Internal Revenue Bulletin 2013-40 (PDF rendition): IRS Notices

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

Bulletin No. 201
3-40
September 30, 20
13
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 2013–16, page 275.
Interest rates: underpayment and overpayments. The rates for
interest determined under section 6621 of the Code for the
calendar quarter beginning October 1, 2013, will be 3 percent
for overpayments (2 percent in the case of a corporation), 3
percent for the underpayments, and 5 percent for large corpo-
ration underpayments. The rate of interest paid on the portion
of a corporation overpayment exceeding $10,000 will be 0.5
percent.
Rev. Rul. 2013–20, page 272.
Fringe benefits aircraft valuation formula. For purposes of sec-
tion 1.61–21(g) of the Income Tax Regulations, relating to the
rule for valuing non-commercial flights on employer-provided
aircraft, the Standard Industry Fare Level (SIFL) cents-per-mile
rates and terminal charge in effect for the second half of 2013
are set forth.
T.D. 9634, page 272.
Final regulations and removal of temporary regulations under
section901oftheCodeprovideguidancerelatingtothede-
termination of the amount of taxes paid for purposes of the
foreign tax credit.
T.D. 9635, page 273.
Temporary regulations provide that a taxpayer’s obligation un-
der a debt instrument can be a position in personal property
that is part of a straddle.
REG–111753–12, page 302.
Proposed regulations provide that a taxpayer’s obligation under
a debt instrument can be a position in personal property that
is part of a straddle. Comments requested by November 4,
2013. A public hearing is scheduled for January 15, 2014.
Notice 2013–54, page 287.
This notice provides guidance on the application of the market
reform provisions and other provisions of the Affordable Care
Act to certain healthcare arrangements, including health re-
imbursement arrangements (HRAs), employer payment plans,
and health flexible spending arrangements (health FSAs). The
notice also provides guidance on section 125(f)(3) of the Code
and on employee assistance programs or EAPs. The guidance
in the notice is being issued in substantially identical form by
the Department of Labor, and guidance is being issued by the
Department of Health and Human Services to reflect that HHS
concurs with the guidance in this notice.
Notice 2013–59, page 297.
This notice provides guidance to taxpayers that elect under
§179(f) to treat as an expense the costs of certain real property
placed in service during any taxable year beginning in 2010,
2011, 2012 or 2013.
Announcement 2013–41, page 322.
This announcement contains corrections to final regulations
(TD 9610) that were published in the Federal Register on Jan-
uary 28, 2013 (78 FR 5874). Sections 1471 through 1474
of the Code, commonly known as FATCA, were added by the
Hiring Incentives to Restore Employment Act of 2010, Pub. L.
111–147. The final regulations under FATCA provide guidance
to persons making certain U.S.-related payments to foreign fi-
nancial institutions (FFIs) and nonfinancial foreign entities and
payments by FFIs to other persons.
(Continued on the next page)
Fi
nding Lists begin on page ii.
Index for July through September begins on page iv.

EMPLOYEE PLANS
Notice 2013–58, page 294.
This notice contains updates for the corporate bond weighted
average interest rate for plan years beginning in September
2013; the 24-month average segment rates; the funding seg-
ment rates applicable for September 2013; and the minimum
present value rates for August 2013. The rates in this no-
tice reflect certain changes implemented by the Moving Ahead
for Progress in the 21st Century Act, Public Law 112–141
(MAP–21).
EXCISE TAX
REG–136630–12, page 303.
Proposed regulations providing guidance to employers that are
subject to the information reporting requirements under section
6056 of the Code, enacted by the Affordable Care Act. Com-
ments requested by November 8, 2013. A public hearing is
scheduled for November 18, 2013.
ADMINISTRATIVE
Notice 2013–57, page 293.
This notice clarifies that a health plan will not fail to qualify as a
high deductible health plan under section 223(c)(2) of the Code
merely because it provides without a deductible the preven-
tive health services required under section 2713 of the Public
Health Service Act to be provided by a group health plan or a
health insurance issuer offering group or individual health insur-
ance coverage.
September 30, 20132013–40 I.R.B.

The IRS Mission
Provide Americ
a’s taxpayers top-quality service by helping
them understa
nd and meet their tax responsibilities and en-
force the law wi
th integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.
It is the poli
cy of the Service to publish in the Bulletin all sub-
stantive ru
lings necessary to promote a uniform application of
the tax laws
, including all rulings that supersede, revoke, mod-
ify, or amen
d any of those previously published in the Bulletin.
All publish
ed rulings apply retroactively unless otherwise indi-
cated. Pro
cedures relating solely to matters of internal man-
agement ar
e not published; however, statements of internal
practices
and procedures that affect the rights and duties of
taxpayers
are published.
Revenue rulings represent the conclusions of the Service on the
application of the law to the pivotal facts stated in the revenue
ruling. In those based on positions taken in rulings to taxpayers
or technical advice to Service field offices, identifying details
and information of a confidential nature are deleted to prevent
unwarranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B, Leg-
islation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the 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 index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The cont
ents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
2013–40 I.R.B.September 30, 2013

Part I. Rulings
and Decisions Under the Internal Revenue Code
of 1986
Section 61.—Gross Income
Defined
26 CFR 1.61–21: Taxation of fringe benefits.
Fringe benefits aircraft valuation for-
mula. For purposes of section 1.61–21(g)
of the Income Tax Regulations, relating
to the rule for valuing non-commercial
flights on employer-provided aircraft,
the Standard Industry Fare Level (SIFL)
cents-per-mile rates and terminal charge
in effect for the second half of 2013 are
set forth.
Rev. Rul. 2013–20
For purposes of the taxation of fringe
benefits under section 61 of the Inter-
nal Revenue Code, section 1.61–21(g) of
the Income Tax Regulations provides a
rule for valuing noncommercial flights
on employer-provided aircraft. Section
1.61–21(g)(5) provides an aircraft valua-
tion formula to determine the value of such
flights. The value of a flight is determined
under the base aircraft valuation formula
(also known as the Standard Industry Fare
Level formula or SIFL) by multiplying
the SIFL cents-per-mile rates applicable
for the period during which the flight was
taken by the appropriate aircraft multiple
provided in section 1.61–21(g)(7) and then
adding the applicable terminal charge. The
SIFL cents-per-mile rates in the formula
and the terminal charge are calculated by
the Department of Transportation and are
reviewed semi-annually.
The following chart sets forth the termi-
nal charge and SIFL mileage rates:
Period
During Which
the Fli
ght Is Taken
Termin
al
Charge
SIFL Mi
leage
Rates
7/1/13
-12/31/13
$48.53
Up to 500 miles
= $.2654 per mile
501-1500 miles
= $.2024 per mile
Over 15
00 miles
=$.194
6permile
DRAFTING INFORMATION
The principal author of this revenue
ruling is Kathleen Edmondson of the
Office of Division Counsel/Associate
Chief Counsel (Tax Exempt/Government
Entities).For further information
regarding this revenue ruling, contact
Ms. Edmondson at (202) 622–0047 (not a
toll-free call).
Section 901.—Taxes
of Foreign Countries
and of Possessions of
United States
T.D. 9634
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Determining the Amount of
Taxes Paid for Purposes of the
Foreign Tax Credit
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations and removal
of temporary regulations.
SUMMARY: This document contains final
regulations providing guidance relating to
the determination of the amount of taxes
paid for purposes of the foreign tax credit.
These regulations address certain highly
structured arrangements that produce in-
appropriate foreign tax credit results. The
regulations affect individuals and corpora-
tions that claim direct and indirect foreign
tax credits.
DATES:Effective Date:These regulations
are effective on September 4, 2013.
Applicability Date:For dates of appli-
cability, see §1.901–2(h)(3).
FOR FURTHER INFORMATION
CONTACT: Jeffrey P. Cowan, at (202)
622–3850.
SUPPLEMENTARY INFORMATION:
Background
This document contains amend-
ments to 26 CFR part 1. On July 18,
2011, a notice of proposed rulemaking
(REG–126519–11) under section 901 of
the Internal Revenue Code (Code) relating
to the determination of the amount of taxes
paid for purposes of the foreign tax credit
was published in theFederal Register
(76 FR 42076). In the same issue of the
2013–40 I.R.B.272September 30, 2013

