irb 2010-16 (rev. april 19, 2010) - internal revenue service

Bulletin No. 2010-16April 19, 2010

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.

INCOME TAX

REG–134235–08, page 596.Proposed regulations under section 6109 of the Code provideguidance to tax return preparers on furnishing an identifyingnumber on tax returns and claims for refund of tax.

Notice 2010–31, page 594.2009 nonconventional source fuel credit, section 45Kinflation adjustment factor, and section 45K referenceprice. The notice announces the inflation adjustment factor,the reference price, and the credit amount for the nonconven-tional source fuel credit for coke or coke gas (other than frompetroleum based products) for the 2009 calendar year.

Notice 2010–32, page 594.This notice extends to taxable years that begin beforeJanuary 1, 2010, the interim guidance provided in Notice2008–116, 2008–52 I.R.B. 1372, and Notice 2008–32,2008–1 C.B. 593, on the treatment under section 67 of theCode of investment advisory costs and other costs subject tothe 2–percent floor under section 67(a) that are integrated aspart of one commission or fee paid to a trustee or executorand are incurred by a trust other than a grantor trust or anestate. Notice 2008–116 modified and superseded.

Announcement 2010–22, page 602.This document informs the public that Treasury and the Ser-vice will provide guidance on the implementation of FATCA. OnMarch 18, 2010, the Hiring Incentives to Restore Employment(HIRE) Act of 2010, Pub. L. 111–147 (H.R. 2847) was enactedincluding FATCA, which makes a number of changes to the taxlaw affecting foreign account tax compliance. Treasury and theIRS are soliciting comments from the public to consider whiledrafting guidance projects.

EXEMPT ORGANIZATIONS

Announcement 2010–23, page 602.A list is provided of organizations now classified as private foun-dations.

ESTATE TAX


GIFT TAX


EMPLOYMENT TAX


(Continued on the next page)

Finding Lists begin on page ii.

SELF-EMPLOYMENT TAX


EXCISE TAX


TAX CONVENTIONS

Announcement 2010–26, page 604.This document contains a copy of the Competent AuthorityAgreement (“the Agreement”) entered into by the CompetentAuthorities of the United States and the Netherlands regard-ing the elimination of the Dutch “qualification” certification pro-cedure used by certain U.S. tax-exempt trusts, companies, orother organizations for claiming treaty benefits from the Nether-lands under Article 35 of the Convention between the Kingdomof the Netherlands and the United States of America for theavoidance of double taxation and the prevention of fiscal eva-sion with respect to taxes on income.

ADMINISTRATIVE


April 19, 2010 2010–16 I.R.B.

The IRS MissionProvide America’s taxpayers top quality service by helping themunderstand and meet their tax responsibilities and by applying

the tax law with integrity and fairness to all.

IntroductionThe Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly and may be obtained from theSuperintendent of Documents on a subscription basis. Bulletincontents are compiled semiannually into Cumulative Bulletins,which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-stantive rulings necessary to promote a uniform application ofthe tax laws, including all rulings that supersede, revoke, mod-ify, or amend any of those previously published in the Bulletin.All published rulings apply retroactively unless otherwise indi-cated. Procedures relating solely to matters of internal man-agement are not published; however, statements of internalpractices and procedures that affect the rights and duties oftaxpayers are published.

Revenue rulings represent the conclusions of the Service on theapplication of the law to the pivotal facts stated in the revenueruling. In those based on positions taken in rulings to taxpayersor technical advice to Service field offices, identifying detailsand information of a confidential nature are deleted to preventunwarranted invasions of privacy and to comply with statutoryrequirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,and Service personnel and others concerned are cautionedagainst reaching the same conclusions in other cases unlessthe facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

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

Part II.—Treaties and Tax Legislation.This part is divided into two subparts as follows: Subpart A,Tax Conventions and Other Related Items, and Subpart B, Leg-islation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.To the extent practicable, pertinent cross references to thesesubjects are contained in the other Parts and Subparts. Alsoincluded in this part are Bank Secrecy Act Administrative Rul-ings. Bank Secrecy Act Administrative Rulings are issued bythe Department of the Treasury’s Office of the Assistant Secre-tary (Enforcement).

Part IV.—Items of General Interest.This part includes notices of proposed rulemakings, disbar-ment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative indexfor the matters published during the preceding months. Thesemonthly indexes are cumulated on a semiannual basis, and arepublished in the last Bulletin of each semiannual period.

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.

2010–16 I.R.B. April 19, 2010

April 19, 2010 2010–16 I.R.B.

Part III. Administrative, Procedural, and MiscellaneousNonconventional Source FuelCredit, Section 45K InflationAdjustment Factor, andSection 45K Reference Price

Notice 2010–31

SECTION 1. PURPOSE

This notice publishes the nonconven-tional source fuel credit, inflation adjust-ment factor, and reference price under§ 45K of the Internal Revenue Code forcoke or coke gas (other than from petro-leum based products) for calendar year2009. The inflation adjustment factor andthe reference price are used to determinethe credit allowable under § 45K for cokeor coke gas. The calendar year 2009 in-flation-adjusted credit applies to the salesof barrel-of-oil equivalent of coke or cokegas sold by a taxpayer to an unrelatedperson during the 2009 calendar year, thedomestic production of which is attribut-able to the taxpayer.

SECTION 2. BACKGROUND

Section 45K(a) provides for a creditfor producing fuel from a nonconventionalsource, measured in barrel-of-oil equiva-lent of qualified fuel, the production ofwhich is attributable to the taxpayer and issold by the taxpayer to an unrelated per-son during the taxable year. For calendaryear 2009, the credit is available only forcoke or coke gas. The credit amount forcoke or coke gas is equal to the product of$3.00 and the appropriate inflation adjust-ment factor.

Section 45K(d)(1) provides that thecredit applies only to sales of qualifiedfuels the production of which is withinthe United States (within the meaning of§ 638(1)) or a possession of the UnitedStates (within the meaning of § 638(2)).

Section 45K(d)(2)(A) requires that theSecretary, not later than April 1 of each cal-endar year, determine and publish in theFederal Register the inflation adjustmentfactor and the reference price for the pre-ceding calendar year.

Section 45K(d)(2)(B) defines “inflationadjustment factor” for a calendar year asa fraction the numerator of which is the

GNP implicit price deflator for the calen-dar year and the denominator of which isthe GNP implicit price deflator for calen-dar year 1979. The term “GNP implicitprice deflator” means the first revision ofthe implicit price deflator for the gross na-tional product as computed and publishedby the Department of Commerce.

Section 45K(d)(2)(C) defines “refer-ence price” to mean with respect to acalendar year the Secretary’s estimate ofthe annual average wellhead price per bar-rel for all domestic crude oil the price ofwhich is not subject to regulation by theUnited States.

Section 45K(d)(5) provides that theterm “barrel-of-oil equivalent” with re-spect to any fuel generally means thatamount of the fuel that has a Btu contentof 5.8 million.

Section 45K(g)(1) provides that inthe case of a facility for producing cokeor coke gas (other than from petroleumbased products), which was placed inservice before January 1, 1993, or af-ter June 30, 1998, and before January 1,2010, § 45K(g) shall apply with respect tocoke or coke gas produced in such facilityand sold during the period beginning onthe later of January 1, 2006, or the datethat such facility is placed in service, andending on the date which is 4 years afterthe date such period began.

Section 45K(g)(2)(A) provides that theamount of coke or coke gas sold during anytaxable year that may be taken into accountto compute the credit under § 45K withrespect to any facility shall not exceed anaverage barrel-of-oil equivalent of 4,000barrels per day.

Section 45K(g)(2)(B) provides that indetermining the amount of credit allow-able to coke or coke gas sold after 2005,the credit shall be computed by substitut-ing “2004” for “1979.” Accordingly, forpurposes of § 45K(g), the inflation adjust-ment factor for a calendar year is a fractionthe numerator of which is the GNP implicitprice deflator for the calendar year and thedenominator of which is the GNP implicitprice deflator for calendar year 2004.

Section 45K(g)(2)(D) provides that thephase-out of the credit under § 45K(b)(1)does not apply in the case of facilities pro-ducing coke or coke gas.

SECTION 3. REFERENCE PRICE

The reference price for calendar year2009 is $56.39.

SECTION 4. INFLATIONADJUSTMENT AND CREDITAMOUNT

The inflation adjustment factor for cal-endar year 2009 is 1.1343. The noncon-ventional source fuel credit is $3.40 perbarrel-of-oil equivalent ($3.00 x 1.1343).

SECTION 5. DRAFTINGINFORMATION CONTACT

The principal author of this notice isJennifer C. Bernardini of the Office ofAssociate Chief Counsel (Passthroughs& Special Industries). For further in-formation regarding this notice, contactMs. Bernardini at (202) 622–3110 (not atoll-free call).

Extension of Interim Guidanceon Section 67 Limitations onEstates or Trusts

Notice 2010–32

This notice extends to taxable yearsthat begin before January 1, 2010, theinterim guidance provided in Notice2008–116, 2008–52 I.R.B. 1372, and No-tice 2008–32, 2008–1 C.B. 593, on thetreatment under § 67 of the Internal Rev-enue Code of investment advisory costsand other costs subject to the 2-percentfloor under § 67(a) that are integrated aspart of one commission or fee paid to atrustee or executor (“Bundled FiduciaryFee”) and are incurred by a trust otherthan a grantor trust (nongrantor trust) oran estate. Notice 2008–116 is modifiedand superseded.

