLAND LAKE, ONTARIO KIRKLAND LAKE CANADAYLD CHAPLEAU, ONTARIO CHAPLEAU CANADAYML MURRAYBAY, QUEBEC CHARLEVOIX CANADAYMP PORT MCNEIL, B.C. PORT MCNEIL CANADAYNK NOOTKA SOUND, B.C. NOOTKA SOUND CANADAYPL PICKLE LAKE, ONTARIO PICKLE LAKE CANADAYQI YARMOUTH, NOVASCOTIA YARMOUTH CANADAYQK KENORA, ONTARIO KENORA CANADAYQL LETHBRIDGE, ALBERTA LETHBRIDGE CANADAYQQ COMOX, B.C. COMOX CANADAYQV YORKTON, SASK. YORKTON CANADAYRL RED LAKE, ONTARIO RED LAKE CANADAYSB SUDBURY, ONTARIO SUDBURY CANADAYSC SHERBROOKE, QUEBEC SHEREBROOKE CANADAYSJ ST. JOHN, N.B. SAINT JOHN CANADAYSP MARATHON, ONTARIO MARATHON CANADAYSZ SQUIRREL COVE, B.C. SQUIRRELCOVE CANADAYTA PEMBROKE ONTARIO PEMBROKE CANADAYTJ TERRACE BAY, ONTARIO TERRACE BAY CANADAYTP TOFINO, B.C. TOFINO SPB CANADAYTS TIMMINS, ONTARIO TIMMINS CANADAYVB BONAVENTURE, QUEBEC BONAVENTURE CANADAYWL WILLIAMS LAKE, B.C. WILLIAMS LAKE CANADAYWR WHITE RIVER, ONTARIO WHITE RIVER CANADAYXC CRANBROOK, B.C. CRANBROOK CANADAYXH MEDICINE HAT, ALBERTA MEDICINE HAT CANADAYXL SIOUX LOOKOUT, ONTARIO SIOUX LOOKOUT CANADAYXR EARLTON, ONTARIO EARLTON CANADAYXZ WAWA, ONTARIO WAWA CANADAYYB NORTH BAY, ONTARIO NORTH BAY CANADAYYG CHARLOTTETOWN, P.E.I. CHARLOTTETOWN CANADAYYU KAPUSKASING, ONTARIO KAPUSKASING CANADAYYY MONT JOLI, QUEBEC MONT JOLI CANADAYZT PORT HARDY, B.C. PORT HARDY CANADAYZV SEVEN ISLANDS, QUEBEC SEPT-ILES CANADABHL BAHIAANGELES MEXICOCVM CIUDAD VICTORIA, TAMAULIPAS MEXICOPDS PIEDRAS NEGRAS, COAHUILA MEXICOSFH SAN FELIPE MEXICOSNQ SAN QUINTIN MEXICOABI ABILENE, TEXAS ABILENE MUNICIPAL UNITED STATESABL AMBLER, ALASKA AMBLER RIVER UNITED STATESABR ABERDEEN, SOUTH DAKOTA ABERDEEN REGIONAL UNITED STATESABY ALBANY, GEORGIA DOUGHERTY COUNTY UNITED STATESACT WACO, TEXAS WACO MUNICIPAL UNITED STATESACV EUREKA/ARCATA, CALIFORNIA ARCATA UNITED STATESADK ADAK ISLAND, ALASKA ADAK ISLAND NS UNITED STATESADQ KODIAK, ALASKA METROPOLITAN AREA UNITED STATESAET ALLAKAKET, ALASKA ALLAKAKET UNITED STATESAEX ALEXANDRIA, LOUISIANA ENGLAND AFB UNITED STATESAFK ANDREAFSKI, ALASKA ANDREAFSKI UNITED STATESAIA ALLIANCE, NEBRASKA ALLIANCE MUNICIPAL UNITED STATESAIN WAINWRIGHT, ALASKA WAINWRIGHT UNITED STATESAKB ATKA, ALASKA ATKA UNITED STATESAKK AKHIOK, ALASKA AKHIOK SPB UNITED STATESAKN KING SALMON, ALASKA KING SALMON UNITED STATES

AKO AKRON, COLORADO WASHINGTON COUNTY UNITED STATESAKP ANAKTUVIK PASS, ALASKA ANAKTUVUK PASS UNITED STATESALE ALPINE, TEXAS ALPINE CASPARIS MUNI UNITED STATESALM ALAMOGORDO, NEW MEXICO ALAMOGORDO MUNICIPAL UNITED STATESALS ALAMOSA, COLORADO ALAMOSAMUNICIPAL UNITED STATESALZ ALITAK, ALASKA ALITAK SPB UNITED STATESANB ANNISTON, ALABAMA ANNISTON COUNTY UNITED STATESANI ANIAK, ALASKA ANIAK UNITED STATESANV ANVIK, ALASKA ANVIK UNITED STATESAOO ALTOONA, PENNSYLVANIA BLAIR COUNTY UNITED STATESAOS AMOOK BAY, ALASKA AMOOK UNITED STATESAPN ALPENA, MICHIGAN ALPENACOUNTY REGL UNITED STATESARC ARCTIC VILLAGE, ALASKA ARCTIC VILLAGE UNITED STATESART WATERTOWN, NEWYORK WATERTOWN MUNICIPAL UNITED STATESATK ATQASUK, ALASKA ATQASUK UNITED STATESATY WATERTOWN, SOUTH DAKOTA WATERTOWN MUNICIPAL UNITED STATESAUG AUGUSTA, MAINE AUGUSTA STATE UNITED STATESAUK ALAKANUK, ALASKA ALAKANUK UNITED STATESBAR BAKER ISLAND, ALASKA BAKER AAF UNITED STATESBCE BRYCE CANYON, UTAH BRYCE CANYON UNITED STATESBFF SCOTTSBLUFF, NEBRASKA SCOTTS BLUFF COUNTY UNITED STATESBHB BAR HARBOR, MAINE BAR HARBOR UNITED STATESBIC BIG CREEK, ALASKA BIG CREEK UNITED STATESBIG BIG DELTA, ALASKA BIG DELTAINTERMED UNITED STATESBJI BEMIDJI, MINNESOTA BEMIDJI-BELTRAMI CO. UNITED STATESBKC BUCKLAND, ALASKA BUCKLAND UNITED STATESBKW BECKLEY, WESTVIRGINIA RALEIGH COUNTY MEML UNITED STATESBKX BROOKINGS, SOUTH DAKOTA UNITED STATESBLF PRINCETON/BLUEFIELD, WV MERCER COUNTY UNITED STATESBNF BARANOF, ALASKA WARM SPRING BAYSPB UNITED STATESBRD BRAINERD, MINNESOTA CROW WING COUNTY UNITED STATESBRW BARROW, ALASKA BARROWWBAS UNITED STATESBSZ BARTLETTS, ALASKA BARTLETTS UNITED STATESBTI BARTER ISLAND, ALASKA BARTER ISLAND UNITED STATESBTT BETTLES, ALASKA BETTLES UNITED STATESBVD BEAVER INLET, ALASKA BEAVER INLET SEWPORT UNITED STATESBWD BROWNWOOD, TEXAS BROWNWOOD MUNICIPAL UNITED STATESBYA BOUNDARY, ALASKA BOUNDARY UNITED STATESCBE CUMBERLAND, MARYLAND WILEYFORD UNITED STATESCDB COLD BAY, ALASKA COLD BAY UNITED STATESCDC CEDAR CITY, UTAH CEDAR CITYMUNICIPAL UNITED STATESCDL CANDLE, ALASKA CANDLE UNITED STATESCDR CHADRON, NEBRASKA CHADRON MUNICIPAL UNITED STATESCDV CORDOVA, ALASKA MILE 13 FIELD UNITED STATESCEC CRESCENT CITY, CALIFORNIA JACK MC NAMARAFIELD UNITED STATESCEM CENTRAL, ALASKA CENTRAL UNITED STATESCEZ CORTEZ, COLORADO MONTEZUMACOUNTY UNITED STATESCFA COFFEE POINT, ALASKA COFFEE POINT UNITED STATESCGI CAPE GIRARDEAU, MISSOURI CAPE GIRARDEAU MUNI UNITED STATESCHP CIRCLE HOT SPRINGS, ALASKA CIRCLE HOT SPRINGS UNITED STATESCHU CHUATHBALUK, ALASKA CHUATHBALUK UNITED STATESCIC CHICO, CALIFORNIA CHICO MUNI UNITED STATESCIK CHALKYITSIK, ALASKA CHALKYITSIK UNITED STATESCIL COUNCIL, ALASKA MELSING CREEK UNITED STATESCIU SAULTSTE MARIE, MICHIGAN CHIPPEWA COUNTY UNITED STATESCJI CRAFTON ISLAND, ALASKA CRAFTON ISLAND SPB UNITED STATESCKB CLARKSBURG, WEST VIRGINIA BENEDUM UNITED STATESCKD CROOKED CREEK, ALASKA CROOKED CREEK UNITED STATES

October 20, 1997 12 1997–42 I.R.B.

1997–42 I.R.B. 13 October 20, 1997

CKX CHICKEN, ALASKA CHICKEN UNITED STATESCLP CLARKS POINT, ALASKA CLARKS POINT UNITED STATESCMX HANCOCK/HOUGHTON, MICHIGAN HOUGHTON COUNTYMEML UNITED STATESCNM CARLSBAD, NEW MEXICO CAVERN CITYAIR TERM UNITED STATESCNY MOAB, UTAH CANYONLANDS FIELD UNITED STATESCOD LOVELL/CODY, WYOMING YELLOWSTONE REGIONAL UNITED STATESCOU COLUMBIA, MISSOURI COLUMBIAREGIONAL UNITED STATESCPR CASPER, WYOMING CASPER UNITED STATESCSG COLUMBUS, GEORGIA METROPOLITAN AREA UNITED STATESCVN CLOVIS, NEW MEXICO CLOVIS MUNICIPAL UNITED STATESCVS CLOVIS, NEW MEXICO CANNON AFB UNITED STATESCXC CHITINA, ALASKA CHITINA UNITED STATESCXF COLDFOOT, ALASKA COLDFOOT UNITED STATESCYF CHEFORNAK, ALASKA CRYSTALLAKE UNITED STATESCYM CHATHAM, ALASKA UNITED STATESCYS CHEYENNE, WYOMING CHEYENNE MUNICIPAL UNITED STATESCYT CAPE YAKATAGA, ALASKA YAKATAGAINTERMEDIAT UNITED STATESCZF CAPE ROMANZOF, ALASKA CAPE ROMANZOF AFS UNITED STATESCZN CHISANA, ALASKA CHISANAFIELD UNITED STATESDDC DODGE CITY, KANSAS DODGE CITY MUNICIPAL UNITED STATESDGB DANGER BAY, ALASKA DANGER BAY UNITED STATESDHN DOTHAN, ALABAMA DOTHAN UNITED STATESDIK DICKINSON, NORTH DAKOTA DICKINSON UNITED STATESDIO DIOMEDE ISLAND, ALASKA LITTLE DIOMEDE UNITED STATESDLG DILLINGHAM, ALASKA DILLINGHAM MUNI UNITED STATESDRG DEERING, ALASKA DEERING UNITED STATESDRO DURANGO, COLORADO LAPLATA UNITED STATESDRT DEL RIO, TEXAS DELRIO INTL UNITED STATESDUJ DU BOIS, PENNSYLVANIA JEFFERSON COUNTY UNITED STATESDUT DUTCH HARBOR, ALASKA EMERGENCYFIELD UNITED STATESDVL DEVILS LAKE, NORTH DAKOTA DEVILS LAKE MUNI UNITED STATESDYS ABILENE, TEXAS DYESS AFB UNITED STATESEAA EAGLE, ALASKA EAGLE MUNICIPAL UNITED STATESEAR KEARNEY, NEBRASKA KEARNEY MUNI UNITED STATESEAT WENATCHEE, WASHINGTON PANGBORN FIELD UNITED STATESEDA EDNABAY, ALASKA EDNABAY UNITED STATESEEN KEENE, NEWHAMPSHIRE UNITED STATESEGX EGEGIK, ALASKA EGEGIK UNITED STATESEHM CAPE NEWENHAM, ALASKA CAPE NEWENHAM AFS UNITED STATESELD ELDORADO/CAMDEN, ARKANSAS GOODWIN FIELD UNITED STATESELI ELIM, ALASKA ELIM UNITED STATESELY ELY, NEVADA YELLAND UNITED STATESEMK EMMONAK, ALASKA EMMONAK UNITED STATESENV WENDOVER, UTAH WENDOVER UNITED STATESESC ESCANABA, MICHIGAN DELTACOUNTY UNITED STATESESF ALEXANDRIA, LOUISIANA ESLER FIELD UNITED STATESFFM FERGUS FALLS, MINNESOTA FERGUS FALLS MUNI UNITED STATESFKL OILCITY/FRANKLIN, PENNSYLVANIA UNITED STATESFLT FLAT, ALASKA FLAT UNITED STATESFMC FIVE MILE CAMP, ALASKA FIVE MILE UNITED STATESFMN FARMINGTON, NEW MEXICO FARMINGTON MUNICIPAL UNITED STATESFNR FUNTER BAY, ALASKA UNITED STATESFOD FT. DODGE, IOWA FORT DODGE MUNICIPAL UNITED STATESFOE TOPEKA, KANSAS FORBES AFB UNITED STATESFRM FAIRMONT, MINNESOTA FAIRMONT MUNICIPAL UNITED STATESFYU FT. YUKON, ALASKA FORT YUKON MUNICIPAL UNITED STATESGAL GALENA, ALASKA GALENA UNITED STATESGAM GAMBELL, ALASKA GAMBELL MUNICIPAL UNITED STATES

GBD GREATBEND, KANSAS GREAT BEND MUNICIPAL UNITED STATESGBH GALBRAITH LAKE, ALASKA GALBRAITH LAKE UNITED STATESGCC GILLETTE, WYOMING CAMPBELL COUNTY UNITED STATESGCK GARDEN CITY, KANSAS GARDEN CITYMUNI UNITED STATESGDV GLENDIVE, MONTANA DAWSON COMMUNITY UNITED STATESGFB TOGIAK FISH, ALASKA TOGIAK FISH UNITED STATESGGW GLASGOW, MONTANA GLASGOW INTL UNITED STATESGKN GULKANA, ALASKA GULKANA UNITED STATESGLD GOODLAND, KANSAS RENNER FIELD UNITED STATESGLH GREENVILLE, MISSISSIPPI GREENVILLE MUNICIPAL UNITED STATESGLV GOLOVIN, ALASKA GOLOVIN UNITED STATESGMT GRANITE MOUNTAIN, ALASKA GRANITE MOUNTAIN UNITED STATESGNU GOODNEWS BAY, ALASKA GOODNEWS BAY UNITED STATESGRI GRAND ISLAND, NEBRASKA GRAND ISLAND AIR PK UNITED STATESGST GUSTAVUS, ALASKA GUSTAVUS UNITED STATESGTR COLUMBUS, MISSISSIPPI GOLDEN TRIANGLE REGL UNITED STATESGUP GALLUP, NEW MEXICO SENATOR CLARKE FIELD UNITED STATESHAY HAYCOCK, ALASKA HAYCOCK UNITED STATESHBH HOBART BAY, ALASKA HOBART BAY UNITED STATESHCR HOLY CROSS, ALASKA HOLY CROSS UNITED STATESHDN STEAMBOAT SPRINGS, COLORADO YAMPAVALLEY UNITED STATESHGZ HOGATZA, ALASKA HOGATZA UNITED STATESHII LAKE HAVASU CITY, ARIZONA LAKE HAVASU CTYMUNI UNITED STATESHKB HEALYLAKE, ALASKA HEALY LAKE UNITED STATESHOB HOBBS, NEW MEXICO LEACOUNTY UNITED STATESHON HURON, SOUTH DAKOTA W W HOWES MUNICIPAL UNITED STATESHOT HOT SPRINGS, ARKANSAS UNITED STATESHPB HOOPER BAY, ALASKA HOOPER BAY UNITED STATESHRO HARRISON, ARKANSAS BOONE COUNTY UNITED STATESHSI HASTINGS, NEBRASKA HASTINGS MUNICIPAL UNITED STATESHSL HUSLIA, ALASKA HUSLIA UNITED STATESHUS HUGHES, ALASKA HUGHES MUNICIPAL UNITED STATESHVR HAVRE, MONTANA HAVRE CITY-COUNTY UNITED STATESHYS HAYS, KANSAS HAYS MUNICIPAL UNITED STATESIAN KIANA, ALASKA BOB BARKER MEMORIAL UNITED STATESICY ICYBAY, ALASKA ICYBAY UNITED STATESIGG IGIUGIG, ALASKA IGIUGIG UNITED STATESIGM KINGMAN, ARIZONA KINGMAN MUNICIPAL UNITED STATESIKO NIKOLSKI, ALASKA NIKOLSKI AFS UNITED STATESILI ILIAMNA, ALASKA ILIAMNA UNITED STATESIMT IRON MOUNTAIN/KINGSFD, MICHIGAN FORD UNITED STATESINL INTERNATIONALFALLS, MINNESOTA FALLS INTERNATIONAL UNITED STATESIPL ELCENTRO, CALIFORNIA IMPERIALCOUNTY UNITED STATESIRC CIRCLE, ALASKA CIRCLE CITY UNITED STATESIRK KIRKSVILLE, MISSOURI KIRKSVILLE MUNICIPAL UNITED STATESISL ISABELPASS, ALASKA ISABELPASS UNITED STATESISN WILLISTON, NORTH DAKOTA SLOULIN FIELD INTL UNITED STATESIWD IRONWOOD, MICHIGAN GOGEBIC COUNTY UNITED STATESJBR JONESBORO, ARKANSAS UNITED STATESJMS JAMESTOWN, NORTH DAKOTA JAMESTOWN MUNICIPAL UNITED STATESKAE KAKE, ALASKA KAKE UNITED STATESKAL KALTAG, ALASKA KALTAG UNITED STATESKBC BIRCH CREEK, ALASKA BIRCH CREEK UNITED STATESKCG CHIGNIK FISHERIES, ALASKA CHIGNIK FISHERIES UNITED STATESKCL CHIGNIK LAGOON, ALASKA CHIGNIK LAGOON UNITED STATESKCN CHERNOFSKI, ALASKA CHERNOFSKI HARBOR UNITED STATESKCQ CHIGNIK, ALASKA CHIGNIK UNITED STATESKEK EKWOK, ALASKA EKWOK UNITED STATES

October 20, 1997 14 1997–42 I.R.B.

