INCOME TAX

REG–209682–94, page 20.Proposed regulations under sections 743, 755, and 1017of the Code provide guidance to partnerships and their part-ners concerning the optional adjustments to the basis ofpartnership property, the allocation of basis adjustmentsamong partnership assets, and the computation of a part-ner’s share of the adjusted basis of depreciable partnershipproperty.

Rev. Proc. 98–30, page 6.Automobile owners and lessees. This procedure providesowners and lessees of passenger automobiles (includingelectric automobiles) with tables detailing the limitations ondepreciation deductions for automobiles first placed in ser-vice during calendar year 1998 and the amounts to be in-cluded in income for automobiles first leased during calen-dar year 1998. In addition, this revenue procedure providesthe maximum allowable value of employer-provided automo-biles first made available to employees for personal use incalendar year 1998 for which the vehicle cents-per-mile valu-ation rule provided under section 1.61–21(e) of the IncomeTax Regulations may be applicable.

EMPLOYEE PLANSNotice 98–24, page 5.Qualified plans; net unrealized appreciation; capitalgains. This notice describes the holding period to be usedfor determining the capital gains tax treatment of net unre-alized appreciation in the distribution of employer securitiesfrom a qualified plan as a result of section 311 of the Tax-payer Relief Act of 1997, Pub. L. No. 105–34.

EXEMPT ORGANIZATIONSAnnouncement 98–33, page 39.A list is provided of organizations that no longer qualify as

organizations to which contributions are deductible undersection 170 of the Code.

Announcement 98–34, page 39.A list is given of organizations now classified as private foun-dations.

ADMINISTRATIVERev. Proc. 98–32, page 11.Information is provided about the Electronic Federal Tax Pay-ment System (EFTPS) programs for Batch Filers and Bulk Fil-ers (Filers). EFTPS is an electronic remittance processingsystem for making federal tax deposits (FTDs) and federaltax payments (FTPs). The Batch Filer and Bulk Filer pro-grams are used by Filers for electronically submitting enroll-ments, FTDs, and FTPs on behalf of multiple taxpayers.

Notice 98–22, page 5.This notice announces that shareholders of passive foreigninvestment companies may apply the rules of section1.1295–1T(b)(4), (f), and (g) of the Income Tax Regulationsto taxable years beginning before January 1, 1998.

Announcement 98–30, page 38.The penalty under section 6677 of the Code will not be im-posed on a U.S. owner of a foreign trust for failure to timelyfile if the foreign trust files Form 3520–A and furnishes therequired statements to the U.S. owners and U.S. beneficia-ries in accordance with this announcement.

Announcement 98–32, page 39.This announcement withdraws the notice issued under sec-tion 7428(c) of the Code in Internal Revenue Bulletin1997–52, dated December 29, 1997, with respect to theorganization At Cost Services, Inc.

Announcement 98–35, page 40.An updated edition of Publication 954, Tax Incentives for Em-powerment Zones and Other Distressed Communities (re-vised March 1998), is now available.

Internal Revenue

bbuulllleettiinnBulletin No. 1998–17

April 27, 1998

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 TreasuryInternal Revenue Service

Finding Lists begin on page 43.Announcement of Declaratory Judgment Proceedings Under Section 7428 begins on page 41.

Mission of the Service

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

ucts and services; and perform in a manner warrantingthe highest degree of public confidence in our integrity, effi-ciency, and fairness.

2

Statement of Principlesof Internal RevenueTax AdministrationThe function of the Internal Revenue Service is to adminis-ter the Internal Revenue Code. Tax policy for raising revenueis determined by Congress.

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 thatcare be exercised not to raise an issue or to ask a court toadopt a position inconsistent with an established Serviceposition.

Administration should be both reasonable and vigorous. Itshould be conducted with as little delay as possible andwith great courtesy and considerateness. It should nevertry to overreach, and should be reasonable within thebounds of law and sound administration. It should, howev-er, be vigorous in requiring compliance with law and itshould be relentless in its attack on unreal tax devices andfraud.

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 obtainedfrom 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 procedures 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 offices,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 Treasury Department Regulations,but they may be used as precedents. Unpublished rulingswill 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 proce-

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

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references 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 semiannual basisand are published in the first Bulletin of the succeeding semi-annual period, respectively.

3

Introduction

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

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

Section 61.—Gross IncomeDefined

26 CFR 61–21: Taxation of fringe benefits.

This procedure provides the maximum value ofemployer-provided automobiles first made availableto employees for personal use in calendar year 1998for which the vehicle cents-per-mile valuation ruleprovided under § 1.61–21(e) of the Income Tax Reg-ulations may be applicable. See Rev. Proc. 98–30,page 6.

Section 280F.—Limitation onDepreciation for LuxuryAutomobiles; Limitation WhereCertain Property Used forPersonal Purposes

26 CFR 280F–7: Property leased after December31, 1986.

This procedure provides owners and lessees ofpassenger automobiles (including electric automo-biles) with tables detailing the limitations on depre-ciation deductions for automobiles first placed in

service during calendar year 1998 and the amountsto be included in income for automobiles first leasedduring calendar year 1998. See Rev. Proc. 98–30,page 6.

Section 1295.—QualifiedElecting Funds

Notice 98–22 announces that final regulationsunder section 1295 will permit shareholders of pas-sive foreign investment companies treated as quali-fied electing funds to apply the rules of § 1.1295–1T(b)(4) (joint return elections), the rulesof § 1.1295–1T(f) and (g) (simplified filing and re-porting procedures), or both sets of rules to a taxableyear beginning before January 1, 1998. See Notice98–22, page 5.

Section 6302.—Mode or Time ofCollection

26 CFR 31.6302–1: Federal tax deposit rules forwithheld income taxes and taxes under the FederalInsurance Contributions Act (FICA) attributable topayments made after December 31, 1992.

Information is provided about the Electronic Fed-eral Tax Payment System (EFTPS) programs forBatch Filers and Bulk Filers (Filers). EFTPS is anelectronic remittance processing system for makingfederal tax deposits (FTDs) and federal tax pay-ments (FTPs). The Batch Filer and Bulk Filer pro-grams are used by Filers for electronically submit-ting enrollments, FTDs, and FTPs on behalf ofmultiple taxpayers. See Rev. Proc. 98–32, page 11.

April 27, 1998 4 1998–17 I.R.B.

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

Application of Section 1.1295–1T(b)(4), (f), and (g) to TaxableYears Beginning Before January 1, 1998

Notice 98–22

This notice provides guidance to director indirect shareholders of passive foreigninvestment companies (PFICs), as de-fined in section 1297 of the Internal Rev-enue Code, concerning the effective dateof § 1.1295–1T(b)(4), (f), and (g) of thetemporary regulations published in theFederal Registeron January 2, 1998, asT.D. 8750. As described below, final reg-ulations under section 1295 will permitshareholders of PFICs to apply the rulesof § 1.1295–1T(b)(4), the rules of § 1.1295–1T(f) and (g), or both sets ofrules to a taxable year beginning beforeJanuary 1, 1998, for which the period oflimitations has not run as of the date ofpublication of this notice, provided that,in the case of § 1.1295–1T(b)(4), theshareholders consistently apply the rulesto all subsequent taxable years.

BACKGROUND

Section 1.1295–1T(b)(4) of the tempo-rary regulations provides rules concern-ing a section 1295 election made by a tax-payer in a joint return under section 6013.Section 1.1295–1T(f) and (g) providesimplified rules concerning the manner ofmaking and maintaining a section 1295election to treat a PFIC as a qualifiedelecting fund (QEF). Prior to the publica-tion of § 1.1295–1T(f) and (g), Notice88–125, 1988–2 C.B. 535, provided suchguidance. Under § 1.1295–1T(k), § 1.1295–1T(b)(4), (f), and (g) is effectivefor taxable years of shareholders begin-ning after December 31, 1997.

APPLICATION TO EARLIERTAXABLE YEARS

Commenters have requested that § 1.1295–1T(b)(4) apply on an electivebasis to taxable years beginning beforeJanuary 1, 1998, to provide taxpayers cer-tainty with respect to elections made onjoint returns for such years. Commentersalso requested that § 1.1295–1T(f) and (g)apply on an elective basis to taxable years

beginning before January 1, 1998, to en-able taxpayers to use the simplified re-porting procedures for 1997. In responseto these comments, the final regulationswill permit taxpayers to apply the rules oftemporary regulations § 1.1295–1T(b)(4),the rules of § 1.1295–1T(f) and (g), orboth sets of rules, to a taxable year begin-ning before January 1, 1998, for whichthe statute of limitations on the assess-ment of tax has not expired as of the dateof publication of this notice. Taxpayersthat filed a joint return in which the sec-tion 1295 election was made may onlyapply the rules of §1.1295–1T(b)(4) ifthey have consistently applied the rules ofthat section to all taxable years followingthe year in which the election was madeand for which the statute of limitations forthe assessment of tax is open. Subject tothis consistency requirement, the rule of§1.1295–1T(b)(4) may be applied to anyopen year even if the section 1295 elec-tion was made in a year for which thestatute of limitations has expired. No ac-tion other than treatment consistent withan effective section 1295 election is nec-essary for the section 1295 election to betreated as made by both spouses.

PAPERWORK REDUCTION ACT

The collections of information require-ments contained in the temporary regula-tions to which this notice applies were re-viewed and, pending receipt andevaluation of public comments, approvedby the Office of Management and Budget(OMB) in accordance with the PaperworkReduction Act (44 U.S.C. 3507) undercontrol number 1545-1555.

FOR FURTHER INFORMATION CON-TACT Teresa Hughes at (202) 622-3840(not a toll-free call).