BACKGROUND

On January 16, 2008, the SupremeCourt of the United States issued its de-cision in Michael J. Knight, Trustee ofWilliam L. Rudkin Testamentary Trustv. Commissioner, 552 U.S. 181, 128S. Ct. 782 (2008), holding that costs paid

2010–16 I.R.B. 594 April 19, 2010

to an investment advisor by a nongrantortrust or estate generally are subject tothe 2-percent floor for miscellaneousitemized deductions under § 67(a). TheIRS and the Treasury Department expectto issue regulations under § 1.67–4 of theIncome Tax Regulations consistent withthe Supreme Court’s holding in Knight.The regulations also will address the issueraised when a nongrantor trust or estatepays a Bundled Fiduciary Fee for costsincurred in-house by the fiduciary, someof which are subject to the 2-percent floorand some of which are fully deductiblewithout regard to the 2-percent floor. Theregulations, however, will not be issued intime to be applicable to the 2009 taxableyear.

Notice 2008–32 provided interim guid-ance that specifically addresses the treat-ment of a Bundled Fiduciary Fee. In short,

Notice 2008–32 provided that taxpayerswould not be required to determine the por-tion of a Bundled Fiduciary Fee that issubject to the 2-percent floor under § 67for any taxable year beginning before Jan-uary 1, 2008. Notice 2008–116 extendedthe interim guidance provided in Notice2008–32 to any taxable years beginningbefore January 1, 2009.

EXTENSION OF INTERIM GUIDANCE

Taxpayers will not be required to deter-mine the portion of a Bundled FiduciaryFee that is subject to the 2-percent floorunder § 67 for any taxable year beginningbefore January 1, 2010. Instead, for eachsuch taxable year, taxpayers may deductthe full amount of the Bundled FiduciaryFee without regard to the 2-percent floor.Payments by the fiduciary to third par-

ties for expenses subject to the 2-percentfloor are readily identifiable and must betreated separately from the otherwise Bun-dled Fiduciary Fee.

EFFECT ON OTHER DOCUMENTS

Notice 2008–116 is modified and super-seded.

CONTACT INFORMATION

The principal authors of this no-tice are Jennifer N. Keeney andBradford R. Poston of the Office ofAssociate Chief Counsel (Passthroughs& Special Industries). For furtherinformation regarding this notice, contactJennifer N. Keeney at (202) 622–3060(not a toll-free call).

April 19, 2010 595 2010–16 I.R.B.

Part IV. Items of General InterestNotice of ProposedRulemaking

Furnishing Identifying Numberof Tax Return Preparer

REG–134235–08

AGENCY: Internal Revenue Service(IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains pro-posed regulations under section 6109 ofthe Internal Revenue Code (Code) thatprovide guidance to tax return preparerson furnishing an identifying number ontax returns and claims for refund of taxthat they prepare. These proposed regula-tions provide guidance on the identifyingnumber of a tax return preparer for taxreturns and claims for refund filed beforeand after the proposed effective date. Theproposed regulations describe how the IRSwill define the identifying number of taxreturn preparers. Additional provisionsof the proposed regulations provide thattax return preparers must apply for andregularly renew their preparer identifyingnumber as the IRS may prescribe in forms,instructions, or other guidance. This doc-ument also invites comments from thepublic regarding these proposed regula-tions.

DATES: Written or electronic commentsand requests for a public hearing must bereceived by April 26, 2010.

ADDRESSES: Send submissions to:CC:PA:LPD:PR (REG–134235–08), room5205, Internal Revenue Service, P.O. Box7604, Ben Franklin Station, Washing-ton, DC 20044. Submissions may behand-delivered Monday through Fridaybetween the hours of 8 a.m. and 4 p.m.to CC:PA:LPD:PR (REG–134235–08),Courier’s Desk, Internal Revenue Ser-vice, 1111 Constitution Avenue, NW,Washington, DC 20224, or sent elec-tronically via the Federal eRulemakingPortal at www.regulations.gov (IRS —REG–134235–08).

FOR FURTHER INFORMATIONCONTACT: Concerning the proposedregulations, Stuart Murray at (202)622–4940 (not a toll-free number); con-cerning submissions of comments andrequests for a hearing, Richard Hurst [email protected].

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information containedin this notice of proposed rulemaking hasbeen submitted to the Office of Manage-ment and Budget for review in accordancewith the Paperwork Reduction Act of 1995(44 U.S.C. 3507(d)). Comments on thecollection of information should be sent tothe Office of Management and Budget,Attn: Desk Officer for the Departmentof the Treasury, Office of Informationand Regulatory Affairs, Washington, DC20503, with copies to the Internal Rev-enue Service, Attn: IRS Reports Clear-ance Officer, SE:W:CAR:MP:T:T:SP,Washington, DC 20224. Comments onthe collection of information should bereceived by April 26, 2010.

Comments are specifically requestedconcerning:

Whether the proposed collection of in-formation is necessary for the proper per-formance of the functions of the IRS, in-cluding whether the information will havepractical utility;

The accuracy of the estimated burdenassociated with the proposed collection ofinformation;

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 appli-cation of automated collection techniquesor other forms of information technology;and

Estimates of capital or start-up costs ofoperation, maintenance, and purchase ofservice to provide information.

The collection of information in theseproposed regulations is in §1.6109–2(d)and (e). This information is required in or-der for the IRS to issue identifying num-bers to tax return preparers who are eligi-

ble to receive them. Tax return preparerswill need to apply for an identifying num-ber as prescribed in forms, instructions, orother guidance. The use of a prescribedidentifying number by tax return prepar-ers on tax returns and claims for refundof tax will enable the IRS to accuratelyidentify tax return preparers, to match taxreturn preparers to tax returns and claimsfor refund that they prepare, and to gener-ally administer the internal revenue laws.The collection of information is manda-tory. The likely respondents are tax returnpreparers and employers of tax return pre-parers.

Estimated total annual reporting bur-den: 300,000 hours.

Estimated average annual burden hours(or fraction of an hour) per respondent:varies from 10 to 20 minutes, with an esti-mated average of 15 minutes.

Estimated number of respondents: 1.2million.

Estimated annual frequency of re-sponses: once every three years.

An agency may not conduct or sponsor,and a person is not required to respondto, a collection of information unless thecollection of information displays a validcontrol number assigned by the Office ofManagement and Budget.

Books or records relating to a collectionof information must be retained as longas their contents may become material inthe administration of any internal revenuelaw. Generally, tax returns and tax returninformation are confidential, as requiredby 26 U.S.C. 6103.

Background

This document contains proposedamendments to regulations under section6109 of the Code relating to furnishing atax return preparer’s identifying numberon tax returns and claims for refund of tax.Section 6109 was added to the Code in1961 (Public Law 87–397, 75 Stat. 828)and authorizes the Secretary to prescriberegulations for the inclusion of identify-ing numbers on a return, statement, orother document required to be filed withthe IRS. In addition, section 6109(c) au-thorizes the Secretary “to require suchinformation as may be necessary to assignan identifying number to any person.”

2010–16 I.R.B. 596 April 19, 2010

Section 6109(a)(4) as originally enactedby section 1203(d) of the Tax ReformAct of 1976 (Public Law 94–455, 90 Stat.1520) required return preparers to furnishon income tax returns and claims for re-fund of income tax an identifying number,as prescribed, to identify the preparer,the preparer’s employer, or both. Section8246(a)(2)(D)(i) of the Small Businessand Work Opportunity Tax Act of 2007(Public Law 110–28, 121 Stat. 112),amended section 6109(a)(4) to allowthe IRS to prescribe that tax returnpreparers furnish identifying numberson any tax returns or claims for refundthey prepare. As currently prescribed inregulations, the identifying number of atax return preparer who is an individualis the preparer’s social security number(SSN) or alternative number as prescribedby the IRS. The proposed regulationsprovide that the identifying number ofa tax return preparer is exclusively thenumber prescribed by the IRS. Theproposed regulations will implementsome of the recommendations madein Publication 4832, Return PreparerReview (Rev. 12–2009), publishedat the end of last year (the Report).The IRS and the Treasury Departmentbelieve that the implementation of theReport’s recommendations, including therecommendations implemented by theseregulations, will increase tax complianceand allow taxpayers to be confident thatthe tax return preparers to whom they turnfor assistance are knowledgeable, skilled,and ethical.

1. Identifying Numbers Generally

Because an identifying number isunique to the person to whom assigned, theIRS is able to use the number to correctlyidentify the taxpayer or the tax returnpreparer. The use of identifying numbersallows the IRS to accurately and timelyprocess returns and issue refunds, central-ize information, post information to thecorrect taxpayer’s account, and effectivelyadminister the rules relating to tax returnpreparers.