1997–42 I.R.B. 15 October 20, 1997

KFP FALSE PASS, ALASKA FALSE PASS UNITED STATESKGK KOLIGANEK, ALASKA NEW KOLIGANEK UNITED STATESKGX GRAYLING, ALASKA GRAYLING UNITED STATESKIB IVANOFF BAY, ALASKA IVANOF BAYSPB UNITED STATESKKA KOYUK, ALASKA KOYUK UNITED STATESKKB KITOI BAY, ALASKA KITOI BAYSPB UNITED STATESKKU EKUK, ALASKA EKUK UNITED STATESKLL LEVELOCK, ALASKA LEVELOCK UNITED STATESKLN LARSEN BAY, ALASKA LARSEN BAY SPB UNITED STATESKMO MANOKOTAK, ALASKA MANOKOTAK SPB UNITED STATESKMY MOSER BAY, ALASKA MOSER BAY UNITED STATESKNK KAKHONAK, ALASKA KAKHONAK UNITED STATESKNW NEWSTUYAHOK, ALASKA NEW STUYAHOK UNITED STATESKOT KOTLIK, ALASKA KOTLIK UNITED STATESKOY OLGABAY, ALASKA OLGABAYSPB UNITED STATESKOZ OUZINKIE, ALASKA OUZINKIE SPB UNITED STATESKPB POINT BAKER, ALASKA POINT BAKER SPB UNITED STATESKPC PORT CLARENCE, ALASKA PORT CLARENCE CGS UNITED STATESKPK PARKS, ALASKA PARKS SPB UNITED STATESKPN KIPNUK, ALASKA KIPNUK SPB UNITED STATESKPR PORT WILLIAMS, ALASKA PORTWILLIAMS SPB UNITED STATESKPV PERRYVILLE, ALASKA PERRYVILLE SPB UNITED STATESKPY PORT BAILEY, ALASKA PORT BAILEY SPB UNITED STATESKQA AKUTAN, ALASKA AKUTAN UNITED STATESKSM ST. MARY’S, ALASKA SAINT MARYS UNITED STATESKTS BREVIG MISSION, ALASKA BREVIG MISSION UNITED STATESKVC KING COVE, ALASKA KING COVE UNITED STATESKVL KIVALINA, ALASKA KIVALINA UNITED STATESKWK KWIGILLINGOK, ALASKA KWIGILLINGOK UNITED STATESKWP WEST POINT, ALASKA WEST POINT VILLAGE UNITED STATESKYK KARLUK, ALASKA KARLUK UNITED STATESKYU KOYUKUK, ALASKA KOYUKUK UNITED STATESKZB ZACHAR BAY, ALASKA ZACHAR BAY SPB UNITED STATESLAA LAMAR, COLORADO LAMAR FIELD UNITED STATESLAR LARAMIE, WYOMING GENERALBREES FIELD UNITED STATESLBF NORTH PLATTE, NEBRASKA LEE BIRD FIELD UNITED STATESLBL LIBERAL, KANSAS LIBERALMUNICIPAL UNITED STATESLMA MINCHUMINA, ALASKA MINCHUMINA UNITED STATESLPW LITTLE PORT WALTER, ALASKA LITTLE PORTWALTER UNITED STATESLRD LAREDO, TEXAS LAREDO INTL UNITED STATESLUR CAPE LISBURNE, ALASKA CAPE LISBURNE AFS UNITED STATESLVD LIME VILLAGE, ALASKA LIME VILLAGE UNITED STATESLWS LEWISTON, IDAHO NEZ PERCE COUNTY UNITED STATESLWT LEWISTOWN, MONTANA LEWISTOWN MUNICIPAL UNITED STATESMBL MANISTEE, MICHIGAN UNITED STATESMCE MERCED, CALIFORNIA MERCED MUNICIPAL UNITED STATESMCG MCGRATH, ALASKA MCGRATH UNITED STATESMCK MC COOK, NEBRASKA MC COOK MUNICIPAL UNITED STATESMCN MACON, GEORGIA LEWIS B WILSON UNITED STATESMDH CARBONDALE, ILLINOIS SOUTHERN ILLINOIS UNITED STATESMEI MERIDIAN, MISSISSIPPI KEY FIELD UNITED STATESMHK MANHATTAN/JCT.CTY/FT.RILEY, KANSAS MANHATTAN MUNICIPAL UNITED STATESMHM MINCHUMINA, ALASKA MINCHUMINA UNITED STATESMKT MANKATO, MINNESOTA UNITED STATESMLC MC ALESTER, OKLAHOMA MC ALESTER MUNICIPAL UNITED STATESMLS MILES CITY, MONTANA MILES CITYMUNICIPAL UNITED STATESMLY MANLEY HOTSPRINGS, ALASKA MANLEY HOTSPRINGS UNITED STATESMMH MAMMOTH LAKES, CALIFORNIA MAMMOTH LAKES UNITED STATES

MOT MINOT, NORTH DAKOTA MINOT INTERNATIONAL UNITED STATESMOU MOUNTAIN VILLAGE, ALASKA MOUNTAIN VILLAGE UNITED STATESMQT MARQUETTE, MICHIGAN MARQUETTE COUNTY UNITED STATESMSS MASSENA, NEWYORK RICHARDS FIELD UNITED STATESMTO MATTOON, ILLINOIS UNITED STATESMUE KAMUELA, HAWAII UNITED STATESMVM KAYENTA, ARIZONA MONUMENTVALLEY UNITED STATESMVN MT. VERNON, ILLINOIS UNITED STATESMWA MARION, ILLINOIS WILLIAMSON COUNTY UNITED STATESMWH EPHRATA/MOSES LAKE, WASHINGTON UNITED STATESMXY MCCARTHY, ALASKA MCCARTHY UNITED STATESMYK MAYCREEK, ALASKA UNITED STATESMYU MEKORYUK, ALASKA ELLIS FIELD UNITED STATESNIB NIKOLAI, ALASKA NIKOLAI UNITED STATESNLG NELSON LAGOON, ALASKA NELSON LAGOON UNITED STATESNME NIGHTMUTE, ALASKA NIGHTMUTE UNITED STATESNNK NAKNEK, ALASKA NAKNEK UNITED STATESNNL NONDALTON, ALASKA NONDALTON UNITED STATESNUI NUIQSUT, ALASKA NUIQSUT UNITED STATESNUL NULATO, ALASKA NULATO UNITED STATESOBU KOBUK, ALASKA KOBUK UNITED STATESOFK NORFOLK, NEBRASKA UNITED STATESOGS OGDENSBURG, NEWYORK OGDENSBURG MUNICIPAL UNITED STATESOLF WOLF POINT, MONTANA WOLF POINT INTL UNITED STATESOLH OLD HARBOR, ALASKA OLD HARBOR SPB UNITED STATESOME NOME, ALASKA NOME UNITED STATESOOK TOKSOOK, ALASKA TOKSOOK BAY UNITED STATESORH WORCESTER, MASSACHUSETTS WORCESTER MUNICIPAL UNITED STATESORI PORT LIONS, ALASKA PORT LIONS SPB UNITED STATESORT NORTHWAY, ALASKA NORTHWAY UNITED STATESORV NOORVIK, ALASKA ROBERT CURTIS MEML UNITED STATESOTM OTTUMWA, IOWA UNITED STATESOTZ KOTZEBUE, ALASKA RALPH WIEN MEMORIAL UNITED STATESPAH PADUCAH, KENTUCKY BARKLEYREGIONAL UNITED STATESPCA PORTAGE CREEK, ALASKA PORTAGE CREEK UNITED STATESPCE PAINTER CREEK, ALASKA PAINTER CREEK UNITED STATESPDB PEDRO BAY, ALASKA PEDRO BAY UNITED STATESPFA PAF WARREN, ALASKA PAF WARREN UNITED STATESPGA PAGE, ARIZONA PAGE UNITED STATESPGV GREENVILLE, NORTH CAROLINA PITT-GREENVILLE UNITED STATESPHO POINT HOPE, ALASKA POINT HOPE MUNICIPAL UNITED STATESPIP PILOT POINT, ALASKA PILOT POINT UNITED STATESPIR PIERRE, SOUTH DAKOTA PIERRE MUNICIPAL UNITED STATESPIZ POINT LAY, ALASKA POINT LAYDEW STN UNITED STATESPML PORT MOLLER, ALASKA PORT MOLLER AFS UNITED STATESPNC PONCACITY, OKLAHOMA PONCACITY MUNICIPAL UNITED STATESPNF PETERSON’S POINT, ALASKA PETERSON’S POINT UNITED STATESPPC PROSPECT CREEK, ALASKA PROSPECT CREEK UNITED STATESPPV PORT PROTECTION, ALASKA PORT PROTECTION UNITED STATESPQI PRESQUE ISLE, MAINE PRESQUE ISLE MUNI UNITED STATESPQS PILOT STATION, ALASKA PILOT STATION UNITED STATESPRC PRESCOTT, ARIZONA PRESCOTT MUN UNITED STATESPSG PETERSBURG, ALASKA PETERSBURG MUNICIPAL UNITED STATESPTA PORTALSWORTH, ALASKA PORTALSWORTH UNITED STATESPTD PORTALEXANDER, ALASKA PORTALEXANDER UNITED STATESPTH PORT HEIDEN, ALASKA PORT HEIDEN UNITED STATESPTL PORTARMSTRONG, ALASKA PORTARMSTRONG UNITED STATESPTU PLATINUM, ALASKA PLATINUM UNITED STATES

October 20, 1997 16 1997–42 I.R.B.

RBH BROOKS LODGE, ALASKA BROOKS LODGE UNITED STATESRBY RUBY, ALASKA RUBY UNITED STATESRDB RED DOG, ALASKA RED DOG MINE UNITED STATESRDD REDDING, CALIFORNIA REDDING MUNICIPAL UNITED STATESRDM REDMOND, OREGON ROBERTS FIELD UNITED STATESRDV RED DEVIL, ALASKA RED DEVIL UNITED STATESRIW RIVERTON, WYOMING RIVERTON MUNICIPAL UNITED STATESRKD ROCKLAND, MAINE KNOX COUNTYREGIONAL UNITED STATESRKS ROCK SPRINGS, WYOMING SWEETWATER COUNTY UNITED STATESRMP RAMPART, ALASKA RAMPART UNITED STATESROW ROSWELL, NEW MEXICO ROSWELLINDUSTRIAL UNITED STATESRQI NIXON FORK MINE, ALASKA NIXON FORK MINE UNITED STATESRTN RATON, NEW MEXICO CREWS FIELD UNITED STATESRUI RUIDOSO, NEW MEXICO RUIDOSO MUNICIPAL UNITED STATESRUT RUTLAND, VERMONT RUTLAND STATE UNITED STATESRWB ROWAN BAY, ALASKA ROWAN BAY UNITED STATESSBY SALISBURY, MARYLAND WICOMICO COUNTY UNITED STATESSCC DEADHORSE, ALASKA DEADHORSE UNITED STATESSCM SCAMMON BAY, ALASKA SCAMMON BAYSPB UNITED STATESSDP SAND POINT, ALASKA SAND POINT MUNICIPAL UNITED STATESSDX SEDONA, ARIZONA SEDONA UNITED STATESSDY SIDNEY, MONTANA RICHARD MUNICIPAL UNITED STATESSGU ST. GEORGE, UTAH ST. GEORGE MUNICIPAL UNITED STATESSGY SKAGWAY, ALASKA SKAGWAY MUNICIPAL UNITED STATESSHD STAUNTON, VIRGINIA SHENANDOAH VALLEY UNITED STATESSHG SHUNGNAK, ALASKA SHUNGNAK UNITED STATESSHH SHISHMAREF, ALASKA SHISHMAREF UNITED STATESSHR SHERIDAN, WYOMING SHERIDAN COUNTY UNITED STATESSHX SHAGELUK, ALASKA SHAGELUK UNITED STATESSIT SITKA, ALASKA SITKA UNITED STATESSJT SAN ANGELO, TEXAS MATHIS FIELD UNITED STATESSKK SHAKTOOLIK, ALASKA SHAKTOOLIK UNITED STATESSLN SALINA, KANSAS SALINAMUNICIPAL UNITED STATESSLQ SLEETMUTE, ALASKA SLEETMUTE UNITED STATESSMK ST. MICHAEL, ALASKA ST. MICHAEL UNITED STATESSMU SHEEPMOUNTAIN, ALASKA SHEEP MOUNTAIN UNITED STATESSNP ST. PAULISLAND, ALASKA SAINT PAULISLAND UNITED STATESSOW SHOW LOW, ARIZONA SHOW LOW UNITED STATESSPS WICHITAFALLS, TEXAS SHEPPARD AFB UNITED STATESSPW SPENCER, IOWA SPENCER MUNICIPAL UNITED STATESSQI STERLING/ROCK FALLS, ILLINOIS UNITED STATESSRV STONYRIVER, ALASKA STONY RIVER SKYPARK UNITED STATESSTG ST. GEORGE, ALASKA ST. GEORGE ISLAND UNITED STATESSUN SUN VALLEY, IDAHO FRIEDMAN MEMORIAL UNITED STATESSVA SAVOONGA, ALASKA SAVOONGA UNITED STATESSVC SILVER CITY, NEW MEXICO GRANT COUNTY UNITED STATESSVS STEVENS VILLAGE, ALASKA STEVENS VILLAGE UNITED STATESSVW SPARREVOHN, ALASKA SPARREVOHN AFS UNITED STATESSWD SEWARD, ALASKA UNITED STATESSXP SHELDON POINT, ALASKA SHELDON POINT SPB UNITED STATESSYA SHEMYAISLAND, ALASKA SHEMYAAFB UNITED STATESSYB SEAL BAY, ALASKA SEAL BAY UNITED STATESSYD SIDNEY, MONTANA UNITED STATESTAL TANANA, ALASKA RALPH M CALHOUN MEML UNITED STATESTBN FT. LEONARD WOOD, MISSOURI FORNEYAAF UNITED STATESTCL TUSCALOOSA, ALABAMA VAN DE GRAAF UNITED STATESTCT TAKOTNA, ALASKA TAKOTNA UNITED STATESTEH TETLIN, ALASKA TETLIN UNITED STATES

1997–42 I.R.B. 17 October 20, 1997

TEX TELLURIDE, COLORADO TELLURIDE REGIONAL UNITED STATESTKI TOKEEN, ALASKA TOKEEN UNITED STATESTKJ TOK, ALASKA TOK UNITED STATESTLA TELLER, ALASKA TELLER UNITED STATESTLF TELIDA, ALASKA TELIDA UNITED STATESTLJ TATALINE, ALASKA TATALINAAFS UNITED STATESTNC TIN CITY, ALASKA TIN CITYAFS UNITED STATESTNK TUNUNAK, ALASKA TUNUNAK UNITED STATESTOG TOGIAK, ALASKA TOGIAK VILLAGE UNITED STATESTUP TUPELO, MISSISSIPPI C D LEMONS MUNICIPAL UNITED STATESTVF THIEF RIVER FALLS, MINNESOTA THIEF RIVER FALLS UNITED STATESTWA TWIN HILLS, ALASKA TWIN HILLS UNITED STATESTWF TWIN FALLS, IDAHO CITY COUNTY UNITED STATESTYR TYLER, TEXAS POUNDS FIELD UNITED STATESUGB PILOT POINT, ALASKA UGASHIK BAY UNITED STATESUGI UGANIK, ALASKA UGANIK UNITED STATESUIN QUINCY, ILLINOIS BALDWIN FIELD UNITED STATESUMT UMIAT, ALASKA UMIAT UNITED STATESUNK UNALAKLEET, ALASKA UNALAKLEET UNITED STATESUTO UTOPIA, ALASKA INDIAN MOUNTAIN AFS UNITED STATESUUK KUPARUK, ALASKA KUPARUK UNITED STATESUXR MONUMENTVALLEY, UTAH MONUMENT VALLEY UNITED STATESVAK CHEVAK, ALASKA CHEVAK UNITED STATESVCT VICTORIA, TEXAS COUNTY-FOSTER UNITED STATESVDZ VALDEZ, ALASKA VALDEZ MUNICIPAL UNITED STATESVEE VENETIE, ALASKA VENETIE UNITED STATESVEL VERNAL, UTAH VERNAL UNITED STATESVIS VISALIA, CALIFORNIA VISALIA MUNICIPAL UNITED STATESVZM JENSENS STRIP, ALASKA JENSENS STRIP UNITED STATESVZN WILDMAN CREEK, ALASKA WILDMAN CREEK UNITED STATESVZR KATMAI BAY, ALASKA KATMAI BAY UNITED STATESVZY KATMAI LODGE, ALASKA KATMAI LODGE UNITED STATESWAA WALES, ALASKA WALES UNITED STATESWBB STEBBINS, ALASKA STEBBINS UNITED STATESWBQ BEAVER, ALASKA BEAVER UNITED STATESWCR CHANDALAR, ALASKA CHANDALAR LAKE UNITED STATESWDG ENID, OKLAHOMA ENID WOODRING MUNI UNITED STATESWFK FRENCHVILLE, MAINE FRENCHVILLE UNITED STATESWKK ALEKNAGIK, ALASKA ALEKNAGIK UNITED STATESWLB LABOUCHERE BAY, ALASKA LABOUCHERE BAY UNITED STATESWLK SELAWIK, ALASKA SELAWIK UNITED STATESWMH MOUNTAIN HOME, ARKANSAS MOUNTAIN HOME MUNI UNITED STATESWMO WHITE MOUNTAIN, ALASKA WHITE MOUNTAIN UNITED STATESWRG WRANGELL, ALASKA WRANGELL SPB UNITED STATESWRL WORLAND, WYOMING WORLAND MUNICIPAL UNITED STATESWSN SOUTH NAKNEK, ALASKA SOUTH NAKNEK UNITED STATESWTK NOATAK, ALASKA NOATAK UNITED STATESWWP WHALE PASS, ALASKA WHALE PASS UNITED STATESWWT NEWTOK, ALASKA NEWTOK UNITED STATESWYS WESTYELLOWSTONE, MONTANA YELLOWSTONE UNITED STATESYAK YAKUTAT, ALASKA YAKUTAT UNITED STATESYKN YANKTON, SOUTH DAKOTA CHAN GURNEYMUNI UNITED STATESYUM YUMA, ARIZONA YUMAINTERNATIONAL UNITED STATESZXF ILLINOIS CREEK, ALASKA ILLINOIS CREEK UNITED STATESZXO ELCAPITAN, ALASKA ELCAPITAN PEAK UNITED STATES

*Rev. Proc. 97–46, which was “dropped” on September 30, 1997, includes Mitchell, South Dakota, as one of the listed rural airports for calendar year 1997. Thatrevenue procedure is incorrect. Mitchell, South Dakota has been deleted from the corrected version of rev. Proc. 97–46 that appears in this Bulletin.

October 20, 1997 18 1997–42 I.R.B.

.02 Where transportation involves twoor more segments, at least one of whichbegins or ends at a rural airport and atleast one of which does not, the 7.5 per-cent rate is applied to the rural portion ofthe transportation and the nonrural rate isapplied to the nonrural portion. The ruralportion is determined by calculating thenumber of great circle miles in those seg-ments beginning or ending at rural air-ports and the total number of great circlemiles in all segments of the transporta-tion. The fraction formed by using thegreat circle miles of the rural portion asthe numerator and the total great circlemiles as the denominator is multiplied bythe amount paid for the transportation.The result is the portion of the totalamount paid that is subject to the 7.5 per-cent rate. The remaining portion of thetotal amount paid is subject to the non-rural rate. In addition, all segments notbeginning or ending at rural airports aresubject to the segment tax.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective foramounts paid after September 30, 1997,for transportation beginning after Septem-ber 30, 1997.

DRAFTING INFORMATION

The principal author of this revenueprocedure is Patrick S. Kirwan of the Of-fice of Assistant Chief Counsel (Pass-throughs and Special Industries). For fur-ther information regarding this revenueprocedure contact Mr. Kirwan at 202-622-3130 (not a toll-free call).

26 C.F.R. 601.602: Tax forms and instructions.(Also Part I, Sections 3504, 6011, 6061, 6071;31.3504–1, 31.6011(a)–7, 31.6061– , 301.6061–1,31.6071(a)–1.)

Rev. Proc. 97–47

Table of ContentsSECTION 1. PURPOSESECTION 2. BACKGROUND A N D

CHANGESSECTION 3. SCOPESECTION 4. DEFINITIONSSECTION 5. A P P L I C ATION FOR

THE FORM 941 ELFPROGRAM

SECTION 6. A C C E P TANCE IN T H EFORM 941 ELF PRO-GRAM

SECTION 7. ADDING AND DELET-ING TA X PAYERS ONTHE REPORT I N GAGENT’S L I S T

SECTION 8. ELECTRONIC FILINGOF FORM 941

SECTION 9. ADJUSTMENTS TOFORM 941

SECTION 10. RESPONSIBILITIES OFAN ELECTRONIC FILER

SECTION 11. A LT E R N ATIVE FILINGPROCEDURES

SECTION 12. REVISION OF COM-PUTER SPECIFICA-TIONS BY THE SER-VICE

SECTION 13. A D V E RTISING STA N-DARDS

SECTION 14. REASONS FOR SUS-PENSION

SECTION 15. A D M I N I S T R ATIVE RE-V I E W PROCESS FORPROPOSED SUSPEN-SION

SECTION 16. E F F E C T OF SUSPEN-SION

SECTION 17. A P P E A L OF SUSPEN-SION

SECTION 18. P E N A LT Y FOR FA I L-URE TO T I M E LY F I L EARETURN

SECTION 19. FILING FORMS W- 4WITH THE INTERNALREVENUE SERVICE

SECTION 20. FILING FORMS W – 2( C O P Y A) WITH T H ES O C I A L S E C U R I T YADMINISTRATION

SECTION 21. I N T E R N A L R E V E N U ESERVICE CONTACT

SECTION 22. E F F E C T ON OTHERDOCUMENTS

SECTION 23. EFFECTIVE DATESECTION 24. PA P E RWORK REDUC-

TION ACT

SECTION 1. PURPOSE

This revenue procedure sets forth therequirements of the Form 941 ELF Pro-gram under which a taxpayer that is a Re-porting Agent (“Agent” as defined in sec-tion 4.07 of this revenue procedure) mayelectronically file Form 941, Employer’sQuarterly Federal Tax Return. The tech-nical specifications for filing Form 941electronically are published separately inPublication 1855, Technical Specifica-tions Guide for the Electronic Filing Sys-

tem of Form 941, Employer’s QuarterlyFederal Tax Return. For further informa-tion, see Publication 1264, File Specicifi-cations, Process Criteria, and Record Lay-outs for Magnetic Tape Filing of Form941, Employer’s Quarterly Federal Ta xReturn. This revenue procedure ampli-fies, clarifies, modifies, and supersedesRev. Proc. 96–19, 1996–1 C.B. 644.