Net Unrealized Appreciation inEmployer Securities

Notice 98–24

PURPOSE

This notice provides guidance concern-ing the tax treatment of net unrealized ap-preciation in employer securities distrib-

uted from a qualified retirement plan, tothe extent such appreciation is realized ina subsequent taxable transaction. Specifi-cally, this notice provides guidance re-garding the holding period to be used fordetermining the capital gains tax rate thatapplies with regard to net unrealized ap-preciation under § 1(h) of the InternalRevenue Code (“Code”) as amended by§ 311 of the Taxpayer Relief Act of 1997(“TRA ’97”), Pub. L. 105–34. This guid-ance applies to sales or other dispositionsof employer securities that occur beforethe later of January 1, 2001, or the datefurther guidance is issued.

BACKGROUND

Section 402(e)(4)(A) of the Code pro-vides that in the case of a distributionother than a lump sum distribution, theamount actually distributed to a distribu-tee from a trust described in § 401(a)which is exempt from tax under § 501(a)shall not include any net unrealized ap-preciation in employer securities attribut-able to amounts contributed by the em-ployee.

Section 402(e)(4)(B) provides that inthe case of a lump sum distribution whichincludes employer securities, there shallbe excluded from gross income the netunrealized appreciation attributable to theemployer securities.

Section 402(e)(4)(C) provides that, forpurposes of § 402(e)(4)(A) and (B), netunrealized appreciation and the resultingadjustments to basis are determined in ac-cordance with regulations.

Section 1.402(a)–1(b)(1)(i) of the In-come Tax Regulations provides that theamount of net unrealized appreciationwhich is not included in the basis of thesecurities in the hands of the distributee atthe time of distribution is considered again from the sale or exchange of a capitalasset held for more than six months to theextent such appreciation is realized in asubsequent taxable transaction. Net gainrealized by the distributee in a subsequenttaxable transaction that exceeds theamount of the net unrealized appreciationat the time of distribution shall constitutea long-term or short-term capital gain, de-pending on the holding period of the secu-rities in the hands of the distributee. In

1998–17 I.R.B. 5 April 27, 1998

Part III. Administrative, Procedural, and Miscellaneous

1956, when this regulation was issued, thelong-term capital gains tax rate applied tothe sale or exchange of a capital asset heldfor more than six months.

Rev. Rul. 81–122, 1981–1 C.B. 202,states that the amount of net unrealizedappreciation that is not included in thebasis of the securities in the hands of adistributee at the time of distribution isconsidered a gain from the sale or ex-change of a capital asset held for morethan one year to the extent it is realized ina subsequent transaction. When this rev-enue ruling was published, the long-termcapital gains tax rate applied to the sale orexchange of a capital asset held for morethan one year.

Section 311 of TRA ’97 reduces thecapital gains tax rate on the sale or ex-change of certain assets held for morethan 18 months from 28 percent to 20 per-cent (10 percent in the case of gain thatwould otherwise be taxed at 15 percent),effective generally for amounts properlytaken into account after May 6, 1997. SeeNotice 97–59, 1997–45 I.R.B. 7. The 28-percent maximum capital gains tax ratecontinues to apply to the sale or exchangeof assets held for 18 months or less butmore than one year.

CAPITAL GAINS RATE APPLICABLETO NET UNREALIZEDAPPRECIATION

Under this notice, the amount of netunrealized appreciation which is not in-cluded in the basis of the securities in thehands of the distributee at the time of dis-tribution is considered a gain from thesale or exchange of a capital asset held formore than 18 months to the extent thatsuch appreciation is realized in a subse-quent taxable transaction. Accordingly,for a sale or other disposition of employersecurities that occurs after May 6, 1997,the actual period that an employer secu-rity was held by a qualified plan need notbe calculated in order to determinewhether, with respect to the net unrealizedappreciation, the disposition qualifies forthe rate for capital assets held for morethan 18 months. However, with respect toany further appreciation in the employersecurities after distribution from the plan,the actual holding period in the hands ofthe distributee determines the capitalgains rate that applies.

The guidance provided in this noticeapplies to sales or other dispositions ofemployer securities that occur before thelater of January 1, 2001, or the date fur-ther guidance is issued. This guidance isfor purposes of the Code and regulationsections cited above. No inference is in-tended with regard to any other section ofthe Code or regulations that deals withcapital gains treatment.

COMMENTS

Beginning in 2001, § 311 of TRA ’97reduces the capital gains tax rates for gainfrom certain assets that are held for morethan 5 years (“qualified 5-year gain”).The 10-percent rate is reduced to 8 per-cent for taxable years beginning after De-cember 31, 2000. The 20-percent rate isreduced to 18 percent for property theholding period for which begins after De-cember 31, 2000.

The Service invites comments with re-spect to the computation of the holdingperiod for purposes of the reduced capitalgains tax rates for qualified 5-year gain asthese rates apply to net unrealized appre-ciation (for example, whether to use anactual holding period, a deemed holdingperiod, or a combination). Commentsshould be submitted by October 24, 1998.

Comments can be addressed toCC:DOM:CORP:R (Notice 98–24), room5228, Internal Revenue Service, POB7604, Ben Franklin Station, Washington,DC 20044. In the alternative, commentsmay be hand delivered between the hoursof 8 a.m. and 5 p.m. to CC:DOM:CORP:R (Notice 98–24), Courier’s Desk, Inter-nal Revenue Service, 1111 ConstitutionAvenue, NW, Washington, DC. Alterna-tively, taxpayers may transmit commentselectronically via the IRS Internet site athttp://www.irs.ustreas.gov/prod/tax_regs/comments.html.

DRAFTING INFORMATION

The principal author of this notice isSteven Linder of the Employee Plans Divi-sion. For further information regarding thisnotice, please contact the Employee PlansDivision’s taxpayer assistance telephoneservice at (202) 622-6074 or (202) 622-6075, between the hours of 1:30 p.m. and3:30 p.m. Eastern time, Monday throughThursday, or Mr. Linder at (202) 622-6214. These are not toll-free numbers.

26 CFR 601.105: Examination of returns andclaims for refund, credit, or abatement;determination of correct tax liability.(Also Part I, § 280F; 1.280F–7, 1.61–21.)

Rev. Proc. 98–30

SECTION 1. PURPOSE

This revenue procedure provides: (1)limitations on depreciation deductions forowners of passenger automobiles firstplaced in service during calendar year1998, including separate limitations onpassenger automobiles designed to bepropelled primarily by electricity andbuilt by an original equipment manufac-turer (electric automobiles); (2) theamounts to be included in income bylessees of passenger automobiles firstleased during calendar year 1998, includ-ing separate inclusion amounts for elec-tric automobiles; and (3) the maximumallowable value of employer-provided au-tomobiles first made available to employ-ees for personal use in calendar year 1998for which the vehicle cents-per-mile valu-ation rule provided under § 1.61–21(e) ofthe Income Tax Regulations may be ap-plicable. The tables detailing these depre-ciation limitations and lessee inclusionamounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal RevenueCode. The maximum allowable automo-bile value for applying the vehicle cents-per-mile valuation rule reflects the auto-mobile price inflation adjustment of § 280F(d)(7) as required by § 1.61–21(e)-(1)(iii)(A).

SECTION 2. BACKGROUND

For owners of automobiles, § 280F(a)imposes dollar limitations on the depreci-ation deduction for the year that the auto-mobile is placed in service and each suc-ceeding year. In the case of electricautomobiles placed in service after Au-gust 5, 1997, and before January 1, 2005,§ 280F(a)(1)(C) requires tripling of theselimitation amounts. Section 280F(d)(7)requires the amounts allowable as depre-ciation deductions to be increased by aprice inflation adjustment amount for pas-senger automobiles placed in service aftercalendar year 1988.

For leased automobiles, § 280F(c) re-quires a reduction in the deduction al-lowed to the lessee of the automobile.

April 27, 1998 6 1998–17 I.R.B.

The reduction must be substantiallyequivalent to the limitations on the depre-ciation deductions imposed on owners ofautomobiles. Under § 1.280F–7(a), thisreduction requires the lessees to includein gross income an inclusion amount de-termined by applying a formula to theamount obtained from a table. There is atable for lessees of electric automobilesand a table for all other passenger auto-mobiles. Each table shows inclusionamounts for a range of fair market valuesfor each tax year after the automobile isfirst leased.

For automobiles first provided by em-ployers to employees that meet the re-quirements of § 1.61–21(e)(1), the valueto the employee of the use of the automo-bile may be determined under the vehiclecents-per-mile valuation rule of § 1.61–21(e). Section 1.61-21(e)(1)(iii)(A) pro-vides that for an automobile first madeavailable after 1988 to any employee ofthe employer for personal use, the valueof the use of the automobile may not bedetermined under the vehicle cents-per-mile valuation rule for a calendar year ifthe fair market value of the automobile(determined pursuant to § 1.61–21(d)-(5)(i) through (iv)) on the first date the au-tomobile is made available to the em-ployee exceeds $12,800 as adjusted by § 280F(d)(7).

SECTION 3. SCOPE AND OBJECTIVE

01. The limitations on depreciation de-ductions in section 4.02 of this revenueprocedure apply to automobiles (otherthan leased automobiles) that are placedin service in calendar year 1998 and con-tinue to apply for each tax year that theautomobile remains in service.

02. The tables in section 4.03 of thisrevenue procedure apply to leased auto-mobiles for which the lease term begins incalendar year 1998. Lessees of such auto-mobiles must use these tables to deter-mine the inclusion amount for each taxyear during which the automobile isleased.

03. SeeRev. Proc. 96–25, 1996–1 C.B.681, for information on determining in-clusion amounts for automobiles firstleased before January 1, 1997; Rev. Proc.97–20, 1997–11 I.R.B. 10, for automo-biles first leased during calendar year

1997, including electric automobiles firstleased on or after January 1, 1997, and be-fore August 6, 1997; and Rev. Proc.98–24, 1998-10 I.R.B. 31, for electric au-tomobiles first leased after August 5,1997, and before January 1, 1998.