2. Requiring Identifying Numbers fromTax Return Preparers

Tax return preparers generally mustprovide an identifying number on the taxreturns they prepare and sign. Specif-

ically, under §1.6695–1(b), a signingtax return preparer, as defined under§301.7701–15(b)(1), must sign a returnof tax or claim for refund after it is com-pleted and before it is presented to thetaxpayer for signature. A signing tax re-turn preparer under §301.7701–15(b)(1)is a tax return preparer who has primaryresponsibility for the overall substantiveaccuracy of the preparation of a return oftax or claim for refund.

Under §1.6109–2(a)(1), a tax returnpreparer who must sign a tax return or taxrefund claim must also include an identify-ing number with the preparer’s signature.A return of tax includes an informationreturn described in §301.7701–15(b)(4).If a signing tax return preparer has an em-ployment arrangement or association withanother person, then that other person’semployer identification number (EIN)must also be included on the tax return orrefund claim.

The identifying number of a signingtax return preparer, and the identifyingnumber of any person with whom thepreparer has an employment arrangementor association, must be included on elec-tronically filed tax returns, as well aspaper returns. Further, because of recentstatutory changes, tax return preparerswho prepare and file individual incometax returns (Form Series 1040) for theirclients will soon be required to electroni-cally file the returns, unless the tax returnpreparer reasonably expects to file only10 or fewer individual income tax returnsfor the calendar year. See Section 17 ofthe Worker, Homeownership, and Busi-ness Assistance Act of 2009, Public Law111–92, 123 Stat. 2984, 2997 (addingCode section 6011(e)(3)).

Tax return preparers who are requiredbut fail to include their identifying numberon a tax return or refund claim, or fail toinclude the identifying number of any per-son with whom they have an employmentarrangement or association, are subject toa penalty under section 6695(c). A tax re-turn preparer is not liable for the penalty ifthe failure to include an identifying num-ber is due to reasonable cause and not dueto willful neglect.

3. Preparer Tax Identification Numbers

Section 6109(a) initially provided thatthe identifying number of a tax return pre-

parer was the individual’s SSN. Section3710(a) of the IRS Restructuring and Re-form Act of 1998 (Public Law 105–206,112 Stat. 685) (RRA ’98), allowed the IRSto prescribe an identifying number for taxreturn preparers other than the preparer’sSSN. In response to section 3710(a) ofRRA ’98, the IRS developed and began toissue preparer tax identification numbers(PTINs). Tax return preparers currentlymay apply online for a PTIN using thee-services PTIN process on the IRS web-site at www.irs.gov or by filing FormW–7P, “Application for Preparer TaxIdentification Number.” Applying onlineis faster, and return preparers are encour-aged to apply online. In the future, the IRSwill prescribe the method to apply for aPTIN consistent with these proposed regu-lations. Currently, under §1.6109–2(a)(2),a tax return preparer may use as an iden-tifying number on a tax return or claimfor refund either the preparer’s SSN oran “alternative number” prescribed by theIRS, including a PTIN. But an EIN, anElectronic Filing Identification Number(EFIN) (which is an identification num-ber assigned to IRS e-file providers), oran Electronic Transmitter IdentificationNumber (ETIN) (which is an identificationnumber assigned to IRS e-file providerswho electronically transmit tax returns tothe IRS) is not a valid preparer identifyingnumber.

4. Regulation of Tax Return Preparers

In June 2009, the IRS initiated a com-prehensive review of tax return preparers,and in December 2009 the IRS publishedthe Report describing its findings from thatreview. The Report recommended, in part,that tax return preparers be required to ob-tain and use a PTIN as the exclusive pre-parer identifying number and undergo atax-compliance check. As discussed be-low, the proposed regulations implementthose recommendations.

Under current law, any individual mayprepare a tax return or claim for refund.The Report recommended that the IRS es-tablish new eligibility standards that anindividual must meet in order to preparetax returns — including testing, continu-ing education, and tax compliance checks.The Report contemplates that only attor-neys, certified public accountants, enrolledagents, as well as tax return preparers who

April 19, 2010 597 2010–16 I.R.B.

pass a minimum competency exam andmeet other requirements (referred to as“registered tax return preparers”) will beeligible to prepare and sign tax returns andclaims for refund. These proposed regu-lations do not establish the requirementsto become a registered tax return preparer,which primarily will be set forth in futureguidance under Treasury Department Cir-cular No. 230, 31 CFR Part 10. After atransition period, however, it is intendedthat only individuals who satisfy the eligi-bility standards may obtain and use a PTINas a tax return preparer.

Explanation of Provisions

1. Requiring the Use of PTINs

The proposed regulations provide thatfor tax returns or refund claims filed afterDecember 31, 2010, the identifying num-ber that a tax return preparer must includewith the preparer’s signature on tax re-turns and refund claims is that prescribedby the IRS in forms, instructions, or otherguidance. Tax return preparers will not beable to use an SSN as a preparer identify-ing number unless specifically prescribedby the IRS in forms, instructions, or otherguidance. Instead, to the extent providedin forms and instructions, a tax return pre-parer will be required to use a PTIN asthe identifying number unless the IRS pre-scribes in the future a replacement to thePTIN. Forms and instructions will be re-vised accordingly. The use of PTINs as theidentifying number for tax return prepar-ers will improve tax administration and taxcompliance, benefit taxpayers and tax re-turn preparers, and help maintain the con-fidentiality of SSNs.

For tax returns or claims for refund filedbefore January 1, 2011, the identifyingnumber of a tax return preparer will remainthe preparer’s SSN or PTIN. In the case oftax returns for taxable periods ending be-fore January 1, 2011, and made on the ap-propriate forms prescribed for the taxableperiods, but which are filed on or after Jan-uary 1, 2011, tax return preparers must fur-nish on the returns the identifying numberprescribed on the forms to be filed and inassociated instructions.

For tax return preparation businessesand other persons having an employmentarrangement or association with a tax re-turn preparer, the business’s or employer’s

EIN continues to be the identifying num-ber that must be included on tax returnsand refund claims along with the tax returnpreparer’s signature and preparer identify-ing number. An individual tax return pre-parer, however, may not use an EIN as apreparer identifying number on a return,even if the preparer has an EIN (for ex-ample, as a sole proprietor). Tax returnpreparers who use their SSN, or an EIN,EFIN, or ETIN, instead of a valid PTIN,on tax returns or claims for refund filed af-ter the effective date may be subject to thepenalty under section 6695(c) unless thefailure to include a valid PTIN is due toreasonable cause and not due to willful ne-glect.

2. Eligibility to Receive a PTIN

The proposed regulations provide thatall tax return preparers must apply for aPTIN or other prescribed identifying num-ber at the time and in the manner as maybe prescribed by the IRS in forms, instruc-tions, or other appropriate guidance. Theproposed regulations also authorize theIRS to prescribe a user fee in connectionwith applying for, and renewing, a PTIN(or successor number similar to a PTIN).Except as provided in any transitional pe-riod, beginning after December 31, 2010,to obtain a PTIN, an individual must bean attorney, certified public accountant,enrolled agent, or registered tax returnpreparer under future guidance to beprovided in Circular 230.

Only for purposes of applying for andrenewing a PTIN or other prescribed pre-parer identifying number, the term tax re-turn preparer means any individual whois compensated for preparing, or assistingin the preparation of, all or substantiallyall, of a tax return or claim for refund oftax. A tax return preparer does not in-clude an individual who is not otherwise atax return preparer as that term is definedin §301.7701–15(b)(2), or who is an indi-vidual described in §301.7701–15(f). Theproposed regulations provide several ex-amples illustrating who is a tax return pre-parer required to apply for a PTIN.

As part of the process of applying for aPTIN, a tax return preparer may be subjectto both an initial tax-compliance check andsubsequent periodic checks, which couldinclude a review of a preparer’s history ofcompliance with personal and business tax

filing and payment obligations. The tax-compliance check is intended to establishwhether a tax return preparer has timelyfiled required personal and business tax re-turns and has paid taxes that are due ormade other acceptable arrangements withthe IRS, such as an approved installmentagreement under section 6159. If a tax re-turn preparer disregards any applicable re-quirements to obtain a prescribed identify-ing number and thereafter omits, when re-quired to include, a valid identifying num-ber on a tax return or claim for refund filedafter the effective date, the preparer maybe liable for the section 6695(c) penalty,unless the failure to include a valid identi-fying number was due to reasonable causeand not due to willful neglect.

The information a tax return preparerprovides when the preparer initially ap-plies for a PTIN or other prescribed identi-fying number will often become outdatedor otherwise inaccurate. The IRS may re-quire tax return preparers to regularly re-new their identifying numbers and other-wise maintain updated information withthe IRS. If a tax return preparer who is re-quired to include an identifying number ona tax return or claim for refund filed afterthe effective date uses an expired identify-ing number, the tax return preparer may beliable for the section 6695(c) penalty, un-less the use of the expired number was dueto reasonable cause and not due to willfulneglect.