SECTION 2. BACKGROUND

.01 Section 6011(a) of the Internal Rev-enue Code provides that any person liablefor any tax imposed by this title, or for thecollection thereof, must make a return orstatement according to the forms and regu-lations prescribed by the Secretary. Everyperson required to make a return or state-ment must include therein the informationrequired by such forms or regulations.

.02 Section 31.6011(a)–4 of the Em-ployment Tax Regulations provides ingeneral that every person required tomake a return of income tax withheldfrom wages pursuant to § 3402 mustmake a return for the first calendar quarterin which the person is required to deductand withhold such tax and for each subse-quent calendar quarter until the personhas filed a final return. Except as other-wise provided, Form 941 is the form pre-scribed for making the return.

.03 Section 31.6011(a)–7 provides thateach return, together with any prescribedcopies or supporting data, must be filledin and disposed of in accordance with theforms, instructions, and regulations ap-plicable thereto. The return may be madeby an agent in the name of the person re-quired to make the return if an acceptablepower of attorney is filed with the InternalRevenue Service office with which suchperson is required to file returns and ifsuch a return includes all taxes required tobe reported by such person on such re-turn. Form 8655, Reporting Agent Autho-rization for Magnetic Tape/Electronic Fil-ers, is an acceptable power of attorney, ifprepared in accordance with the require-ments set forth in Rev. Proc. 96–17,1996–1 C.B. 633, as modified by section22.02 of this revenue procedure.

.04 Section 31.6061–1 provides that thereturn may be signed for the taxpayer byan agent that is fully authorized in accor-dance with § 31.6011(a)–7 to make suchreturn. An Agent may sign the Form 941on behalf of a taxpayer that has a validForm 8655 on file with the Service.

1997–42 I.R.B. 19 October 20, 1997

.05 Section 301.6061–1 of the Regula-tions on Procedure and A d m i n i s t r a t i o nprovides that the Secretary may prescribein forms, instructions, or other appropri-ate guidance the method for signing anyreturn, statement, or other document re-quired to be made under any provision ofthe internal revenue laws or regulations.The Service has prescribed in the elec-tronic filing instructions to Form 941 thatan electronically filed Form 941 is signedby the entry of the Electronic Filer’s Per-sonal Identification Number (“PIN”).

.06 Section 31.6071(a)–1 generallyprovides that each return required to bemade under § 31.6011(a)–1 for taxes im-posed by the Federal Insurance Contribu-tions Act, or required to be made under § 31.6011(a)–4 for withheld incometaxes, must be filed on or before the lastday of the first calendar month followingthe period for which it is made. However,under § 31.6071(a)–1 a return may befiled on or before the 10th day of the sec-ond calendar month following such pe-riod if timely deposits under § 6302(c)and the regulations thereunder have beenmade in full payment of such taxes duefor the period.

.07 Procedures for the magnetic filingof Form 941 are in Rev. Proc. 96–18,1996–1 C.B. 637, and the specificationsare in Publication 1264.

.08 The submission of federal tax de-posit (“FTD”) information on magnetictape is addressed in Rev. Proc. 89–48,1989–2 C.B. 599. For taxpayers that arerequired to make FTDs by electronicfunds transfer pursuant to § 6302(h), thesubmission of the FTD information alongwith the transfer of funds is addressed inRev. Proc. 97–33, 1997–30 I.R.B. 10.

.09 This revenue procedure updatesR e v. Proc. 96–19. The updates includechanges in the 941 ELF Program, clarifi-cations of prior Form 941 ELF Programstatements, and additional guidance de-rived from other Service documents thatrelate to the Form 941 ELF Program.Some of the updates are:

(1) the signature provisions for anelectronically filed Form 941 have beenmodified, amplified, and clarified to re-quire use of a PIN instead of filing a Form4996, Electronic/Magnetic Media FilingTransmittal for Wage and Wi t h h o l d i n gTax Returns (sections 2.05, 4.05, 5.02,6.06, 8.02, 10.02, 10.03, and 10.04);

(2) the definition of an ElectronicFiler:

(a) is prospectively limited to Re-porting Agents whose applications (re-ceived after the effective date of this rev-enue procedure) include an A g e n t ’s Listcontaining 10 or more taxpayers (sections4.02, 5.03, and 23.02); and

(b) has been expanded to includeSoftware Developers (sections 4.02, 5.02,5.04, 6.04, 6.05, and 10.05); and

(3) a Reporting Agent is not requiredto replace a previously submitted Autho-rization under certain circumstances (sec-tion 5.05).

SECTION 3. SCOPE

.01 The Form 941 ELF Program ac-cepts electronically filed Forms 941 inElectronic Data Interchange (“EDI”) for-mat developed by the American NationalStandards Institute that meets the require-ments of this revenue procedure and Pub-lication 1855.

.02 An Electronic Filer in the Form 941ELF Program must use asynchronouscommunications protocols to transmitelectronic returns. See Publication 1855for further information regarding commu-nications and formatting requirements.

.03 The Form 941 ELF Program ac-cepts timely current returns that are zerobalance, refund, or limited balance due re-turns. For the current limitations on bal-ance due returns, refer to Publication1855. For the due dates of returns underthe Form 941 ELF Program, see section8.01 of this revenue procedure. The Form941 ELF Program will not accept theelectronic filing of the following returns:

(1) amended returns;(2) corrected returns;(3) returns containing attachments;

or(4) untimely returns.

A violation of any of these restrictionswill cause a Processing Interruption (asdefined in section 4.06 of this revenueprocedure).

SECTION 4. DEFINITIONS

.01 Authorized Signatory. The “Autho-rized Signatory” is the person who is au-thorized to use the PIN for returns filed byan Electronic Filer under the Form 941ELF Program or during software develop-ment testing.

.02 Electronic Filer. After acceptance

in the Form 941 ELF Program, as de-scribed in section 6 of this revenue proce-dure, a participant is referred to as an“Electronic Filer.” An Electronic Filermay be:

(1) an Agent that files Forms 941electronically; or

(2) a “Software Developer” that de-velops software for the purposes of (a)formatting returns according to the Ser-v i c e ’s electronic return specifications inPublication 1855; and/or (b) transmittingelectronic returns directly to the Service.A Software Developer may also sell itssoftware.

.03 Electronic Filing Help Desk. TheElectronic Filing Help Desk (“ELF HelpDesk”) is responsible for the administra-tion of the Form 941 ELF Program. Seesection 21 of this revenue procedure forthe address and telephone number of theELF Help Desk.

.04 Error Rate. The “Error Rate” is thepercentage of the total volume of tax datarecords that are identified by the Service’scomputer program as containing errors(as defined in Publication 1855).

.05 Personal Identification Number. APersonal Identification Number (“PIN”)is a number assigned by the Service to theAuthorized Signatory of an ElectronicFiler for purposes of signing an electroni-cally filed Form 941.

.06 P rocessing Interru p t i o n . A “ P r o-cessing Interruption” is an abnormal ter-mination of a program run caused by theelectronic data submitted by an ElectronicFiler.

.07 R e p o rting Agent. A R e p o r t i n gAgent (“Agent”) is an accounting service,f r a n c h i s e r, bank, or other person thatcomplies with Rev. Proc. 96–17, as modi-fied by section 22.02 of this revenue pro-cedure, and is authorized to prepare andelectronically file a Form 941 for a tax-payer.

.08 Reporting Agent Authorization. AReporting Agent Authorization (“Autho-rization”) allows a taxpayer to designatean Agent. The Authorization may be sub-mitted on Form 8655, or any other instru-ment that complies with Rev. Proc. 96–17, as modified by section 22.02 of thisrevenue procedure. An A u t h o r i z a t i o nmust be submitted for each taxpayer onthe Reporting Agent’s List.

.09 R e p o rting A g e n t ’s List. For pur-poses of the Form 941 ELF Program, a

October 20, 1997 20 1997–42 I.R.B.

Reporting A g e n t ’s List (“Agent’s List”)identifies all taxpayers for whom an A g e n twill file Forms 941 electronically. As e p a-rate Authorization must be submitted foreach taxpayer on the A g e n t ’s List. T h eA g e n t ’s List must contain each taxpayer’semployer identification number (“EIN”).

.10 User identification/password. Theuser identification/password (“userid/password”) consists of an identificationnumber (userid) issued by the Service anda confidential set of characters (password)that, when used in conjunction with eachother, permit an Electronic Filer access tothe Form 941 ELF Program.

. 11 Validated Reporting A g e n t ’s List. AValidated Reporting A g e n t ’s List (“Va l i-dated A g e n t ’s List”) is the source of theEIN and name control to be used as anidentification of each taxpayer by an Elec-tronic Filer that is an Agent. A Va l i d a t e dA g e n t ’s List is a list of taxpayers and theirEINs prepared by an Agent that is con-firmed and assigned name controls by theService. Once the Service returns a Va l i-dated A g e n t ’s List, the Agent must use it tofill in certain required fields (for example,the name control field) of the electronictransmission. See Publication 1855.

SECTION 5. APPLICATION FOR THEFORM 941 ELF PROGRAM

.01 A prospective Electronic Filer(“Applicant”) must first submit a Letter ofApplication (“Application”) to participatein the Form 941 ELF Program.

.02 All Applications must contain thefollowing:

(1) the name, address, and EIN of theApplicant;

(2) the name, title, and telephonenumber of the person to contact regardingthe Application;

(3) the first tax period for which theApplicant plans to file Forms 941 elec-tronically or to have Form 941 softwareavailable to the public;

(4) a representation that the A p p l i-cant will comply with section 10 of thisrevenue procedure regarding responsibili-ties of an Electronic Filer;

(5) a listing of any suspension fromany of the Service’s magnetic tape orelectronic filing programs;

(6) the name and title of the Autho-rized Signatory; and

(7) the signature of the A p p l i c a n t ’sAuthorized Signatory for electronically

filing Forms 941 or for software develop-ment testing.

.03 An Application of an Agent mustalso contain the following:

(1) the estimated volume of returns theApplicant plans to file under the Form941 ELF Program;

(2) the brand name of the softwaretranslation package and the EDI versionto be used;

(3) a statement that the Applicant willkeep a copy of all the Authorizations onfile at the A p p l i c a n t ’s principal place ofbusiness for examination by the Serviceupon request;

(4) a representation that the Applicantwill comply with section 3.03 of this rev-enue procedure regarding the types of re-turns accepted under the Form 941 ELFProgram;

(5) an A g e n t ’s List containing thenames of 10 or more taxpayers (except asprovided in the grandfather rule in section23.02 of this revenue procedure); and

(6) except as provided in section 5.05of this revenue procedure, an A u t h o r i z a-tion made on Form 8655 with a revisiondate of October 1995 or later (or its equiv-alent) for each taxpayer included on theA g e n t ’s List. See Rev. Proc. 96-17, asmodified by section 22.02 of this revenueprocedure, for general instructions onpreparing Form 8655.See Exhibit 1 in the APPENDIX of thisrevenue procedure for a sample Applica-tion to Participate in the Form 941 ELFProgram as an Agent.

.04 An Application of a Software De-veloper must also contain the following:

(1) the brand name of the softwaretranslation package, or the developmentname if no brand name exists, and theEDI version to be used; and

(2) whether the software is stand-alone or interfaces with a named payrollpackage.See Exhibit 2 in the APPENDIX of thisrevenue procedure for a sample Applica-tion to Participate in the Form 941 ELFProgram as a Software Developer.

.05 A revised Authorization is not re-quired to replace an Authorization madeon Form 8655 with a revision date beforeOctober 1995 (or its equivalent) that waspreviously submitted to the Service by anAgent, provided that Authorization placesno restriction on the medium for filingForm 941, and the Agent:

(1) advises its client that its Forms941 may be filed electronically, and pro-vides the client with the option of reject-ing electronic filing as the medium for fil-ing its Forms 941. An Agent may use themost efficient and timely method ofclearly providing this notification to aclient. A c l i e n t ’s rejection of electronicfiling for its Forms 941 must be submittedin writing to the Agent; and

(2) immediately removes any clientfrom its electronic filing client base thatrejects having its Forms 941 filed elec-tronically.

.06 To allow sufficient time for the ap-proval process, the Applicant should sub-mit its Application by the Application duedates preceding the quarter ending dates,as follows:

Application Due For Quarter Date Ending

December 15 (prior year) March 31March 15 June 30June 15 September 30September 15 December 31

.07 The Application must be submittedto the Service at the address provided insection 21 of this revenue procedure.

.08 An Application may not include arequest to file Forms 941, 940, and 945 onmagnetic tape or make FTD paymentsand submit FTD information to the Ser-vice on magnetic tape or electronically.An Applicant interested in participating inthese programs should submit an Applica-tion in accordance with the following rev-enue procedures: Rev. Proc. 96–18 (mag-netic tape filing of Forms 941, 940, and945); Rev. Proc. 97–33 (electronic trans-mission of FTDs); and Rev. Proc. 89–48(magnetic tape filing of FTD informa-tion).

SECTION 6. ACCEPTANCE IN THEFORM 941 ELF PROGRAM

.01 In the case of an Applicant that isan Agent, the Applicant will receive aValidated Agent’s List within 45 days ofthe Service receiving the Agent’sApplica-tion. Failure to use the names and EINsprovided on the Validated A g e n t ’s Listmay delay processing.

.02 An Applicant must contact the ELFHelp Desk, at the number listed in section21 of this revenue procedure (unless in-structed to use a different number), to no-tify the Service that the Applicant is ready

1997–42 I.R.B. 21 October 20, 1997

to begin the testing process. In the case ofan Applicant that is an Agent, the Agentmust contact the ELF Help Desk after re-ceiving the Validated Agent’s List.

.03 An Applicant must transmit an ini-tial test electronic transmission of Form941 (“test file”) by the test file due datespreceding the corresponding quarter duedates, as follows:

Initial Test File For Quart e rDue Date Ending

April 10 March 31July 10 June 30October 10 September 30January 10 December 31

To transmit subsequent test files, contactthe ELF Help Desk. Transmission of atest file does not constitute the filing of atax return. See Publication 1855 for spe-cific testing procedures.

.04 After evaluating the test file, theService will notify an Applicant in writingof approval or denial of electronic filingprivileges. An approval remains in effectunless the Electronic Filer:

(1) that is an Agent fails to complywith the Authorization requirements ofsections 5.03(6) and 5.05 of this revenueprocedure;

(2) that is a Software Developer failsto comply with the requirements of sec-tion 10.05 of this revenue procedure; or

(3) is suspended from the Form 941ELF Program. See section 16 of this rev-enue procedure for the effect of a suspen-sion.

.05 The acceptance by the Service of aSoftware Developer as an ElectronicFiler:

(1) establishes only that the test elec-tronic transmission(s) are formatted prop-erly and may be processed by the Service;

(2) is not an endorsement by the Ser-vice of the software or the quality of ser-vices provided by the Software Devel-oper; and

(3) does not entitle the Software De-veloper to electronically file Forms 941unless the Software Developer is also ac-cepted in the Form 941 ELF Program asan Agent.

.06 If an Application is approved, theService will send the Electronic Filer thefollowing two documents:

(1) a notification of approval thatwill contain the userid/password, and in-formation and procedures regarding sign-

ing onto the system for filing electronicForms 941; and

(2) a PIN that may be used only bythe Electronic Filer’s Authorized Signa-tory named in the Application.

.07 Upon receipt of each document ref-erenced in section 6.06 of this revenueprocedure, the Electronic Filer must returnthe following documents to the Service:

(1) an acknowledgement signed byeach employee recipient of theuserid/password indicating possession of,and responsibility for, the userid/pass-word; and

(2) an acknowledgement signed bythe Electronic Filer’s Authorized Signa-tory indicating possession of, and respon-sibility for, the proper use of the PIN forsigning tax returns (pursuant to § 301.6061–1) filed in the Form 941 ELFProgram. See Exhibit 3 in the APPENDIX of thisrevenue procedure for a sample userid/password and PIN receipt.

.08 The Service will activate theuserid/password and the PIN upon receiv-ing the Electronic Filer’s acknowledge-ments of the receipt of the two documentsreferenced in section 6.06 of this revenueprocedure.

.09 If an A p p l i c a n t ’s test file fails tomeet the evaluation criteria, the Applicantmust, within 15 days of the Service’s noti-fication of the failure, transmit a new testfile or contact the ELF Help Desk to makeother arrangements.

.10 If an Applicant that is an Agent isdenied, or does not receive, approval forparticipating in the Form 941 ELF Pro-gram before the end of the tax quarter forwhich the Forms 941 will be filed, theApplicant should file the returns on paperForms 941 (or on magnetic tape if the Ap-plicant meets the requirements of Rev.Proc. 96–18).

.11 If an Applicant is denied acceptanceinto the Form 941 ELF Program, the Ap-plicant may reapply for a subsequent taxquarter by resubmitting an A p p l i c a t i o nand test file in accordance with sections 5and 6 of this revenue procedure.

SECTION 7. ADDING ANDDELETING TAXPAYERS BYAREPORTING AGENT

.01 After an Electronic Filer that is anAgent is notified that the application forelectronic filing of Forms 941 has been

approved, the Agent may want to add anddelete taxpayers from the Form 941 ELFProgram.

.02 To add taxpayers, the Agent mustsubmit the added names and EINs (AddList) and an Authorization, in accordancewith sections 5.03(6) and 5.05 of this rev-enue procedure, for each taxpayer addedto the Form 941 ELF Program. The Ser-vice must validate the Add List and returnit to the Agent before the Agent can elec-tronically file returns for these taxpayers.The Service will generally validate andmail the Add List to the Agent within 10business days of receiving the Add List.

.03 To delete taxpayers, the Agent mustsubmit a list of those taxpayers to bedeleted (Delete List) and, if known, ashort statement indicating which taxpay-ers will not remain in business.

SECTION 8. ELECTRONIC FILING OFFORM 941

.01 An Electronic Filer that is an Agentmust ensure that an electronic Form 941is filed on or before the due date of the re-turn. The due dates prescribed for filingpaper Forms 941 with the Service alsoapply to returns filed under the Form 941ELF Program. Forms 941 are due on orbefore the last day of the first calendarmonth following the period for which thereturn is made. However, a return forwhich all tax deposits were made whendue for the quarter may be filed by the10th day of the month following the duedate. In no case may one electronic trans-mission include returns with more thanone due date.

.02 An electronically filed Form 941 isnot considered filed until it has been ac-knowledged as accepted for processing bythe Service. If an electronically filedForm 941 is transmitted on or before thedue date, the return will be deemed timelyfiled. If an electronically filed Form 941is initially transmitted on or shortly beforethe return due date and is ultimately re-jected, but the Electronic Filer complieswith section 8.03 of this revenue proce-dure, the return will be deemed timelyfiled.

.03 An electronic transmission thatcauses a Processing Interruption or thathas an Error Rate exceeding 5 percentmay not be accepted, and the ElectronicFiler will be asked to resubmit the re-turn(s). If the electronic transmission is

October 20, 1997 22 1997–42 I.R.B.

acknowledged as rejected by the Service,the Electronic Filer should correct theerror(s) and retransmit the return(s) on thesame calendar day. If the Electronic Filerchooses not to have the previously re-jected return retransmitted, or if the returnstill cannot be accepted for processing, apaper Form 941 (or a Form 941 on mag-netic tape if the Electronic Filer meets therequirements of Rev. Proc. 96–18) mustbe filed by the later of: (1) the due date ofthe return; or (2) within five calendar daysof the rejection or notice that the returncannot be retransmitted, with an explana-tion of why the return is being filed afterthe due date. For the penalty for failure tofile a timely return, see section 18 of thisrevenue procedure.

SECTION 9. ADJUSTMENTS TOFORM 941

Forms 941 filed under the Form 941ELF Program must not contain adjust-ments other than adjustments resultingfrom rounding fractions of cents or fromthird-party sick pay for which an em-ployer is not responsible. Returns withother adjustments must be filed on mag-netic tape or on paper.

SECTION 10. RESPONSIBILITIES OFAN ELECTRONIC FILER

.01 To ensure that complete returns areaccurately and efficiently filed, an Elec-tronic Filer must comply with Publication1855.