04. The maximum fair market valuefigure in section 4.04(2) of this revenueprocedure applies to employer-providedautomobiles first made available to anyemployee for personal use in calendaryear 1998. SeeRev. Proc. 97–20, for themaximum fair market value figure for au-tomobiles first made available in calendaryear 1997.

SECTION 4. APPLICATION

01. A taxpayer placing an automobilein service for the first time during calen-dar year 1998 is limited to the deprecia-tion deduction shown in Table 1 of sec-tion 4.02(2) or, in the case of an electricautomobile, Table 2. A taxpayer firstleasing an automobile in calendar year1998 must determine the inclusionamount that is added to gross incomeusing Table 3 of section 4.03 or, in thecase of an electric automobile, Table 4.Otherwise, the procedures of § 1.280F–7(a) must be followed. An employer pro-viding an automobile for the first time incalendar year 1998 for the personal use ofany employee may determine the value ofthe use of the automobile by using thecents-per-mile valuation rule in § 1.61–21(e) if the fair market value of the auto-mobile does not exceed the amount speci-fied in section 4.04(2). If the fair marketvalue of the automobile exceeds theamount specified in section 4.04(2), theemployer may determine the value of theuse of the automobile under the generalvaluation rules of § 1.61–21(b) or underthe special valuation rules of § 1.61–21(d)(Automobile lease valuation) or § 1.61–21(f) (Commuting valuation) if the ap-plicable requirements are met.

02. Limitations on Depreciation De-ductions for Certain Automobiles.

(1) Amount of the Inflation Adjust-ment. Under § 280F(d)(7)(B)(i), the auto-mobile price inflation adjustment for anycalendar year is the percentage (if any) bywhich the CPI automobile component forOctober of the preceding calendar yearexceeds the CPI automobile component

for October 1987. The term “CPI auto-mobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobilecomponent” of the Consumer Price Indexfor all Urban Consumers published by theDepartment of Labor (the CPI). The newcar component of the CPI was 115.2 forOctober 1987 and 140.6 for October1997. The October 1997 index exceededthe October 1987 index by 25.4. The In-ternal Revenue Service has, therefore, de-termined that the automobile price infla-tion adjustment for 1998 is 22.05 percent(25.4/115.2 3 100%). This adjustment isapplicable to all automobiles that are firstplaced in service in calendar year 1998.The dollar limitations in § 280F(a) musttherefore be multiplied by a factor of0.2205, and the resulting increases, afterrounding to the nearest $100, are added tothe 1988 limitations to give the deprecia-tion limitations applicable to passengerautomobiles (other than electric automo-biles) for 1998. To determine the dollarlimitations applicable to an electric auto-mobile first placed in service during cal-endar year 1998, the dollar limitations in§ 280F(a) are tripled in accordance with § 280F(a)(1)(C) and are then multipliedby a factor of 0.2205; the resulting in-creases, after rounding to the nearest$100, are added to the tripled 1988 limita-tions to give the depreciation limitationsfor 1998.

(2) Amount of the Limitation.Forautomobiles (other than electric automo-biles) placed in service in calendar year1998, Table 1 contains the dollar amountof the depreciation limitations for eachtax year. For electric automobiles placedin service in calendar year 1998, Table 2contains these amounts.

1998–17 I.R.B. 7 April 27, 1998

REV. PROC. 98–30 TABLE 1

DEPRECIATION LIMITATIONSFOR AUTOMOBILES (OTHERTHAN ELECTRIC AUTOMO-

BILES) FIRST PLACED IN SER-VICE IN CALENDAR YEAR 1998

Tax Year Amount

1st Tax Year $3,1602nd Tax Year $5,0003rd Tax Year $2,950Each Succeeding Year $1,775

REV. PROC. 98–30 TABLE 3

DOLLAR AMOUNTS FOR AUTOMOBILES (OTHER THAN ELECTRIC AUTOMOBILES)WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1998

Fair Market Value of Automobile Tax Year During Lease

Over Not Over 1st 2nd 3rd 4th 5th and Later

$ 15,800 16,100 1 5 8 12 1416,100 16,400 4 10 16 22 2516,400 16,700 6 15 25 31 3616,700 17,000 9 20 33 41 4717,000 17,500 12 28 43 53 6217,500 18,000 16 37 56 70 8018,000 18,500 20 46 70 85 9918,500 19,000 24 55 83 101 11719,000 19,500 28 64 96 117 13619,500 20,000 32 73 110 133 15420,000 20,500 36 82 123 149 17320,500 21,000 40 91 36 165 19121,000 21,500 45 99 150 181 20921,500 22,000 49 108 163 197 22822,000 23,000 55 122 183 221 25523,000 24,000 63 140 210 252 29224,000 25,000 71 158 236 285 32925,000 26,000 79 176 263 316 36626,000 27,000 88 193 290 348 40327,000 28,000 96 211 317 380 43928,000 29,000 104 229 343 412 47729,000 30,000 112 247 370 444 51330,000 31,000 120 265 396 476 550 31,000 32,000 128 283 423 508 58732,000 33,000 137 301 449 540 624 33,000 34,000 145 319 476 571 66134,000 35,000 153 337 502 604 697 35,000 36,000 161 355 529 635 73536,000 37,000 169 373 556 667 77137,000 38,000 178 391 582 699 80838,000 39,000 186 409 608 731 84539,000 40,000 194 427 635 763 882

03. Inclusions in Income of Lessees ofAutomobiles.

The inclusion amounts for automobilesfirst leased in calendar year 1998 are cal-

culated under the procedures described in§ 1.280F-7(a). Lessees of automobilesother than electric automobiles should useTable 3 in applying these procedures,

while lessees of electric automobilesshould use Table 4.

April 27, 1998 8 1998–17 I.R.B.

REV. PROC. 98–30 TABLE 2

DEPRECIATION LIMITATIONS FOR ELECTRIC AUTOMOBILES FIRST PLACED IN SERVICE IN CALENDAR YEAR 1998

Tax Year Amount

1st Tax Year $9,3802nd Tax Year $15,0003rd Tax Year $8,950Each Succeeding Year $5,425

1998–17 I.R.B. 9 April 27, 1998

REV. PROC. 98–30 TABLE 3—Continued

DOLLAR AMOUNTS FOR AUTOMOBILES (OTHER THAN ELECTRIC AUTOMOBILES)WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1998

Fair Market Value of Automobile Tax Year During Lease

Over Not Over 1st 2nd 3rd 4th 5th and Later

40,000 41,000 202 445 662 794 91941,000 42,000 210 463 688 827 95542,000 43,000 218 481 715 859 99243,000 44,000 227 498 742 891 1,02844,000 45,000 235 516 769 922 1,06645,000 46,000 243 534 795 955 1,10246,000 47,000 251 552 822 986 1,14047,000 48,000 259 570 849 1,018 1,17648,000 49,000 268 588 875 1,050 1,21349,000 50,000 276 606 901 1,082 1,25050,000 51,000 284 624 928 1,114 1,28651,000 52,000 292 642 955 1,145 1,32452,000 53,000 300 660 981 1,178 1,36053,000 54,000 308 678 1,008 1,209 1,39854,000 55,000 317 695 1,035 1,241 1,43455,000 56,000 325 713 1,062 1,273 1,47156,000 57,000 333 732 1,087 1,305 1,50857,000 58,000 341 750 1,114 1,337 1,54458,000 59,000 349 768 1,140 1,369 1,58259,000 60,000 358 785 1,168 1,400 1,61960,000 62,000 370 812 1,207 1,449 1,67462,000 64,000 386 848 1,261 1,512 1,74764,000 66,000 403 884 1,313 1,577 1,82166,000 68,000 419 920 1,367 1,640 1,89468,000 70,000 435 956 1,420 1,704 1,96870,000 72,000 452 991 1,474 1,767 2,04272,000 74,000 468 1,027 1,527 1,832 2,11574,000 76,000 484 1,063 1,580 1,896 2,18976,000 78,000 501 1,099 1,633 1,959 2,26378,000 80,000 517 1,135 1,686 2,023 2,33780,000 85,000 546 1,198 1,779 2,134 2,46685,000 90,000 587 1,287 1,913 2,294 2,64990,000 95,000 627 1,377 2,046 2,453 2,83495,000 100,000 668 1,467 2,178 2,613 3,018

100,000 110,000 730 1,601 2,378 2,852 3,294110,000 120,000 812 1,780 2,644 3,172 3,662120,000 130,000 893 1,960 2,910 3,490 4,031130,000 140,000 975 2,139 3,176 3,810 4,398140,000 150,000 1,057 2,318 3,443 4,128 4,767150,000 160,000 1,139 2,498 3,708 4,447 5,135160,000 170,000 1,221 2,677 3,974 4,766 5,504170,000 180,000 1,302 2,857 4,240 5,085 5,872180,000 190,000 1,384 3,036 4,506 5,404 6,241190,000 200,000 1,466 3,215 4,772 5,724 6,608200,000 210,000 1,548 3,394 5,039 6,042 6,977210,000 220,000 1,630 3,574 5,304 6,361 7,345220,000 230,000 1,712 3,753 5,570 6,680 7,714230,000 240,000 1,793 3,932 5,837 6,999 8,082240,000 250,000 1,875 4,112 6,102 7,318 8,450

April 27, 1998 10 1998–17 I.R.B.