Federal Register, final and temporary
regulations were also issued. The text
of those temporary regulations served as
the text of the proposed regulations. No
comments were received in response to
the notice of proposed rulemaking. No
public hearing was requested or held. This
Treasury Decision adopts the proposed
regulations with no substantive change,
and the corresponding temporary regula-
tions are removed.
Special Analyses
It has been determined that this Trea-
sury decision is not a significant regula-
tory action as defined in Executive Or-
der 12866. Therefore, a regulatory assess-
ment is not required. It is hereby certified
that these regulations will not have a sig-
nificant economic impact on a substantial
number of small entities. This certification
is based on the fact that these regulations
will primarily affect affiliated groups of
corporations that have foreign operations,
which tend to be larger businesses. More-
over the number of taxpayers affected and
the average burden are minimal. There-
fore, a Regulatory Flexibility Analysis is
not required. Pursuant to section 7805(f)
of the Code, the notice of proposed rule-
making preceding this regulation was sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal author of these regu-
lations is Jeffrey P. Cowan, Office of
Associate Chief Counsel (International).
However, other personnel from the IRS
and the Treasury Department participated
in their development.
*****
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.901–2 is amended by:
1. Adding a sentence at the end of para-
graph (e)(5)(iv)(B)(1)(ii).
2. Removing paragraph (e)(5)(iv)(B)
(1)(iii).
3. Revising the first sentence of para-
graph (h)(2).
4. Revising paragraph (h)(3).
The revisions and addition read as fol-
lows:
§1.901–2 Income, war profits, or excess
profits tax paid or accrued.
*****
(e) * * *
(5) * * *
(iv) * * *
(B) * * *
(1)***
(ii)***Aforeignpaymentattribut-
able to income of the entity also includes
a withholding tax (within the meaning of
section 901(k)(1)(B)) imposed on a divi-
dend or other distribution (including dis-
tributions made by a pass-through entity
or an entity that is disregarded as an entity
separate from its owner for U.S. tax pur-
poses) with respect to the equity of the en-
tity.
*****
(h) * * *
(2) Except as provided in paragraph
(h)(3) of this section, paragraph (e)(5)(iv)
of this section applies to foreign payments
that, if such payments were an amount
of tax paid, would be considered paid or
accrued under §1.901–2(f) on or after July
13, 2011. * * *
(3) The last sentence of paragraph
(e)(5)(iv)(B)(1)(ii) of this section applies
to foreign payments that, if such payments
were an amount of tax paid, would be con-
sidered paid or accrued under §1.901–2(f)
on or after September 4, 2013. See 26 CFR
1.901–2T(e)(5)(iv)(B)(1)(iii)(revisedas
of April 1, 2013) for rules applicable to
foreign payments that, if such payments
were an amount of tax paid, would be con-
sidered paid or accrued under §1.901–2(f)
before September 4, 2013.
*****
§1.901–2T [Removed]
Par. 3. Section 1.901–2T is removed.
Beth Tucker,
Deputy Commissioner for
Operations Support.
Approved August 6, 2013.
Mark J. Mazur,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on September 3,
2013, 8:45 a.m., and published in the issue of the Federal
Register for September 4, 2013, 78 F.R. 54391)
Section 1092.—Straddles
T.D. 9635
DEPARTMENT OF TREASURY
Internal Revenue Service
26 CFR Part 1
Debt That is a Position in
Personal Property That is Part
of a Straddle
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final and temporary regula-
tions.
SUMMARY: This document contains fi-
nal and temporary regulations relating to
the application of the straddle rules to a
debt instrument. The temporary regula-
tions clarify that a taxpayer’s obligation
under a debt instrument can be a position
in personal property that is part of a strad-
dle. The temporary regulations primar-
ily affect taxpayers that issue debt instru-
ments that provide for one or more pay-
ments that reference the value of personal
property or a position in personal prop-
erty. The text of these temporary regula-
tions also serves as the text of the proposed
regulations (REG–111753–12) set forth in
this issue of the Bulletin.
DATES:Effective Date:These regulations
are effective on September 5, 2013.
Applicability Dates:Fordateofappli-
cability, see §1.1092(d)–1T(e).
FOR FURTHER INFORMATION
CONTACT: Mary Brewer, (202)
622–4695 (not a toll-free number).
September 30, 20132732013–40 I.R.B.

SUPPLEMENTARY INFORMATION:
BACKGROUND AND
EXPLANATION OF PROVISIONS
1.Summary of Prior Notice of Proposed
Rule Making
This document contains amendments
to 26 CFR part 1. On January 18,
2001, a notice of proposed rulemaking
(REG–105801–00; RIN 1545–AX92) (the
2001 NPRM) was published in theFederal
Register(66 FR 4746). The 2001 NPRM
addresses the definition of personal prop-
erty for purposes of section 263(g) of the
Internal Revenue Code (Code), the types
of expenses subject to capitalization, and
the operation of the capitalization rules.
Another portion of the 2001 NPRM (pro-
posed regulation §1.1092(d)–1(d)) would
clarify the circumstances under which an
issuer’s position under a debt instrument is
treated as a position in personal property
that is part of a straddle.
No public hearing was requested
or held. Written and electronic com-
ments responding to the 2001 NPRM
were received, and the only commenter
that substantively addressed proposed
§1.1092(d)–1(d) urged its adoption.
This Treasury Decision adopts proposed
§1.1092(d)–1(d) (REG–105801–00) in the
form proposed. As so adopted, this pro-
vision is designated as §1.1092(d)–1T(d).
This Treasury Decision also adopts the
2001 NPRM’s proposed amendment to
the effective/applicability dates (proposed
§1.1092(d)–1(e)). As so adopted, this ef-
fective/applicability date is designated as
§1.1092(d)–1T(e)(2). The amendments
are discussed in section 2 of this preamble.
The remainder of the 2001 NPRM remains
proposed.
2.Overview of the Temporary Regulations
The temporary regulations provide
guidance under section 1092 regarding
when an issuer’s obligation under a debt
instrument may be a position in actively
traded personal property and, therefore,
may be part of a straddle.
Definition of personal property for
purposes of section 1092
Section 1092(d)(1) defines “personal
property” to mean “personal property of
a type that is actively traded.” A debt or
obligation generally is not property of the
debtor or obligor. Nevertheless, if a debt
instrument providesfor payments that are
(or are reasonably expected to be) linked
to the value of personal property as so
defined, then the obligor on the instrument
has a position in the personal property
referenced by the debt instrument.
Section 1092(d)(7) provides that if a
debt instrument is denominated in a non-
functional currency, the obligor’s position
under the debt obligation is a position in
the nonfunctional currency. Some main-
tain that section 1092(d)(7) evidences an
intent by Congress to limit the circum-
stances in which an obligor’s interest in
a debt instrument may be a position in a
straddle, and that such treatment is proper
only with respect to debt obligations de-
nominated in nonfunctional currency.
The IRS and the Treasury Department do
not believe that section 1092(d)(7) de-
scribes the only circumstance in which an
obligor’s interest in a debt instrument may
be treated as part of a straddle. The statute
and the legislative history do not contain
any indication that Congress intended to
limitsection1092inthismanner;rather,
the legislative history characterizes sec-
tion 1092(d)(7) as a clarification of prior
law:
The Senate amendment clarifies that an
obligor’s interest in a foreign currency
denominated obligation is a “position”
for purposes of the loss deferral rule.
The rationale for this treatment is that a
foreign currency borrowing is econom-
ically similar to a short position in the
foreign currency.
H. R. REP. NO. 99–841, pt. 2, at 670
(1986) (Conf. Rep.); 1986–3 (Vol. 4) CB
670. Moreover, it is clear that an economic
exposure associated with an obligation that
is not a debt instrument (such as a written
option or the obligation created by a short
sale) may be a straddle position. Simi-
larly, a debt instrument may be a position
in personal property, and accordingly sub-
ject to the straddle rules, if the obligation
islinkedtopersonalproperty. Therefore,
§1.1092(d)–1T(d) of the temporary regula-
tions expressly provides that an obligation
under a debt instrument may be a position
in personal property that is part of a strad-
dle.
Dates of Applicability of the Regulations
The temporary regulations adopt
the effective/applicability date set forth
in the 2001 NPRM by providing that
§1.1092(d)–1T(d) applies to straddles es-
tablished on or after January 17, 2001 (the
date on which the 2001 NPRM was filed
with theFederal Register). No inference
is intended with respect to straddles es-
tablished prior to January 17, 2001. In
appropriate cases, the IRS may take the
position under section 1092(d)(2) that,
even in the absence of a regulation, an
obligation under a debt instrument was
part of a straddle prior to the effective date
of §1.1092(d)–1T(d) if the debt instrument
functioned economically as an interest in
actively traded personal property.
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866, as supplemented by Executive Or-
der 13563. Therefore, a regulatory assess-
ment is not required. It also has been de-
termined that section 553(b) of the Admin-
istrative Procedure Act (5 U.S.C. chapter
5) does not apply to these regulations. For
the applicability of the Regulatory Flexi-
bility Act (5 U.S.C. chapter 6) refer to the
Special Analyses section of the preamble
to the cross-reference notice of proposed
rulemaking published in this issue of the
Bulletin. Pursuant to section 7805(f) of the
Code, this regulation has been submitted
to the Chief Counsel for Advocacy of the
Small Business Administration for com-
ment on its impact on small business.
Drafting Information
The principal author of these regula-
tions is Mary Brewer, Office of Associate
Chief Counsel (Financial Institutions and
Products). However, other personnel from
the IRS and the Treasury Department
participated in their development.
*****
Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended
as follows:
2013–40 I.R.B.274September 30, 2013

PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.1092(d)–1T also issued under
26 U.S.C. 1092(b)(1). * * *
Par. 2. Section 1.1092(d)–1 is
amended by redesignating paragraph (d)
as newly-designated paragraph (e) and
revising newly-designated paragraph (e),
and adding new paragraph (d) to read as
follows:
§1.1092(d)–1 Definitions and special
rules.
*****
(d) [Reserved]. For further guidance,
see §1.1092(d)–1T(d).
(e)Effective/applicability dates.(1)
Paragraph (b)(1)(vii) of this section ap-
plies to positions entered into on or after
October 14, 1993. Paragraph (c) of this
section applies to positions entered into on
or after July 8, 1991.
(2) [Reserved]. For further guidance,
see §1.1092(d)–1T(e)(2).
Par. 3. Section 1.1092(d)–1T is added
to read as follows:
§1.1092(d)–1T Definitions and special
rules (temporary).
(a) through (c) [Reserved]. For further
guidance, see §1.1092(d)–1(a) through (c).
(d)Debt instrument linked to the value
of personal property. If a taxpayer is the
obligor under a debt instrument one or
more payments on which are linked to the
value of personal property or a position
with respect to personal property, then the
taxpayer’s obligation under the debt instru-
ment is a position with respect to personal
property and may bepart of a straddle.
(e)Effective/applicability dates—(1)
[Reserved]. For further guidance, see
§1.1092(d)–1(e)(1).
(2) Notwithstandingparagraph (e)(1) of
this section, paragraph (d) of this section
applies to straddles established on or after
January 17, 2001.
(f)Expiration date. The applicability of
this section expires on September 2, 2016.
Beth Tucker,
Deputy Commissioner for
Operations Support.
Approved August 26, 2013.
Mark J. Mazur,
Assistant Secretary
oftheTreasury(TaxPolicy).
(Filed by the Office of the Federal Register on September
4, 2013, 8:45 a.m., and published in the issue of the Federal
Register for September 5, 2013, 78 F.R. 54568)
Section 6621.—Determina-
tion of Rate of Interest
26 CFR 301.6621–1: Interest rate.
Interest rates: underpayment and over-
payments. The rates for interest deter-
mined under section 6621 of the Code for
the calendar quarter beginning October 1,
2013, will be 3 percent for overpayments
(2 percent in the case of a corporation), 3
percent for the underpayments, and 5 per-
cent for large corporation underpayments.
The rate of interest paid on the portion
of a corporation overpayment exceeding
$10,000 will be 0.5 percent.
Rev. Rul. 2013–16
Section 6621 of the Internal Revenue
Code establishes the interest rates on over-
payments and underpayments of tax. Un-
der section 6621(a)(1), the overpayment
rate is the sum of the federal short-term
rate plus 3 percentage points (2 percent-
age points in the case of a corporation), ex-
cept the rate for the portion of a corporate
overpayment of tax exceeding $10,000 for
a taxable period is the sum of the federal
short-term rate plus 0.5 of a percentage
point. Under section 6621(a)(2), the un-
derpayment rate is the sum of the federal
short-term rate plus 3 percentage points.
Section 6621(c) provides that for pur-
poses of interest payable under section
6601 on any large corporate underpay-
ment, the underpayment rate under section
6621(a)(2) is determined by substituting
“5 percentage points” for “3 percentage
points.” See section 6621(c) and section
301.6621–3 of the Regulations on Proce-
dure and Administration for the definition
of a large corporate underpayment and
for the rules for determining the appli-
cable date. Section 6621(c) and section
301.6621–3 are generally effective for
periods after December 31, 1990.
Section 6621(b)(1) provides that the
Secretary will determine the federal
short-term rate for the first month in each
calendar quarter. Section 6621(b)(2)(A)
provides that the federal short-term rate
determined under section 6621(b)(1) for
any month applies during the first calendar
quarter beginning after that month. Sec-
tion 6621(b)(3) provides that the federal
short-term rate for any month is the fed-
eral short-term rate determined during that
month by the Secretary in accordance with
section 1274(d), rounded to the nearest
full percent (or, if a multiple of 1/2 of 1
percent, the rate is increased to the next
highest full percent).
Notice 88–59, 1988–1 C.B. 546, an-
nounced that in determining the quarterly
interest rates to be used for overpayments
and underpayments of tax under section
6621, the Internal Revenue Service will
use the federal short-term rate based on
daily compounding because that rate is
most consistent with section 6621 which,
pursuant to section 6622, is subject to daily
compounding.
The federal short-term rate determined
in accordance with section 1274(d) during
July 2013 is the rate published in Revenue
Ruling 2013–13, 2013–32 I.R.B. 124, to
take effect beginning August 1, 2013. The
federal short-term rate, rounded to the
nearest full percent, based on daily com-
pounding determined during the month of
July 2013 is 0 percent. Accordingly, an
overpayment rate of 3 percent (2 percent
in the case of a corporation) and an under-
payment rate of 3 percent are established
for the calendar quarter beginning October
1, 2013. The overpayment rate for the
portion of a corporate overpayment ex-
ceeding $10,000 for the calendar quarter
beginning October 1, 2013, is 0.5 percent.
The underpayment rate for large corporate
underpayments for the calendar quarter
beginning October 1, 2013, is 5 percent.
These rates apply to amounts bearing in-
terest during that calendar quarter.
The 3 percent rate also applies to es-
timated tax underpayments for the fourth
calendar quarter in 2013.
Interest factors for daily compound in-
terest for annual rates of 0.5 percent are
published in Appendix A of this Revenue
Ruling. Interest factors for daily com-
pound interest for annual rates of 2 percent,
3 percent and 5 percent are published in Ta-
bles 9, 11, and 15 of Rev. Proc. 95–17,
1995–1 C.B. 563, 565, and 569.
September 30, 20132752013–40 I.R.B.

Annual interest rates to be compounded
daily pursuant to section 6622 that apply
for prior periods are set forth in the tables
accompanying this revenue ruling.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Deborah Colbert-James of the Office
of Associate Chief Counsel (Procedure &
Administration). For further information
regarding this revenue ruling, contact
Ms. Colbert-James at (202) 622–3400
(not a toll-free call).
2013–40 I.R.B.276September 30, 2013

APPENDIX A
365 Day Year
0.5% Compound Ra
te 184 Days
DaysFactorDaysFactorDaysFactor
10.000013699630.000863380
125
0.001713784
20.000027397640.000877091126
0.001727506
30.000041096
65
0.0008908011270.001741228
4
0.000054796
66
0.000904512
128
0.001754951
50.000068495
670.0009182231290.001768673
6
0.000082195
680.0009319341300.001782396
7
0.000095894
69
0.000945646
1310.001796119
8
0.000109594
70
0.000959357
1320.001809843
90.000123294710.000973069133
0.001823566
10
0.000136995
720.0009867811340.001837290
11
0.000150695
730.001000493
1350.001851013
120.000164396740.0010142061360.001864737
130.00017809
7
75
0.00102791
8
1370.00187846
2
140.000191798760.0010416311380.001892186
150.0002054
99
77
0.0010553
44
139
0.0019059
10
160.0002192
01
78
0.001069057
140
0.001919635
170.000232902790.0010827701410.001933360
180.000246604800.001096484142
0.001947
085
190.000260
306
810.001110
197
1430.001960
811
200.000274008820.001123911144
0.001974536
210.00028771183
0.001137
625
145
0.001988262
220.000301
413
84
0.001151339
1460.002001
988
23
0.000315116850.001165054
147
0.002015714
240.000328819860.0011787681480.002029440
250.000342522
870.00119
2483
1490.00204
3166
26
0.000356225
880.001206198
1500.002056893
270.000369929890.001219913
151
0.002070620
280.0003
83633
900.0012
33629
152
0.0020
84347
290.000397336910.001247344
153
0.002098074
300.000411041920.001261060
154
0.002111801
31
0.000424745
930.001
274776
1550.002125529
320.000438449940.001288492
1560.002139257
33
0.00
0452154
95
0.001302208
1570.00
2152985
34
0.000465859
96
0.001315925158
0.00
2166713
350.000479564
970.001329641
159
0.002180441
360.00049326998
0.0
01343358
1600.002194169
37
0.000506974
99
0.001357075
1610.0
02207898
38
0.000520680
1000.0013707921620.002221627
39
0.0
00534386
101
0.0
01384510
163
0.0
02235356
40
0.000548092
10
2
0.
001398227
16
4
0.002249085
41
0.000561798
103
0.0014119451650.002262815
42
0.
000575504
104
0.
001425663
166
0.
002276544
43
0.000589211105
0.
001439381
16
7
0.
002290274
440.000602917106
0.001453100
1680.002304004
4
5
0.0006166241070.0014668181690.002317734
4
6
0
.000630331
1
08
0.001480537
1
70
0.002331465
470.000644039109
0.001494256
171
0.002345195
48
0.000657746
110
0.001507975
172
0.002358926
49
0.000671454
111
0.001521694
173
0.002372657
500.000685161
112
0.001535414
1740.002386388
51
0.000698869113
0.001549133175
0.002400120
520.000712578
114
0.001562853
176
0.002413851
53
0.000726286
1150.001576573
177
0.002427583
540.000739995
116
0.001590293
178
0.002441315
550.000753703
1170.001604014179
0.002455047
56
0.0007674121180.0016177341800.002468779
September 30, 20132772013–40 I.R.B.