.02 The Electronic Filer that is anAgent must retain the following materialfor 4 years after the due date of the return,unless otherwise notified by the Service:

(1) a complete copy of the electroni-cally filed Form 941;

(2) a copy of the Service’s acknowl-edgement of receipt of the return; and

(3) a copy of each Authorization..03 An Electronic Filer that is an Agent

must: (1) provide the taxpayer with a copy

of the taxpayer’s electronically filed Form941. This information may be providedon a replica of an official form or on anunofficial form. However, data entries onan unofficial form must refer to the linenumbers on an official form;

(2) advise the taxpayer to retain acopy of the return and any supporting ma-terial;

(3) inform the taxpayer of the service

center that processes the taxpayer’s re-turns;

(4) advise the taxpayer that anamended return, if needed, must be filedas a paper return and mailed to the servicecenter identified in accordance with sec-tion 10.03(3) of this revenue procedure.See section 9 of this revenue procedurefor adjustments to Forms 941; and

(5) provide the taxpayer, upon re-quest, with the date the return was trans-mitted to the Service and the date the Ser-vice acknowledged receipt of thetaxpayer’s return.

.04 An Electronic Filer must complywith the following userid/password andPIN requirements:

(1) each authorized employee of theElectronic Filer must submit a signed re-ceipt acknowledging receipt of theuserid/password, and accepting the asso-ciated responsibilities. See Exhibit 3 inthe APPENDIX of this revenue procedurefor a sample userid/password receipt;

(2) the Authorized Signatory for theElectronic Filer must submit a signed re-ceipt acknowledging possession, and ac-cepting responsibility for proper use, ofthe PIN for signing and filing tax returns(or for software development testing) inthe Form 941 ELF Program. See Exhibit3 in the APPENDIX of this revenue pro-cedure for a sample PIN receipt;

(3) the Electronic Filer is responsiblefor ensuring that the PIN remains the con-fidential information of the ElectronicFiler’s Authorized Signatory. If the Elec-tronic Filer suspects that the confidential-ity of the PIN and/or userid/password hasbeen compromised, the Electronic Filermust contact the ELF Help Desk within24 hours for instructions on how to pro-ceed. See section 21 of this revenue pro-cedure for Service contact information;

(4) if the Authorized Signatory for anElectronic Filer changes, the ElectronicFiler must notify the Service of the nameand title of the new Authorized Signatoryfor the electronically filed Form 941 andapply for a new PIN no later than 15 daysbefore the filing of another return. Afterthis notification, the Service will deacti-vate the current PIN and issue a new PINto the new Authorized Signatory. T h enew Authorized Signatory must submit aPIN receipt as specified in section10.04(2) of this revenue procedure inorder to activate the PIN; and

(5) the Authorized Signatory for theElectronic Filer must manually enter thePIN signature for each transmission ofelectronically filed Forms 941.

.05 An Electronic Filer that is a Soft-ware Developer must:

(1) promptly correct any softwareerror that may cause, or causes, an elec-tronic return to be rejected;

(2) promptly distribute any suchsoftware correction;

(3) ensure that any software packagethat will be used to transmit returns frommultiple Electronic Filers that are Agentshas the capability of combining these re-turns into one Service transmission file;and

(4) not incorporate into its software aService assigned PIN.

SECTION 11. ALTERNATIVE FILINGPROCEDURES

.01 Procedures for the filing of Form941 on magnetic tape are in Rev. Proc.96-18 and the specifications are in Publi-cation 1264.

.02 An Electronic Filer that is an Agentmay use a Form 941 ELF Program Autho-rization to file a paper Form 941 under theForm 941 ELF Program under the follow-ing circumstances:

(1) the late receipt of payroll infor-mation from a taxpayer that would jeopar-dize the timely submission of the tax-payer’s return;

(2) the amendment of returns filedunder the Form 941 ELF Program;

(3) the rejection of an electronictransmission that would jeopardize thetimely submission of the taxpayer’s re-turn;

(4) an authorization by the Servicefor an Electronic Filer to file paper Forms941 instead of electronically filed Forms941; or

(5) the suspension of an Agent fromthe Form 941 ELF Program as providedin section 16.02(3) of this revenue proce-dure.

.03 An Agent may prepare a paperForm 941 for the taxpayer’s signature. At a x p a y e r’s authorized representative thatis not an Agent participating in the Form941 ELF Program (including a suspendedAgent) must have a valid power of attor-ney (usually a Form 2848, Power of At-torney and Declaration of Representative)that authorizes the representative to sign

1997–42 I.R.B. 23 October 20, 1997

and file a paper Form 941 on behalf of ataxpayer.

.04 Each paper Form 941 must besigned by the taxpayer, the taxpayer’s au-thorized representative, or a participatingAgent to the extent permitted under sec-tion 11.02 of this revenue procedure.

SECTION 12. REVISION OF COMPUTER SPECIFICATIONS BYTHE SERVICE

.01 If Publication 1855 is revised, theService, if necessary, will advise all cur-rent Electronic Filers to submit test filesprior to filing under the new specifica-tions. Failure to submit a test file maylater result in a Processing Interruption oran Error Rate exceeding 5 percent on re-turns filed electronically for which anElectronic Filer may receive a notice ofsuspension. See section 14 of this revenueprocedure concerning the reasons for sus-pension of electronic filing privileges.

.02 If an Electronic Filer is unable tocomply with the changes in specifica-tions, the Electronic Filer must contactthe ELF Help Desk for further instruc-tions. See section 21 of this revenue pro-cedure.

SECTION 13. ADVERTISINGSTANDARDS

.01 An Electronic Filer must:(1) comply with the advertising and

solicitation provisions of 31 C.F.R. Part10 (Treasury Department Circular No.230). This circular prohibits the use orparticipation in the use of any form ofpublic communication containing a false,fraudulent, misleading, deceptive, undulyinfluencing, coercive, or unfair statementor claim. In addition, advertising mustnot imply a special relationship with theService, Financial Management Service(“FMS”), or the Treasury Department;

(2) adhere to all relevant federal,state, and local consumer protection laws;

(3) not use the Service’s name, “In-ternal Revenue Service” or “IRS”, withina firm’s name;

(4) not use improper or misleadingadvertising in relation to the Form 941ELF Program;

(5) not carry the Service, FMS, orother Treasury Seals on its advertisingmaterial;

(6) clearly state the names of all co-operating parties if advertising for a coop-

erative electronic return filing project(public/private sector);

(7) pre-record any radio or televisionadvertisement and keep a copy of this ad-vertisement for a period of at least 36months from the date of the last transmis-sion or use; and

(8) retain a copy of any actual directmailing or fax communications, alongwith a list or other description of personsto whom the communication was mailed,faxed, or otherwise distributed for a pe-riod of at least 36 months from the date ofthe last mailing, fax, or distribution.

.02 Acceptance to participate in theForm 941 ELF Program does not implyendorsement by the Service, FMS, or theTreasury Department of the software orquality of services provided.

SECTION 14. REASONS FOR SUSPENSION

.01 The Service reserves the right tosuspend an Electronic Filer from theForm 941 ELF Program for the followingreasons (this list is not all-inclusive):

(1) submitting tax returns for whichthe Service did not receive A u t h o r i z a-tions;

(2) repeatedly submitting tax returnsthat have an Error Rate exceeding 5 per-cent or that cause a Processing Interrup-tion;

(3) submitting tax returns that havean Error Rate exceeding 5 percent or thatcause a Processing Interruption after fail-ing to submit the test file required by sec-tion 12 of this revenue procedure;

(4) failing to comply with the re-sponsibilities of an Electronic Filer setforth in section 10 of this revenue proce-dure;

(5) failing to abide by the advertisingstandards in section 13 of this revenueprocedure; or

(6) significant complaints about anElectronic Filer’s performance in theForm 941 ELF Program.

.02 If the Electronic Filing Coordinator(“ELF Coordinator”) informs an Elec-tronic Filer that a certain action is a rea-son for suspension and the action contin-ues, the service center director may sendthe Electronic Filer a notice proposingsuspension of the Electronic Filer. How-ever, a notice proposing suspension maybe sent without a warning if the Elec-tronic Filer’s action indicates an inten-

tional disregard of rules. Anotice propos-ing suspension will describe the reason(s)for the proposed suspension, and indicatethe length of the suspension and the con-ditions that need to be met before the sus-pension will terminate.

.03 An Electronic Filer that is an Agenthas an obligation to notify taxpayers fil-ing through the Agent if and when thatAgent is suspended from filing under theForm 941 ELF Program as provided insection 16.02(4) of this revenue proce-dure. The Service reserves the right toextend the period of suspension of anyAgent that fails to comply with this re-quirement.

SECTION 15. ADMINISTRATIVE REVIEW PROCESS FOR PROPOSEDSUSPENSION

.01 An Electronic Filer that receives anotice proposing suspension may requestan administrative review prior to the pro-posed suspension taking effect.

.02 The request for an administrativereview must be in writing and contain de-tailed reasons, with supporting documen-tation, for withdrawal of the proposedsuspension.

.03 The written request for an adminis-trative review and a copy of the noticeproposing suspension must be deliveredto the ELF Coordinator within 30 calen-dar days of the date on the notice propos-ing suspension. The ELF Coordinatorwill forward the written request to the Na-tional Program Analyst for Electronic Fil-ing of Business Returns (“National Coor-dinator”) if the service center directorcontinues to believe that suspension iswarranted.

.04 After consideration of the writtenrequest for an administrative review, theNational Coordinator will either issue asuspension letter or notify the ElectronicFiler in writing that the proposed suspen-sion is withdrawn.

.05 If an Electronic Filer receives a sus-pension letter, the ELF Coordinator’s sub-sequent determination of whether a rea-son for suspension has been corrected isnot subject to review or appeal.

.06 If an Electronic Filer does nottimely submit a written request for an ad-ministrative review, the service center di-rector will issue a suspension letter.

.07 Failure to submit a written requestfor an administrative review within the

October 20, 1997 24 1997–42 I.R.B.

30-day period described in section 15.03of this revenue procedure irrevocably ter-minates the Electronic Filer’s right to anadministrative review of the proposedsuspension.

SECTION 16. EFFECT OF SUSPENSION

.01 An Electronic Filer’s suspensionwill continue for the length of time speci-fied in the suspension letter, or until theconditions for terminating the suspensionhave been met, whichever is later.

.02 In the case of an Electronic Filerthat is an Agent, the following additionalrules apply:

(1) if a Form 941 is due (without re-gard to extensions) within 60 days fromthe date on the suspension letter, theAgent may file the Form 941 under theForm 941 ELF Program;

(2) if a Form 941 is due (without re-gard to extensions) more than 60 daysfrom the date on the suspension letter, theAgent may not file the Form 941 underthe Form 941 ELF Program;

(3) if a suspended Agent has a powerof attorney from a taxpayer that autho-rizes the Agent to sign and file Form 941,the suspended Agent will be able to signand file a paper Form 941 for the tax-payer. See section 11.03 of this revenueprocedure. Form 8655 does not authorizethe filing of paper Forms 941 outside ofthe Form 941 ELF Program; and

(4) an Agent must provide writtennotification of a suspension to a taxpayerat least 45 days before the due date of thetaxpayer’s first return affected by the sus-pension. This notification must be pro-vided even though the Agent may believethat the Agent will be able to meet theconditions for terminating the suspensionbefore the due date.

.03 An Electronic Filer will be able toparticipate in the Form 941 ELF Programfrom which the Electronic Filer was sus-pended, without reapplying to the Form941 ELF Program, after:

(1) the stated suspension period ex-pires; and

(2) the reason(s) for suspension arecorrected.

SECTION 17. APPEALOF SUSPENSION

.01 If an Electronic Filer receives a sus-pension letter from the National Coordi-

nator, the Electronic Filer is entitled to ap-peal, by written protest, to the NationalDirector of Appeals. The written protestmust be sent to the National Coordinator,who will forward it to the National Direc-tor of Appeals. During the appealsprocess, the suspension remains in effect.

.02 The written protest must be re-ceived by the National Coordinator within30 calendar days of the date of the sus-pension letter. The written protest mustcontain detailed reasons, with supportingdocumentation, for termination of the sus-pension.

.03 Within 15 calendar days of receiptof a written protest, the National Coordi-nator will forward the file on the Elec-tronic Filer and the material described insection 17.02 of this revenue procedure tothe National Director of Appeals.

.04 Failure to appeal within the 30-dayperiod described in section 17.02 of thisrevenue procedure irrevocably terminatesthe Electronic Filer’s right to appeal thesuspension.

SECTION 18. PENALTY FOR AFAILURE TO TIMELY FILE ARETURN

Section 6651(a)(1) provides that foreach month (or part thereof) a return isnot filed when required (determined withregard to any extensions of time for fil-ing), there is a penalty of 5 percent of theunpaid tax not to exceed 25 percent, ab-sent reasonable cause. A taxpayer doesnot establish reasonable cause simply byengaging a competent Agent to file thetaxpayer’s return. However, if the Agenthas reasonable cause under § 6651(a) forfailing to timely file the taxpayer’s return,the taxpayer will also have reasonablecause for that failure, and the failure-to-file penalty will be abated.

SECTION 19. FILING FORMS W–4WITH THE INTERNAL REVENUESERVICE

.01 An employer is required to send tothe Service by the due date of the quar-terly return copies of all Forms W–4, Em-p l o y e e ’s Withholding Allowance Certifi-cates, received during the quarter fromany employee still employed at the end ofthe quarter who claims:

(1) more than 10 withholding ex-emptions; or

(2) exemption from withholding and

is expected to earn more than $200 perweek.Employers should not send other FormsW–4 unless notified by the Service inwriting to do so.

.02 If an employer’s Form 941 is filedunder the Form 941 ELF Program, copiesof required paper Forms W-4 along with acover letter providing the employer’sname, address, EIN, and the number ofForms W–4 included must be sent to theservice center that would have receivedthe employer’s paper Form 941. See Pub-lication 15, Circular E, Employer’s Ta xGuide, for more information on sendingForms W–4 to the Service.

.03 Required Forms W–4 informationmay also be filed on magnetic media (51/4 inch diskettes, 3 1/2 inch diskettes, ormagnetic tape). See Publication 1245,Specifications for Filing Form W–4, Em-p l o y e e ’s Withholding Allowance Certifi-cate, on Magnetic Tape, and 5 1/4- and 31/2-Inch Magnetic Diskettes, for more in-formation concerning magnetic media fil-ing of Forms W–4.

SECTION 20. FILING FORMS W–2(COPYA) WITH THE SOCIALSECURITYADMINISTRATION

Forms W–2, Wage and Tax Statements,must be filed directly with the Social Se-curity Administration on magnetic mediaor paper. For information on magneticmedia reporting of Form W–2, contact theSocial Security Administration’s RegionalMagnetic Media Coordinators.

SECTION 21. INTERNALREVENUESERVICE CONTACT

Unless otherwise instructed, all ques-tions regarding this revenue procedureshould be directed to the following ad-dress and telephone number:

Internal Revenue ServiceMemphis Service CenterElectronic Filing Help DeskP.O. Box 30309 AMFMemphis, TN 38130Attention: ELF Unit Stop 26

The telephone number of this office is(901) 546-2690 (not a toll-free number).

SECTION 22. EFFECT ON OTHERDOCUMENTS

.01 Rev. Proc. 96–9 is amplified, clari-fied, modified, and superseded.

1997–42 I.R.B. 25 October 20, 1997

APPENDIX

Exhibit 1

Letter of Application to Participate in the Form 941 ELF Program as an Agent

AAAPayroll, Inc.111 Main St.Columbus, NY 11111EIN XX-XXXXXXX

[Date]


To whom it may concern:This letter is an application to participate in the electronic filing program for Forms 941 (“Form 941 ELF Program”).I understand and agree to the following which are prerequisites for participation in the Form 941 ELF Program:1. I will keep copies of the Form 8655, Reporting Agent Authorization for Magnetic Tape/Electronic Filers (or its equivalent) onfile at my principal place of business for a period no less than required under the period of limitation for assessment for the last re-turn filed under its authority. I will provide these Authorizations for examination by the Service upon request.2. I will abide by the recordkeeping requirements set forth in section 10.02 of Rev. Proc. 97–47.

.02 Section 6.05 of Rev. Proc. 96–17,1996–1 C.B. 633, is modified to providethe same relief as set forth in section 5.05of this revenue procedure (regarding anAgent not having to replace a previouslysubmitted Authorization under certain cir-cumstances).

SECTION 23. EFFECTIVE DATE

.01 In general. This revenue procedureis effective for returns due after October20, 1997 (without regard to extensions).

.02 Grandfather rule. Ataxpayer or anAgent that has filed an application for ac-ceptance in the Form 941 ELF Programon or before the effective date of this rev-enue procedure, may be treated as anElectronic Filer that is an Agent for pur-poses of this revenue procedure. The tax-payer or Agent must have been eligible toapply for acceptance in the Form 941 ELFProgram under Rev. Proc. 96–19, andmust comply with all the applicable pro-visions of this revenue procedure otherthan the section 5.03(5) requirement of anA g e n t ’s List containing the names of 10or more taxpayers.

SECTION 24. PAPERWORKREDUCTION ACT

The collections of information con-tained in this revenue procedure havebeen reviewed and approved by the Of-fice of Management and Budget in accor-dance with the Paperwork Reduction Act(44 U.S.C. 3507) under control number1545–1557.

An agency may not conduct or sponsor,and a person is not required to respond to,a collection of information unless the col-lection of information displays a validcontrol number.

The collections of information in thisrevenue procedure are in sections 5, 6, 7,8, 10, 12, and 13. This information is re-quired by the Service to implement theForm 941 ELF Program and to enabletaxpayers to file their Forms 941 electron-i c a l l y. The information will be used toensure that taxpayers receive accurate andessential information regarding the filingof their electronic returns and to identifypersons involved in the filing of elec-tronic returns. The collections of information are required to retain the benefit of

participating in the Form 941 ELF Pro-gram. The likely respondents are busi-ness or other for-profit institutions, fed-eral, state or local governments, nonprofitinstitutions, and small businesses or orga-nizations.

The estimated total annual reportingand recordkeeping burden is 9,305 hours.

The estimated annual burden per re-spondent/recordkeeper varies from 9hours to 47 hours, depending on individ-ual circumstances, with an estimated av-erage of 46.53 hours. The estimated num-ber of respondents and recordkeepers is200.

The estimated annual frequency of re-sponses is on occasion.

Books or records relating to a collec-tion of information must be retained aslong as their contents may become mater-ial in the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

October 20, 1997 26 1997–42 I.R.B.

1997–42 I.R.B. 27 October 20, 1997

3. I will provide my clients documentation of filed returns as set forth in section 10.03 of Rev. Proc. 97–47.4. I will comply with all electronic security restrictions set forth in section 10.04 of Rev. Proc. 97–47 and Publication 1855, Tech-

nical Specifications Guide for the Electronic Filing System of Form 941, Employer’s Quarterly Federal Tax Return. 5. I agree to submit returns that meet the eligibility requirements set forth in section 3.03 of Rev. Proc. 97–47.[Name, title] of [firm name] is the individual to contact concerning the userid/password. [Name] can be reached at [telephone

number]. [Name] has read and understands the rules that apply to the use of the userid/password.[Name, title] of [firm name and address] is the designated recipient of the Personal Identification Number (PIN). [Name] is au-

thorized to administer and use the PIN as the signature of [firm name] to sign and file tax returns in the Form 941 ELF Program.I will begin submitting returns using the Form 941 ELF Program for returns due XX quarter 19XX. I estimate that I will be sub-

mitting XXX number of returns (no fewer than 10 returns).I expect to use [software brand name] translation software and EDI release version [number] for electronic transmissions.I have included with this application a Reporting Agent’s List and an Authorization for each taxpayer on my Reporting Agent’s

List.Please contact [name, title & telephone number] to discuss this letter of application.