REV. PROC. 98–30 TABLE 4

DOLLAR AMOUNTS FOR ELECTRIC AUTOMOBILES WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1998

Fair Market Value of Automobile Tax Year During Lease

Over Not Over 1st 2nd 3rd 4th 5th and Later

$ 47,000 48,000 5 11 18 21 2348,000 49,000 13 29 45 52 6049,000 50,000 21 47 71 85 9650,000 51,000 29 65 98 116 13451,000 52,000 38 83 124 148 17152,000 53,000 46 101 151 180 20753,000 54,000 54 119 177 212 24454,000 55,000 62 137 204 244 28155,000 56,000 70 155 231 275 31856,000 57,000 79 172 258 307 35557,000 58,000 87 190 284 340 39158,000 59,000 95 208 311 372 42859,000 60,000 103 226 338 403 46560,000 62,000 115 253 378 451 52062,000 64,000 132 289 430 515 59464,000 66,000 148 325 484 578 66866,000 68,000 164 361 537 643 74168,000 70,000 181 396 591 706 81570,000 72,000 197 432 644 770 88872,000 74,000 214 468 697 834 96274,000 76,000 230 504 750 898 1,03576,000 78,000 246 540 803 962 1,10978,000 80,000 263 576 856 1,025 1,18380,000 85,000 291 639 949 1,137 1,31285,000 90,000 332 728 1,083 1,296 1,49690,000 95,000 373 818 1,215 1,456 1,68195,000 100,000 414 908 1,348 1,615 1,865

100,000 110,000 475 1,042 1,548 1,855 2,141110,000 120,000 557 1,221 1,814 2,174 2,509120,000 130,000 639 1,401 2,080 2,492 2,878130,000 140,000 721 1,580 2,346 2,812 3,245140,000 150,000 803 1,759 2,612 3,131 3,614150,000 160,000 884 1,939 2,878 3,450 3,982160,000 170,000 966 2,118 3,144 3,769 4,350170,000 180,000 1,048 2,297 3,410 4,088 4,719180,000 190,000 1,130 2,477 3,676 4,406 5,087190,000 200,000 1,212 2,656 3,942 4,726 5,455200,000 210,000 1,293 2,835 4,209 5,044 5,824210,000 220,000 1,375 3,015 4,474 5,364 6,191220,000 230,000 1,457 3,194 4,740 5,683 6,560230,000 240,000 1,539 3,373 5,006 6,002 6,928240,000 250,000 1,621 3,552 5,273 6,320 7,297

04. Maximum Automobile Value forUsing the Cents-per-mile Valuation Rule.

(1) Amount of Adjustment.Under § 1.61–21(e)(1)(iii)(A), the limitation onthe fair market value of an employer-pro-vided automobile first made available toany employee for personal use after 1988is to be adjusted in accordance with § 280F(d)(7). Accordingly, the adjust-ment for any calendar year is the percent-age (if any) by which the CPI automobilecomponent for October of the precedingcalendar year exceeds the CPI automobilecomponent for October 1987 (See,section4.02(1).) The new car component of theCPI was 115.2 for October 1987 and140.6 for October 1997. The October1997 index exceeded the October 1987index by 25.4. The Internal Revenue Ser-vice has, therefore, determined that theadjustment for 1998 is 22.05 percent(25.4/115.2 3 100%). This adjustment isapplicable to all employer-provided auto-mobiles first made available to any em-ployee for personal use in calendar year1998. The maximum fair market valuespecified in § 1.61–21(e)(1)(iii)(A) musttherefore be multiplied by a factor of0.2205, and the resulting increase, afterrounding to the nearest $100, is added to$12,800 to give the maximum value for1998.

(2) The Maximum Automobile Value.For automobiles first made available incalendar year 1998 to any employee ofthe employer for personal use, the vehiclecents-per-mile valuation rule may be ap-plicable if the fair market value of the au-tomobile on the date it is first made avail-able does not exceed $15,600.

SECTION 5. EFFECTIVE DATE

This revenue procedure is effective forautomobiles (other than leased automo-biles) that are first placed in service dur-ing calendar year 1998, to leased automo-biles that are first leased during calendaryear 1998, and to employer-provided au-tomobiles first made available to employ-ees for personal use in calendar year1998.

DRAFTING INFORMATION

The principal author of this revenueprocedure is Bernard P. Harvey of the Of-fice of the Assistant Chief Counsel(Passthroughs and Special Industries).

For further information regarding the de-preciation limitations and lessee inclusionamounts in this revenue procedure, con-tact Mr. Harvey at (202) 622-3110; forfurther information regarding the maxi-mum automobile value for applying thevehicle cents-per-mile valuation rule,contact Ms. Janine Cook of the Office ofthe Associate Chief Counsel (EmployeeBenefits and Exempt Organizations) at(202) 622-6040 (not toll-free calls).

26 CFR 601.602: Tax forms and instructions.(Also Part I, §§ 6302; 31.6302–1)

Rev. Proc. 98–32

Table of ContentsSECTION 1. PURPOSESECTION 2. BACKGROUNDSECTION 3. DEFINITIONSSECTION 4. OVERVIEWSECTION 5. REGISTRATIONSECTION 6. ASSIGNMENT TO A FI-

NANCIAL AGENTSECTION 7. AUTHORIZATIONS SECTION 8. ENROLLMENTSECTION 9. ACH DEBIT ENTRYSECTION 10. ACH CREDIT ENTRYSECTION 11. ELECTRONIC TAX AP-

PLICATION TRANSAC-TION

SECTION 12. PROOF OF PAYMENTSECTION 13. REFUNDSSECTION 14. DISASTER PROCE-

DURESSECTION 15. RESPONSIBILITIES OF

A FILERSECTION 16. ADVERTISING STAN-

DARDS SECTION 17. REASONS FOR SUS-

PENSIONSECTION 18. ADMINISTRATIVE RE-

VIEW PROCESS FORPROPOSED SUSPEN-SION

SECTION 19. EFFECT OF SUSPEN-SION

SECTION 20. APPEAL OF SUSPEN-SION

SECTION 21. PENALTIES SECTION 22. FORMS, PUBLICA-

TIONS, IMPLEMENTA-TION GUIDES, ANDADDITIONAL INFOR-MATION

SECTION 23. EFFECT ON OTHERDOCUMENTS

SECTION 24. EFFECTIVE DATESECTION 25. PAPERWORK REDUC-

TION ACT

SECTION 1. PURPOSE

This revenue procedure provides infor-mation about the Electronic Federal TaxPayment System (EFTPS) programs forBatch Filers and Bulk Filers (Filers).EFTPS is an electronic remittance pro-cessing system for making federal tax de-posits (FTDs) and federal tax payments(FTPs). The Batch Filer and Bulk Filerprograms are used by Filers for electroni-cally submitting enrollments, FTDs, andFTPs on behalf of multiple taxpayers.

SECTION 2. BACKGROUND

.01 Section 6302(c) of the InternalRevenue Code provides that the Secretaryof the Treasury (Secretary) may authorizeFederal Reserve banks, and incorporatedbanks and other financial institutions thatare depositories or financial agents of theUnited States, to receive any tax imposedunder the internal revenue laws, in suchmanner, at such times, and under suchconditions as the Secretary may prescribe.Section 6302(c) also provides that theSecretary shall prescribe the manner,times, and conditions under which the re-ceipt of such tax by such banks and otherfinancial institutions is to be treated as apayment of such tax to the Secretary.

.02 Section 6302(h) requires the Secre-tary to establish an electronic funds trans-fer (EFT) system to collect depositarytaxes (FTDs). EFTPS is the EFT systemdeveloped by the Secretary to collect fed-eral taxes (FTDs and FTPs). See § 31.6302–1(h)(4)(i) of the EmploymentTax and Collection of Income Tax atSource Regulations, and Rev. Proc. 97–33, 1997–30 I.R.B. 10.

.03 Some taxpayers are required by theregulations issued under § 6302(h) to make FTDs using EFTPS. See § 31.6302–1(h)(2)(i)(A). Taxpayers notrequired to make FTDs using EFTPS maychoose to do so voluntarily. Taxpayersalso may choose to make FTPs usingEFTPS.

.04 All Filers using the Batch Filer orBulk Filer programs must comply withthis revenue procedure, and with the Im-plementation Guide for EFTPS Batch Fil-ers, or the Implementation Guide for

1998–17 I.R.B. 11 April 27, 1998

EFTPS Bulk Filers, whichever is applica-ble.

.05 The two primary remittance meth-ods in EFTPS are an Automated ClearingHouse (ACH) debit entry and an ACHcredit entry. Filers may also use an Elec-tronic Tax Application (ETA) transaction.These remittance methods are defined insection 3 and described in sections 9, 10,and 11 of this revenue procedure.

.06 Filers participating in EFTPS mustensure that taxpayers’ funds are remittedon a timely basis. See § 31.6302–1(h)(8)for rules regarding when an FTD remittedby EFTPS is deemed made. For FTDsand FTPs remitted by EFTPS, see § 31.6302–1(h)(9) for rules regardingwhen the tax is deemed paid.

.07 If a taxpayer is required by regula-tions to make an FTD by EFTPS, a Filermay not use a paper FTD coupon (Form8109, Federal Tax Deposit Coupon) or themagnetic tape FTD program (described inRev. Proc. 89–48, 1989–2 C.B. 599) tomake an FTD for the taxpayer. If a tax-payer is a voluntary participant in EFTPS(that is, a participant not required by regu-lations to make an FTD by EFTPS) andthe Filer is unable, for any reason, tomake an FTD using EFTPS or choosesnot to use EFTPS to make an FTD, theFiler may make a timely FTD for the tax-payer by using a paper FTD coupon, orthe magnetic tape FTD program if autho-rized by the taxpayer.

.08 EFTPS does not change the compu-tation of tax liability, interest or penalties,or FTD or FTP due dates.

SECTION 3. DEFINITIONS

.01 The definitions provided in this sec-tion will be used for the Batch Filer andBulk Filer programs.

.02 Administrative FRB Head OfficeLocal Zone Time. “Administrative FRBHead Office Local Zone Time” is thelocal zone time of the Administrative Fed-eral Reserve Bank head office throughwhich a financial institution, or its autho-rized correspondent bank, sends a Same-Day Payment.

.03 Authorization. An “Authorization”is an instrument used by a taxpayer todesignate a Filer as the taxpayer’s agentfor submitting enrollments and for mak-ing FTDs or FTPs.

.04 Automated Clearing House(ACH).“Automated Clearing House” is a funds

transfer system, governed by the ACHRules (the Operating Rules and the Oper-ating Guidelines published by NationalAutomated Clearing House Association(NACHA)) that provides for the interbankclearing of electronic entries for partici-pating financial institutions.