365 Day Year
0.5% Compound Rate 184 Days – Continued
DaysFactorDaysFactorDaysFactor
57
0.000781121119
0.001631455
181
0.002482511
58
0.000794831120
0.001645176
1820.002496244
590.000808540
121
0.001658897
183
0.002509977
60
0.000822250
1220.001672619184
0.002523710
61
0.000835960
1230.001686340
620.0008496701240.001700062
366 Day Year
0.5% Compound Rate 184 Days
DaysFactorDaysFactorDaysFactor
10.000013661630.000861020
125
0.001709097
20.000027323640.0008746931260.001722782
30.000040984
65
0.0008883661270.001736467
4
0.000054646
660.000902040128
0.001750152
5
0.00006830867
0.000915713
1290.001763837
60.000081970680.000929387130
0.001777522
7
0.000095632
690.0009430611310.001791208
8
0.000109295
70
0.000956735
1320.001804893
9
0.000122958
710.000970409133
0.001818579
100.000136620720.000984084134
0.001832265
11
0.000150283
73
0.0009977581350.001845951
120.000163947740.001011433136
0.001859638
130.000177610
750.001025108
1370.001873324
140.000191274760.0010387831380.001887011
15
0.00020493877
0.001052459
1390.001900698
160.000218602780.001066134140
0.001914385
170.000232266790.0010798101410.001928073
18
0.000245930
800.0010934861420.001941760
19
0.000259595
810.001107162143
0.001955448
200.000273260820.0011208391440.001969136
210.00028692483
0.001134515145
0.001982824
22
0.000300590
840.001148192146
0.001996512
23
0.00031425585
0.0011618691470.002010201
240.00032792086
0.001175546
1480.002023889
250.000341586
870.001189223149
0.002037578
26
0.000355252
880.001202900
1500.002051267
270.00036891889
0.0012165781510.002064957
28
0.000382584
90
0.001230256152
0.002078646
29
0.000396251
910.001243934
153
0.002092336
300.00040991792
0.0012576121540.002106025
31
0.000423584
930.001271291
1550.002119715
32
0.000437251
940.001284969
1560.002133405
33
0.00045091895
0.001298648
157
0.002147096
34
0.000464586
960.001312327
158
0.002160786
350.000478253
970.001326006
159
0.002174477
360.00049192198
0.001339685
1600.002188168
37
0.000505589
99
0.001353365
161
0.002201859
38
0.000519257
1000.001367044162
0.002215550
39
0.000532925
1010.0013807241630.002229242
40
0.000546594
1020.0013944041640.002242933
41
0.000560262
103
0.0014080851650.002256625
42
0.000573931
104
0.001421765
1660.002270317
43
0.0005876001050.001435446
1670.002284010
440.0006012691060.0014491271680.002297702
45
0.0006149391070.001462808169
0.002311395
2013–40 I.R.B.278September 30, 2013

366 Day Year
0.5% Compound Rate 184 Days – Continued
DaysFactorDaysFactorDaysFactor
460.0006286081080.001476489170
0.002325087
470.0006422781090.0014901701710.002338780
48
0.000655948
110
0.001503852
172
0.002352473
490.000669618111
0.001517533
1730.002366167
50
0.000683289112
0.001531215
1740.002379860
510.000696959
113
0.0015448971750.002393554
52
0.000710630114
0.001558580
1760.002407248
53
0.000724301
1150.001572262
1770.002420942
54
0.000737972116
0.001585945
1780.002434636
550.000751643
117
0.001599628
1790.002448331
560.000765315
1180.001613311180
0.002462025
57
0.0007789861190.001626994181
0.002475720
580.000792658
1200.001640678182
0.002489415
59
0.000806330121
0.001654361
183
0.002503110
600.000820003122
0.001668045
184
0.002516806
61
0.000833675
1230.001681729
620.000847348124
0.001695413
TABLE OF INTEREST RATES
PERIODS BEFORE JUL. 1, 1975 — PERIODS ENDING DEC. 31, 1986
OVERPAYMENTS AND UNDERPAYMENTS
PERIODRATE
In 1995–1 C.B.
DAILY RATE TABLE
Before Jul. 1, 1975
6%
Table 2, pg. 557
Jul. 1, 1975—Jan. 31, 1976
9%
Table 4, pg. 559
Feb. 1, 1976—Jan. 31, 19787%
Table 3, pg. 558
Feb. 1, 1978—Jan. 31, 19806%
Table 2, pg. 557
Feb. 1, 1980—Jan. 31, 198212%
Table 5, pg. 560
Feb. 1, 1982—Dec. 31, 198220%
Table 6, pg. 560
Jan. 1, 1983—Jun. 30, 198316%
Table 37, pg. 591
Jul. 1, 1983—Dec. 31, 198311%
Table 27, pg. 581
Jan. 1, 1984—Jun. 30, 198411%
Table 75, pg. 629
Jul. 1, 1984—Dec. 31, 198411%
Table 75, pg. 629
Jan. 1, 1985—Jun. 30, 1985
13%
Table 31, pg. 585
Jul. 1, 1985—Dec. 31, 1985
11%
Table 27, pg. 581
Jan. 1, 1986—Jun. 30, 198610%
Table 25, pg. 579
Jul. 1, 1986—Dec. 31, 19869%
Table 23, pg. 577
TABLE OF INTEREST RATES
FROM JAN. 1, 1987 — DEC. 31, 1998
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1, 1987—Mar. 31, 19878%21
575
9%23
577
Apr. 1, 1987—Jun. 30, 19878%21
575
9%23
577
Jul. 1, 1987—Sep. 30, 19878%21
575
9%23
577
Oct. 1, 1987—Dec. 31, 19879%23
577
10%
25579
Jan. 1, 1988—Mar. 31, 198810%7362711%
75
629
Apr. 1, 1988—Jun. 30, 19889%71
625
10%73627
Jul. 1, 1988—Sep. 30, 19889%71
625
10%73627
Oct. 1, 1988—Dec. 31, 198810%7362711%
75
629
September 30, 20132792013–40 I.R.B.

TABLE OF INTEREST RATES
FROM JAN. 1, 1987 — DEC. 31, 1998 – Continued
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1, 1989—Mar. 31, 198910%
25579
11%27
581
Apr. 1, 1989—Jun. 30, 198911%27
581
12%29
583
Jul. 1, 1989—Se
p. 30, 1989
11%27
581
12%29
583
Oct. 1, 1989—Dec. 31, 198910%
25579
11%27
581
Jan. 1, 1990—Mar. 31, 199010%
25579
11%27
581
Apr. 1, 1990—J
un. 30, 1990
10%
25579
11%27
581
Jul. 1, 1990—Sep. 30, 199010%
25579
11%27
581
Oct. 1, 1990—Dec. 31, 199010%
25579
11%27
581
Jan. 1, 1991—
Mar. 31, 1991
10%
25579
11%27
581
Apr. 1, 1991—Jun. 30, 19919%23
577
10%
25579
Jul. 1, 1991—Sep. 30, 19919%23
577
10%
25579
Oct. 1, 1991
—Dec. 31, 1991
9%23
577
10%
25579
Jan. 1, 1992—Mar. 31, 19928%696239%71
625
Apr. 1, 1992—Jun. 30, 19927%676218%69623
Jul. 1, 1992
—Sep. 30, 1992
7%676218%69623
Oct. 1, 1992—Dec. 31, 19926%
65
6197%67621
Jan. 1, 1993—Mar. 31, 19936%17
571
7%19
573
Apr. 1, 19
93—Jun. 30, 1993
6%17
571
7%19
573
Jul. 1, 1993—Sep. 30, 19936%17
571
7%19
573
Oct. 1, 1993—Dec. 31, 19936%17
571
7%19
573
Jan. 1, 19
94—Mar. 31, 1994
6%17
571
7%19
573
Apr. 1, 1994—Jun. 30, 19946%17
571
7%19
573
Jul. 1, 1994—Sep. 30, 19947%19
573
8%21
575
Oct. 1, 1
994—Dec. 31, 1994
8%21
575
9%23
577
Jan. 1, 1995—Mar. 31, 1995
8%21
575
9%23
577
Apr. 1,
1995—Jun. 30, 1995
9%23
577
10%
25579
Jul. 1, 1995—Sep. 30, 1995
8%21
575
9%23
577
Oct. 1, 1995—Dec. 31, 1995
8%21
575
9%23
577
Jan. 1, 1996—Mar. 31, 19968%696239%71
625
Apr. 1
, 1996—Jun. 30, 1996
7%676218%69623
Jul. 1, 1996—Sep. 30, 19968%696239%71
625
Oct. 1, 1996—Dec. 31, 19968%696239%71
625
Jan.
1, 1997—Mar. 31, 1997
8%21
575
9%23
577
Apr. 1, 1997—Jun. 30, 19978%21
575
9%23
577
Jul. 1, 1997—Sep. 30, 19978%21
575
9%23
577
Oct
. 1, 1997—Dec. 31, 1997
8%21
575
9%23
577
Jan. 1, 1998—Mar. 31, 19988%21
575
9%23
577
Apr. 1, 1998—Jun. 30, 19987%19
573
8%21
575
Jul
. 1, 1998—Sep. 30, 1998
7%19
573
8%21
575
Oct. 1, 1998—Dec. 31, 19987%19
573
8%21
575
TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS
1995–1 C.B.
RATETABLEPAGE
Jan. 1, 1999—Mar. 31, 19997%19
573
Apr
. 1, 1999—Jun. 30, 1999
8%21
575
Jul. 1, 1999—Sep. 30, 19998%21
575
Oct. 1, 1999—Dec. 31, 19998%21
57
5
Ja
n. 1, 2000—Mar. 31, 2000
8%6962
3
Apr. 1, 2000—Jun. 30, 20009%71
625
2013–40 I.R.B.280September 30, 2013