[Signature of Electronic Filer’s Authorized Signatory]

Attachments:(1) Agent’s List(2) Authorizations for taxpayers on the Agent’s List

Exhibit 2

Letter of Application to Participate in the Form 941 ELF Program as a Software Developer

AAAPay Developers111 Main St.Columbus, NY 11111EIN XX–XXXXXXX

[Date]


To whom it may concern:This letter is an application to participate in the electronic filing program for Forms 941 (“Form 941 ELF Program”).I understand and agree to the following which is a prerequisite for participation in the Form 941 ELF Program as a software de-

veloper:I will comply with all electronic security restrictions set forth in section 10.04 of Rev. Proc. 97–47 andPublication 1855, Technical Specifications Guide for the Electronic Filing System of Form 941, Employer’s Quarterly Federal

Tax Return.[Name, title] of [firm name] is the individual to contact concerning the userid/password. [Name] can be reached at [telephone

number]. [Name] has read and understands the rules that apply to the use of the userid/password.[Name, title] of [firm name and address] is the designated recipient of the Personal Identification Number (PIN). [Name] is au-

thorized to administer and use the PIN as the signature of [firm name] to test software for use in filing tax returns in the Form 941ELF Program.

I will provide software to begin submitting returns using the Form 941 ELF Program for returns due XX quarter 19XX. I will use [name of software brand or development name] translation software and EDI release version [number] for electronic

transmissions. The software package will be marketed to [reporting agents filing more than XXX returns (no fewer than 10 re-turns)]. The software is a [standalone or payroll package interface].

Please contact [name, title & telephone number] to discuss this letter of application.

[Signature of Software Developer’s Authorized Signatory]

October 20, 1997 28 1997–42 I.R.B.

Exhibit 3

PIN/Userid/Password Receipt

I, [i n s e rt “name of Authorized Signatory, title, Electronic Filer’s name and addre s s ”] acknowledge receipt of the [i n s e rt“userid/password” or “PIN” as appropriate] for the Form 941 ELF Program.

I understand that I am bound by the requirements and responsibilities regarding [insert userid/password, or “PIN” as appropri -ate] as set forth in Rev. Proc. 97–47, and Publication 1855.

[Note: the following paragraph only applies to the PIN receipt] I accept and adopt the PIN as my signature for signing tax returnsfiled for [insert “Electronic Filer’s name”] in the Form 941 ELF Program. I also understand that by entering the PIN, I will be de-claring, under penalties of perjury, that to the best of my knowledge and belief, the tax returns being submitted electronically aretrue, correct, and complete.

For userid/password: [Signature of employee recipient]

For PIN: [Signature of Electronic Filer’s Authorized Signatory]

NOTE: Separate receipts are required for a user identification/password and a PIN.

1997–42 I.R.B. 29 October 20, 1997

October 20, 1997 30 1997–42 I.R.B.

Notice of Proposed Rulemakingand Notice of Public Hearing

Public Disclosure of MaterialRelating to Tax-ExemptOrganizations

REG–246250–96


ACTION: Notice of proposed rulemak-ing and notice of public hearing.

S U M M A RY: This document containsproposed regulations relating to the publicdisclosure requirements of section6104(e) of the Internal Revenue Code.The proposed regulations provide guid-ance for a tax-exempt organization re-quired to make its application for tax ex-emption and annual information returnavailable for public inspection. The pro-posed regulations also provide guidancefor a tax-exempt organization required tocomply with requests made in writing orin person from individuals who seek acopy of those documents. The proposedregulations describe how a tax-exempt or-ganization can make those documentswidely available and, therefore, not be re-quired to provide copies in response to in-dividual requests. The proposed regula-tions address the standards that apply indetermining whether a tax-exempt organi-zation is the subject of a harassment cam-paign and guidance on the applicable pro-cedures to obtain relief. This documentalso provides notice of a public hearing.

DATES: Written comments and requeststo speak (with outlines of oral comments)at the public hearing scheduled for Febru-ary 4, 1998, beginning at 10 a.m. must besubmitted by December 26, 1997.

ADDRESSES: Send submissions to:CC:DOM:CORP:R (REG–246250–96),room 5226, Internal Revenue Service,POB 7604, Ben Franklin Station, Wa s h-ington DC 20044. Submissions may behand-delivered between the hours of 8a.m. and 5 p.m. to: CC:DOM:CORP:R(REG–246250–96), Courier’s Desk, In-ternal Revenue Service, 1111 ConstitutionAvenue NW., Washington DC. A l t e r n a-t i v e l y, taxpayers may submit comments

electronically via the Internet by selectingthe “Tax Regs” option on the IRS HomePage, or by submitting comments directlyto the IRS Internet site at http://www.irs.u s t r e a s . g o v / p r o d / t a x _ r e g s / c o m m e n t s . h t m l .The public hearing will be held in the IRSAuditorium, Internal Revenue ServiceBuilding, 1111 Constitution Avenue, NW.,Washington, DC.

FOR FURTHER INFORMATION CON-TA C T: Concerning the regulations,Michael B. Blumenfeld, (202) 622-6070;concerning submissions and the hearing,Michael Slaughter, (202) 622-7190 (nottoll-free numbers).


Paperwork Reduction Act

The collections of information con-tained in this notice of proposed rulemak-ing have been submitted to the Office ofManagement and Budget for review in ac-cordance with the Paperwork ReductionAct of 1995 (44 U.S.C. 3507(d)). Com-ments on the collections of informationshould be sent to the Office of Manage-ment and Budget, Attn: Desk Officer forthe Department of the Treasury, Office ofInformation and Regulatory A ff a i r s ,Washington, DC 20503, with copies tothe Internal Revenue Service, Attn: IRSReports Clearance Off i c e r, T: F P, Wa s h-ington, DC 20224. Comments on the col-lections of information should be receivedby November 25, 1997. Comments arespecifically requested concerning:

Whether the proposed collections of in-formation are necessary for the properperformance of the functions of the Inter-nal Revenue Service, including whetherthe information will have practical utility;

The accuracy of the estimated burdenassociated with the proposed collectionsof information;

How the quality, utility, and clarity ofthe information to be collected may be en-hanced;

How the burden of complying with theproposed collections of information maybe minimized, including through the ap-plication of automated collection tech-niques or other forms of information tech-nology; and

Estimates of capital or start-up costsand costs of operation, maintenance, andpurchase of services to provide informa-tion.

The collections of information in theseproposed regulations are in §§301.6104-(e)–1, 301.6104(e)–2, and 301.6104(e)–3.This information is required to enable atax-exempt organization to comply withsection 6104(e) of the Internal RevenueCode. Under section 6104(e), a tax-ex-empt organization is required to make itsapplication for tax exemption and its an-nual information returns available forpublic inspection. In addition, a tax-ex-empt organization is required to complywith requests made in writing or in personfrom individuals who seek a copy of thosedocuments or, in the alternative, to makeits documents widely available. The re-quirement that a tax-exempt organizationmake its application for tax exemptionand annual information returns availablefor public inspection and comply with re-quests made in writing or in person fromindividuals who seek a copy of those doc-uments or, in the alternative, make thedocuments widely available, will enablethe public to obtain information about thetax-exempt organization. Under section6104(e), a tax-exempt organization is per-mitted to file an application for relieffrom the requirement to provide copies ifthe organization reasonably believes it isthe subject of a harassment campaign.The information a tax-exempt org a n i z a-tion provides when filing an applicationfor a determination that it is subject to aharassment campaign will be used by theIRS to make such determination. T h ecollection of information is required toobtain relief from the requirement to com-ply with requests for copies if such re-quests are part of the harassment cam-paign. The likely respondents and/orrecordkeepers are tax-exempt org a n i z a-tions. The burden for recordkeeping andfor reporting is reflected below.

Estimated total annual recordkeepingburden: 551,000 hours.

Estimated average annual burden perrecordkeeper: 30 minutes.

Estimated number of recordkeepers:1,100,000.

Estimated total annual reporting bur-den: 500 hours.

Part IV. Items of General Interest

1997–42 I.R.B. 31 October 20, 1997

Estimated average annual reportingburden per respondent: 29 minutes.

Estimated number of respondents:1050.

Estimated annual frequency of re-sponses: on occasion.

An agency may not conduct or sponsor,and a person is not required to respond to,a collection of information unless it dis-plays a valid control number assigned bythe Office of Management and Budget.

Books or records relating to a collec-tion of information must be retained aslong as their contents may become mater-ial in the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential, asrequired by 26 U.S.C. 6103.

Background

This document contains proposedamendments to the Income Tax Regula-tions (26 CFR part 301) relating to thesection 6104(e) disclosure requirementsaffecting tax-exempt organizations (orga-nizations described in sections 501(c) or(d) and exempt from taxation under sec-tion 501(a)). Section 10702 of the Om-nibus Budget Reconciliation Act of 1987(OBRA ‘87) added subsection (e) to sec-tion 6104 of the Internal Revenue Code(Code). Section 6104(e) requires eachtax-exempt organization, including onethat is a private foundation, to allow pub-lic inspection of the organization’s appli-cation for recognition of tax exemption.Section 6104(e) also requires each tax-ex-empt organization, other than one that is aprivate foundation, to allow public in-spection at the organization’s principal of-fice (and certain regional or district of-fices) of its three most recent annualinformation returns. Each return must bemade available for a 3-year period begin-ning on the date the return is required tobe filed or is actually filed, whichever isl a t e r. Notice 88–20 (1988–2 C.B. 454),provided tax-exempt organizations withguidance for complying with the section6104(e) public inspection requirements.

The Taxpayer Bill of Rights 2(TBOR2), enacted on July 30, 1996,amended section 6104(e) by adding addi-tional requirements. As amended, section6104(e) requires each tax-exempt organi-zation, including one that is a privatefoundation, to comply with requests,made either in writing or in person, for

copies of the org a n i z a t i o n ’s applicationfor recognition of tax-exempt status. Sec-tion 6104(e) also requires each tax-ex-empt organization, other than one that is aprivate foundation, to comply with re-quests, made either in writing or in per-son, for copies of the organization’s threemost recent annual information returns.The organization must fulfill these re-quests without charge, other than a rea-sonable fee for reproduction and mailingcosts. If the request for copies is made inperson, the organization must provide therequested copies immediately. If the re-quest for copies is made in writing, the or-ganization must provide the copies within30 days. Section 6104(e) also providesthat an organization is relieved of itsobligation to provide copies upon requestif, in accordance with regulations to bepromulgated by the Secretary of the Trea-sury, (1) the organization has made the re-quested documents widely available or(2) the Secretary of the Treasury deter-mines, upon application by the organiza-tion, that the organization is subject to aharassment campaign such that a waiverof the obligation to provide copies wouldbe in the public interest.

In Notice 96–48 (1996–39 I.R.B. 8),the IRS invited comments on the changesmade by TBOR2. Twenty-two commentswere received and considered in the draft-ing of this notice of proposed rulemaking.The comments addressed a range of is-sues, although they made several sugges-tions in common. Several commentatorsrequested that the guidance on the newdisclosure requirements follow the exist-ing guidance on the public inspection re-quirements provided in Notice 88–120.Several commentators also recommendedthat the fee charged by the IRS for copiesof organization documents be used to es-tablish a reasonable fee for an org a n i z a-tion to charge when fulfilling requests forcopies of the documents. A number ofcomments were received concerning theInternet. Most, but not all, of these com-ments urged that posting an org a n i z a-t i o n ’s documents on the Internet betreated as making those documentswidely available. Finally, several com-mentators asked for guidance in determin-ing when an organization is subject to aharassment campaign, how to apply for aharassment determination, what kind ofrelief is available while such an applica-

tion is pending and the effect of a deter-mination that the organization is the sub-ject of a harassment campaign.

Explanation of Provisions

Overview

The proposed regulations provide guid-ance concerning the application and re-turns a tax-exempt organization mustmake available for public inspection andmust supply in response to requests forcopies. The proposed regulations alsoprovide guidance on (1) the place andtime for making these documents avail-able for public inspection, (2) conditionsthat may be placed on requests for copiesof documents, and (3) the amount, formand time of payment of any fees that maybe charged. The regulations also pre-scribe how an organization can make itsapplication for tax exemption and annualinformation returns widely available. Fi-n a l l y, the proposed regulations provideguidance on the standards that apply indetermining whether an organization isthe subject of a harassment campaign andon the applicable procedures for obtainingrelief.

Material Required to be Made Availablefor Public Inspection and Supplied in Response to a Request for Copies

The proposed regulations specify thedocuments that a tax-exempt organizationmust make available for public inspectionor supply in response to a request forcopies. A tax-exempt organization, in-cluding one that is a private foundation,must make its application for tax exemp-tion available. An application for tax ex-emption includes the application form(such as Form 1023 or Form 1024) andany supporting documents filed by the or-ganization in support of its application. Italso includes any letter or document is-sued by the IRS in connection with theapplication. Consistent with the guidanceprovided in Notice 88–120, if an organi-zation filed its application before July 15,1987, the proposed regulations providethat the organization is required to makeavailable a copy of its application only ifit had a copy of the application on July15, 1987.

A tax-exempt organization, other thanone that is a private foundation, mustmake its three most recent annual infor-

mation returns available. Generally, anannual information return includes Forms990, 990–EZ, 990–BL, and Form 1065. Italso includes all schedules and attach-ments filed with the IRS. An organizationis not required, however, to disclose theparts of the return that identify names andaddresses of contributors to the organiza-tion, nor is it required to disclose Form990–T. The proposed regulations providerules concerning the documents that mustbe made available by an organization thatis recognized as tax-exempt under a groupexemption letter or that files a group re-turn pursuant to §1.6033–2(d) and Rev.Proc. 80–27, 1980–1 C.B. 677 (or anysuccessor provision). Finally, the pro-posed regulations provide guidance to anindividual denied inspection, or a copy, ofan application or a return. In such a case,the individual may provide the IRS with astatement that describes the reason whythe individual believes the denial was inviolation of legal requirements.

Place and Time Documents Must BeAvailable for Public Inspection

The proposed regulations provide that atax-exempt organization must make thespecified documents available for publicinspection at its principal, regional anddistrict offices. The specified documentsgenerally must be available for inspectionon the day of the request during the of-fice’s normal business hours. Consistentwith section 6104(e) and Notice 88–120,the proposed regulations provide that ano ffice of an organization will be consid-ered a regional or district office only if ithas three or more paid full-time employ-ees (or paid employees, whether part-timeor full-time, whose aggregate number ofpaid hours per week is at least 120). Therules exclude certain sites where the orga-n i z a t i o n ’s employees perform solely ex-empt function activities from beingtreated as a regional or district office. Inaddition, the proposed regulations pre-scribe how an organization that does notmaintain a permanent office or whose of-fice has very limited hours during certaintimes of the year can comply with thepublic inspection requirements. The pro-posed regulations also provide rules con-cerning the conditions the org a n i z a t i o nmay impose on public inspections that areconsistent with Notice 88–120.

Requirement to Furnish Copy to a Requester

The proposed regulations require that atax-exempt organization accept requestsfor copies made in person at the sameplace and time that the information mustbe available for public inspection. Theyalso generally require an organization toprovide the copies on the day of the re-quest. In unusual circumstances, an orga-nization will be permitted to provide therequested copies on the next business day.

When a request is made in writing, theproposed regulations require that a tax-exempt organization furnish the copieswithin 30 days from the date it receivesthe request. If an organization, however,requires advance payment of a reasonablefee for copying and mailing, it may pro-vide the copies within 30 days from thedate it receives payment, rather than fromthe date of the initial request.

The proposed regulations provide guid-ance as to what constitutes a request,when a request is considered received,and when copies are considered provided.The proposed regulations provide that, in-stead of requesting a copy of an entire ap-plication for tax exemption or annual in-formation return, individuals may requesta specific part of either document. Fi-n a l l y, the proposed regulations permit aprincipal, regional, or district office of anorganization to use an agent to process re-quests for copies.

Reasonable Fee for Providing Copies

The proposed regulations provide thatthe reasonable fee a tax-exempt organiza-tion is permitted to charge for copies maybe no more than the fees charged by theIRS for copies of tax-exempt organizationtax returns and related documents (cur-rently $1.00 for the first page and $.15 foreach subsequent page), plus actualpostage costs. The proposed regulationspermit an organization to collect paymentin advance of providing the requestedcopies. If an organization receives a writ-ten request for copies with no paymentenclosed, and the organization requirespayment in advance, the org a n i z a t i o nmust request payment within 7 days fromthe date it receives the request. Paymentwill be deemed to occur on the day an or-ganization receives the cash, check (pro-vided the check subsequently clears) or

money order. The proposed regulationsrequire an organization to accept paymentmade by cash or money order, and whenthe request is made in writing, also acceptpayment made by personal check. An or-ganization is permitted, though not re-quired, to accept other forms of payment.To protect requesters from unexpectedfees where a tax-exempt org a n i z a t i o ndoes not require prepayment and where arequester does not enclose prepaymentwith a request, an organization must re-ceive consent from a requester before pro-viding copies for which the fee charg e dfor copying and postage is in excess of$20.

Making Applications and Information Returns Widely Available

The proposed regulations provide that atax-exempt organization is not required tocomply with requests for copies if the or-ganization has made the requested docu-ments widely available. The proposedregulations specify that an org a n i z a t i o ncan make its application for tax exemp-tion and/or an annual information returnwidely available by posting the applicabledocument on the org a n i z a t i o n ’s Wo r l dWide Web page on the Internet or by hav-ing the applicable document posted on an-other org a n i z a t i o n ’s page as part of adatabase of similar materials. In addition,the proposed regulations provide that theCommissioner may prescribe, by revenueprocedure or other guidance, other meth-ods that an organization can use to makeits application and/or its return widelyavailable. An organization that makes itsapplication and/or its return widely avail-able must inform individuals who requestcopies how and where to obtain the re-quested document. The Treasury and theIRS are interested in comments on addi-tional methods by which applications andreturns could be made widely available,including the use of a clearinghouse thatmaintains a large inventory of documentsfrom many organizations.

Harassment Campaigns

The proposed regulations provide guid-ance in determining whether a tax-exempto rganization is the subject of a harass-ment campaign. Generally, a harassmentcampaign exists where an organization re-ceives a group of requests, and the rele-vant facts and circumstances show that

October 20, 1997 32 1997–42 I.R.B.

the purpose of the group of requests wasto disrupt the operations of the tax-ex-empt organization rather than to obtain in-formation. The proposed regulations alsocontain examples that evaluate whetherparticular situations constitute a harass-ment campaign and whether an organiza-tion has a reasonable basis for believingthat a request is part of the harassmentcampaign. For example, the IRS will notallow organizations to suspend compli-ance with a request for copies from a rep-resentative of the news media eventhough the organization believes that re-quest is part of a harassment campaign.The proposed regulations also permit ano rganization to disregard requests in ex-cess of two per month or four per yearmade by a single individual or sent from asingle address. Finally, the proposed reg-ulations provide procedures for request-ing a determination that an organization issubject to a harassment campaign, thetreatment of requests for copies while arequest for a determination is pending,and the effect of such a determination.

Proposed Effective Date

These regulations are proposed to beeffective beginning 60 days after publica-tion of these regulations as final regula-tions.

Special Analyses

Pursuant to sections 603(a) and 605(b)of the Regulatory Flexibility Act, it is cer-tified that the collection of informationreferenced in this notice of proposed rule-making will not have a significant eco-nomic impact on a substantial number ofsmall entities. Although a substantialnumber of small entities will be subject tothe collection of information require-ments in these regulations, the require-ments will not have a significant eco-nomic impact on these entities. T h eaverage time required to maintain and dis-close the information required under theseregulations is estimated to be 30 minutesfor each tax-exempt organization. T h i sestimate is based on the assumption that,on average, a tax-exempt org a n i z a t i o nwill receive one request per year to in-spect or provide copies of its applicationfor tax exemption and its annual informa-tion returns. Less than 0.001 percent ofthe tax-exempt organizations affected bythese regulations will be subject to the re-

porting requirements contained in the reg-ulations. It is estimated that annually, ap-proximately 1,000 tax-exempt org a n i z a-tions will make its documents widelyavailable by posting them on the Internet.In addition, it is estimated that annually,approximately 50 tax-exempt org a n i z a-tions will file an application for a determi-nation that they are the subject of a ha-rassment campaign such that a waiver ofthe obligation to provide copies of theirapplications for tax exemption and theirannual information returns is in the publicinterest. The average time required tocomplete, assemble and file an applica-tion describing a harassment campaign isexpected to be 5 hours. Because applica-tions for a harassment campaign determi-nation will be filed so infrequently, theywill have no effect on the average timeneeded to comply with the requirementsin these regulations. In addition, a tax-ex-empt organization is allowed in these reg-ulations to charge a reasonable fee forproviding copies to requesters. T h e r e-fore, it is estimated that on average it willcost tax-exempt organizations less than$10 per year to comply with these regula-tions, which is not a significant economicimpact.

Pursuant to section 7805(f) of the Inter-nal Revenue Code, this notice of pro-posed rulemaking will be submitted to theChief Counsel for Advocacy of the SmallBusiness Administration for comment onits impact on small business.