.05 ACH credit entry.An “ACH creditentry” is a transaction in which a financialinstitution, upon instructions from a Filer,originates an FTD or FTP to the appropri-ate Treasury Department account throughthe ACH system. An ACH credit entry isa transfer of funds representing one FTDor FTP. There are no “bulk” ACH creditentries. See section 10 of this revenueprocedure for information on an ACHcredit entry.

.06 ACH debit entry. An “ACH debitentry” is a transaction in which one of theFinancial Agents, upon instructions froma Filer, instructs the Filer’s or the tax-payer’s financial institution to withdrawfunds from a designated account for anFTD or FTP and to route the FTD or FTPto the appropriate Treasury Departmentaccount through the ACH system. A sin-gle ACH debit entry is a transfer of fundsrepresenting one FTD or FTP. A bulkACH debit entry (a remittance methodavailable only in the Bulk Filer program)is a transfer of funds representing multi-ple FTDs or FTPs. See section 9 of thisrevenue procedure for information on anACH debit entry.

.07 Batch Filer. A Batch Filer is a Filerthat is registered under the Batch Filerprogram. A Batch Filer submits multipleelectronic enrollment files at one time anduses a personal computer or telephone formaking FTDs or FTPs.

.08 Bulk Filer. A Bulk Filer is a Filerthat is registered under the Bulk Filer pro-gram. A Bulk Filer uses Electronic DataInterchange (EDI) files to transmit and re-ceive enrollment or payment information.A Bulk Filer also has additional remit-tance methods (bulk ACH debit entriesand bulk ETA entries).

.09 Electronic tax application (ETA)transaction. An “ETA transaction” (alsoreferred to as “Same-Day Payment”) is atransfer of funds through the ETA subsys-tem of EFTPS that receives, processes,and transmits an FTD or FTP and the re-lated tax payment information for Same-Day Payments through Fedwire valuetransfers, Fedwire non-value transactions,

and Direct Access transactions. A singleETA transaction is a transfer of funds rep-resenting one FTD or FTP. A bulk ETAtransaction (a remittance method avail-able only in the Bulk Filer program) is atransfer of funds representing multipleFTDs or FTPs. See section 11 of this rev-enue procedure for information on anETA transaction.

.10 Employer identification number(EIN). An “EIN” is a unique nine digittaxpayer identifying number issued by theInternal Revenue Service to business tax-payers for the purpose of reporting tax re-lated information.

.11 Federal Reserve Bank(FRB). The“FRB” is the U.S. Government’s fiscalagent. The FRB also processes ACHtransactions to a commercial financial in-stitution account or to a Treasury Depart-ment account.

.12 Filer. A “Filer” is a person makingFTDs or FTPs on behalf of multiple tax-payers in the Batch Filer or Bulk Filerprogram. Each Filer must be either thetaxpayer or a person authorized to act onbehalf of the taxpayer.

.13 Financial Agent. For purposes ofEFTPS, a “Financial Agent” (also re-ferred to as a “Treasury Financial Agent”)is a financial institution that is designatedas an agent of the Treasury Department.The Secretary has designated Nations-Bank and First National Bank of Chicago(First Chicago) to be the Financial Agentsfor EFTPS. A Financial Agent processesBatch Filer and Bulk Filer registrations,processes taxpayer enrollments, receivespayment information, originates ACHdebit entries upon instructions from tax-payers or Filers, and provides customerservice assistance for EFTPS enrollmentand payment information.

.14 IRS individual taxpayer identifica-tion number(ITIN). An “ITIN” is a tax-payer identifying number issued by theService to an alien individual who is inel-igible to receive a social security number(SSN) for the purpose of reporting tax re-lated information.

.15 Prenotification ACH credit. “Pre-notification ACH credit” is a processwhereby a financial institution verifies theappropriate Treasury Routing TransitNumber (RTN), the Treasury Depart-ment’s account number, and the tax-payer’s taxpayer identification number(TIN).

April 27, 1998 12 1998–17 I.R.B.

.16 Prenotification ACH debit. “Preno-tification ACH debit” is a processwhereby the appropriate Financial Agentverifies the RTN of the financial institu-tion, the account number, and the accounttype.

.17 Social security number(SSN). An“SSN” is a taxpayer identifying numberassigned to an individual or estate by theSocial Security Administration.

.18 Taxpayer identification number(TIN). A “TIN” is a taxpayer identifyingnumber assigned to a taxpayer for the pur-pose of reporting tax related information.A TIN includes an EIN, ITIN, or SSN.

SECTION 4. OVERVIEW

Filers must follow the following proce-dures to participate in the Batch Filer orBulk Filer programs:

(1) register as a Filer with the appropri-ate Financial Agent (see sections 5 and 6of this revenue procedure);

(2) obtain an Authorization from eachtaxpayer for which the Filer will be sub-mitting enrollments and making FTDs orFTPs, and submit these Authorizations tothe Service (see section 7 of this revenueprocedure); and

(3) enroll each of those taxpayers withthe appropriate Financial Agent (see sec-tion 8 of this revenue procedure).

SECTION 5. REGISTRATION

.01 A Filer may register for the Batch

Filer or Bulk Filer program if the Filer an-ticipates making FTDs or FTPs for multi-ple taxpayers.

.02 The Batch Filer program is recom-mended for Filers who anticipate submit-ting 50 or more enrollments. Additionalinformation for Batch Filers is furnishedin the Implementation Guide for EFTPSBatch Filers. A copy of this implementa-tion guide may be obtained from EFTPSCustomer Service (see section 22 of thisrevenue procedure).

.03 The Bulk Filer program is recom-mended for Filers who anticipate making750 or more FTDs or FTPs on a peak day.Additional information for Bulk Filers isfurnished in the Implementation Guidefor EFTPS Bulk Filers. A copy of this im-plementation guide may be obtained fromEFTPS Customer Service (see section 22of this revenue procedure).

.04 A Filer wanting to participate in ei-ther the Batch Filer or Bulk Filer programmust submit the appropriate registrationletter (also referred to as an “Agree-ment”). Some Bulk Filers may wish touse the Batch Filer program as a backup.To participate in both programs, a Filermust submit a Batch Filer registration let-ter and a Bulk Filer registration letter.Blank registration letter(s) may be ob-tained by contacting the appropriate Fi-nancial Agent (listed in section 6 of thisrevenue procedure).

.05 A Filer must submit the registrationletter to the address designated in the in-

structions accompanying the registrationletter.

.06 If an unregistered entity acquires aregistered Filer, a new registration lettermust be submitted by the unregistered en-tity if it wants to participate in either theBatch Filer or Bulk Filer program.

.07 A Filer should notify the appropri-ate Financial Agent if the Filer chooses towithdraw from either the Batch Filer orBulk Filer program. A Filer that is inac-tive in the Batch Filer or Bulk Filer pro-gram (that is, the Filer has submitted noenrollments, FTDs, or FTPs in that pro-gram) for 6 months or more is treated ashaving withdrawn from that program. Ifa Bulk Filer uses the Batch Filer programas a backup, the Filer must submit anFTD or FTP through the Batch Filer pro-gram at least once every six months toprevent the Filer from being treated ashaving withdrawn from the Batch Filerprogram. If a Filer withdraws (or istreated as having withdrawn) from a pro-gram, the Filer must reregister to partici-pate in that program.

SECTION 6. ASSIGNMENT TO AFINANCIAL AGENT

.01 A Filer’s assignment to a FinancialAgent is based on the location of theFiler’s principal place of business. EachFinancial Agent has responsibility forcertain geographic locations as listedbelow:

1998–17 I.R.B. 13 April 27, 1998

NationsBank (800) 555-4477AlabamaAmerican Samoa Arizona Arkansas California (Los Angeles,

Orange, San Bernardino, Riverside, San Diego, and Imperial counties only)

Commonwealth of the Northern Mariana Islands Commonwealth of Puerto Rico Delaware District of Columbia Florida Georgia Guam Kentucky Louisiana Maryland Mississippi Nevada New Mexico

First Chicago (800) 945-0966AlaskaCalifornia (except Los Angeles, Orange, San Bernardino,

Riverside, San Diego, and Imperial counties)ColoradoConnecticutHawaiiIdahoIllinoisIndianaIowaKansasMaineMassachusettsMichiganMinnesotaMissouriMontanaNebraskaNew HampshireNew Jersey

.02 If a Filer wants to use the other Fi-nancial Agent, the Filer must submit awritten request detailing the reasons forthe request and providing the name andtelephone number of a contact person.This request may be submitted to:

FTD & Electronic Payments Section,T:S:C:F Internal Revenue Service5000 Ellin RdLanham, MD 20706

or faxed to FTD & Electronic PaymentsSection at (202) 283-7434 (not a toll-freenumber).

.03 A Filer, registered with a FinancialAgent on April 27, 1998, may continueusing the services of that Financial Agent,regardless of the geographic assignmentsin section 6.01 of this revenue procedure.

SECTION 7. AUTHORIZATIONS

.01 If a Filer is not the taxpayer, theFiler must submit a taxpayer’s Authoriza-tion to the Service before submitting thetaxpayer’s enrollment to the FinancialAgent.

.02 Except as provided under thegrandfather rule in section 24.02 of thisrevenue procedure, an Authorization mustbe submitted on Form 8655, ReportingAgent Authorization for MagneticTape/Electronic Filers, or any other in-strument that complies with Rev. Proc.96–17, 1996–1 C.B. 633, as modified byRev. Proc. 97–47, 1997–42 I.R.B. 19.

.03 A Filer that acquires all or some ofthe clients of another Filer must obtainnew Authorizations from those clients andsubmit the new Authorizations to the Ser-vice before making FTDs and FTPs onbehalf of those clients.