The proposed regulations provide thatif necessary for effective tax administra-tion, the IRS may prescribe exceptions toany of the requirements, such as for an in-terim period while procedures are beingimplemented. For example, the IRS andthe Treasury Department recognize thatthe procedures for becoming a registeredtax return preparer may not be fully imple-mented when these regulations become ef-fective. It is anticipated that transitionalinterim guidance will be provided to al-low individuals who intend to become reg-istered tax return preparers to obtain aninterim PTIN or other interim identifyingnumber that may be used as a prepareridentifying number on tax returns and re-fund claims until the procedures are fullyimplemented. After the interim period,however, to obtain a PTIN, an individualwill need to be an attorney, certified publicaccountant, enrolled agent, or registered

2010–16 I.R.B. 598 April 19, 2010

tax return preparer authorized to practicebefore the IRS under Circular 230.

Proposed Effective/Applicability Date

These regulations are effective after thedate that final regulations are published inthe Federal Register.

Special Analyses

It has been determined that this noticeof proposed rulemaking is not a significantregulatory action as defined in ExecutiveOrder 12866. Therefore, a regulatory as-sessment is not required. It has also beendetermined that section 553(b) of the Ad-ministrative Procedure Act (5 U.S.C. chap-ter 5) does not apply to these regulations.

It has been determined that an ini-tial regulatory flexibility analysis under5 U.S.C. 603 is required for this noticeof proposed rulemaking. The analysis isset forth below under the heading, “InitialRegulatory Flexibility Analysis.”

Pursuant to section 7805(f) of the Code,this notice of proposed rulemaking hasbeen submitted to the Chief Counsel forAdvocacy of the Small Business Adminis-tration for comment on its impact on smallbusiness.

Initial Regulatory Flexibility Analysis

When an agency issues a rulemak-ing proposal, the Regulatory FlexibilityAct (5 U.S.C. chapter 6) requires theagency to “prepare and make availablefor public comment an initial regulatoryflexibility analysis” that “describe[s] theimpact of the proposed rule on smallentities.” 5 U.S.C. 603(a). Section 605of the Act provides an exception tothis requirement if the agency certifiesthat the proposed rulemaking will nothave a significant economic impact on asubstantial number of small entities. Asmall entity is defined as a small business,small nonprofit organization, or smallgovernmental jurisdiction. 5 U.S.C.601(3)-(6). The IRS and the TreasuryDepartment conclude that the proposedregulations, if promulgated (together withother contemplated guidance providedfor in these regulations), will impact asubstantial number of small entities andthe economic impact will be significant.As a result, an initial regulatory flexibilityanalysis is required.

Description of the reasons why the agencyaction is being considered.

Taxpayers’ reliance on paid tax returnpreparers has grown steadily in recentdecades. Today, paid tax return preparersassist a majority of U.S. taxpayers in meet-ing their income tax filing obligations.Beyond preparing tax returns, tax returnpreparers also help educate taxpayersabout the tax laws, and facilitate electronicfiling. Tax return preparers provide adviceto taxpayers, identify items or issues forwhich the law or guidance is unclear, andinform taxpayers of the benefits and risksof positions taken on a tax return, and thetax treatment or reporting of items andtransactions. Competent tax return prepar-ers who are well educated in the rules andsubject matter of their field can preventcostly errors, potentially saving a taxpayerfrom unwanted problems later on and re-lieving the IRS from expending valuableexamination and collection resources.

Given the important role that tax returnpreparers play in Federal tax administra-tion, the IRS has a significant interest inbeing able to accurately identify tax re-turn preparers and monitor their tax returnpreparation activities. The proposed regu-lations are intended to advance tax admin-istration by requiring all individuals whoare paid to prepare all or substantially allof a tax return or claim for refund of tax toobtain a preparer identifying number pre-scribed by the IRS. Pursuant to the pro-posed regulations, the IRS will require in-dividuals who sign tax returns or claims forrefund to report the preparer’s identifyingnumber on a tax return or claim for refundwhen the return or refund claim is signed.The proposed regulations also provide thatthe IRS may require tax return preparers toapply for, and regularly renew, their iden-tifying numbers. Under the proposed reg-ulations, the IRS may prescribe a user feepayable when applying for a number andfor renewal.

Further, the IRS and the Treasury De-partment conclude that taxpayers, tax re-turn preparers, and overall tax administra-tion will be best served through increasedoversight of the tax return preparer indus-try. Mandating a single prescribed identi-fying number for all tax return preparersand assigning a prescribed number to reg-istered tax return preparers is critical to ef-fective oversight.

Statement of the objectives of, and thelegal basis for, the proposed rule.

The principal objective of the proposedregulations is to enable the IRS to more ac-curately identify tax return preparers andthe tax returns and refund claims associ-ated with each tax return preparer. Theproposed regulations do this by provid-ing that the IRS may prescribe the use ofidentifying numbers for tax return prepar-ers and the qualifications or other require-ments necessary to obtain a valid number.The legal basis for these provisions is sec-tion 6109 of the Code, which authorizesthe Secretary to prescribe the “identifyingnumber for securing proper identificationof” a tax return preparer and “to requiresuch information as may be necessary toassign an identifying number to any per-son.”

Description and estimate (where feasible)of the number of small entities subject tothe proposed rule.

The proposed regulations apply to indi-viduals who prepare tax returns and claimsfor refund of tax. The estimated number ofpaid tax return preparers is as high as 1.2million, which means the proposed regu-lations are likely to impact a large numberof individuals. Most paid tax return pre-parers are employed by firms. A substan-tial number of paid tax return preparers areemployed at small tax return preparationfirms or are self-employed tax return pre-parers. Any economic impact of these reg-ulations on small entities generally will beon self-employed tax return preparers whoprepare and sign tax returns or on smallbusinesses that employ one or more indi-viduals who sign tax returns.

The appropriate NAICS codes fortax return preparers are those for tax re-turn preparation services (NAICS code541213) and other accounting services(NAICS code 541219). Entities identifiedunder either of these two codes are con-sidered small under the Small BusinessAdministration’s size standards (13 CFR121.201), if their annual revenue is lessthan $7 million or $8.5 million, respec-tively. The IRS estimates that approxi-mately 70 to 80 percent of the individualssubject to these proposed regulations aretax return preparers operating as or em-ployed by small entities.

April 19, 2010 599 2010–16 I.R.B.

Description of the projected reporting,recordkeeping, and related requirementsof the proposed rule, including an estimateof the classes of small entities that willbe subject to the requirements and thetype of professional skills necessary forpreparation of the report or record.

The proposed regulations do not di-rectly impose any reporting, recordkeep-ing, or similar requirements on any smallentities. Rather, the proposed regula-tions provide that the IRS may prescribein forms, instructions, or other guidance(including regulations) requirements foridentifying numbers for tax return pre-parers, regular renewal of identifyingnumbers, and payment of a user fee whenapplying for or renewing an identifyingnumber. In addition, other guidance mayrequire certain tax return preparers tocomplete competency testing, completecontinuing education courses, and adhereto established rules of practice governingattorneys, certified public accountants,enrolled agents, enrolled actuaries, andenrolled retirement plan agents.

Applying for an identifying number andsubsequent renewal will require reportingof certain information, but are not expectedto require recordkeeping. These activi-ties also will not require the purchase oruse of any special business equipment orsoftware. To the extent it will be neces-sary to apply for a PTIN (or similar iden-tifying number that replaces a PTIN) on-line at www.irs.gov, most if not all tax re-turn preparation businesses have comput-ers and Internet access. The IRS estimatesthat applying for a PTIN will take 10 to 20minutes per individual, with an average of15 minutes per individual.

Under other guidance that the IRS mayissue, tax return preparers who apply tobe registered tax return preparers and whoregularly renew their status may be subjectto recordkeeping requirements becausethey may be required to maintain specifiedrecords, such as documentation and edu-cational materials relating to completionof continuing education courses. Theserequirements do not involve any spe-cific professional skills other than generalrecordkeeping abilities already needed toown and operate a small business or tocompetently act as a tax return preparer. Itis estimated that tax return preparers willannually spend approximately 30 minutes

to 1 hour in maintaining records relatingto the continuing education requirements,depending on individual circumstances.

A separate regulation addressing rea-sonable user fees will be proposed in thenear future. Tax return preparers may berequired to pay a user fee when first apply-ing for a PTIN and at every renewal. Smallentities may be affected by these costs ifthe entities choose to pay some or all ofthese fees for their employees.

Under regulations to be issued in thefuture, tax return preparers may also in-cur costs for commercial continuing edu-cation courses and minimum competencyexaminations, plus incidental costs, suchas for travel and accommodations in orderto maintain their status as registered tax re-turn preparers under Circular 230. Courseprices can vary greatly, from free to hun-dreds of dollars. Many small tax returnpreparation firms may choose, as with theuser fee, to bear these costs for their em-ployees. In some cases, small entities maylose sales and profits while their employedtax return preparers attend training or ed-ucational classes or are studying and sit-ting for examinations. Some small entitiesthat employ tax return preparers may evenneed to alter their business operations if asignificant number of their employees can-not satisfy the necessary registration andcompetency requirements. The IRS andthe Treasury Department conclude, how-ever, that only a small percentage of smallentities, if any, may need to cease doingbusiness or radically change their businessmodel due to the proposed regulations.

Although each of the reporting andrecordkeeping requirements and the costsidentified above (in connection with theproposed regulations and the other antici-pated guidance necessary to implement theReturn Preparer Review) is not expectedto singly result in a significant economicimpact, taken together it is anticipatedthat they may have a significant economicimpact on a substantial number of smallentities.