Comments and Public Hearing

Before these proposed regulations areadopted as final regulations, considera-tion will be given to any written com-ments (a signed original and eight (8)copies) that are submitted timely to theIRS. All comments will be available forpublic inspection and copying.

A public hearing has been scheduledfor February 4, 1998, beginning at 10 a.m.in the IRS Auditorium, Internal RevenueBuilding, 1111 Constitution Avenue, NW.,Washington, DC. Because of access re-strictions, visitors will not be admitted be-yond the Internal Revenue Service Build-ing lobby more than 15 minutes beforethe hearing starts.

The rules of 26 CFR 601.601(a)(3)apply to the hearing.

Persons that wish to present oral com-ments at the hearing must submit written

comments and an outline of the topics tobe discussed and the time devoted to eachtopic (signed original and eight (8)copies) by December 26, 1997.

A period of 10 minutes will be allottedto each person for making comments.

An agenda showing the schedule ofspeakers will be prepared after the dead-line for receiving outlines has passed.Copies of the agenda will be availablefree of charge at the hearing.


The principal author of these regula-tions is Michael B. Blumenfeld, Office ofAssociate Chief Counsel (Employee Ben-efits and Exempt Organizations), IRS.Other personnel from the IRS and Tr e a-sury Department also participated in theirdevelopment.

* * * * *

Proposed Amendments to the Regulations

A c c o r d i n g l y, 26 CFR Part 301 is pro-posed to be amended as follows:

PART301—PROCEDURE ANDADMINISTRATION

Paragraph 1. The authority citation for26 CFR part 301 is amended by addingentries in numerical order to read as fol-lows:

Authority: 26 U.S.C. 7805 * * *Section 301.6104(e)–2 also issued

under 26 U.S.C. 6104(e)(3);Section 301.6104(e)–3 also issued

under 26 U.S.C. 6104(e)(3); * * *P a r. 2. Sections 301.6104(e)–0,

301.6104(e)–1, 301.6104(e)–2, and301.6104(e)–3 are added to read as follows:

§301.6104(e)–0 Table of contents.

This section lists captions contained in§§301.6104(e)–1, 301.6104(e)–2, and301.6104(e)-3.

§301.6104(e)–1 Public inspection anddistribution of annual information returnsof tax-exempt organizations (other thanprivate foundations) and applications fortax exemption.

(a) In general.(b) Definitions.(1) Tax-exempt organization.(2) Private foundation.(3) Application for tax exemption.(i) In general.

1997–42 I.R.B. 33 October 20, 1997

(ii) No prescribed application form.(iii) Exceptions.(4) Annual information return.(i) In general.(ii) Returns more than 3 years old.(5) Regional or district offices.(i) In general.(ii) Site not considered a regional or dis-

trict office.(c) Special rules relating to public in-

spection.(1) Permissible conditions on public in-

spection.(2) O rganizations that do not maintain

permanent offices.(d) Special rules relating to copies.(1) Time and place for providing copies

in response to requests made in per-son.

(i) In general.(ii) Unusual circumstances.(iii) Agents for providing copies.(2) Request for copies in writing.(i) In general.(ii) Time and manner of fulfilling written

requests.(A) In general.(B) Agents for providing copies.(3) Request for a copy of parts of docu-

ment.(4) Fees for copies.(i) In general.(ii) Form of payment.(A) Request made in person.(B) Request made in writing.(iii) Avoidance of unexpected fees.(iv) Responding to inquiries of fees

charged.(e) Rules relating to documents to be

provided by regional and district of-fices, and local and subordinate orga-nizations.

(1) Documents to be provided by re-gional and district offices.

(2) Documents to be provided by localand subordinate organizations.

(f) Failure to comply with public inspec-tion or copying requirements.

(g) Effective date.

§301.6104(e)-2 Making applications andreturns widely available.

(a) In general.(b) Widely available.(1) In general.(2) Internet posting.(3) Notice requirement.(c) Effective date.

§301.6104(e)–3 Tax-exempt organizationsubject to harassment campaign.

(a) In general.(b) Harassment.(c) Special rule for multiple requests

from a single individual or address.(d) Harassment determination procedure.(e) Effect of a harassment determination.(f) Examples.(g) Effective date.

§301.6104(e)–1 Public inspection anddistribution of annual information returnsof tax-exempt organizations (other thanprivate foundations) and applications fortax exemption.

(a) In general. Except as otherwiseprovided in this section, a tax-exempt or-ganization, including one that is a privatefoundation, shall make its application fortax exemption (as defined in paragraph(b)(3) of this section) available for publicinspection without charge at its principal,regional and district offices during regularbusiness hours. A tax-exempt org a n i z a-tion, other than a private foundation, shallmake its annual information returns (asdefined in paragraph (b)(4) of this sec-tion) available for public inspection with-out charge in the same offices during reg-ular business hours. Each annualinformation return shall be made avail-able for a period of three years beginningon the date the return is required to befiled (determined with regard to any ex-tension of time for filing) or is actuallyfiled, whichever is later. In addition, ex-cept as provided in §301.6104(e)–2 and§301.6104(e)–3, an organization shallprovide a copy without charge, other thana reasonable fee for reproduction and ac-tual postage costs, of all or any part of anyapplication or return required to be madeavailable for public inspection under thisparagraph to any individual who makes arequest for such copy in person or in writ-ing. See paragraph (d)(4) of this sectionfor rules relating to fees for copies.

(b) D e f i n i t i o n s . For purposes of sec-tion 6104(e) and the regulations thereun-der, the following definitions apply:

(1) Tax-exempt organization. The termtax-exempt organization means any orga-nization that is described in section 501(c)or section 501(d) and is exempt from tax-ation under section 501(a).

(2) Private foundation. The term pri-

vate foundation means a private founda-tion as defined in section 509(a).

(3) Application for tax exemption— ( i )In general. The term application for taxexemption includes any prescribed appli-cation form (such as Form 1023 or Form1024), all documents and statements theInternal Revenue Service requires an ap-plicant to file with the form, any state-ment or other supporting document sub-mitted by an organization in support of itsapplication, and any letter or other docu-ment issued by the Internal Revenue Ser-vice concerning the application (such as afavorable determination letter or a list ofquestions from the Internal Revenue Ser-vice about the application). For example,a legal brief supporting an application, ora response to questions from the InternalRevenue Service during the applicationprocess, is a supporting document.

(ii) No prescribed application form. Ifno form is prescribed for an org a n i z a-t i o n ’s application for tax exemption, theapplication for tax exemption includes—

(A) The application letter and copy ofthe articles of incorporation, declarationof trust, or other similar instrument thatsets forth the permitted powers or activi-ties of the organization;

(B) The organization’s bylaws or othercode of regulations;

(C) The org a n i z a t i o n ’s latest financialstatements, as of the date the applicationis submitted, showing assets, liabilities,receipts and disbursements;

(D) Statements describing the characterof the organization, the purpose for whichit was organized, and its actual activities;

(E) Statements showing the sources ofthe org a n i z a t i o n ’s income and receiptsand their disposition; and

(F) Any other statements or documentsthe Internal Revenue Service required theorganization to file with, or that the orga-nization submitted in support of, the ap-plication letter.

(iii) Exceptions. The term applicationfor tax exemption does not include—

(A) Any application for tax exemptionfiled by an organization that has not yetbeen recognized, on the basis of the appli-cation, by the Internal Revenue Service asexempt from taxation for any taxable year;

(B) Any application for tax exemptionfiled before July 15, 1987 unless the orga-nization filing the application had a copyof the application on July 15, 1987; or

October 20, 1997 34 1997–42 I.R.B.

(C) Any material, including the mater-ial listed in §301.6104(a)–1(i) and infor-mation that the Secretary would be re-quired to withhold from publicinspection, that is not available for publicinspection under section 6104.

(4) Annual information re t u r n—(i) I ngeneral. The term annual information re -turn includes an exact copy of any returnfiled by a tax-exempt organization pur-suant to section 6033. It also includes anyamended return filed with the InternalRevenue Service after the date the origi-nal return is filed. The copy must includeall information furnished to the InternalRevenue Service on Form 990, Return ofO rganization Exempt From Income Ta x ,or any version of Form 990 (such asForms 990–EZ or 990–BL except Form990–T) and Form 1065, as well as allschedules, attachments and supportingdocuments, except for the name or ad-dress of any contributor to the org a n i z a-tion. For example, the annual informationreturn includes Schedule A of Form 990containing supplementary information onsection 501(c)(3) organizations, and thoseparts of the return that show compensa-tion paid to specific persons (Part VI ofForm 990 and Parts I and II of Schedule Aof Form 990). The term annual informa -tion return does not include Schedule AofForm 990–BL, Form 990–T, Exempt Or-ganization Business Income Tax Returnor Form 1120–POL, U.S. Income Tax Re-turn For Certain Political Org a n i z a t i o n s .For purposes of this section and the regu-lations thereunder, an annual informationreturn does not include the return of a pri-vate foundation. See §301.6104(d)–1 forrequirements relating to public disclosureof private foundation annual returns.

(ii) Returns more than 3 years old. Theterm annual information return does notinclude any return after the expiration of 3years from the date the return is requiredto be filed (including any extension oftime that has been granted for filing suchreturn) or is actually filed, whichever isl a t e r. If an organization has filed anamended return, however, the amendedreturn must be made available for a periodof 3 years beginning on the date it is filedwith the Internal Revenue Service.

(5) Regional or district offices—(i) I ngeneral. A regional or district office isany office of a tax-exempt org a n i z a t i o n ,other than its principal office, that has—

(A) 3 or more paid full-time employ-ees; or

(B) Paid employees, whether part-timeor full-time, whose aggregate number ofpaid hours a week are normally at least120.

(ii) Site not considered a regional ordistrict office. A site is not considered aregional or district office, however, if—

(A) The only services provided at thesite further exempt purposes (such as daycare, health care or scientific or medicalresearch); and

(B) The site does not serve as an officefor management staff, other than man-agers involved solely in managing the ex-empt function activities at the site.

(c) Special rules relating to public in -s p e c t i o n—(1) Permissible conditions onpublic inspection. A tax-exempt org a n i-zation may have an employee present inthe room during an inspection. The orga-nization, however, must allow the indi-vidual conducting the inspection to takenotes freely during the inspection, and tophotocopy the document at no charge, ifthe individual provides the photocopyingequipment at the place of inspection.

(2) Organizations that do not maintainpermanent offices. If a tax-exempt orga-nization does not maintain a permanentoffice, the organization shall comply withthe public inspection requirements ofparagraph (a) of this section by making itsapplication for tax exemption and its an-nual information returns, as applicable,available for inspection at a reasonable lo-cation of its choice. Such an organizationshall permit public inspection within areasonable amount of time after receivinga request for inspection (normally notmore than 2 weeks) and at a reasonabletime of day. At the organization’s option,it may mail, within 2 weeks of receivingthe request, a copy of its application fortax exemption and annual information re-turns to the requester in lieu of allowingan inspection. The organization maycharge the requester for copying and ac-tual postage costs only if the requesterconsents to the charge. An org a n i z a t i o nthat has a permanent office, but has no of-fice hours or has very limited hours dur-ing certain times of the year, shall makeits documents available during those peri-ods when office hours are limited or notavailable as though it were an org a n i z a-tion without a permanent office.

(d) Special rules relating to copies—(1) Time and place for providing copies inresponse to requests made in-person—(i)In general. A tax-exempt org a n i z a t i o nshall provide copies of the documents it isrequired to provide under section 6104(e)in response to a request made in person atthe time and place that it makes its docu-ments available for inspection under para-graph (a) of this section. Except as pro-vided in paragraph (d)(1)(ii) of thissection, an organization shall providesuch copies to a requester on the day therequest is made.

(ii) Unusual circumstances. Where un-usual circumstances exist such that fulfill-ing a request on the same business dayplaces an unreasonable burden on the tax-exempt organization, the org a n i z a t i o nmay provide the copies in response to arequest made in person on the next busi-ness day following the day of the request.Unusual circumstances may include, butare not limited to, receipt of a volume ofrequests that exceeds the org a n i z a t i o n ’sdaily capacity to make copies; requestsreceived shortly before the end of regularbusiness hours that require an extensiveamount of copying; or requests receivedon a day when the organization’s manage-rial staff is conducting special duties, suchas student registration, rather than its reg-ular administrative duties.

(iii) Agents for providing copies. Aprincipal, regional or district office of atax-exempt organization subject to the re-quirements of this section may retain alocal agent, within reasonable proximityof the applicable office, to process in per-son requests for copies of its documents.An agent that receives a request for copiesmust provide the copies within the timeand under the conditions that apply to theorganization itself. For example, an agentmust provide a copy to a requester on theday the agent receives the request. How-ever, an office using such an agent that re-ceives an in-person request for a copymust immediately provide the name, ad-dress and telephone number of the localagent to the requester. An org a n i z a t i o nthat notifies an in-person requester ofsuch an agent is not required to respondfurther to the requester. However, thepenalty provisions of sections 6652(c)(1)-(C), 6652(c)(1)(D), and 6685 continue toapply to the tax-exempt organization ifthe org a n i z a t i o n ’s agent fails to provide

1997–42 I.R.B. 35 October 20, 1997

the documents as required under section6104(e).

(2) Request for copies in writing— ( i )In general. A tax-exempt org a n i z a t i o nmust honor a written request for a copy ofdocuments that the organization is re-quired to provide under section 6104(e) ifthe request—

(A) Is addressed to, and delivered bymail, electronic mail, facsimile, a privatedelivery service as defined in section7502(f), or in person, to the principal, re-gional or district office of the org a n i z a-tion; and

(B) Sets forth the address to which thecopy of the documents should be sent.

(ii) Time and manner of fulfilling writ -ten re q u e s t s—(A) In general. A t a x - e x-empt organization receiving a written re-quest for a copy shall mail the copy of therequested documents (or the requestedparts of documents) within 30 days fromthe date it receives the request. If a tax-exempt organization requires payment inadvance, it shall provide the copies within30 days from the date it receives payment.If an organization requiring payment inadvance receives a written request with-out payment or an insufficient payment,the organization must, within 7 days fromthe date it receives the request, notify therequester of its prepayment policy and theamount due. A request or payment that ismailed shall be deemed (in the absence ofevidence to the contrary) to be receivedby an organization 7 days after the date ofthe postmark. Requests transmitted to theorganization by electronic mail or facsim-ile shall be deemed received the day therequest is transmitted successfully.Copies are deemed provided on the dateof the postmark or private delivery mark(or if sent by certified or registered mail,the date of registration or the date of thepostmark on the sender’s receipt). If anindividual making a request consents, atax-exempt organization may provide acopy of the requested document exclu-sively by electronic mail. In such case,the material is provided on the date the or-ganization successfully transmits the elec-tronic mail.

(B) Agents for providing copies. Atax-exempt organization subject to the re-quirements of this section may retain anagent to process written requests forcopies of its documents. The agent shallprovide the copies within the time and

under the conditions that apply to the or-ganization itself. For example, if the or-ganization received the request first (e.g.before the agent), the deadline for provid-ing a copy in response to a request shallbe determined in reference to when theo rganization received the request, notwhen the agent received the request. Anorganization that transfers a request for acopy to such an agent is not required torespond further to the request. However,if the organization’s agent fails to providethe documents as required under section6104(e), the penalty provisions of sec-tions 6652(c)(1)(C), 6652(c)(1)(D), and6685 continue to apply to the tax-exemptorganization.

(3) Request for a copy of parts of docu -ment. A tax-exempt organization mustfulfill a request for a copy of the organiza-tion’s entire application for tax exemptionor annual information return or any iden-tifiable part, attachment or supportingpaper of its application or return. A r e-quest for a copy of less than its entire ap-plication or less than its entire return mustdescribe the information desired in suffi-cient detail to enable the organization toidentify the desired part of the applicabledocument without placing an unreason-able burden upon the organization. Forexample, a request may be limited tothose parts of an organization’s annual in-formation return that relates to the com-pensation of the org a n i z a t i o n ’s off i c e r sand managers.

(4) Fees for copies—(i) In general. Atax-exempt organization charges a reason-able fee for providing copies only if itcharges no more than the per-page copy-ing charge stated in §601.702(f)(5)(iv)(B)of this chapter (fee charged by the Inter-nal Revenue Service for providing copiesto a requester), plus no more than the ac-tual postage costs incurred by the organi-zation to provide the copies. An organi-zation may require that an individualrequesting copies of documents pay thefee before the documents are provided. Ifthe organization has provided an individ-ual making a request with notice of thefee, and the individual has not paid the feewithin 30 days, or if the individual paysthe fee by check and the check does notclear when deposited, the org a n i z a t i o nmay disregard the request.

(ii) Form of payment—(A) R e q u e s tmade in person. If a tax-exempt organi-

zation charges a fee for copying as per-mitted under paragraph (d)(4)(i) of thissection, it shall accept payment by cashand money order for requests made inperson. The organization may acceptother forms of payment, such as personalchecks or credit cards.

(B) Request made in writing. If a tax-exempt organization charges a fee forcopying and postage as permitted underparagraph (d)(4)(i) of this section, it shallaccept payment by certified check, per-sonal check and money order for requestsmade in writing. The organization mayaccept other forms of payment, such ascredit cards.

(iii) Avoidance of unexpected fees.Where a tax-exempt organization doesnot require prepayment and a requesterdoes not enclose prepayment with a re-quest, an organization must receive con-sent from a requester before providingcopies for which the fee charged for copy-ing and postage under paragraph (d)(4)(i)of this section is in excess of $20.

(iv) Responding to inquiries of feesc h a rg e d . In order to facilitate a re-q u e s t e r’s ability to receive copiespromptly, a tax-exempt organization shallrespond to any questions from potentialrequesters concerning its fees for copyingand postage. For example, the organiza-tion shall inform the requester of itscharge for copying and mailing its appli-cation for exemption and each annual in-formation return, with and without attach-ments, so that a requester may includepayment with the request for copies.

(e) Rules relating to documents to beprovided by regional and district offices,and local and subordinate org a n i z a -t i o n s—(1) Documents to be provided byregional and district offices. A r e g i o n a lor district office of a tax-exempt organi-zation must satisfy the same rules as theprincipal office with respect to public in-spection and providing copies of its appli-cation for tax exemption and annual infor-mation returns. However, a regional ordistrict office is not required to make itsannual information return available for in-spection or for providing copies until 30days after the date the return is required tobe filed (including any extension of timethat is granted for filing such return) or isactually filed, whichever is later.

(2) Documents to be provided by localand subordinate organizations. A l o c a l

October 20, 1997 36 1997–42 I.R.B.

organization that does not file its own an-nual information return (because it is af-filiated with a central organization thatfiles a group return pursuant to §1.6033-2(d)) must make available the applicableannual information returns filed by thecentral organization. However, a local or-ganization is not required to make its an-nual information return available for in-spection or for providing copies until 30days after the date the return is required tobe filed (including any extension of timethat is granted for filing such return) or isactually filed by the central organization,whichever is later. If a subordinate orga-nization is covered by a group exemptionl e t t e r, the application for tax exemptionthe subordinate organization must makeavailable for public inspection and furnishin response to requests for copies is theapplication submitted to the Internal Rev-enue Service by its parent or supervisoryo rganization to obtain the group exemp-tion letter, as well as any additional docu-ments submitted in order to cover the sub-ordinate organization under the groupexemption letter.

(f) F a i l u re to comply with public in -spection or copying re q u i re m e n t s . If atax-exempt organization denies an indi-v i d u a l ’s request for inspection or a copyof an application for tax exemption or anannual information return as requiredunder section 6104(e) and this section,and the individual wants to alert the Inter-nal Revenue Service to the possible needfor enforcement action, the individualmay provide a statement to the Director,Exempt Organizations Division,CP:E:EO, Internal Revenue Service, 1111Constitution Avenue, NW., Wa s h i n g t o n ,D.C. 20224 that describes the reason whythe individual believes the denial was inviolation of the requirements of section6104(e).

(g) Effective date. This section is effec-tive beginning 60 days after its publica-tion as a final regulation in the F e d e r a lRegister.

§301.6104(e)–2 Making applicationsand returns widely available.

(a) In general. Atax-exempt organiza-tion is not required to comply with a re-quest for a copy of its application for taxexemption or an annual information re-turn pursuant to §301.6104(e)–1(a) if theo rganization has made the requested ap-

plication or return widely available in ac-cordance with paragraph (b) of this sec-tion. An organization that makes its application or return widely availablemust nevertheless make the application orreturn available for public inspection asrequired under §301.6104(d)–1 or§301.6104(e)–1, as applicable.