.04 An Authorization permits a Filer tosubmit enrollments and to make FTDs orFTPs on behalf of a taxpayer. An Autho-rization may also permit the Filer to re-

ceive certain tax information on behalf ofthe taxpayer. Although EFTPS is de-signed for the payment of various types oftax, the Authorization may limit the typesof tax information the Filer is permitted toreceive. For example, a Filer may makeFTDs and FTPs on behalf of the taxpayer,but may be authorized to receive only no-tices regarding FTDs for Form 941, Em-ployer’s Quarterly Federal Tax Return,and Form 940, Employer’s Annual Fed-eral Unemployment (FUTA) Tax Return.

.05 Except as provided in section 7.07of this revenue procedure, a Filer submit-ting Authorizations to the Service for theBatch Filer and Bulk Filer programs on orafter April 27, 1998, must include a list ofall taxpayers for whom the Filer is sub-mitting Authorizations. The list must in-clude each taxpayer’s complete name (forexample, business name on file with Ser-vice), address (including zip code), andTIN. EINs, SSNs, and ITINs should eachbe grouped separately. Within eachgroup, the taxpayers must be listed in TINnumber sequence.

.06 Except as provided in section 7.07of this revenue procedure, the Authoriza-tions and the accompanying list must besubmitted to:

EFTPS Coordinator—Authorizations5333 Getwell RoadStop 532Memphis, TN 38118

or faxed to the EFTPS Coordinator at(901) 546-4112 (not a toll-free number).

.07 If a Filer has submitted Authoriza-tions to the Service for the Form 941 ELFprogram, as described in Rev. Proc. 97–47, or the Form 941 or Form 940 MagTape Programs, as described in Rev. Proc.96–18, 1996–1 C.B. 637, and these Au-thorizations allow the Filer to make pay-ments on behalf of the taxpayer, the Fileris not required to resubmit the Authoriza-

tions or to submit a list containing thoseAuthorizations to the Service. Similarly,if a Filer has submitted Authorizations tothe Service for the magnetic tape FTDprogram, as described in Rev. Proc. 89–48, the Filer is not required to resubmitthe Authorizations or to submit a list con-taining those Authorizations to the Ser-vice.

.08 To delete Authorizations that a Filerpreviously submitted to the Service, theFiler must submit a list of the taxpayers tobe deleted to the EFTPS Coordinator.The list must be submitted in the formatprescribed in section 7.05 of this revenueprocedure and to the address (or fax num-ber) provided in section 7.06 of this rev-enue procedure.

SECTION 8. ENROLLMENT

.01 A Filer must submit electronic tax-payer enrollments to the appropriate Fi-nancial Agent in accordance with the ap-plicable implementation guide. As part ofcompleting each taxpayer enrollment, theFiler may choose to use the ACH debitentry or ACH credit entry remittancemethod on a taxpayer-by-taxpayer basis.In both the Batch Filer and the Bulk Filerprograms, enrollment of a taxpayer in theACH Debit remittance method will auto-matically enroll the taxpayer in the ACHCredit remittance method. In the BulkFiler program, enrollment of a taxpayer inthe ACH Credit remittance method willautomatically enroll the taxpayer in theACH Debit remittance method. How-ever, in the Batch Filer program, enroll-ment of a taxpayer in the ACH Credit re-mittance method will not automaticallyenroll the taxpayer in the ACH Debit re-mittance method.

.02 The Financial Agent will verify theaccuracy of the enrollment informationfor each taxpayer and enter the verified

April 27, 1998 14 1998–17 I.R.B.

NationsBank (800) 555-4477North CarolinaOhioOklahomaPennsylvaniaSouth CarolinaTennessee Texas U.S. Virgin Islands Virginia West Virginia

First Chicago (800) 945-0966New YorkNorth DakotaOregonRhode IslandSouth DakotaUtahVermontWashingtonWisconsinWyomingForeign countries

enrollment information in its enrollmentrecord database. As part of the verifica-tion process for an ACH debit entry in theBatch Filer program, the Financial Agentwill originate a prenotification ACHdebit, if requested by the Batch Filer. Inthe Bulk Filer program, prenotificationACH debits are not available. When aprenotification ACH debit is not made,the Filer assumes responsibility for theaccuracy of the information, including theRTN of the financial institution.

.03 When the enrollment process for ataxpayer is completed, the FinancialAgent will provide the Filer with an en-rollment response record that either ac-cepts or rejects the taxpayer’s enrollment.A rejected enrollment will identify neces-sary corrections. Any necessary correc-tions must be submitted by the Filer as anew enrollment of that taxpayer.

.04 If a Filer attempts to make an FTDor FTP through EFTPS before a taxpayeris enrolled, the FTD or FTP generally willbe rejected and the taxpayer may be sub-ject to a penalty for a late FTD or FTP.

SECTION 9. ACH DEBIT ENTRY

.01 For an FTD or FTP to be timely, aFiler must complete the initiation of anACH debit entry with a Financial Agent atleast one business day prior to the FTD orFTP due date.

.02 A Filer may “warehouse” an ACHdebit entry for a business taxpayer by ar-ranging for the entry up to 30 days in ad-vance of the due date. A Filer may ware-house an ACH debit entry for anindividual taxpayer by arranging for theentry up to 105 days in advance of the duedate.

.03 After a Batch Filer or a Bulk Filerinitiates a single ACH debit entry, the Fi-nancial Agent will validate the taxpayer’spayment information and issue an ac-knowledgment number to the Filer. Theacknowledgment number verifies whenthe necessary payment information wasreceived by a Financial Agent but doesnot constitute proof of payment. See sec-tion 12 of this revenue procedure regard-ing proof of payment.

.04 After a Bulk Filer initiates a bulkACH debit entry, the Financial Agent willvalidate the taxpayers’ payment informa-tion and issue acknowledgment numbersto the Filer for accepted payments. TheBulk Filer will receive an acknowledg-

ment number for the bulk ACH debitentry and separate acknowledgementnumbers for each accepted FTD or FTPincluded in the bulk ACH debit entry.The acknowledgment numbers verifywhen the necessary payment informationwas received by a Financial Agent but donot constitute proof of payment. See sec-tion 12 of this revenue procedure regard-ing proof of payment.

.05 In a bulk ETA debit entry, any re-jected payment will be returned to theBulk Filer without an acknowledgementnumber and subtracted from the bulkACH debit entry, as specified in the Im-plementation Guide for EFTPS Bulk Fil-ers. The Bulk Filer assumes responsibil-ity for reinitiating any rejected payments.

.06 Pursuant to the Filer’s instructions,the Financial Agent, on the date desig-nated by the Filer, will originate the trans-fer of funds from the taxpayer’s or Filer’saccount to the appropriate Treasury De-partment account. The Financial Agentalso will transmit the related payment in-formation, supplied by the Filer, to theService for posting to the tax account(s)of the taxpayer(s).

.07 The Service will deem an FTD orFTP made by an ACH debit entry to havebeen made at the time of the debit (that is,when the amount is withdrawn from thetaxpayer’s or Filer’s account and not re-turned or reversed).

.08 When a timely ACH debit entrycannot be made, a Filer may instruct theFinancial Agent to complete the transac-tion at the next opportunity to submit anACH debit entry. The Filer may also usean ACH credit entry or an ETA transac-tion. If a taxpayer is not required to useEFTPS for FTDs, the Filer may use apaper FTD coupon or, if authorized by thetaxpayer, the magnetic tape FTD program.To avoid penalties, the FTD or FTP mustbe received by an appropriate means on orbefore the FTD or FTP due date.

.09 The ACH Rules will govern ACHdebit entry returns and reversals.

SECTION 10. ACH CREDIT ENTRY

.01 If a Filer chooses the ACH creditentry remittance method to make an FTDor FTP, the Filer may use any financial in-stitution capable of originating an ACHcredit entry.

.02 For each TIN used in making ACHcredit entries through a financial institu-

tion, the Filer may request that the finan-cial institution originate a prenotificationACH credit.

.03 To initiate a timely ACH creditentry, a Filer must take into account thefinancial institution’s deadline for origi-nating an ACH credit entry.

.04 When a timely ACH credit entrycannot be made, a Filer may instruct thefinancial institution to complete the trans-action at the next opportunity to submit anACH credit entry. The Filer may alsouse an ETA transaction. A Bulk Filer mayinitiate an ACH debit entry. However, aBatch Filer may initiate an ACH debitentry only if the taxpayer is enrolled forthe ACH debit remittance method. If ataxpayer is not required to use EFTPS forFTDs, the Filer may use a paper FTDcoupon or, if authorized by the taxpayer,the magnetic tape FTD program. Toavoid penalties, the FTD or FTP must bereceived by an appropriate means on orbefore the FTD or FTP due date.

.05 The Financial Agent will receiveand process the ACH credit entry pay-ment information. The Financial Agentwill compare the transaction’s paymentinformation with the taxpayer’s enroll-ment record. If they match, the FinancialAgent will send the payment informationto the Service for posting to the tax-payer’s tax account.

.06 If the Financial Agent cannot iden-tify the taxpayer, the ACH credit entrywill be returned to the originating finan-cial institution.

.07 Failure to provide correct, com-plete, and properly formatted payment in-formation may cause an ACH credit entryto be returned. In the event of a return, aFiler may instruct the financial institutionto submit a corrected ACH credit entry atthe next opportunity to submit an ACHcredit entry. The Filer may also use anETA transaction. A Bulk Filer may initi-ate an ACH debit entry. However, aBatch Filer may initiate an ACH debitentry only if the taxpayer is enrolled forthe ACH debit remittance method. If ataxpayer is not required to use EFTPS forFTDs, the Filer may use a paper FTDcoupon or, if authorized by the taxpayer,the magnetic tape FTD program. Toavoid penalties, the FTD or FTP must bereceived by an appropriate means on orbefore the FTD or FTP due date.

.08 An ACH Credit entry that is not re-turned or reversed will be deemed made

1998–17 I.R.B. 15 April 27, 1998

at the time that the funds are paid into theappropriate Treasury Department ac-count.