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS – Continued
1995–1 C.B.
RATETABLEPAGE
Jul. 1, 2000—Sep. 30, 20009%71
625
Oct. 1, 2000—Dec. 31, 20009%71
625
Jan. 1, 2001—Mar. 31, 20019%23
577
Apr. 1, 2001—Jun. 30, 20018%21
575
Jul. 1, 2001—Sep. 30, 20017%19
573
Oct. 1, 2001—Dec. 31, 20017%19
573
Jan. 1, 2002—Mar. 31, 20026%17
571
Apr. 1, 2002—Jun. 30, 20026%17
571
Jul. 1, 2002—Sep. 30, 20026%17
571
Oct. 1, 2002—Dec. 31, 20026%17
571
Jan. 1, 2003—Mar. 31, 2003
5%15569
Apr. 1, 2003—Jun. 30, 2003
5%15569
Jul. 1, 2003—Sep. 30, 2003
5%15569
Oct. 1, 2003—Dec. 31, 20034%13
567
Jan. 1, 2004—Mar. 31, 20044%61
615
Apr. 1, 2004—Jun. 30, 2004
5%
63617
Jul. 1, 2004—Sep. 30, 20044%61
615
Oct. 1, 2004—Dec. 31, 2004
5%
63617
Jan. 1, 2005—Mar. 31, 20055%15569
Apr. 1, 2005—Jun. 30, 2005
6%17
571
Jul. 1, 2005—Sep. 30, 2005
6%17
571
Oct. 1, 2005—Dec. 31, 2005
7%19
573
Jan. 1, 2006—Mar. 31, 20067%19
573
Apr. 1, 2006—Jun. 30, 20067%19
573
Jul. 1, 2006—Sep. 30, 20068%21
575
Oct. 1, 2006—Dec. 31, 20068%21
575
Jan. 1, 2007—Mar. 31, 20078%21
575
Apr. 1, 2007—Jun. 30, 20078%21
575
Jul. 1, 2007—Sep. 30, 20078%21
575
Oct. 1, 2007—Dec. 31, 20078%21
575
Jan. 1, 2008—Mar. 31, 20087%67621
Apr. 1, 2008—Jun. 30, 20086%
65
619
Jul. 1, 2008—Sep. 30, 2008
5%
63617
Oct. 1, 2008—Dec. 31, 20086%
65
619
Jan. 1, 2009—Mar. 31, 2009
5%15569
Apr. 1, 2009—Jun. 30, 20094%13
567
Jul. 1, 2009—Sep. 30, 20094%13
567
Oct. 1, 2009—Dec. 31, 20094%13
567
Jan. 1, 2010—Mar. 31, 20104%13
567
Apr. 1, 2010—Jun. 30, 20104%13
567
Jul. 1, 2010—Sep. 30, 20104%13
567
Oct. 1, 2010—Dec. 31, 20104%13
567
Jan. 1, 2011—Mar. 31, 20113%11
565
Apr. 1, 2011—Jun. 30, 20114%13
567
Jul. 1, 2011—Sep. 30, 20114%13
567
Oct. 1, 2011—Dec. 31, 20113%11
565
Jan. 1, 2012—Mar. 31, 20123%
59
613
Apr. 1, 2012—Jun. 30, 20123%
59
613
Jul. 1, 2012—Sep. 30, 20123%
59
613
Oct. 1, 2012—Dec. 31, 20123%
59
613
Jan. 1, 2013—Mar. 31, 20133%11
565
Apr. 1, 2013—Jun. 30, 20133%11
565
Jul. 1, 2013—Sep. 30, 20133%11
565
Oct. 1, 2013—Dec. 31, 20133%11
565
September 30, 20132812013–40 I.R.B.

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Jan. 1, 1999—Mar. 31, 19996%17
571
7%19
573
Apr. 1, 1999—Jun
. 30, 1999
7%19
573
8%21
575
Jul. 1, 1999—Sep. 30, 19997%19
573
8%21
575
Oct. 1, 1999—Dec. 31, 19997%19
573
8%21
575
Jan. 1, 2000—Ma
r. 31, 2000
7%676218%69623
Apr. 1, 2000—Jun. 30, 20008%696239%71
625
Jul. 1, 2000—Sep. 30, 20008%696239%71
625
Oct. 1, 2000—D
ec. 31, 2000
8%696239%71
625
Jan. 1, 2001—Mar. 31, 20018%21
575
9%23
577
Apr. 1, 2001—Jun. 30, 20017%19
573
8%21
575
Jul. 1, 2001—
Sep. 30, 2001
6%17
571
7%19
573
Oct. 1, 2001—Dec. 31, 20016%17
571
7%19
573
Jan. 1, 2002—Mar. 31, 2002
5%15569
6%17
571
Apr. 1, 2002
—Jun. 30, 2002
5%15569
6%17
571
Jul. 1, 2002—Sep. 30, 2002
5%15569
6%17
571
Oct. 1, 2002—Dec. 31, 2002
5%15569
6%17
571
Jan. 1, 200
3—Mar. 31, 2003
4%13
5675%15569
Apr. 1, 2003—Jun. 30, 20034%13
5675%15569
Jul. 1, 2003—Sep. 30, 20034%13
5675%15569
Oct. 1, 20
03—Dec. 31, 2003
3%11
565
4%13
567
Jan. 1, 2004—Mar. 31, 20043%
59
6134%61
615
Apr. 1, 2004—Jun. 30, 20044%61
6155%
63617
Jul. 1, 2
004—Sep. 30, 2004
3%
59
6134%61
615
Oct. 1, 2004—Dec. 31, 20044%61
6155%
63617
Jan. 1, 2
005—Mar. 31, 2005
4%13
5675%15569
Apr. 1, 2005—Jun. 30, 20055%15569
6%17
571
Jul. 1, 2005—Sep. 30, 20055%15569
6%17
571
Oct. 1,
2005—Dec. 31, 2005
6%17
571
7%19
573
Jan. 1,
2006—Mar. 31, 2006
6%17
571
7%19
573
Apr. 1, 2006—Jun. 30, 20066%17
571
7%19
573
Jul. 1, 2006—Sep. 30, 20067%19
573
8%21
575
Oct. 1
, 2006—Dec. 31, 2006
7%19
573
8%21
575
Jan. 1, 2007—Mar. 31, 20077%19
573
8%21
575
Apr. 1, 2007—Jun. 30, 20077%19
573
8%21
575
Jul.
1, 2007—Sep. 30, 2007
7%19
573
8%21
575
Oct. 1, 2007—Dec. 31, 20077%19
573
8%21
575
Jan. 1, 2008—Mar. 31, 20086%
65
6197%67621
Apr
. 1, 2008—Jun. 30, 2008
5%
636176%
65
619
Jul. 1, 2008—Sep. 30, 20084%61
6155%
63617
Oct. 1, 2008—Dec. 31, 2008
5%
636176%
65
619
Jan
. 1, 2009—Mar. 31, 2009
4%13
5675%15569
Apr. 1, 2009—Jun. 30, 20093%11
565
4%13
567
Jul. 1, 2009—Sep. 30, 20093%11
56
5
4%13
56
7
Oc
t. 1, 2009—Dec. 31, 2009
3%11
565
4%13
567
Jan. 1, 2010—Mar. 31, 20103%11
565
4%13
567
Apr. 1, 2010—Jun. 30, 20103%11
5
65
4%13
5
67
J
ul. 1, 2010—Sep. 30, 2010
3
%
1
1
565
4
%
1
3
567
Oct. 1, 2010—Dec. 31, 20103%11
565
4%13
567
Jan. 1, 2011—Mar. 31, 20112%9
563
3%11
565
Apr. 1, 2011—Jun. 30, 20113%11
565
4%13
567
Jul. 1, 2011—Sep. 30, 20113%11
565
4%13
567
Oct. 1, 2011—Dec. 31, 20112%9
563
3%11
565
Jan. 1, 2012—Mar. 31, 20122%
57
6113%
59
613
2013–40 I.R.B.282September 30, 2013