(b) Widely available—(1) In general.A tax-exempt organization makes its ap-plication for tax exemption and/or an an-nual information return widely availableif the organization uses a method speci-fied in paragraph (b)(2) of this section orin a revenue procedure or other form ofguidance issued by the Commissioner,and if the organization satisfies the re-quirements of paragraph (b)(3) of thissection.

(2) Internet posting. A tax-exempt or-ganization can make its application fortax exemption and/or an annual informa-tion return widely available by posting theapplication or return on a World Wi d eWeb page that the tax-exempt org a n i z a-tion establishes and maintains or by hav-ing the application or return posted, aspart of a database of similar documents ofother tax-exempt organizations, on aWorld Wide Web page established andmaintained by another entity. In order forthe application or return to be widelyavailable through an Internet posting, theentity maintaining the World Wide We bpage must have procedures for ensuringthe reliability and accuracy of the applica-tion or return that it posts on the page andmust take reasonable precautions to pre-vent alteration, destruction or accidentalloss of the application or return posted onits page. Furthermore, the application orreturn will be considered widely availableonly if—

(i) it is posted in the same format usedby the Internal Revenue Service to postforms and publications on the InternalRevenue Service World Wide Web page;

(ii) the World Wide Web page throughwhich it is available clearly informs read-ers that the document is available and pro-vides instructions for downloading it;

(iii) when downloaded and printed inhard copy, the application or return is insubstantially the same form as the originalapplication or return, and contains thesame information provided in the originalapplication or return filed with the Inter-nal Revenue Service (except information

withheld pursuant to §301.6104(e)–1(b)(4)(i)(the names and addresses ofcontributors listed on the annual informa-tion), Schedule Aof Form 990–BLand in-formation on the application for tax ex-emption required to be withheld undersection 6104(a)(1)(D) and §301.6104(e)–1(b)(3)(trade secrets and similar informa-tion)); and

(iv) a person can access and downloadthe application or return without paymentof a fee to the organization maintainingthe World Wide Web page.

(3) Notice requirement. If a tax-exemptorganization has made its application fortax exemption and/or an annual informa-tion return otherwise widely available itmust tell any individual requesting a copywhere the documents are available (in-cluding the address on the World Wi d eWeb, if applicable). If the request is madein person, the organization shall providesuch notice to the individual immediately.If the request is made in writing, the no-tice shall be provided within 7 days of re-ceiving the request.

(c) Effective date. This section is effec-tive beginning 60 days after its publica-tion as a final regulation in the F e d e r a lRegister.

§301.6104(e)-3 Tax-exempt organizationsubject to harassment campaign.

(a) In general. If the key district direc-tor for the district where the org a n i z a-t i o n ’s principal office is located deter-mines that the organization is the subjectof a harassment campaign and compli-ance with the requests that are part of theharassment campaign would not be in thepublic interest, a tax-exempt organizationis not required to fulfill a request (as oth-erwise required by §301.6104(e)–1(a))for a copy that it reasonably believes ispart of the campaign.

(b) H a r a s s m e n t . A group of requestsfor an org a n i z a t i o n ’s application for taxexemption or annual information returnsis indicative of a harassment campaign ifthe requests are part of a single coordi-nated effort to disrupt the operations of atax-exempt organization rather than tocollect information about the org a n i z a-tion. Whether a group of requests consti-tutes a harassment campaign depends onthe relevant facts and circumstances.Facts and circumstances that indicate theo rganization is the subject of a harass-

1997–42 I.R.B. 37 October 20, 1997

ment campaign include: a sudden increasein the number of requests; an extraordi-nary number of requests made throughform letters or similarly worded corre-spondence; evidence of a purpose to detersignificantly the org a n i z a t i o n ’s employ-ees or volunteers from pursuing the orga-n i z a t i o n ’s exempt purpose; requests thatcontain language hostile to the organiza-tion; direct evidence of bad faith by orga-nizers of the purported harassment cam-paign; evidence that the organization hasalready provided the requested documentsto a member of the purported harassinggroup; and a demonstration by the tax-ex-empt organization that it routinely pro-vides copies of its documents upon re-quest.

(c) Special rule for multiple re q u e s t sf rom a single individual or address. Atax-exempt organization may disregardany request for copies of all or part of anydocument beyond the first two receivedwithin any 30-day-period or the first fourreceived within any one-year-period fromthe same individual or the same address,regardless of whether the key district di-rector has determined that the org a n i z a-tion is subject to a harassment campaign.

(d) Harassment determination pro c e -d u re . A tax-exempt organization mayapply for a determination that it is thesubject of a harassment campaign by sub-mitting a signed application to the keydistrict director for the key district wherethe org a n i z a t i o n ’s principal office is lo-cated. The application shall consist of awritten statement giving the org a n i z a-tion’s name, address, employer identifica-tion number, and the name, address andtelephone number of the person to contactregarding the application, and describingin detail the facts and circumstances thatthe organization believes support a deter-mination that the organization is subjectto a harassment campaign. The organiza-tion may suspend compliance with re-spect to any request for a copy of its docu-ments based on its reasonable belief thatsuch request is part of a harassment cam-paign, provided that the organization filesan application for a determination within5 days from the day the organization firstsuspends compliance with respect to a re-quest that is part of the alleged campaign.In addition, the organization may suspendcompliance with any request it reasonablybelieves to be part of a harassment cam-

paign until it receives a response to its ap-plication for a harassment campaign de-termination.

(e) Effect of a harassment determina -tion. If the appropriate key district direc-tor determines that a tax-exempt org a n i-zation is the subject of a harassmentcampaign, such organization is not re-quired to comply with any request forcopies that it reasonably believes is partof the campaign. This determination maybe subject to other terms and conditionsset forth by the key district director. Aperson (as defined in section 6652(c)-4)(C)) shall not be liable for any penaltyunder sections 6652(c)(1)(C), (D) or 6685for failing to timely provide a copy ofdocuments in response to a request cov-ered in a request for a harassment deter-mination if the organization fulfills the re-quest within 30 days of receiving adetermination from the key district direc-tor that the organization is not subject to aharassment campaign. Notwithstandingthe preceding sentence, if the key districtdirector further determines that the orga-nization did not have a reasonable basisfor requesting a determination that it wassubject to a harassment campaign or rea-sonable belief that a request was part ofthe campaign, the person (as defined insection 6652(c)(4)(C)) remains liable forany penalties that result from not provid-ing the copies in a timely fashion.

(f) E x a m p l e s . The provisions of thissection may be further illustrated by thefollowing examples.

Example 1. V, a tax-exempt organization, re-ceives an average of 25 requests per month forcopies of its three most recent information returns.In the last week of May,Vis mentioned in a nationalnews magazine story that discusses information con-tained in V’s 1996 information return. From June 1through June 30, 1997 Vreceives 200 requests for acopy of its documents. Other than the sudden in-crease in the number of requests for copies, there isno other evidence to suggest that the requests arepart of an organized campaign to disrupt V’s opera-tions. Although fulfilling the requests will place aburden on V, the facts and circumstances do notshow that V is subject to a harassment campaign.Therefore, Vmust respond timely to each of the 200requests it receives in June.

Example 2. Y is a tax-exempt organization thatreceives an average of 10 requests a month forcopies of its annual information returns. FromMarch 1, 1997 to March 31, 1997, Yreceives 25 re-quests for copies of its documents. Fifteen of the re-quests come from individuals Yknows to be activemembers of the board of organization X. In the pastX has opposed most of the positions and policiesthat Yadvocates. None of the requesters have asked

for copies of documents from Yduring the past year.Yhas no other information about the requesters. Al-though the facts and circumstances show that someof the individuals making requests are hostile to Y,they do not show that the individuals have organizeda campaign that will place enough of a burden on Yto disrupt its activities. Therefore, Y must respondto each of the 25 requests it receives in March.

Example 3. The facts are the same as in Example2, except that during March 1997, Yreceives 100 re-quests. In addition to the fifteen requests frommembers of organization X’s board, 75 of the re-quests are similarly worded form letters. Y discov-ers that several individuals associated with X haveurged the X’s members and supporters, via the Inter-net, to submit as many requests for a copy of Y’s an-nual information returns as they can. The messagecirculated on the Internet provides a form letter thatcan be used to make the request. Both the appeal viathe Internet and the requests for copies received byY contain hostile language. During the same yearbut before the 100 requests were received, Y p r o-vided copies of its annual information returns to theheadquarters of X. The facts and circumstancesshow that the 75 form letter requests are coordinatedfor the purpose of disrupting Y’s operations, and notto collect information that has already been providedto an association representing the requesters’ inter-ests. Thus, the fact and circumstances show that Yisthe subject of an organized harassment campaign.To confirm that it may disregard the 90 requests thatconstitute the harassment campaign, Ymust apply tothe district director for a determination. Y may dis-regard the 90 requests while the application is pend-ing and after the determination is received. How-e v e r, it must respond within the applicable timelimits to the 10 requests it received in March thatwere not part of the harassment campaign.

Example 4. The facts are the same as in Example3, except that Y receives 5 additional requests fromrepresentatives of the news media. In the past, someof these representatives have published articles criti-cizing Y. Some of these articles were hostile to Y.N o r m a l l y, the Internal Revenue Service will notconsider a tax-exempt organization to be reasonableunder paragraph (d) of this section if it disregards re-quests from members of the news media. There areno additional facts that demonstrate that Ycould rea-sonably believe the requests from the news media tobe part of X’s harassment campaign. Thus, althoughY is the subject of a harassment campaign, it mustrespond within the applicable time limits to the 5 re-quests that it received from representatives of thenews media.

(g) Effective date. This section is effec-tive beginning 60 days after its publica-tion as a final regulation in the FederalRegister.


Internal Revenue.


October 20, 1997 38 1997–42 I.R.B.

Foundations Status of CertainOrganizations

Announcement 97–104The following organizations have

failed to establish or have been unable tomaintain their status as public charities oras operating foundations. A c c o r d i n g l y,grantors and contributors may not, afterthis date, rely on previous rulings or des-ignations in the Cumulative List of Orga-nizations (Publication 78), or on the pre-sumption arising from the filing of noticesunder section 508(b) of the Code. T h i slisting does not indicate that the organiza-tions have lost their status as org a n i z a-tions described in section 501(c)(3), eligi-ble to receive deductible contributions.

Former Public Charities. The followingo rganizations (which have been treated aso rganizations that are not private founda-tions described in section 509(a) of theCode) are now classified as private foun-d a t i o n s :Casella Houses Housing Development

Fund Corporation, Bronx, NYCenter for Community Harmony, Inc.,

North Ferrisburg, VTCenter for Cultural Diversity, Inc., New

York, NYCenter for Minority Professional

Development, Inc., New York, NYChildren First, Inc., Bristol, VTChildren’s Development Services, Inc.,

Leonia, NJChildren’s Friends for Life Foundation,

Inc., Great Neck, NYChildren’s Museum of the Berkshires,

Inc., Pittsfield, MAChilds Chance, Inc., East Freetown, MAFriends of Hem Sheela Model School

Corporation, Springfield, MOMedical Education Institute Inc.,

Madison, WIPacific Basin Research Institute,

Rockville, MDPaul Hall Contemporary Dance Theatre,

Inc., New Haven, CTPearl M. Goodwin Charitable Trust,

Westbury, NYPenfield Community Drug & Alcohol

Awareness Committee, Penfield, NYThe Penobscot Center for Marine

Studies, Inc., Rockland, MEPenobscot Compact, Inc., Rockport, MEPeople for People, Greenport, NYPeruvian American Cultural Association

of Connecticut, Inc., East Hartford, CT

PHDF Corp Community ManagementProgram, Bronx, NY

Pious House of the Oratory of St. PhilipNeri, Inc., Plainville, CT

Planning and Visual Education Partnership, Inc., New York, NY

Pragati, Cambridge, MAPride on the Hill Foundation, Inc.,

Medford, MAPrime Community Development Corp.,

Springfield, MAProfessional Nursing Network, Kingston,

NYProject for Global Harmony, Manchester,

NHProject 40, Brooklyn, NYProtestant Free Burial Society, Inc.,

Brooklyn, NYPublic Access to Sports Foundation, Inc.,

New York, NYPuerto Rican Empowerment Partnership,

Inc., New York, NYP.U.M.A., Pawtucket, RIPutnam Childrens Discovery Center, Inc.,

Carmel, NYRachel’s Tears Community Improvement

and Service Corp., Bronx, NYRainbow Recycling, Inc., Brookline, MARainforest Eagle Protection Project,

Incorporated, Goshen, NYRavena-Coeymans Youth Club, Inc.,

Ravena, NYRecovering Child Foundation, Inc.,

Buffalo, NYReform Kibbutz Fund, Great Neck, NYRefuah Health Center, Inc., Spring

Valley, NYReveneh Cultural and Educational Fund,

Inc., New York, NYRevict Foundation for Lipid Biomedical

Research, Inc., Forest Hills, NYRGATeam Fund, Inc., Reading, MARhode Island Lesbian and Gay Pride

Committee, Inc., Providence, RIRide to Freedom, Inc., New York, NYRochester Friends for Fun, Inc.,

Rochester, MARonald W. Dion Memorial Foundation,

Inc., Agawam, MARoosevelt Island Coalition, Inc., New

York, NYThe Route to Roots Corporation, New

York, NYRozmarin, New York, NYRussian-American Performing Arts

Center, Inc., Boston, MASalem Lutheran Child Development Cen-

ter, Inc., Bridgeport, CT

Science & Technology Advisory CouncilNYFoundation, Inc., New York, NY

Science Technology and Teaching, Inc.,New York, NY

Seacoast Networking Support Group,Inc., Portsmouth, NH

Shakespeare Hartford, Inc., Glastonbury,CT

Shining Light Health Center, Inc., Providence, RI

Shorinji Kempo Association, Inc., NewYork, NY

Sikh Volunteers of North America, Pittsford, NY

Sindhi Association of North America,Inc., Floral Park, NY

Sisters of Color, Inc., Albany, NYSolid Ground Inc., Clinton Twsp, MISolutions to Overpopulation of Pets, Inc.,

Concord, NHSports in Schools Foundation, Inc., Long

Island City, NYStaten Island Debs AA, Staten Island, NYSterling Charties, Worcester, MAStillwater Players Among Others, Inc.,

Stillwater, NYSummer Youth Festival, Inc., Cos Cob,

CTSummit Music Festival, Inc., Mount

Vernon, NYSupporting Health Services, Inc.,

Lawrence, MASupporting People in Need, New York,

NYTalented Seniors and Youth on the Move,

Inc., New York, NYTheatricows, Inc., Hinesburg, VTThurman Thomas Foundation,

Cheektown, NYThe Training Trust, Inc., Coventry,

EnglandTri-Community Widowed Persons

Services, Inc., Southbridge, MATrumball United Soccer Club, Inc.,

Trumbull, CTTurkish Broadcasting Organization, Inc.,

White Plains, NYTuttle House, Inc., Dorchester, MAUnion Bridge Films, Inc., New York, NYUnited Parents of Buffalo, Buffalo, NYUrban Logic, Inc., New York, NYU.S. Brownsville II HDFC, Brooklyn,

NYVatican Museums Foundation, New York,

NYVeterans Park Restoration Committee,

Inc., South Boston, MAVictory Lake Nursing Center, Inc., Hyde

1997–42 I.R.B. 39 October 20, 1997

Park, NYVoices, Inc., Plainville, MAWalworth Food Pantry, Walworth, NYWarriors, Inc., New York, NYWashington Library Association,

Washington, MEWaterbury Community Access

Television, Inc., Waterbury, CTWatermark Theater, Inc., Broomall, PAWeare Youth Organization, Weare, NHWest Broadway Homeowners

Association, Providence, RIWesterly Youth Soccer Association, Inc.,

Westerly, RIWestern New York Consortium, Buffalo,

NYWeston Community Center Foundation,

Inc., Weston, CTWhere Do I Go From Here, Orange, MAWilliamstown Public Library Foundation,

Inc., Williamstown, MAWoodchuck Theatre Company, Inc.,

Waterbury, VTWoodstock Actors Theater, Inc.,

Kingston, NYWorld Joint Federation Cadet Corps of

America, Inc., Bronx, NYZane Foundation, Inc., Branford, CTZichron Yehuda Foundation, Inc.,

Brooklyn, NYIf an organization listed above submits

information that warrants the renewal of itsclassification as a public charity or as a pri-

vate operating foundation, the InternalRevenue Service will issue a ruling or de-termination letter with the revised classifi-cation as to foundation status. Grantors andcontributors may thereafter rely upon suchruling or determination letter as providedin section 1.509(a)–7 of the Income Ta xRegulations. It is not the practice of theService to announce such revised classifi-cation of foundation status in the InternalRevenue Bulletin.

Deletions From Cumulative Listof Organizations Contributionsto Which Are Deductible UnderSection 170 of the Code

Announcement 97–105

The names of organizations that nolonger qualify as organizations describedin section 170(c)(2) of the Internal Rev-enue Code of 1986 are listed below.

Generally, the Service will not disallowdeductions for contributions made to alisted organization on or before the dateof announcement in the Internal RevenueBulletin that an organization no longerqualifies. However, the Service is notprecluded from disallowing a deductionfor any contributions made after an orga-nization ceases to qualify under section170(c)(2) if the organization has not

timely filed a suit for declaratory judg-ment under section 7428 and if the con-tributor (1) had knowledge of the revoca-tion of the ruling or determination letter,(2) was aware that such revocation wasimminent, or (3) was in part responsiblefor or was aware of the activities or omis-sions of the organization that broughtabout this revocation.

If on the other hand a suit for declara-tory judgment has been timely filed, con-tributions from individuals and organiza-tions described in section 170(c)(2) thatare otherwise allowable will continue tobe deductible. Protection under section7428(c) would begin on October 20,1997, and would end on the date the courtfirst determines that the organization isnot described in section 170(c)(2) as moreparticularly set forth in section 7428(c)-(1). For individual contributors, the maxi-mum deduction protected is $1,000, witha husband and wife treated as one contrib-utor. This benefit is not extended to anyindividual who was responsible, in wholeor in part, for the acts or omissions of theorganization that were the basis for revo-cation.

Tri-City American Legion Post 513

New Brighton, MN

Wesleyan Foundation of South Dakota

Rapid City, SD

October 20, 1997 40 1997–42 I.R.B.

1997–42 I.R.B. 41 October 20, 1997

Under title 31 of the Code of FederalRegulations, section 10.76, the Directorof Practice is authorized to immediatelysuspend from practice before the InternalRevenue Service any practitioner who,within five years, from the date the expe-dited proceeding is instituted, (1) has hada license to practice as an attorney, certi-fied public accountant, or actuary sus-pended or revoked for cause; or (2) hasbeen convicted of any crime under title 26of the United States Code or, of a felonyunder title 18 of the United States Codeinvolving dishonesty or breach of trust.

Attorneys, certified public accountants,enrolled agents, and enrolled actuaries are

prohibited in any Internal Revenue Servicematter from directly or indirectly employ-ing, accepting assistance from, being em-ployed by, or sharing fees with, any practi-tioner disbarred or suspended from practicebefore the Internal Revenue Service.

To enable attorneys, certified public ac-countants, enrolled agents, and enrolled ac-tuaries to identify practitioners under expe-dited suspension from practice before theInternal Revenue Service, the Director ofPractice will announce in the Internal Rev-enue Bulletin the names and addresses ofpractitioners who have been suspendedfrom such practice, their designation as at-t o r n e y, certified public accountant, en-

rolled agent, or enrolled actuary, and dateor period of suspension. This announce-ment will appear in the weekly Bulletin atthe earliest practicable date after such ac-tion and will continue to appear in theweekly Bulletins for five successive weeksor for as many weeks as is practicable foreach attorney, certified public accountant,enrolled agent, or enrolled actuary so sus-pended and will be consolidated and pub-lished in the Cumulative Bulletin.