.09 The ACH Rules will govern ACHcredit entry returns and reversals.

SECTION 11. ELECTRONIC TAXAPPLICATION TRANSACTION

.01 A Filer may use an ETA transactionto make an FTD or FTP. The Filer shouldcontact the financial institution throughwhich the ETA payment will be made todetermine if the financial institution is ca-pable of making an ETA payment.

.02 A Bulk Filer may use a bulk ETAtransaction to make FTDs or FTPs. TheBulk Filer should contact the financial in-stitution through which the bulk ETA pay-ment will be made to determine if the fi-nancial institution is capable of making abulk ETA payment.

.03 If a Filer uses a single ETA trans-action, the transfer of funds and the trans-mission of the related payment informa-tion occur together. If a Bulk Filer uses abulk ETA transaction, the transmission ofthe payment information precedes the re-lated transfer of funds, both of whichoccur on the same day.

.04 The Service generally will deem anETA payment to have been made on thedate the payment is received by the FRB.A Filer should contact the financial insti-tution through which the ETA paymentwill be made to determine the deadline forinitiating ETA payments for a particularday. ETA payments received by the FRBafter the deadline set forth in the TreasuryFinancial Manual, Volume IV (IV TFM),will not be accepted. Currently, the dead-line in IV TFM is 2:00 p.m. Administra-tive FRB Head Office Local Zone Time.If a payment is not accepted, the Filermust reoriginate the payment using anETA transaction or any other permissibleremittance method.

.05 Additional ETA information may befound in the sections on Same-Day Pay-ments in the Implementation Guide forEFTPS Bulk Filers and the EFTPS Pay-ment Instruction Booklets for businesses.

SECTION 12. PROOF OF PAYMENT

.01 For an ACH debit or credit entryposted to the taxpayer’s account in a fi-nancial institution, a statement prepared

by that financial institution showing atransfer (that is, a decrease to the tax-payer’s account balance) will be acceptedas proof of payment if the statement:

(1) shows the amount and the date ofthe transfer; and

(2) identifies the U.S. Governmentas the payee (for example, “USA tax”).

.02 For an ETA payment posted to thetaxpayer’s account in a financial institu-tion, a taxpayer may request that its finan-cial institution obtain a statement from theFRB that executed the transfer. Thisstatement will be accepted as proof ofpayment if the statement:

(1) shows the amount and the date ofthe transfer; and

(2) identifies the U.S. Governmentas the payee (for example, “USA tax”).

.03 For purposes of this section, state-ments prepared by a financial institutioninclude statements prepared by a thirdparty that is contractually obligated toprepare statements for the financial insti-tution.

.04 A taxpayer’s payment to a Filer (in-cluding a subsidiary’s payment to its par-ent) is not a payment of tax by the tax-payer. Therefore, a statement prepared bythe taxpayer’s financial institution show-ing a transfer from the taxpayer’s accountto the Filer as payee is not proof of pay-ment. Further, a statement prepared bythe Filer’s financial institution showing atransfer of funds from the Filer’s accountto the U.S. Government is not proof ofpayment because the payment may nothave been made on behalf of the taxpayer.The taxpayer will need the acknowledge-ment number for an FTD or FTP madefrom the Filer’s account to establish thatthe FTD or FTP was made on behalf ofthe taxpayer. The acknowledgementnumber allows the Service to trace thepayment. The Filer has the acknowledge-ment number or may obtain it from the Fi-nancial Agent.

SECTION 13. REFUNDS

No refunds of FTDs or FTPs will bemade through EFTPS. However, a refundrequest may be made using existing taxrefund procedures. If a taxpayer’s errorresults in a significant hardship, the tax-payer may contact the Service at (800)829-1040 for assistance.

SECTION 14. DISASTERPROCEDURES

.01 A taxpayer’s ability to make FTDsand FTPs timely may be affected by thetime, severity, and extent of a major disas-ter. In such circumstances, the Serviceprovides relief through the nonassertionor abatement of certain penalties. TheService publicizes the relief for a particu-lar disaster area through the publication ofa News Release, Notice, or Announce-ment. Generally, the Service identifiesthe taxpayers who qualify for this disasterrelief.

.02 If a disaster affects a Filer, the Filershould provide the Service with the infor-mation necessary to identify those FTDsand FTPs of taxpayers outside the disasterarea which were or will be late due to thedisaster. The Service will then determineif the nonassertion or abatement of certainpenalties is appropriate.

.03 In addition, if a Bulk Filer’s pri-mary processing system is affected by adisaster and the Bulk Filer’s backup pro-cessing system fails, the Bulk Filer mayuse an emergency bulk ETA transactionunder which the transfer of funds occursbefore the transmission of the related pay-ment information.

SECTION 15. RESPONSIBILITIES OFA FILER

.01 Each Filer must: (1) comply with this revenue proce-

dure and the applicable implementationguide (Implementation Guide for EFTPSBatch Filers or Implementation Guide forEFTPS Bulk Filers);

(2) maintain a high degree of in-tegrity, compliance, and accuracy;

(3) ensure that FTDs and FTPs areaccurately and timely made;

(4) ensure the security of all trans-mitted information; and

(5) ensure that after a disabling eventthe Filer is able to operate its Batch Fileror Bulk Filer programs with minimal in-terruption (generally, less than 24 hours).

.02 A Filer that is not the taxpayermust:

(1) retain copies of each Authoriza-tion and each enrollment at its principalplace of business for 4 years after the pre-scribed due date of the last return towhich the any FTD or FTP relates, unless

April 27, 1998 16 1998–17 I.R.B.

the Filer is otherwise notified by the Ser-vice;

(2) retain any payment information(including acknowledgement numbers) atits principal place of business for 4 yearsafter the prescribed due date of the returnto which the FTD or FTP relates, unlessthe Filer is otherwise notified by the Ser-vice. A shorter retention period for pay-ment information may be substituted forthis “4-year” retention period, providedthe Filer notifies the taxpayer in writingthat the Filer will not be retaining the pay-ment information after the shorter reten-tion period and the Filer gives such infor-mation to the taxpayer. The shorterretention period must be at least 90 days;and

(3) advise the taxpayer to enroll it-self separately in EFTPS. If the Filer isnot authorized to make all the taxpayer’srequired FTDs and FTPs, the taxpayer’sseparate enrollment will allow the tax-payer to make its own FTDs and FTPsthrough EFTPS. To enroll separately, ataxpayer must submit a completed Form9779, EFTPS Business Enrollment Form,or Form 9783, EFTPS Individual Enroll-ment Form, to the EFTPS EnrollmentProcessing Center at the address providedin the applicable form’s instructions. SeeRev. Proc. 97-33 for more information.

.03 A Filer that is the taxpayer must:(1) absent a specific retention period

prescribed by regulations, retain the pay-ment information and any supporting ma-terial at its principal place of business foras long as the contents thereof may be-come material in the administration ofany internal revenue law; and

(2) retain copies of each enrollmentat its principal place of business for 4years after the prescribed due date of thereturn to which the last FTD or FTP re-lates, unless otherwise notified by theService.

SECTION 16. ADVERTISINGSTANDARDS

.01 A Filer must comply with the ad-vertising and solicitation provisions of 31C.F.R. Part 10 (Treasury Department Cir-cular No. 230). This circular prohibits theuse or participation in the use of any formof public communication containing afalse, fraudulent, misleading, deceptive,unduly influencing, coercive, or unfairstatement or claim.

.02 A Filer must adhere to all relevantfederal, state, and local consumer protec-tion laws that relate to advertising and so-liciting.

.03 A Filer must not use the Service’sname, “Internal Revenue Service” or“IRS”, within a firm’s name.

.04 A Filer must not use improper ormisleading advertising in relation toEFTPS.

.05 Advertising materials must notcarry the Service, FMS, or other TreasurySeals.

.06 If a Filer uses radio or televisionbroadcasting to advertise, the broadcastmust be pre-recorded. The Filer mustkeep a copy of the pre-recorded advertise-ment for a period of at least 36 monthsfrom the date of the last transmission oruse.

.07 If a Filer uses direct mail or faxcommunications to advertise, the Filermust retain a copy of the actual mailing orfax, along with a list or other descriptionof the firms, organizations, or individualsto 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.

.08 If a Filer uses a Web site or printmedia (including newspapers, magazines,or yellow pages) to advertise, the Filermust retain a copy of the advertising for aperiod of at least 36 months from the dateof the last posting or publication.

.09 Acceptance in the Batch Filer orBulk Filer programs is not an endorse-ment by the Service, FMS, or the Trea-sury Department of the quality of the ser-vices provided by the Filer.

SECTION 17. REASONS FORSUSPENSION

.01 The Service reserves the right tosuspend a Filer from the Batch Filer orBulk Filer programs for the following rea-sons (this list is not all-inclusive):

(1) failing to submit payment infor-mation in accordance with this revenueprocedure and the applicable implementa-tion guides;

(2) failing to maintain and makeavailable the required records for the pe-riod specified in section 15 of this rev-enue procedure;

(3) submitting payment informationon behalf of taxpayers for which the Ser-vice did not receive Authorizations;

(4) failing to abide by the advertisingstandards in section 16 of this revenueprocedure;

(5) failing to cooperate with the Ser-vice’s efforts to monitor Filers and inves-tigate abuse in the Batch Filer or BulkFiler programs; or

(6) generating significant complaintsabout the Filer’s performance in the BatchFiler or Bulk Filer programs.

.02 If the Service informs a Filer that acertain action is a reason for suspensionand the action continues, the Service maysend the Filer a notice proposing suspen-sion of the Filer from the Batch Filer orBulk Filer program. However, a noticeproposing suspension may be sent with-out a warning if the Filer’s action indi-cates an intentional disregard of rules. Anotice proposing suspension will describethe reason(s) for the proposed suspension,and indicate the length of the suspensionand the conditions that need to be met be-fore the suspension will terminate.