TABLE OF INTEREST RATES
FROM JANUARY 1, 1999 — PRESENT
CORPORATE OVERPAYMENTS AND UNDERPAYMENTS – Continued
OVERPAYMENTSUNDERPAYMENTS
1995–1 C.B.1995–1 C.B.
RATE TABLEPGRATE TABLEPG
Apr. 1, 2012—Jun. 30, 20122%
57
6113%
59
613
Jul. 1, 2012—Sep. 30, 20122%
57
6113%
59
613
Oct. 1, 2012—De
c. 31, 2012
2%
57
6113%
59
613
Jan. 1, 2013—Mar. 31, 20132%9
563
3%11
565
Apr. 1, 2013—Jun. 30, 20132%9
563
3%11
565
Jul. 1, 2013—S
ep. 30, 2013
2%9
563
3%11
565
Oct. 1, 2013—Dec. 31, 20132%9
563
3%11
565
TABLE OF INTEREST RATES FOR
LARGE CORPORA
TE UNDERPAYMENTS
FROM JANUARY 1
, 1991 — PRESENT
1995–1 C.B.
RATETABLEPG
Jan. 1, 1991—Mar. 31, 199113%31
585
Apr. 1, 1991—Jun. 30, 199112%29
583
Jul. 1, 1991—S
ep. 30, 1991
12%29
583
Oct. 1, 1991—Dec. 31, 199112%29
583
Jan. 1, 1992—Mar. 31, 199211%
75
629
Apr. 1, 1992—
Jun. 30, 1992
10%73627
Jul. 1, 1992—Sep. 30, 199210%73627
Oct. 1, 1992—Dec. 31, 19929%71
625
Jan. 1, 1993
—Mar. 31, 1993
9%23
577
Apr. 1, 1993—Jun. 30, 19939%23
577
Jul. 1, 1993—Sep. 30, 19939%23
577
Oct. 1, 199
3—Dec. 31, 1993
9%23
577
Jan. 1, 1994—Mar. 31, 19949%23
577
Apr. 1, 1994—Jun. 30, 19949%23
577
Jul. 1, 19
94—Sep. 30, 1994
10%
25579
Oct. 1, 1994—Dec. 31, 199411%27
581
Jan. 1, 1
995—Mar. 31, 1995
11%27
581
Apr. 1, 1995—Jun. 30, 1995
12%29
583
Jul. 1, 1995—Sep. 30, 1995
11%27
581
Oct. 1,
1995—Dec. 31, 1995
11%27
581
Jan. 1,
1996—Mar. 31, 1996
11%
75
629
Apr. 1, 1996—Jun. 30, 199610%73627
Jul. 1, 1996—Sep. 30, 199611%
75
629
Oct. 1
, 1996—Dec. 31, 1996
11%
75
629
Jan. 1, 1997—Mar. 31, 199711%27
581
Apr. 1, 1997—Jun. 30, 199711%27
581
Jul. 1
, 1997—Sep. 30, 1997
11%27
581
Oct. 1, 1997—Dec. 31, 199711%27
581
Jan. 1, 1998—Mar. 31, 199811%27
581
Apr.
1, 1998—Jun. 30, 1998
10%
25579
Jul. 1, 1998—Sep. 30, 199810%
25579
Oct. 1, 1998—Dec. 31, 199810%
25579
Jan
. 1, 1999—Mar. 31, 1999
9%23
577
Apr. 1, 1999—Jun. 30, 199910%
25579
Jul. 1, 1999—Sep. 30, 199910%
2557
9
Oc
t. 1, 1999—Dec. 31, 1999
10%
25579
Jan. 1, 2000—Mar. 31, 200010%73627
Apr. 1, 2000—Jun. 30, 200011%
75
629
September 30, 20132832013–40 I.R.B.

TABLE OF INTEREST RATES FOR
LARGE CORPORATE UNDERPAYMENTS
FROM JANUARY 1, 1991 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Jul. 1, 2000—Sep. 30, 200011%
75
629
Oct. 1, 2000—Dec. 31, 200011%
75
629
Jan. 1, 2001—Mar. 31, 200111%27
581
Apr. 1, 2001—Jun. 30, 200110%
25579
Jul. 1, 2001—Sep. 30, 20019%23
577
Oct. 1, 2001—Dec. 31, 20019%23
577
Jan. 1, 2002—Mar. 31, 20028%21
575
Apr. 1, 2002—Jun. 30, 20028%21
575
Jul. 1, 2002—Sep. 30, 20028%21
575
Oct. 1, 2002—Dec. 30, 20028%21
575
Jan. 1, 2003—Mar. 31, 20037%19
573
Apr. 1, 2003—Jun. 30, 20037%19
573
Jul. 1, 2003—Sep. 30, 20037%19
573
Oct. 1, 2003—Dec. 31, 20036%17
571
Jan. 1, 2004—Mar. 31, 20046%
65
619
Apr. 1, 2004—Jun. 30, 20047%67621
Jul. 1, 2004—Sep. 30, 20046%
65
619
Oct. 1, 2004—Dec. 31, 20047%67621
Jan. 1, 2005—Mar. 31, 2005
7%19
573
Apr. 1, 2005—Jun. 30, 2005
8%21
575
Jul. 1, 2005—Sep. 30, 2005
8%21
575
Oct. 1, 2005—Dec. 31, 2005
9%23
577
Jan. 1, 2006—Mar. 31, 20069%23
577
Apr. 1, 2006—Jun. 30, 20069%23
577
Jul. 1, 2006—Sep. 30, 200610%
25579
Oct. 1, 2006—Dec. 31, 200610%
25579
Jan. 1, 2007—Mar. 31, 200710%
25579
Apr. 1, 2007—Jun. 30, 200710%
25579
Jul. 1, 2007—Sep. 30, 200710%
25579
Oct. 1, 2007—Dec. 31, 200710%
25579
Jan. 1, 2008—Mar. 31, 20089%71
625
Apr. 1, 2008—Jun. 30, 20088%69623
Jul. 1, 2008—Sep. 30, 20087%67621
Oct. 1, 2008—Dec. 31, 20088%69623
Jan. 1, 2009—Mar. 31, 20097%19
573
Apr. 1, 2009—Jun. 30, 20096%17
571
Jul. 1, 2009—Sep. 30, 20096%17
571
Oct. 1, 2009—Dec. 31, 20096%17
571
Jan. 1, 2010—Mar. 31, 20106%17
571
Apr. 1, 2010—Jun. 30, 20106%17
571
Jul. 1, 2010—Sep. 30, 20106%17
571
Oct. 1, 2010—Dec. 31, 20106%17
571
Jan. 1, 2011—Mar. 31, 2011
5%15569
Apr. 1, 2011—Jun. 30, 20116%17
571
Jul. 1, 2011—Sep. 30, 20116%17
571
Oct. 1, 2011—Dec. 31, 2011
5%15569
Jan. 1, 2012—Mar. 31, 2012
5%
63617
Apr. 1, 2012—Jun. 30, 2012
5%
63617
Jul. 1, 2012—Sep. 30, 2012
5%
63617
Oct. 1, 2012—Dec. 31, 2012
5%
63617
Jan. 1, 2013—Mar. 31, 2013
5%15569
Apr. 1, 2013—Jun. 30, 2013
5%15569
Jul. 1, 2013—Sep. 30, 2013
5%15569
Oct. 1, 2013—Dec. 31, 2013
5%15569
2013–40 I.R.B.284September 30, 2013

TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS EXCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT
1995–1 C.B.
RATETABLEPG
Jan. 1, 1995—Mar. 31, 19956.5%
18
572
Apr. 1, 1995—Jun. 30, 19957.5%
20
574
Jul. 1, 1995—Sep. 30, 19956.5%
18
572
Oct. 1, 1995—Dec. 31, 19956.5%
18
572
Jan. 1, 1996—Mar. 31, 1996
6.5%
66620
Apr. 1, 1996—Jun. 30, 1996
5.5%
64618
Jul. 1, 1996—Sep. 30, 1996
6.5%
66620
Oct. 1, 1996—Dec. 31, 1996
6.5%
66620
Jan. 1, 1997—Mar. 31, 1997
6.5%
18
572
Apr. 1, 1997—Jun. 30, 1997
6.5%
18
572
Jul. 1, 1997—Sep. 30, 1997
6.5%
18
572
Oct. 1, 1997—Dec. 31, 1997
6.5%
18
572
Jan. 1, 1998—Mar. 31, 1998
6.5%
18
572
Apr. 1, 1998—Jun. 30, 1998
5.5%
16
570
Jul. 1, 1998—Sep. 30, 1998
5.5%
16
570
Oct. 1, 1998—Dec. 31, 1998
5.5%
16
570
Jan. 1, 1999—Mar. 31, 1999
4.5%
14
568
Apr. 1, 1999—Jun. 30, 1999
5.5%
16
570
Jul. 1, 1999—Sep. 30, 1999
5.5%
16
570
Oct. 1, 1999—Dec. 31, 1999
5.5%
16
570
Jan. 1, 2000—Mar. 31, 2000
5.5%
64618
Apr. 1, 2000—Jun. 30, 2000
6.5%
66620
Jul. 1, 2000—Sep. 30, 2000
6.5%
66620
Oct. 1, 2000—Dec. 31, 2000
6.5%
66620
Jan. 1, 2001—Mar. 31, 2001
6.5%
18
572
Apr. 1, 2001—Jun. 30, 2001
5.5%
16
570
Jul. 1, 2001—Sep. 30, 2001
4.5%
14
568
Oct. 1, 2001—Dec. 31, 2001
4.5%
14
568
Jan. 1, 2002—Mar. 31, 2002
3.5%
12
566
Apr. 1, 2002—Jun. 30, 2002
3.5%
12
566
Jul. 1, 2002—Sep. 30, 2002
3.5%
12
566
Oct. 1, 2002—Dec. 31, 2002
3.5%
12
566
Jan. 1, 2003—Mar. 31, 2003
2.5%
10
564
Apr. 1, 2003—Jun. 30, 2003
2.5%
10
564
Jul. 1, 2003—Sep. 30, 2003
2.5%
10
564
Oct. 1, 2003—Dec. 31, 2003
1.5%
8
562
Jan. 1, 2004—Mar. 31, 2004
1.5%56
610
Apr. 1, 2004—Jun. 30, 2004
2.5%58
612
Jul. 1, 2004—Sep. 30, 2004
1.5%56
610
Oct. 1, 2004—Dec. 31, 2004
2.5%58
612
Jan. 1, 2005—Mar. 31, 20052.5%
10
564
Apr. 1, 2005—Jun. 30, 20053.5%
12
566
Jul. 1, 2005—Sep. 30, 20053.5%
12
566
Oct. 1, 2005—Dec. 31, 20054.5%
14
568
Jan. 1, 2006—Mar. 31, 2006
4.5%
14
568
Apr. 1, 2006—Jun. 30, 2006
4.5%
14
568
Jul. 1, 2006—Sep. 30, 2006
5.5%
16
570
Oct. 1, 2006—Dec. 31, 2006
5.5%
16
570
Jan. 1, 2007—Mar. 31, 2007
5.5%
16
570
Apr. 1, 2007—Jun. 30, 2007
5.5%
16
570
Jul. 1, 2007—Sep. 30, 2007
5.5%
16
570
Oct. 1, 2007—Dec. 31, 2007
5.5%
16
570
Jan. 1, 2008—Mar. 31, 2008
4.5%
62616
Apr. 1, 2008—Jun. 30, 2008
3.5%
60614
Jul. 1, 2008—Sep. 30, 2008
2.5%58
612
September 30, 20132852013–40 I.R.B.

TABLE OF INTEREST RATES FOR CORPORATE
OVERPAYMENTS E
XCEEDING $10,000
FROM JANUARY 1, 1995 — PRESENT – Continued
1995–1 C.B.
RATETABLEPG
Oct. 1, 2008—Dec. 31, 2008
3.5%
60614
Jan. 1, 2009—Mar. 31, 2009
2.5%
10
564
Apr. 1, 2009—Jun. 30, 2009
1.5%
8
562
Jul. 1, 2009—Sep. 30, 2009
1.5%
8
562
Oct. 1, 2009—Dec. 31, 2009
1.5%
8
562
Jan. 1, 2010—Mar. 31, 2010
1.5%
8
562
Apr. 1, 2010—Jun. 30, 2010
1.5%
8
562
Jul. 1, 2010—Sep. 30, 2010
1.5%
8
562
Oct. 1, 2010—Dec. 31, 2010
1.5%
8
562
Jan. 1, 2011—Mar. 31, 2011
0.5%*
Apr. 1, 2011—Jun. 30, 2011
1.5%
8
562
Jul. 1, 2011—Sep. 30, 2011
1.5%
8
562
Oct. 1, 2011—Dec. 31, 2011
0.5%*
Jan. 1, 2012—Mar. 31, 2012
0.5%*
Apr. 1, 2012—Jun. 30, 2012
0.5%*
Jul. 1, 2012—Sep. 30, 2012
0.5%*
Oct. 1, 2012—Dec. 31, 2012
0.5%*
Jan. 1, 2013—Mar. 31, 2013
0.5%*
Apr. 1, 2013—Jun. 30, 2013
0.5%*
Jul. 1, 2013—Sep. 30, 2013
0.5%*
Oct. 1, 2013—Dec. 31, 2013
0.5%*
* The asterisk reflects the interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix
A of this Revenue Ruling.
2013–40 I.R.B.286September 30, 2013

Part III. Administrative, Procedural, and Miscellaneous
Application of Market Reform
and other Provisions of the
Affordable Care Act to HRAs,
Health FSAs, and Certain
otherEmployerHealthcare
Arrangements
Notice 2013–54
I. PURPOSE AND OVERVIEW
This notice provides guidance on the
application of certain provisions of the Af-
fordable Care Act
1
to the following types
of arrangements: (1) health reimburse-
ment arrangements (HRAs), including
HRAs integrated with a group health plan;
(2) group health plans under which an em-
ployer reimburses an employee for some
or all of the premium expenses incurred
for an individual health insurance pol-
icy, such as a reimbursement arrangement
described in Revenue Ruling 61–146,
1961–2 C.B. 25, or arrangements un-
der which the employer uses its funds to
directly pay the premium for an individ-
ual health insurance policy covering the
employee (collectively, an employer pay-
ment plan); and (3) certain health flexible
spending arrangements (health FSAs).
This notice also provides guidance on
section 125(f)(3) of the Internal Revenue
Code (Code) and on employee assistance
programs or EAPs.
The Departments of the Treasury (Trea-
sury Department), Health and Human Ser-
vices (HHS), and Labor (DOL) (collec-
tively, the Departments) are continuing to
work together to develop coordinated reg-
ulations and other administrative guidance
to assist stakeholders with implementation
of the Affordable Care Act. The guidance
in this notice is being issued in substan-
tially identical form by DOL, and guidance
is being issued by HHS to reflect that HHS
concurs in the application of the laws un-
der its jurisdiction as set forth in this no-
tice.
II. BACKGROUND
A.Health Reimbursement Arrangements
An HRA is an arrangement that is
funded solely by an employer and that
reimburses an employee for medical care
expenses (as defined under Code § 213(d))
incurred by the employee, or his spouse,
dependents, and any children who, as of
the end of the taxable year, have not at-
tained age 27, up to a maximum dollar
amount for a coverage period. IRS No-
tice 2002–45, 2002–02 C.B. 93; Revenue
Ruling 2002–41, 2002–2 C.B. 75. This
reimbursement is excludable from the em-
ployee’s income. Amounts that remain at
the end of the year generally can be used
to reimburse expenses incurred in later
years. HRAs generally are considered to
be group health plans within the meaning
of Code § 9832(a), § 733(a) of the Em-
ployee Retirement Income Security Act
of 1974 (ERISA), and § 2791(a) of the
Public Health Service Act (PHS Act) and
are subject to the rules applicable to group
health plans.
B.Employer Payment Plans
Revenue Ruling 61–146 holds that if
an employer reimburses an employee’s
substantiated premiums for non-employer
sponsored hospital and medical insurance,
the payments are excluded from the em-
ployee’s gross income under Code § 106.
This exclusion also applies if the employer
pays the premiums directly to the insur-
ance company. An employer payment
plan, as the term is used in this notice,
does not include an employer-sponsored
arrangement under which an employee
may choose either cash or an after-tax
amount to be applied toward health cover-
age. Individual employers may establish
payroll practices offorwarding post-tax
employee wages to a health insurance
issuer at the direction of an employee
without establishing a group health plan,
if the standards of the DOL’s regulation at
29 C.F.R. § 2510.3–1(j) are met.
C.Health Flexible Spending
Arrangements (Health FSAs)
In general, a health FSA is a ben-
efit designed to reimburse employees
for medical care expenses (as defined
in Code § 213(d), other than premiums)
incurred by the employee, or the em-
ployee’s spouse, dependents, and any
children who, as of the end of the tax-
able year, have not attained age 27. See
Employee Benefits—Cafeteria Plans, 72
Fed. Reg. 43938, 43957 (August 6, 2007)
(proposed regulations; to be codified, in
part, once final, at 26 C.F.R. § 1.125–5);
Code §§ 105(b) and 106(f). Contributions
to a health FSA offered through a cafe-
teria plan satisfying the requirements of
Code § 125 (a Code § 125 plan) do not
result in gross income to the employee.
Code § 125(a). While employees electing
coverage under a health FSA typically
also elect to enter into a salary reduction
agreement, employers may provide addi-
tional health FSA benefits in excess of the
salary reduction amount. See Employee
Benefits—Cafeteria Plans, 72 Fed. Reg.
43938, 43955–43957 (August 6, 2007)
(proposed regulations; to be codified, in
part, once final, at 26 C.F.R. §§ 1.125–1(r),
1.125–5(b)). For plan years beginning
after December 31, 2012, the amount of
the salary reduction is limited by Code
§ 125(i) to $2,500 (indexed annually for
plan years beginning after December 31,
2013). See IRS Notice 2012–40, 2012–26
I.R.B. 1046, for more information about
the application of the limitation. Ad-
ditional employer contributions are not
limited by Code § 125(i).
The Code, ERISA, and the PHS Act
impose various requirements on group
health plans, but certain of these require-
ments do not apply to a group health plan
in relation to its provision of excepted ben-
efits. Code § 9831(b), ERISA § 732(b),
PHS Act §§ 2722(b) and 2763. Although
a health FSA is a group health plan within
the meaning of Code § 9832(a), ERISA
§ 733(a), and PHS Act § 2791(a), a health
FSA may be considered to provide only
excepted benefits if other group health
plan coverage not limited to excepted
1
The “Affordable Care Act” refers to the Patient Protection and AffordableCare Act (enacted March 23, 2010, Pub. L. No. 111–148) (ACA), as amended by the Health Care and Education
Reconciliation Act of 2010 (enacted March 30, 2010, Pub. L. No. 111–152), andas further amended by the Department of Defense and Full-Year ContinuingAppropriations Act, 2011
(enacted April 15, 2011, Pub. L. No. 112–10).
September 30, 20132872013–40 I.R.B.