Identification, to the extent practicable,of all relevant Federal rules that mayduplicate, overlap, or conflict with theproposed rule.

The proposed regulations do not dupli-cate, overlap, or conflict with any Federalstatutes or other rules.

Description of any significant alternativesto the proposed rule that accomplish thestated objectives of applicable statutesand minimize any significant economicimpact on small entities.

The IRS and the Treasury Departmenthave determined that there are no viable al-ternatives to the proposed regulations thatwould enable the IRS to accurately iden-tify tax return preparers, other than throughthe use of a prescribed identifying number,as provided in the proposed regulations.

More broadly, the IRS received a largevolume of comments as part of the ReturnPreparer Review on the issue of increasedoversight of tax return preparers generallyand on the Report’s proposed recommen-dations, including requiring tax return pre-parers to use a uniform prescribed identify-ing number. The comments were receivedfrom all categories of interested stakehold-ers, including tax professional groups rep-resenting large and small entities, IRS ad-visory groups, tax return preparers, andthe public. The input received from thislarge and diverse community overwhelm-ingly expressed support for the proposedrequirements.

As to the proposed requirements rec-ommended in the Report, the IRS and theTreasury Department considered variousalternatives in determining the best waysto effectuate proposed changes with re-spect to tax return preparers, including:

(1) Requiring all paid tax return prepar-ers to comply with the ethical standards inCircular 230 or an ethics code similar toCircular 230, but not requiring any paidpreparers to demonstrate their qualifica-tion and competency;

(2) Requiring tax return preparers whoare not currently authorized to practice be-fore the IRS to register with the IRS, com-plete annual continuing education require-ments, and meet certain ethical standards,but not to pass a minimum competency ex-amination;

(3) Requiring all paid tax return prepar-ers to pass a minimum competency exami-nation and meet other registration require-ments; and

(4) Requiring all paid tax return pre-parers who are not currently authorized topractice before the IRS to pass a minimumcompetency examination and meet otherregistration requirements, but “grandfatherin” tax return preparers who have accu-

2010–16 I.R.B. 600 April 19, 2010

rately and competently prepared tax re-turns for a certain period of years.

After consideration of these and otheralternatives and the responses received inthe public comment process, the IRS andthe Treasury Department conclude that theprovisions of the proposed regulations willmost effectively promote sound tax admin-istration. The provisions in the proposedregulations for a single prescribed identi-fying number for tax return preparers willenable the IRS to accurately identify taxreturn preparers, match preparers with thetax returns and claims for refund they pre-pare, and better administer the tax lawswith respect to tax return preparers andtheir clients. The provisions, in combi-nation with anticipated guidance describedabove, also will ensure that qualified, com-petent, and ethical tax return preparers willbe assigned prescribed preparer identify-ing numbers. The testing requirementsthat may be set forth in other guidancewill establish a benchmark of minimumcompetency necessary for tax return pre-parers to obtain their professional creden-tials, while the continuing education re-quirements are intended to ensure that taxreturn preparers remain current on the Fed-eral tax laws and continue to develop theirtax knowledge. The extension in other,prospective guidance of the rules in Circu-lar 230 to any paid tax return preparer willrequire all practitioners to meet certain eth-ical standards and allow the IRS to suspendor otherwise appropriately discipline taxreturn preparers who engage in unethicalor disreputable conduct. Accordingly, theimplementation of qualification and com-petency standards is expected to increasetax compliance and allow taxpayers to beconfident that the tax return preparers towhom they turn for assistance are knowl-edgeable, skilled, and ethical.

Comments and Requests for PublicHearing

Before these proposed regulations areadopted as final regulations, considerationwill be given to any written comments(a signed original and eight (8) copies)or electronic comments that are submittedtimely to the IRS. The IRS and the Trea-sury Department request comments on theclarity of the proposed rules and how theycan be made easier to understand. Allcomments that are submitted by the public

will be available for public inspection andcopying. A public hearing will be sched-uled if requested in writing by any personwho timely submits comments. If a pub-lic hearing is scheduled, notice of the date,time, and place for the public hearing willbe published in the Federal Register.

Drafting Information

The principal author of these proposedregulations is Stuart Murray of the Officeof the Associate Chief Counsel, Procedureand Administration.

* * * * *

Proposed Amendments to theRegulations

Accordingly, 26 CFR part 1 is proposedto be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation forpart 1 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *Section 1.6109–2 also issued under

26 U.S.C. 6109(a) * * *Par. 2. Section 1.6109–2 is amended

by revising the section heading, revisingparagraphs (a)(2) and (d), and adding para-graphs (e), (f), (g), (h), and (i) to read asfollows:

§1.6109–2 Tax return preparers furnishingidentifying numbers for returns or claimsfor refund and related requirements.

(a) * * *(2)(i) For tax returns or claims for re-

fund filed on or before December 31, 2010,the identifying number of an individual taxreturn preparer is that individual’s socialsecurity number or such alternative num-ber as may be prescribed by the InternalRevenue Service in forms, instructions, orother appropriate guidance.

(ii) For tax returns or claims for re-fund filed after December 31, 2010, theidentifying number of a tax return prepareris the individual’s preparer tax identifica-tion number or such other number pre-scribed by the Internal Revenue Servicein forms, instructions, or other appropriateguidance.

* * * * *

(d) Beginning after December 31, 2010,all tax return preparers must have a pre-parer tax identification number or otherprescribed identifying number that was ap-plied for and received at the time and in themanner, including the payment of a userfee, as may be prescribed by the InternalRevenue Service in forms, instructions, orother appropriate guidance. Except as pro-vided in paragraph (h) of this section, be-ginning after December 31, 2010, to ob-tain a preparer tax identification number orother prescribed identifying number, a taxreturn preparer must be an attorney, certi-fied public accountant, enrolled agent, orregistered tax return preparer authorized topractice before the Internal Revenue Ser-vice under 31 U.S.C. 330 and the regula-tions thereunder.

(e) The Internal Revenue Service maydesignate an expiration date for any pre-parer tax identification number or otherprescribed identifying number and mayfurther prescribe the time and mannerfor renewing a preparer tax identificationnumber or other prescribed identifyingnumber, including the payment of a userfee, as set forth in forms, instructions, orother appropriate guidance. The InternalRevenue Service may provide that anyidentifying number issued by the InternalRevenue Service prior to the effective dateof this regulation will expire on Decem-ber 31, 2010, unless properly renewed asset forth in forms, instructions, or otherappropriate guidance, including these reg-ulations.

(f) As may be prescribed in forms, in-structions, or other appropriate guidance,the IRS may conduct a tax compliancecheck on a tax return preparer who ap-plies for or renews a preparer tax identi-fication number or other prescribed identi-fying number.

(g) Only for purposes of paragraphs (d),(e), and (f) of this section, the term tax re-turn preparer means any individual whois compensated for preparing, or assistingin the preparation of, all or substantiallyall of a tax return or claim for refund oftax. Factors to consider in determiningwhether an individual is a tax return pre-parer under this paragraph (g) include, butare not limited to, the complexity of thework performed by the individual relativeto the overall complexity of the tax returnor claim for refund of tax; the amount ofthe items of income, deductions, or losses

April 19, 2010 601 2010–16 I.R.B.

attributable to the work performed by theindividual relative to the total amount ofincome, deductions, or losses required tobe correctly reported on the tax return orclaim for refund of tax; and the amount oftax or credit attributable to the work per-formed by the individual relative to the to-tal tax liability required to be correctly re-ported on the tax return or claim for refundof tax. A tax return preparer does not in-clude an individual who is not otherwise atax return preparer as that term is definedin §301.7701–15(b)(2), or who is an indi-vidual described in §301.7701–15(f). Theprovisions of this paragraph (g) are illus-trated by the following examples:

Example 1. Employee A, an individual employedby Tax Return Preparer B, assists Tax Return PreparerB in answering telephone calls, making copies, in-putting client tax information gathered by B into thedata fields of tax preparation software on a computer,and using the computer to file electronic returns of taxprepared by B. Although Employee A must exercisejudgment regarding which data fields in the tax prepa-ration software to use, A does not exercise any discre-tion or independent judgment as to the clients’ under-lying tax positions. Employee A, therefore, merelyprovides clerical assistance or incidental services andis not a tax return preparer required to apply for aPTIN or other identifying number as the Internal Rev-enue Service may prescribe in forms, instructions, orother appropriate guidance.

Example 2. The facts are the same as in Exam-ple 1, except that Employee A also interviews B’sclients and obtains from them information needed forthe preparation of tax returns. Employee A deter-mines the amount and character of entries on the re-turns and whether the information provided is suf-ficient for purposes of preparing the returns. For atleast some of B’s clients, A obtains information andmakes determinations that constitute all or substan-tially all of the tax return. Employee A is a tax returnpreparer required to apply for a PTIN or other iden-tifying number as the Internal Revenue Service mayprescribe in forms, instructions, or other appropriateguidance. Employee A is a tax return preparer evenif Employee A relies on tax preparation software toprepare the return.