The following individuals have beenplaced under suspension from practice be-fore the Internal Revenue Service by virtueof the expedited proceeding provisions ofthe applicable regulations:

Announcement of the Expedited Suspension of Attorneys, Certified PublicAccountants, Enrolled Agents, and Enrolled Actuaries From PracticeB e f o re the Internal Revenue Serv i c e

Name Address Designation Date of Suspension

Booker, William G. Winston-Salem, NC CPA Indefinite from June 12, 1997

Acevado, Gustavo Laredo, TX Attorney Indefinite from July 23, 1997

Piotti, Wayne H. Homer, NY CPA Indefinite from July 23, 1997

Burley, Franklin R. Monroe, LA CPA Indefinite from July 23, 1997

Kent, William F. Winston-Salem, NC CPA Indefinite from July 23, 1997

Levine, Jack Phoenix, AZ Attorney Indefinite from July 23, 1997

Kapral, Stephen M. Richmond, VA Attorney Indefinite from July 23, 1997

Bell, Abraham E. St. Louis, MO CPA Indefinite from July 30, 1997

Jackson, Paul Burley, ID CPA Indefinite from September 11, 1997

Clay, Henry New York, NY Attorney Indefinite from September 11, 1997

Cooley, Donald Springfield, MO Attorney Indefinite from September 11, 1997

Duke, Charla R. Oakland, CA Attorney Indefinite from September 11, 1997

Devins, George Munsey Park, NY CPA Indefinite from September 11, 1997

Williams, Ronald A. Doylestown, PA Enrolled Agent Indefinite from September 11, 1997

Under 31 Code of Federal Regulations,Part 10, an attorney, certified public ac-countant, enrolled agent, or enrolled ac-t u a r y, in order to avoid the institution orconclusion of a proceeding for his disbar-ment or suspension from practice beforethe Internal Revenue Service, may off e rhis consent to suspension from such prac-tice. The Director of Practice, in his dis-cretion, may suspend an attorney, certi-

fied public accountant, enrolled agent, orenrolled actuary in accordance with theconsent off e r e d .

Attorneys, certified public accountants,enrolled agents, and enrolled actuaries areprohibited in any Internal Revenue Ser-vice matter from directly or indirectly em-ploying, accepting assistance from, beingemployed by, or sharing fees with, anypractitioner disbarred or suspended from

practice before the Internal Revenue Ser-vice.

To enable attorneys, certified public ac-countants, enrolled agents, and enrolledactuaries to identify practitioners underconsent suspension from practice before theInternal Revenue Service, the Directorof Practice will announce in the InternalRevenue Bulletin the names and ad-dresses of practitioners who have been

Announcement of the Consent Vo l u n t a ry Suspension of Attorn e y s ,C e rtified Public Accountants, Enrolled Agents, and Enrolled ActuariesF rom Practice Before the Internal Revenue Serv i c e

October 20, 1997 42 1997–42 I.R.B.


Weksler, Mark R. Arlington Heights, IL CPA June 16, 1997 to June 15, 2000

Womble, Bill R. Dallas, TX Attorney Indefinite from June 19, 1997

Robinson II, Vaughn Midland, TX CPA Indefinite from June 19, 1997

Kim, Kwang W. Schaumburg, IL CPA June 30, 1997 to December 29, 1997

Tymas, George M. Russellton, PA CPA July 1, 1997 to February 28, 1999

Rattet, Robert L. New Rochelle, NY Attorney July 26, 1997 to June 25, 1998

Noles, R. Leon N. Little Rock, AR CPA July 30, 1997 to October 29, 1997

Harbin, Glenn E. Bakersfield, CA CPA July 31, 1997 to December 30, 1998

Harms, John G. Lemont, PA CPA August 1, 1997 to November 30, 1997

Lewis, Craig S. Savannah, GA CPA August 1, 1997 to July 31, 1998

Terranova, Michael P. Lake Charles, LA CPA August 7, 1997 to May 6, 1998

Frantz, Barbara A. Pontiac, IL Attorney August 8, 1997 to July 31, 1999

Smith, Glen L. Edina, MN Attorney August 9, 1997 to November 8, 1997

Bayus Sr., Gerald A. Hubbard, OH CPA August 11, 1997 to July 10, 1998

Winton, D. Michael Clovis, NM Enrolled Agent August 15, 1997 to November 14, 1997

McNabb, Gerald White Bear, MN Attorney August 22, 1997 to January 21, 2000

Ness, Stanley L. Minneapolis, MN CPA August 25, 1997 to February 24, 1998

Culmer, Thomas A. Devils Lake, ND CPA September 1, 1997 to November 30, 1997

Ziskind, Sherman Dunlevy, PA CPA September 1, 1997 to February 28, 1999

Huston, James L. Kingman, AZ CPA September 1, 1997 to December 31, 1997

Fulthorpe, Douglas R. St. Petersburg, FL CPA September 1, 1997 to August 30, 1998

Suszko, Richard J. La Mesa, CA Enrolled Agent September 1, 1997 to August 31, 1999

Bromagen, Kent E. Dayton, OH CPA September 1, 1997 to February 28, 2000

Shawhan, David W. Xenia, OH CPA September 1, 1997 to August 31, 1999

Kennedy Jr., Joseph Santa Barbara, CA Enrolled Agent September 1, 1997 to May 31, 1998

Brummet, Richard E. Hinsdale, IL CPA September 3, 1997 to January 2, 1998

Pollard, E. Dwain Idabell, OK CPA September 4, 1997 to August 3, 1999

Tamminga, Roland R. Belmont, NH Attorney September 5, 1997 to December 4, 1997

Ayala, Simon Oxnard, CA Enrolled Agent Indefinite from September 19, 1997

Balmer, Alan J. Fairfield, IA CPA September 30, 1997 to August 29, 1999

Fox, Eugene Rockville Centre, NY CPA October 1, 1997 to March 31, 1998

Sanford, Paul L. Avon, CT CPA November 1, 1997 to July 31, 1997

Glemann, Richard P. Jacksonville Beach, FL CPA November 1, 1997 to October 31, 1999

Rubey, Patrick J. Chicago, IL CPA November 1, 1997 to January 31, 1999

Coverdale Jr., Alphonso Philadelphia, PA Enrolled Agent December 1, 1997 to November 30, 2000

suspended from such practice, their desig-nation as attorney, certified public ac-countant, enrolled agent, or enrolled actu-ary, and date or period of suspension. Thisannouncement will appear in the weeklyBulletin at the earliest practicable date

after such action and will continue to ap-pear in the weekly Bulletins for five suc-cessive weeks or for as many weeks as ispracticable for each attorney, certifiedpublic accountant, enrolled agent, or en-rolled actuary so suspended and will be

consolidated and published in the Cumu-lative Bulletin.

The following individuals have beenplaced under consent suspension frompractice before the Internal Revenue Ser-v i c e :

1997–42 I.R.B. 43 October 20, 1997

Under Section 330, Title 31 of the UnitedStates Code, the Secretary of the Tr e a s u r y,after due notice and opportunity for hearing,is authorized to suspend or disbar from prac-tice before the Internal Revenue Service anyperson who has violated the rules and regu-lations governing the recognition of attor-neys, certified public accountants, enrolledagents, or enrolled actuaries to practice be-fore the Internal Revenue Service.

Attorneys, certified public accountants,enrolled agents, and enrolled actuaries areprohibited in any Internal Revenue Servicematter from directly or indirectly employ-

ing, accepting assistance from, being em-ployed by, or sharing fees with, any practi-tioner disbarred or under suspension frompractice before the Internal Revenue Ser-v i c e .

To enable attorneys, certified public ac-countants, enrolled agents, and enrolled ac-tuaries to identify such disbarred or sus-pended practitioners, the Director ofPractice will announce in the Internal Rev-enue Bulletin the names and addresses ofpractitioners who have been disbarred orsuspended from such practice, their desig-nation as attorney, certified public accoun-

tant, enrolled agent, or enrolled actuary, anddate of disbarment or period of suspension.This announcement will appear in theweekly Bulletin for five successive weeksor for as many weeks as is practicable foreach attorney, certified public accountant,enrolled agent, or enrolled actuary so sus-pended and will be consolidated and pub-lished in the Cumulative Bulletin.

After due notice and opportunity forhearing before an administrative law judge,the following individuals have been sus-pended from further practice before the In-ternal Revenue Service:

Announcement of the Suspension of Attorneys, Certified PublicAccountants, Enrolled Agents, and Enrolled Actuaries From PracticeB e f o re the Internal Revenue Serv i c e


Makos, Deborah Green Bay, WI Enrolled Agent June 20, 1997 to May 19, 2000

Friberg, John P. Milwaukee, WI CPA July 20, 1997 to June 19, 2001

Under Section 330, Title 31 of the UnitedStates Code, the Secretary of the Tr e a s u r y,after due notice and opportunity for hearing,is authorized to suspend or disbar from prac-tice before the Internal Revenue Service anyperson who has violated the rules and regu-lations governing the recognition of attor-neys, certified public accountants, enrolledagents, or enrolled actuaries to practice be-fore the Internal Revenue Service.

Attorneys, certified public accountants,enrolled agents, and enrolled actuaries areprohibited in any Internal Revenue Servicematter from directly or indirectly employ-

ing, accepting assistance from, being em-ployed by, or sharing fees with, any practi-tioner disbarred or under suspension frompractice before the Internal Revenue Ser-v i c e .

To enable attorneys, certified public ac-countants, enrolled agents, and enrolled ac-tuaries to identify such disbarred or sus-pended practitioners, the Director ofPractice will announce in the Internal Rev-enue Bulletin the names and addresses ofpractitioners who have been disbarred orsuspended from such practice, their desig-nation as attorney, certified public accoun-

tant, enrolled agent, or enrolled actuary, andthe date of disbarment or period of suspen-sion. This announcement will appear in theweekly Bulletin for five successive weeksor for as many weeks as is practicable foreach attorney, certified public accountant,enrolled agent, or enrolled actuary so sus-pended and will be consolidated and pub-lished in the Cumulative Bulletin.

After due notice and opportunity forhearing before an administrative law judge,the following individuals have been dis-barred from further practice before the In-ternal Revenue Service:

Announcement of the Disbarment of Attorneys, Certified PublicAccountants, Enrolled Agents, and Enrolled Actuaries From PracticeB e f o re the Internal Revenue Serv i c e

Name Address Designation Effective Date

Hoyt III, Walter J. Burns, OR Enrolled Agent July 13, 1997

Lu, John S. New York, NY Enrolled Agent July 21, 1997

McCue, William T. Glen Rock, NJ Attorney July 21, 1997

Foster, Dennis S. Pittsburgh, PA CPA September 8, 1997

October 20, 1997 44 1997–42 I.R.B.

Revenue rulings and revenue pro c e d u re s( h e reinafter re f e rred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe thee f f e c t :

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position isbeing extended to apply to a variation ofthe fact situation set forth therein. T h u s ,if an earlier ruling held that a principleapplied to A, and the new ruling holdsthat the same principle also applies to B,the earlier ruling is amplified. (Comparewith m o d i f i e d, below).

Clarified is used in those instanceswhere the language in a prior ruling isbeing made clear because the languagehas caused, or may cause, some confu-sion. It is not used where a position in aprior ruling is being changed.

D i s t i n g u i s h e d describes a situationwhere a ruling mentions a previouslypublished ruling and points out an essen-tial difference between them.

Modified is used where the substanceof a previously published position isbeing changed. Thus, if a prior rulingheld that a principle applied to A but notto B, and the new ruling holds that it ap-

plies to both A and B, the prior ruling ismodified because it corrects a publishedposition. (Compare with amplified a n dc l a r i f i e d, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly usedin a ruling that lists previously publishedrulings that are obsoleted because ofchanges in law or regulations. A r u l i n gmay also be obsoleted because the sub-stance has been included in regulationssubsequently adopted.

Revoked describes situations where theposition in the previously published rul-ing is not correct and the correct positionis being stated in the new ruling.

Superseded describes a situation wherethe new ruling does nothing more thanrestate the substance and situation of apreviously published ruling (or rulings).Thus, the term is used to republish underthe 1986 Code and regulations the sameposition published under the 1939 Codeand regulations. The term is also usedwhen it is desired to republish in a singleruling a series of situations, names, etc.,that were previously published over a pe-riod of time in separate rulings. If the

new ruling does more than restate thesubstance of a prior ruling, a combinationof terms is used. For example, m o d i f i e dand superseded describes a situationwhere the substance of a previously pub-lished ruling is being changed in part andis continued without change in part and itis desired to restate the valid portion ofthe previously published ruling in a newruling that is self contained. In this casethe previously published ruling is firstmodified and then, as modified, is super-s e d e d .

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling andthat list is expanded by adding furthernames in subsequent rulings. After theoriginal ruling has been supplementedseveral times, a new ruling may be pub-lished that includes the list in the originalruling and the additions, and supersedesall prior rulings in the series.

Suspended is used in rare situations toshow that the previous published rulingswill not be applied pending some futureaction such as the issuance of new oramended regulations, the outcome ofcases in litigation, or the outcome of aService study.

AbbreviationsThe following abbreviations in current use and for -merly used will appear in material published in theBulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C.—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contribution Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign Corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statements of Procedral Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

Definition of Terms

1997–42 I.R.B. 45 October 20, 1997

Numerical Finding List1

Bulletins 1997–27 through 1997–41

Announcements:

97–61, 1997–29 I.R.B. 1397–67, 1997–27 I.R.B. 3797–68, 1997–28 I.R.B. 1397–69, 1997–28 I.R.B. 1397–70, 1997–29 I.R.B. 1497–71, 1997–29 I.R.B. 1597–72, 1997–29 I.R.B. 1597–73, 1997–30 I.R.B. 8697–74, 1997–31 I.R.B. 1697–75, 1997–32 I.R.B. 2897–76, 1997–32 I.R.B. 2897–77, 1997–33 I.R.B. 5897–78, 1997–34 I.R.B. 1197–79, 1997–35 I.R.B. 897–80, 1997–34 I.R.B. 1297–81, 1997–34 I.R.B. 1297–82, 1997–34 I.R.B. 1297–83, 1997–34 I.R.B. 1397–84, 1997–34 I.R.B. 1397–85, 1997–35 I.R.B. 897–86, 1997–35 I.R.B. 997–87, 1997–35 I.R.B. 997–88, 1997–35 I.R.B. 997–89, 1997–36 I.R.B. 1097–90, 1997–36 I.R.B. 1097–91, 1997–37 I.R.B. 2597–92, 1997–37 I.R.B. 2697–93, 1997–36 I.R.B. 1197–94, 1997–36 I.R.B. 1297–95, 1997–36 I.R.B. 1297–96, 1997–39 I.R.B. 1597–97, 1997–38 I.R.B. 2297–98, 1997–39 I.R.B. 1597–99, 1997–40 I.R.B. 797–100, 1997–40 I.R.B. 897–101, 1997–41 I.R.B. 1397–102, 1997–41 I.R.B. 1597–103, 1997–41 I.R.B. 16

Court Decisions:

2061, 1997–31 I.R.B. 52062, 1997–32 I.R.B. 8

Delegation Orders:97 (Rev. 34), 1997–41 I.R.B. 14172 (Rev. 5), 1997–28 I.R.B. 6

Notices:

97–37, 1997–27 I.R.B. 497–38, 1997–27 I.R.B. 897–39, 1997–27 I.R.B. 897–40, 1997–28 I.R.B. 697–41, 1997–28 I.R.B. 697–42, 1997–29 I.R.B. 1297–43, 1997–30 I.R.B. 997–44, 1997–31 I.R.B. 1597–45, 1997–33 I.R.B. 797–46, 1997–34 I.R.B. 1097–47, 1997–35 I.R.B. 597–48, 1997–35 I.R.B. 597–49, 1997–36 I.R.B. 897–50, 1997–37 I.R.B. 2197–51, 1997–38 I.R.B. 2097–52, 1997–38 I.R.B. 2097–53, 1997–40 I.R.B. 6

Notices–Continued

97–54, 1997–41 I.R.B. 797–55, 1997–40 I.R.B. 6

Railroad Retirement Quarterly Rate:

1997–28 I.R.B. 5

Proposed Regulations:

REG–104893–97, 1997–29 I.R.B. 13REG–105160–97, 1997–37 I.R.B. 22REG–106043–97, 1997–37 I.R.B. 24REG–107644–97, 1997–32 I.R.B. 24REG–208151–91, 1997–38 I.R.B. 21

Revenue Procedures:

97–32, 1997–27 I.R.B. 997–32A, 1997–34 I.R.B. 1097–33, 1997–30 I.R.B. 1097–34, 1997–30 I.R.B. 1497–35, 1997–33 I.R.B. 1197–36, 1997–33 I.R.B. 1497–37, 1997–33 I.R.B. 1897–38, 1997–33 I.R.B. 4397–39, 1997–33 I.R.B. 4897–40, 1997–33 I.R.B. 5097–41, 1997–33 I.R.B. 597–42, 1997–33 I.R.B. 5797–43, 1997–39 I.R.B. 1297–44, 1997–41 I.R.B. 897–45, 1997–41 I.R.B. 10

Revenue Rulings:

97–27, 1997–27 I.R.B. 497–28, 1997–28 I.R.B. 497–29, 1997–28 I.R.B. 497–30, 1997–31 I.R.B. 1297–31, 1997–32 I.R.B. 497–32, 1997–33 I.R.B. 497–33, 1997–34 I.R.B. 497–34, 1997–34 I.R.B. 1497–35, 1997–35 I.R.B. 497–36, 1997–36 I.R.B. 597–37, 1997–37 I.R.B. 1597–38, 1997–38 I.R.B. 1497–39, 1997–39 I.R.B. 497–40, 1997–39 I.R.B. 897–41, 1997–40 I.R.B. 497–42, 1997–41 I.R.B. 4

Treasury Decisions:

8722, 1997–29 I.R.B. 48723, 1997–30 I.R.B. 48724, 1997–36 I.R.B. 48725, 1997–37 I.R.B. 168726, 1997–34 I.R.B. 78727, 1997–34 I.R.B. 58728, 1997–37 I.R.B. 48729, 1997–38 I.R.B. 48730, 1997–38 I.R.B. 16

1 A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., published inInternal Revenue Bulletins 1997–1 through 1997–26will be found in Internal Revenue Bulletin 1997–27,dated July 7, 1997.

October 20, 1997 46 1997–42 I.R.B.

Finding List of Current Action onPreviously Published Items1

Bulletins 1997–27 through 1997–41

*Denotes entry since last publication

Revenue Procedures:

96–36Superseded by97–34, 1997–30 I.R.B. 14

96–42Superseded by97–27, 1997–27 I.R.B. 9

97–32Modified and amplified by97–32A, 1997–34 I.R.B. 10

Revenue Rulings:

89–42Supplemented by97–31, 1997–32 I.R.B. 4

93–76Clarified, modified, partiallyobsoleted, and superceded by97–39, 1997–39 I.R.B 4

94–7Clarified, modified, partiallyobsoleted, and superceded by97–39, 1997–39 I.R.B 4

1 A cumulative finding list for previously publisheditems mentioned in Internal Revenue Bulletins1997–1 through 1997–26 will be found in InternalRevenue Bulletin 1997–27, dated July 7, 1997.

1997–42 I.R.B. 47 October 20, 1997

INTERNAL REVENUE BULLETINThe Introduction on page 3 describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is sold

on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superintendent ofDocuments when their subscriptions must be renewed.

CUMULATIVE BULLETINSThe contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are

sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the week-ly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of printand are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from theSuperintendent of Documents.

HOW TO ORDERCheck the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,

detach entire page, and mail to the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Pleaseallow two to six weeks, plus mailing time, for delivery.

WE WELCOME COMMENTS ABOUT THEINTERNAL REVENUE BULLETIN

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, wewould be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page(www.irs.ustreas.gov) or write to the IRS Bulletin Unit, T:FP:F:CD, Room 5560, 1111 Constitution Avenue NW, Washington, DC20224. You can also leave a recorded message 24 hours a day, 7 days a week at 1–800–829–9043.

Superintendent of DocumentsU.S. Government Printing OfficeWashington, DC 20402

Official BusinessPenalty for Private Use, $300

First Class MailPostage and Fees PaidGPOPermit No. G–26

INTERNAL REVENUE BULLETINThe Introduction on page 3 describes the purpose and content of this publication. The weekly Internal Revenue Bulletin is sold

on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the Superintendent ofDocuments when their subscriptions must be renewed.

CUMULATIVE BULLETINSThe contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are

sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the week-ly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of printand are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from theSuperintendent of Documents.

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WE WELCOME COMMENTS ABOUT THEINTERNAL REVENUE BULLETIN

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, wewould be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page(www.irs.ustreas.gov) or write to the IRS Bulletin Unit, T:FP:F:CD, Room 5560, 1111 Constitution Avenue NW, Washington, DC20224. You can also leave a recorded message 24 hours a day, 7 days a week at 1–800–829–9043.

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