SECTION 18. ADMINISTRATIVEREVIEW PROCESS FOR PROPOSEDSUSPENSION

.01 A Filer that receives a noticeproposing suspension from the BatchFiler or Bulk Filer program, as describedin section 17.02 of this revenue proce-dure, may request an administrative re-view prior to the proposed suspensiontaking 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 address designated in the noticewithin 30 days of the effective date on thenotice.

.04 After consideration of the writtenrequest for an administrative review, theService will either issue a suspension let-ter or notify the Filer in writing that theproposed suspension is withdrawn.

.05 If a Filer receives a suspension let-ter, the Service’s subsequent determina-tion of whether a reason for suspensionhas been corrected is not subject to ad-ministrative review or appeal.

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

1998–17 I.R.B. 17 April 27, 1998

30-day period described in section 18.03of this revenue procedure irrevocably ter-minates the Filer’s right to an administra-tive review of the proposed suspension,and the Service will issue a suspensionletter.

SECTION 19. EFFECT OFSUSPENSION

.01 The Filer’s suspension will con-tinue for the length of time specified inthe suspension letter, or until the condi-tions for terminating the suspension havebeen met, whichever is later.

.02 After suspension, a Filer may sub-mit an FTD under the Batch Filer or BulkFiler program only if the FTD is due notmore than 30 days after the effective dateon the suspension letter. No FTPs may besubmitted by the Filer under the BatchFiler or Bulk Filer programs during thesuspension period.

.03 A Filer must provide written notifi-cation of a suspension from the BatchFiler or Bulk Filer programs to each tax-payer in the program(s) within 10 daysfrom the date on the suspension letter.This notification must be provided eventhough the Filer may believe that the Filerwill be able to meet the conditions for ter-minating the suspension within the 30-day period provided in section 19.02 ofthis revenue procedure.

.04 A Filer will be able to submit pay-ment information under the Batch Filer orBulk Filer programs without reregisteringfor those programs after:

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

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

SECTION 20. APPEAL OF ASUSPENSION

.01 If a Filer receives a suspension let-ter from the Service, the Filer is entitledto appeal, by written protest, to the Ser-vice. The written protest must be deliv-ered to the address designated on the sus-pension letter. During the appealsprocess, the suspension remains in effect.

.02 The written protest must be re-ceived by the Service within 30 days ofthe effective date on the suspension letter.The written protest must contain detailedreasons, with supporting documentation,for withdrawal of the suspension.

.03 Failure to appeal within the 30-dayperiod described in section 20.02 of thisrevenue procedure irrevocably terminatesthe Filer’s right to appeal the suspensionunder section 20.01 of this revenue proce-dure.

SECTION 21. PENALTIES

.01 Section 6656 imposes a failure-to-deposit penalty if a taxpayer does notmake a timely FTD, unless such failure isdue to reasonable cause and not due towillful neglect. SeeRev. Rul. 94–46,1994–2 C.B. 278. Absent reasonablecause, a taxpayer that is required to de-posit federal taxes by EFTPS is subject tothe failure-to-deposit penalty if FTDs aremade by means other than EFTPS (for ex-ample, using a paper FTD coupon). SeeRev. Rul. 95–68, 1995–2 C.B. 272. How-ever, for a taxpayer that was first requiredto deposit by EFTPS on or after July 1,1997, this penalty will not be imposedsolely by reason of a failure to deposit byEFTPS prior to July 1, 1998.

.02 Section 6655 imposes a penalty forunderpayments of estimated tax by a cor-poration, private foundation, tax-exemptorganization, or qualified settlement fund.

.03 Section 6651 imposes a failure-to-pay penalty if a taxpayer does not make atimely FTP, unless such failure is due toreasonable cause and not due to willfulneglect.

SECTION 22. FORMS,PUBLICATIONS, IMPLEMENTATIONGUIDES, AND ADDITIONALINFORMATION

.01 A Filer may obtain copies of thisrevenue procedure, enrollment forms(Forms 9779 and 9783), implementationguides, payment instruction booklets, reg-istration letters, and additional informa-tion on EFTPS by calling EFTPS Cus-tomer Service at (800) 945-0966 (FirstChicago) or (800) 555-4477 (Nations-Bank).

.02 A Filer may obtain enrollmentforms and Authorizations (Forms 8655)by calling the IRS Distribution Center at(800) TAX-FORM ((800) 829-3676).

.03 A Filer may obtain information onthe submission of Authorizations by call-ing the EFTPS Coordinator at (901) 546-4103 (not a toll-free call).

SECTION 23. EFFECT ON OTHERDOCUMENTS

Section 9.03 of Rev. Proc. 97–33,1997–30 I.R.B. 10, 13, is modified to pro-vide the same rule (regarding the FRB’snonacceptance of late ETA payments) asset forth in section 11.04 of this revenueprocedure.

SECTION 24. EFFECTIVE DATE

.01 In general. This revenue procedureis effective April 27, 1998.

.02 Grandfather rule.A power of attor-ney on Form 2848, Power of Attorney andDeclaration of Representative, or otherdocument that satisfies the requirementsof § 601.503(a) of the Statement of Proce-dural Rules, that was submitted to theService on or before April 27, 1998, willbe treated as an Authorization for pur-poses of this revenue procedure, eventhough it does not comply with section7.02 of this revenue procedure.

SECTION 25. 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 number1545-1601.

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, 12, 14, 15, and 16 of this revenue pro-cedure. This information is required toimplement EFTPS, and verify that tax-payers have met their obligations to paytheir taxes and make FTDs by EFTPS.This information will be used to identifypersons paying taxes and making FTDson behalf of taxpayers and to credit tax-payers’ tax accounts for FTDs and FTPsmade through EFTPS. The collections ofinformation are mandatory. The likely re-spondents are business or other for-profitinstitutions.

The estimated total annual reportingand recordkeeping burden will be 51,885hours.

April 27, 1998 18 1998–17 I.R.B.

The estimated annual burden per re-spondent/recordkeeper will vary from 71hours to 91 hours, depending on individ-ual circumstances, with an estimated aver-age of 74.33 hours. The estimated number

of respondents and recordkeepers is 620. The estimated annual frequency of re-

sponses is on occasion. Books or records relating to a collec-

tion of information must be retained as

long 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.

1998–17 I.R.B. 19 April 27, 1998

April 27, 1998 20 1998–17 I.R.B.

Partial Withdrawal of, andAmendment to, Notice ofProposed Rulemaking; Notice of Proposed Rulemaking andNotice of Public Hearing

Adjustments Following Sales ofPartnership Interests

REG–209682–94

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Partial withdrawal of notice ofproposed rulemaking, amendment to no-tice of proposed rulemaking; notice ofproposed rulemaking and notice of publichearing.

SUMMARY: This document withdrawsa portion of the notice of proposed rule-making published in the Federal Regis-ter, February 16, 1984 (49 F.R. 5940);contains proposed regulations relating tothe optional adjustments to the basis ofpartnership property following certaintransfers of partnership interests undersection 743, the calculation of gain orloss under section 751(a) following thesale or exchange of a partnership interest,the allocation of basis adjustmentsamong partnership assets under section755, and the allocation of a partner’sbasis in its partnership interest to proper-ties distributed to the partner by the part-nership under section 732(c); and, finally,amends proposed regulations relating tothe computation of a partner’s propor-tionate share of the adjusted basis of de-preciable property (or depreciable realproperty) under section 1017. Thechanges are necessary to provide clearerguidance on the the proper application ofthese sections and will effect partnershipsand partners where there are transfers ofpartnership interests, distributions ofproperty, or elections under sections108(b)(5) or (c). In addition, the pro-posed regulations under section 732(c)reflect changes to the law made by theTaxpayer Relief Act of 1997.

DATES: Written comments must be re-ceived by April 29, 1998. Outlines of top-ics to be discussed at the public hearingscheduled for Wednesday, July 8, 1998, at

10 a.m. must be received by Wednesday,June 24, 1998.

ADDRESSES: Send submissions to:CC:DOM:CORP:R (REG–209682–94),room 5226, Internal Revenue Service,POB 7604, Ben Franklin Station, Wash-ington, DC 20044. Submissions may behand delivered between the hours of 8a.m. and 5 p.m. to: CC:DOM:CORP:R(REG–209682–94), Courier’s Desk, In-ternal Revenue Service, 1111 ConstitutionAvenue, NW, Washington, DC.

Alternatively, taxpayers may submitcomments electronically via the internetby selecting the “Tax Regs” option on theIRS Home Page, or by submitting com-ments directly to the IRS internet site athttp://www.irs.ustreas.gov/prod/tax_regs/comments.html.

The public hearing will be held in theIRS Auditorium, Internal Revenue Build-ing, 1111 Constitution Avenue, NW,Washington, DC.

FOR FURTHER INFORMATION CON-TACT: Concerning the regulations, TerriA. Belanger, (202) 622-3070; concerningsubmissions and the hearing, LaNitaVanDyke, (202) 622-7180 (not toll-freenumbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information con-tained in this notice of proposed rulemak-ing has 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 collection of informationshould be sent to the Office of Manage-ment and Budget,Attn: Desk Officer forthe Department of the Treasury, Office ofInformation and Regulatory Affairs,Washington, DC 20503, with copies tothe Internal Revenue Service, Attn: IRSReports Clearance Officer, T:FP, Wash-ington, DC 20224. Comments on the col-lection of information should be receivedby March 30, 1998. Comments arespecifically requested concerning:

Whether the proposed collection of in-formation is necessary for the proper per-formance of the functions of the Internal

Revenue Service,including whether theinformation will have practical utility;

The accuracy of the estimated burdenassociated with the proposed collection ofinformation (see below);

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

How the burden of complying with theproposed collection 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 cost andcosts of operation, maintenance, and pur-chase of service to provide information.

The collection of information in thisproposed regulation is in §§1.743–1(b),1.743–1(k), and 1.755–1.