Example 3. C is an employee of a firm thatprepares tax returns and claims for refund of taxfor compensation. C is responsible for preparing aForm 1040, “U.S. Individual Income Tax Return,”for a client. C obtains the information necessaryfor completing the return during a meeting with theclient, and makes determinations with respect to theproper application of the tax laws to the informationin order to determine the client’s tax liability. Ccompletes the tax return and sends the completedreturn to employee D, who reviews the return foraccuracy before signing it. Both C and D are taxreturn preparers required to apply for a PTIN orother identifying number as the Internal RevenueService may prescribe in forms, instructions, or otherappropriate guidance.

Example 4. E is an employee at a firm which pre-pares tax returns and claims for refund of tax for com-

pensation. The firm is engaged by a corporation toprepare its Federal income tax return on Form 1120,“U.S. Corporation Income Tax Return.” Among thedocumentation that the corporation provides to E inconnection with the preparation of the tax return isdocumentation relating to the corporation’s potentialeligibility to claim a recently enacted tax credit for thetaxable year. In preparing the return, and specificallyfor purposes of the new tax credit, E (with the cor-poration’s consent) obtains advice from F, a subjectmatter expert on this and similar credits. F advisesE as to the corporation’s entitlement to the credit andprovides his calculation of the amount of the credit.Based on this advice from F, E prepares the corpora-tion’s Form 1120 claiming the tax credit in the amountrecommended by F. The additional credit is one ofmany tax credits and deductions claimed on the taxreturn, and determining the credit amount does notconstitute preparation of all or substantially all of thecorporation’s tax return under this paragraph (g). Fwill not be considered to have prepared all or substan-tially all of the corporation’s tax return, and F is nota tax return preparer required to apply for a PTIN orother identifying number as the Internal Revenue Ser-vice may prescribe in forms, instructions, or other ap-propriate guidance. The analysis is the same whetheror not the tax credit is a substantial portion of the re-turn under §301.7701–15 of this chapter, and whetheror not F is in the same firm with E. E is a tax returnpreparer required to apply for a PTIN or other iden-tifying number as the Internal Revenue Service mayprescribe in forms, instructions, or other appropriateguidance.

(h) The Internal Revenue Service,through forms, instructions, or other ap-propriate guidance, may prescribe excep-tions to the requirements of this section,including the requirement that an individ-ual be authorized to practice before theInternal Revenue Service before receivinga preparer tax identification number orother prescribed identifying number, asnecessary in the interest of effective taxadministration.

(i) Effective/applicability date. Para-graph (a)(2) of this section is effective forreturns and claims for refund filed afterthe date that final regulations are publishedin the Federal Register. Paragraphs (d)through (h) of this section are effective af-ter the date that final regulations are pub-lished in the Federal Register.

Steven T. Miller,Deputy Commissioner forServices and Enforcement.

(Filed by the Office of the Federal Register on March 24,2010, 11:15 a.m., and published in the issue of the FederalRegister for March 26, 2010, 75 F.R. 1439)

Announcement RegardingImplementation of FATCA andRequest for Comments

Announcement 2010–22

On March 18, 2010, the Hiring Incen-tives to Restore Employment (HIRE) Actof 2010, Pub. L. 111–147 (H.R. 2847) wasenacted into law. Subtitle A of Title V ofthe HIRE Act (Subtitle A) made a numberof changes to the tax law to improve taxcompliance with respect to foreign ac-counts and cross-border transactions andauthorized the Secretary to promulgateguidance to implement these changes.

The Treasury Department and theIRS request comments from the publicregarding guidance projects and issuesconcerning the interpretation and imple-mentation of Subtitle A. Send submissionsto: CC:PA:LPD:PR (REG–146097–09),room 5203, Internal Revenue Service, POBox 7604, Ben Franklin Station, Wash-ington, DC 20044. Submissions may behand-delivered Monday through Fridaybetween the hours of 8 a.m. and 4 p.m.to: CC:PA:LPD:PR (NOT–112379–10),Courier’s Desk, Internal Revenue Service,1111 Constitution Avenue, NW, Wash-ington, DC 20224 or sent electronicallyvia the Federal eRulemaking Portal atwww.regulations.gov (NOT–112379–10).

The principal author of this announce-ment is Kathryn T. Holman of the Office ofAssociate Chief Counsel (International).For further information regarding this an-nouncement, contact Kathryn T. Holmanat (202) 622–8556 (not a toll-free call).

Foundations Status of CertainOrganizations


The following organizations have failedto establish or have been unable to main-tain their status as public charities or as op-erating foundations. Accordingly, grantorsand contributors may not, after this date,rely on previous rulings or designationsin the Cumulative List of Organizations(Publication 78), or on the presumptionarising from the filing of notices under sec-tion 508(b) of the Code. This listing doesnot indicate that the organizations have losttheir status as organizations described in

2010–16 I.R.B. 602 April 19, 2010

section 501(c)(3), eligible to receive de-ductible contributions.

Former Public Charities. The follow-ing organizations (which have been treatedas organizations that are not private foun-dations described in section 509(a) of theCode) are now classified as private foun-dations:

2nd Chance Sports, Inc., Columbus, MSAfrica Cancer Treatment,

Los Angeles, CAAfuntummireku Heritage Society,

Asbury Park, NJAlternative Life Counseling,

Los Angeles, CAAmerican Argentine Art Association, Inc.,

Port St. Lucie, FLAnother Chance Outreach Ministry

International, Amory, MSAssu-Ranch Care Consultants, Inc.,

Garland, TXAtlanta Sound of Gospel, St. Paul, MNBalm of Gilead Ministries, Wichita, KSBishop Ministries, Inc., Pearland, TXBokeelia Charitable Tournaments, Inc.,

Sarasota, FLBridgeway Ministries, Inc., Ashland, VABrown County General Hospital Services,

Georgetown, OHCaribbean Community Foundation,

Baltimore, MDCastles of America Preservation Society,

LTD, Peterson, MNCDI - Utah, Caldwell, IDCentral Alabama Volunteer Examiner

Coordinator, Inc., Huntsville, ALChanging Images, Inc., South Orange, NJChenaniah Music Ministries,

Southfield, MIChristian Center Family Services, Inc.,

Yulle, FLClear Creek Child Conservancy, Inc.,

Copperas Cove, TXCommunity Potential, Inc.,

Binghamton, NYComplete Baby Com, Inc., West End, NCEducation & Employment Exchange

Foundation, North Port, FLEquipping Ministries with Technology,

Pekin, ILExousia Ministries, Houston, TXFamily Life to The Community,

Portsmouth, VAFeed My Sheep Outreach, Inc.,

Beverly Hills, CAFreedom-Forum Group Foundation,

San Juan Capistrano, CA

Future First, Minneapolis, MNG.S. Community Development, Inc.,

Fort Worth, TXGolden Star Christian Community

Outreach Center, Philadelphia, PAGospel Faith Organization, Mobile, ALGRAA Education Foundation,

Redding, CTGreater New Bethel Economic

Development Inc., Longview, TXHabakkuks Revelation Center,

Pittsburg, CAHispanic-American Partnership, Inc.,

Las Vegas, NVHouma Hurricane Baseball Team,

Houma, LAInternational Vietnamese Mutual

Assistance Foundation,Garden Grove, CA

Ishyirahamwe Ubumwe, Stockton, CAJeffrey Reiken-Johnson Clergy Public

Ministry, San Francisco, CAJobs-Readines and Development

Education Center, Arcola, TXJoffe Foundation, Cincinnati, OHJohnny R. Green Ministries, Inc.,

Houston, TXLos Angeles Student Athlete,

Los Angeles, CALutheran Housing Services #20,

Toledo, OHLutheran Housing Services #21,

Toledo, OHLutheran Housing Services #22,

Toledo, OHMinistries of Divine Faith, Inc.,

Bainbridge, GAMinistry of Salvation Outreach Ministries,

Irving, TXMinnesota Multicultural Media

Consortium, Inc., Saint Paul, MNMission Possible Enterprises,

Gig Harbor, WANational Wellness Foundation, Inc.,

San Diego, CANeighborhood Sports Academy,

Fort Wayne, INNeshoba County Community

Development Corporation,Philadelphia, MS

New Beginning Community DevelopmentCenter COGOP, Fontana, CA

Our History Matters, Inc., La Mesa, CAParent Involvement in Education

Foundation, Culver City, CAUnited in Love Family Service Center,

Fayetteville, NC

United States Jails & Prisons Forum, Inc.,Bowie, MD

Reaching U Network, Inc., Miami, FLRedemptive Network Ministries,

Chattanooga, TNRedmond Parks Foundation,

Redmond, ORRose Project, Midland, TXSeattle Youth Life Skills Center,

Seattle, WAS E E A Inc., Cleveland, OHSelf Empowerment & Literacy

Foundation, Los Angeles, CAShadow Skate Complex, Columbia, MOShiloh Treatment Center California, Inc.,

Lake Jackson, TXSibis Enterprises, Inc., Schererville, INSkokos Foundation, Sandy, UTSomali Community of Michigan,

Ypsilanti, MISouthlake Arts Foundation, Inc.,

Southlake, TXSpeak Easy Language Development

and Learning Center, Inc.,Pembroke Pines, FL

Spirit of the Sun, Inc., Broomfield, COTeachers Institute, Jamaica Plains, MSTexas Team Handball Clubs, Inc.,

Austin, TXThird Eye Group, Potomac, MDTigerpaid Foundation, San Francisco, CATimothy’s Helping Hands,

Sauk Village, ILVisual Voice, La Canada Flintridge, CAWings to Wings, Joppa, MDWorld Missions Outreach Ministries,

Amarillo, TXWorld Safety, Inc., Hempstead, TX

If an organization listed above submitsinformation that warrants the renewal ofits classification as a public charity or asa private operating foundation, the Inter-nal Revenue Service will issue a ruling ordetermination letter with the revised clas-sification as to foundation status. Grantorsand contributors may thereafter rely uponsuch ruling or determination letter as pro-vided in section 1.509(a)–7 of the IncomeTax Regulations. It is not the practice ofthe Service to announce such revised clas-sification of foundation status in the Inter-nal Revenue Bulletin.

April 19, 2010 603 2010–16 I.R.B.

U.S-Netherlands: Eliminationof the Dutch “Qualification”Certification


The following is a copy of the Com-petent Authority Agreement (“the Agree-ment”) entered into by the CompetentAuthorities of the United States and theNetherlands regarding the eliminationof the Dutch “qualification” certificationprocedure used by certain U.S. tax-ex-empt trusts, companies, or other organi-zations for claiming treaty benefits fromthe Netherlands under Article 35 of theConvention between the Kingdom ofthe Netherlands and the United States ofAmerica for the avoidance of double tax-ation and the prevention of fiscal evasionwith respect to taxes on income.

The text of the Agreement is as follows:

COMPETENT AUTHORITYAGREEMENT

The Competent Authorities of theNetherlands and the United States hereby

amend Chapter III of the agreement thatthey entered into on August 6, 20071 (the“2007 MAP”), with respect to the “qual-ification” certification procedure used bycertain U.S. tax-exempt trusts, compa-nies, or other organizations for claimingtreaty benefits from the Netherlands un-der Article 35 of the Convention betweenthe Kingdom of the Netherlands and theUnited States of America for the avoid-ance of double taxation and the preventionof fiscal evasion with respect to taxes onincome, signed on December 18, 1992,and amended by Protocols signed on Oc-tober 13, 1993 and March 8, 2004 (the“Treaty”). This agreement constitutes aMutual Agreement in accordance withArticle 29 of the Treaty.

Elimination of the Dutch “qualification”certification

Under Chapter III of the 2007 MAP, aU.S. trust, company, or other organizationthat qualifies for benefits under Article 35of the Treaty may request treaty benefitsfrom the Netherlands under the exemptionmethod by supplying an IRS Form 6166 or

a “qualification” certification issued by thecompetent Netherlands tax authorities.

This agreement amends Chapter IIIof the 2007 MAP by providing that aU.S. tax-exempt trust, company, or otherorganization may no longer apply forand receive a “qualification” certificationfrom the Netherlands tax authorities afterMarch 31, 2010. A U.S. resident that hasbeen issued a “qualification” certificationmay continue to claim benefits using suchcertification for a period of three yearsbeginning on April 1, 2010, providedthat no material change in facts andcircumstances has occurred. All other U.S.resident tax-exempt trusts, companies,or other organizations must provide anIRS Form 6166 to claim benefits underArticle 35 of the Treaty after March31, 2010. An IRS Form 6166 may beobtained by completing and sending Form8802, Application for U.S. ResidencyCertification, to the appropriate IRS officeidentified in the Instructions to Form 8802.

Agreed to by the undersigned compe-tent authorities:

Michael DanilackU.S. Competent Authority

Edwin A. VisserNetherlands Competent Authority

1 Published in the Netherlands as IFZ2007/537M in Stcrt. 2007, 154 and in the United States as Announcement 2007–75, 2007–2 C.B. 540.

2010–16 I.R.B. 604 April 19, 2010

Definition of TermsRevenue rulings and revenue procedures(hereinafter referred to as “rulings”) thathave an effect on previous rulings use thefollowing defined terms to describe the ef-fect:

Amplified describes a situation whereno change is being made in a prior pub-lished position, but the prior position is be-ing extended to apply to a variation of thefact situation set forth therein. Thus, ifan earlier ruling held that a principle ap-plied to A, and the new ruling holds that thesame principle also applies to B, the earlierruling is amplified. (Compare with modi-fied, below).

Clarified is used in those instanceswhere the language in a prior ruling is be-ing made clear because the language hascaused, or may cause, some confusion.It is not used where a position in a priorruling is being changed.

Distinguished describes a situationwhere a ruling mentions a previously pub-lished ruling and points out an essentialdifference between them.

Modified is used where the substanceof a previously published position is beingchanged. Thus, if a prior ruling held that aprinciple applied to A but not to B, and thenew ruling holds that it applies to both A

and B, the prior ruling is modified becauseit corrects a published position. (Comparewith amplified and clarified, above).

Obsoleted describes a previously pub-lished ruling that is not considered deter-minative with respect to future transac-tions. This term is most commonly used ina ruling that lists previously published rul-ings that are obsoleted because of changesin laws or regulations. A ruling may alsobe obsoleted because the substance hasbeen included in regulations subsequentlyadopted.

Revoked describes situations where theposition in the previously published rulingis not correct and the correct position isbeing stated in a new ruling.

Superseded describes a situation wherethe new ruling does nothing more than re-state the substance and situation of a previ-ously published ruling (or rulings). Thus,the term is used to republish under the1986 Code and regulations the same po-sition published under the 1939 Code andregulations. The term is also used whenit is desired to republish in a single rul-ing a series of situations, names, etc., thatwere previously published over a period oftime in separate rulings. If the new rul-ing does more than restate the substance

of a prior ruling, a combination of termsis used. For example, modified and su-perseded describes a situation where thesubstance of a previously published rulingis being changed in part and is continuedwithout change in part and it is desired torestate the valid portion of the previouslypublished ruling in a new ruling that is selfcontained. In this case, the previously pub-lished ruling is first modified and then, asmodified, is superseded.

Supplemented is used in situations inwhich a list, such as a list of the names ofcountries, is published in a ruling and thatlist is expanded by adding further names insubsequent rulings. After the original rul-ing has been supplemented several times, anew ruling may be published that includesthe list in the original ruling and the ad-ditions, and supersedes all prior rulings inthe 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 of casesin litigation, or the outcome of a Servicestudy.

AbbreviationsThe following abbreviations in current useand formerly used will appear in materialpublished in the Bulletin.

A—Individual.Acq.—Acquiescence.B—Individual.BE—Beneficiary.BK—Bank.B.T.A.—Board of Tax Appeals.C—Individual.C.B.—Cumulative Bulletin.CFR—Code of Federal Regulations.CI—City.COOP—Cooperative.Ct.D.—Court Decision.CY—County.D—Decedent.DC—Dummy Corporation.DE—Donee.Del. Order—Delegation Order.DISC—Domestic International Sales Corporation.DR—Donor.E—Estate.EE—Employee.E.O.—Executive Order.

ER—Employer.ERISA—Employee Retirement Income Security Act.EX—Executor.F—Fiduciary.FC—Foreign Country.FICA—Federal Insurance Contributions Act.FISC—Foreign International Sales Company.FPH—Foreign Personal Holding Company.F.R.—Federal Register.FUTA—Federal Unemployment Tax Act.FX—Foreign corporation.G.C.M.—Chief Counsel’s Memorandum.GE—Grantee.GP—General Partner.GR—Grantor.IC—Insurance Company.I.R.B.—Internal Revenue Bulletin.LE—Lessee.LP—Limited Partner.LR—Lessor.M—Minor.Nonacq.—Nonacquiescence.O—Organization.P—Parent Corporation.PHC—Personal Holding Company.PO—Possession of the U.S.PR—Partner.

PRS—Partnership.PTE—Prohibited Transaction Exemption.Pub. L.—Public Law.REIT—Real Estate Investment Trust.Rev. Proc.—Revenue Procedure.Rev. Rul.—Revenue Ruling.S—Subsidiary.S.P.R.—Statement of Procedural Rules.Stat.—Statutes at Large.T—Target Corporation.T.C.—Tax Court.T.D. —Treasury Decision.TFE—Transferee.TFR—Transferor.T.I.R.—Technical Information Release.TP—Taxpayer.TR—Trust.TT—Trustee.U.S.C.—United States Code.X—Corporation.Y—Corporation.Z —Corporation.

April 19, 2010 i 2010–16 I.R.B.

Numerical Finding List1

Bulletins 2010–1 through 2010–16

Announcements:

2010-1, 2010-4 I.R.B. 333

2010-2, 2010-2 I.R.B. 271

2010-3, 2010-4 I.R.B. 333

2010-4, 2010-5 I.R.B. 384

2010-5, 2010-6 I.R.B. 402

2010-6, 2010-6 I.R.B. 402

2010-7, 2010-6 I.R.B. 403

2010-8, 2010-7 I.R.B. 408

2010-9, 2010-7 I.R.B. 408

2010-10, 2010-7 I.R.B. 410

2010-11, 2010-10 I.R.B. 438

2010-12, 2010-7 I.R.B. 410

2010-13, 2010-8 I.R.B. 426

2010-14, 2010-11 I.R.B. 449

2010-15, 2010-10 I.R.B. 438

2010-16, 2010-11 I.R.B. 450

2010-17, 2010-13 I.R.B. 515

2010-18, 2010-12 I.R.B. 460

2010-19, 2010-14 I.R.B. 529

2010-20, 2010-15 I.R.B. 551

2010-21, 2010-15 I.R.B. 551

2010-22, 2010-16 I.R.B. 602

2010-23, 2010-16 I.R.B. 602

2010-24, 2010-15 I.R.B. 587

2010-25, 2010-15 I.R.B. 588

2010-26, 2010-16 I.R.B. 604

Notices:

2010-1, 2010-2 I.R.B. 251

2010-2, 2010-2 I.R.B. 251

2010-3, 2010-2 I.R.B. 253

2010-4, 2010-2 I.R.B. 253

2010-5, 2010-2 I.R.B. 256

2010-6, 2010-3 I.R.B. 275

2010-7, 2010-3 I.R.B. 296

2010-8, 2010-3 I.R.B. 297

2010-9, 2010-3 I.R.B. 298

2010-10, 2010-3 I.R.B. 299

2010-11, 2010-4 I.R.B. 326

2010-12, 2010-4 I.R.B. 326

2010-13, 2010-4 I.R.B. 327

2010-14, 2010-5 I.R.B. 344

2010-15, 2010-6 I.R.B. 390

2010-16, 2010-6 I.R.B. 396

2010-17, 2010-14 I.R.B. 519

2010-18, 2010-14 I.R.B. 525

2010-19, 2010-7 I.R.B. 404

2010-20, 2010-8 I.R.B. 422

2010-21, 2010-12 I.R.B. 451

2010-22, 2010-10 I.R.B. 435

2010-23, 2010-11 I.R.B. 441

Notices— Continued:

2010-24, 2010-12 I.R.B. 452

2010-25, 2010-14 I.R.B. 527

2010-26, 2010-14 I.R.B. 527

2010-27, 2010-15 I.R.B. 531

2010-28, 2010-15 I.R.B. 541

2010-29, 2010-15 I.R.B. 547

2010-31, 2010-16 I.R.B. 594

2010-32, 2010-16 I.R.B. 594

Proposed Regulations:

REG-132232-08, 2010-6 I.R.B. 401

REG-134235-08, 2010-16 I.R.B. 596

REG-137036-08, 2010-6 I.R.B. 398

REG-101896-09, 2010-5 I.R.B. 347

REG-117501-09, 2010-11 I.R.B. 442

REG-131028-09, 2010-4 I.R.B. 332

REG-148681-09, 2010-11 I.R.B. 443

Revenue Procedures:

2010-1, 2010-1 I.R.B. 1

2010-2, 2010-1 I.R.B. 90

2010-3, 2010-1 I.R.B. 110

2010-4, 2010-1 I.R.B. 122

2010-5, 2010-1 I.R.B. 165

2010-6, 2010-1 I.R.B. 193

2010-7, 2010-1 I.R.B. 231

2010-8, 2010-1 I.R.B. 234

2010-9, 2010-2 I.R.B. 258

2010-10, 2010-3 I.R.B. 300

2010-11, 2010-2 I.R.B. 269

2010-12, 2010-3 I.R.B. 302

2010-13, 2010-4 I.R.B. 329

2010-14, 2010-12 I.R.B. 456

2010-15, 2010-7 I.R.B. 404

2010-17, 2010-8 I.R.B. 425

2010-18, 2010-9 I.R.B. 451

2010-19, 2010-13 I.R.B. 469

2010-20, 2010-14 I.R.B. 528

2010-21, 2010-13 I.R.B. 473

Revenue Rulings:

2010-1, 2010-2 I.R.B. 248

2010-2, 2010-3 I.R.B. 272

2010-3, 2010-3 I.R.B. 272

2010-4, 2010-4 I.R.B. 309

2010-5, 2010-4 I.R.B. 312

2010-6, 2010-6 I.R.B. 387

2010-7, 2010-8 I.R.B. 417

2010-8, 2010-10 I.R.B. 432

2010-9, 2010-13 I.R.B. 461

2010-10, 2010-13 I.R.B. 461

2010-11, 2010-14 I.R.B. 516

Tax Conventions:

2010-2, 2010-2 I.R.B. 271

Tax Conventions— Continued:

2010-26, 2010-16 I.R.B. 604

Treasury Decisions:

9474, 2010-4 I.R.B. 322

9475, 2010-4 I.R.B. 304

9476, 2010-5 I.R.B. 336

9477, 2010-6 I.R.B. 385

9478, 2010-4 I.R.B. 315

9480, 2010-11 I.R.B. 439

1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin2009–52, dated December 28, 2009.

2010–16 I.R.B. ii April 19, 2010

Finding List of Current Actions onPreviously Published Items1

Bulletins 2010–1 through 2010–16

Announcements:

2009-51

Supplemented and superseded by

Ann. 2010-16, 2010-11 I.R.B. 450

2010-4

Corrected by

Ann. 2010-10, 2010-7 I.R.B. 410

Notices:

2005-88

Superseded by

Notice 2010-13, 2010-4 I.R.B. 327

2006-87

Superseded by

Notice 2010-27, 2010-15 I.R.B. 531

2007-25

Superseded by

Notice 2010-27, 2010-15 I.R.B. 531

2007-77

Superseded by

Notice 2010-27, 2010-15 I.R.B. 531

2008-41

Modified by

Notice 2010-7, 2010-3 I.R.B. 296

2008-55

Modified by

Notice 2010-3, 2010-2 I.R.B. 253

2008-88

Modified by

Notice 2010-7, 2010-3 I.R.B. 296

2008-107

Superseded by

Notice 2010-27, 2010-15 I.R.B. 531

2008-113

Modified by

Notice 2010-6, 2010-3 I.R.B. 275

2008-115

Modified by

Notice 2010-6, 2010-3 I.R.B. 275

2008-116

Modified and superseded by

Notice 2010-32, 2010-16 I.R.B. 594

2009-11

Amplified by

Notice 2010-9, 2010-3 I.R.B. 298

Notices— Continued:

2009-13

Obsoleted by

T.D. 9478, 2010-4 I.R.B. 315REG-131028-09, 2010-4 I.R.B. 332

2009-35

Supplemented by

Notice 2010-17, 2010-14 I.R.B. 519

2009-38

Amplified and superseded by

Notice 2010-2, 2010-2 I.R.B. 251

2009-62

Modified and supplemented by

Notice 2010-23, 2010-11 I.R.B. 441

Proposed Regulations:

REG-127270-06

Hearing scheduled by

Ann. 2010-6, 2010-6 I.R.B. 402

Revenue Procedures:

80-59

Modified and superseded by

Rev. Proc. 2010-11, 2010-2 I.R.B. 269

87-35

Obsoleted by

Rev. Proc. 2010-3, 2010-1 I.R.B. 110

2008-14

Updated by

Rev. Proc. 2010-15, 2010-7 I.R.B. 404

2009-1

Superseded by

Rev. Proc. 2010-1, 2010-1 I.R.B. 1

2009-2

Superseded by

Rev. Proc. 2010-2, 2010-1 I.R.B. 90

2009-3

Superseded by

Rev. Proc. 2010-3, 2010-1 I.R.B. 110

2009-4

Superseded by

Rev. Proc. 2010-4, 2010-1 I.R.B. 122

2009-5

Superseded by

Rev. Proc. 2010-5, 2010-1 I.R.B. 165

2009-6

Superseded by

Rev. Proc. 2010-6, 2010-1 I.R.B. 193

2009-7

Superseded by

Rev. Proc. 2010-7, 2010-1 I.R.B. 231

Revenue Procedures— Continued:

2009-8

Superseded by

Rev. Proc. 2010-8, 2010-1 I.R.B. 234

2009-9

Superseded by

Rev. Proc. 2010-9, 2010-2 I.R.B. 258

2009-15

Amplified and superseded by

Rev. Proc. 2010-12, 2010-3 I.R.B. 302

2009-17

Superseded by

Rev. Proc. 2010-21, 2010-13 I.R.B. 473

2009-25

Superseded by

Rev. Proc. 2010-3, 2010-1 I.R.B. 110

2009-55

Corrected by

Ann. 2010-11, 2010-10 I.R.B. 438

2010-1

Corrected by

Ann. 2010-5, 2010-6 I.R.B. 402

Revenue Rulings:

67-436

Obsoleted by

REG-101896-09, 2010-5 I.R.B. 347

92-19

Supplemented in part by

Rev. Rul. 2010-7, 2010-8 I.R.B. 417

2008-52

Supplemented and superseded by

Rev. Rul. 2010-2, 2010-3 I.R.B. 272

Treasury Decisions:

9424

Corrected by

Ann. 2010-18, 2010-12 I.R.B. 460

9443

Corrected by

Ann. 2010-8, 2010-7 I.R.B. 408

9458

Corrected by

Ann. 2010-7, 2010-6 I.R.B. 403

1 A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2009–27 through 2009–52 is in Internal Revenue Bulletin 2009–52, dated December 28,2009.

April 19, 2010 iii 2010–16 I.R.B.

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