benefits is made available for the year
to employees by the employer, but only
if the arrangement is structured so that
the maximum benefit payable to any
participant cannot exceed two times the
participant’s salary reduction election for
the arrangement for the year (or, if greater,
cannot exceed $500 plus the amount of
the participant’s salary reduction elec-
tion). 26 C.F.R. § 54.9831–1(c)(3)(v), 29
C.F.R. § 2590.732(c)(3)(v), and 45 C.F.R.
§ 146.145(c)(3)(v).
D.Affordable Care Act Guidance
1. Market Reforms — In General
The Affordable Care Act contains cer-
tain market reforms that apply to group
health plans (the market reforms).
2
In
accordance with Code § 9831(a)(2) and
ERISA § 732(a), the market reforms do
not apply to a group health plan that has
fewer than two participants who are cur-
rent employees on the first day of the
plan year, and, in accordance with Code
§ 9831(b), ERISA § 732(b), and PHS Act
§§ 2722(b) and 2763, the market reforms
also do not apply to a group health plan
in relation to its provision of excepted
benefits described in Code § 9832(c),
ERISA § 733(c) and PHS Act § 2791(c).
3
Excepted benefits include, among other
things, accident-only coverage, disability
income, certain limited-scope dental and
vision benefits, certain long-term care
benefits, and certain health FSAs.
The market reforms specifically ad-
dressed in this notice are:
4
(a) PHS Act § 2711 which provides that
a group health plan (or a health insurance
issuer offering group health insurance cov-
erage) may not establish any annual limit
on the dollar amount of benefits for any
individual—this rule does not prevent a
group health plan, or a health insurance is-
suer offering group health insurance cov-
erage, from placing an annual limit, with
respect to any individual, on specific cov-
ered benefits that are not essential health
benefits
5
to the extent that such limits are
otherwise permitted under applicable law
(the annual dollar limit prohibition); and
(b) PHS Act § 2713 which requires
non-grandfathered group health plans (or
health insurance issuers offering group
health insurance plans) to provide cer-
tain preventive services without imposing
any cost-sharing requirements for these
services (the preventive services require-
ments).
2. Prior Guidance on the Application of
the Market Reforms to HRAs
The preamble to the interim final reg-
ulations implementing the annual dollar
limit prohibition states that if an HRA is
integrated with other coverage as part of
a group health plan and the other coverage
alone would comply with the annual dollar
limit prohibition, the fact that benefits un-
der the HRA by itself are limited does not
fail to comply with the annual dollar limit
prohibition because the combined bene-
fit satisfies the requirements. Further, the
preamble states that in the case of a stand-
alone HRA that is limited to retirees, the
exemption from the requirements of the
Code and ERISA relating to the Afford-
able Care Act for plans with fewer than
two current employees means that the re-
tiree-only HRA is not subject to the an-
nual dollar limit prohibition. 75 Fed. Reg.
37188, 37190–37191 (June 28, 2010).
On January 24, 2013, the Departments
issued FAQs that address the application
of the annual dollar limit prohibition to
certain HRA arrangements (HRA FAQs).
6
In the HRA FAQs, the Departments state
that an HRA is not integrated with primary
health coverage offered by an employer
unless, under the terms of the HRA, the
HRA is available only to employees who
are covered by primary group health plan
coverage that is provided by the employer
and that meets the annual dollar limit pro-
hibition. Further, the HRA FAQs indicate
that the Departments intend to issue guid-
ance providing that:
(a) for purposes of the annual dollar
limit prohibition, an employer-sponsored
HRA cannot be integrated with individual
market coverage or with individual poli-
cies provided under an employer payment
plan,and,therefore,anHRAusedtopur-
chase coverage on the individual market
under these arrangements will fail to com-
ply with the annual dollar limit prohibi-
tion; and
(b) an employer-sponsored HRA may
be treated as integrated with other cov-
erage only if the employee receiving the
HRA is actually enrolled in the cover-
age, and any HRA that credits additional
amounts to an individual, when the indi-
vidual is not enrolled in primary coverage
meeting the annual dollar limit prohibi-
tion provided by the employer, will fail to
comply with the annual dollar limit prohi-
bition.
The HRA FAQs also state that the De-
partments anticipate that future guidance
will provide that, whether or not an HRA
is integrated with other group health plan
coverage, unused amounts credited before
January 1, 2014 consisting of amounts
credited before January 1, 2013, and
amounts that are credited in 2013 under
the terms of an HRA as in effect on Jan-
uary 1, 2013, may be used after December
31, 2013 to reimburse medical expenses
in accordance with those terms without
causing the HRA to fail to comply with
the annual dollar limit prohibition. If the
HRA terms in effect on January 1, 2013
did not prescribe a set amount or amounts
to be credited during 2013 or the timing for
2
Section 1001 of the ACA added new PHS Act §§ 2711–2719. Section 1563 of the ACA (as amended by ACA § 10107(b)) added Code § 9815(a) and ERISA § 715(a) to incorporate the
p
rovisions of part A of title XXVII of the PHS Act into the Code and ERISA, and tomake them applicable to group health plans and health insurance issuers providing health insurance
coverage in connection with group health plans. The PHS Act sections incorporated by these references are sections 2701 through 2728. Accordingly, these referenced PHS Act sections (i.e.,
the market reforms) are subject to shared interpretive jurisdiction by the Departments.
3
See the preamble to the Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and
Affordable Care Act, 75 Fed. Reg. 34538, 34539 (June 17, 2010). See also Affordable Care Act Implementation FAQs Part III, Question 1, available athttp://www.dol.gov/ebsa/faqs/faq-
aca3.htmland athttp://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs3.html.
4
The Departments previously addressed HRAs and the requirements under PHS Act § 2715 (summary of benefits and coverage and uniform glossary). See 77 Fed. Reg.
8668, 8670–8671 (February 14, 2012); see also Affordable Care Act Implementation FAQs Part VIII, Question 6, available athttp://www.dol.gov/ebsa/faqs/faq-aca8.html
and athttp://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.htmland see page 1 of the Instruction Guide for Group Coverage, available at
http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf.
5
See ACA § 1302(b) for the definitionof “essential health benefits”.
6
See Affordable Care Act Implementation FAQs Part XI, available athttp://www.dol.gov/ebsa/faqs/faq-aca11.htmland athttp://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-
FAQs/aca_implementation_faqs11.html.
2013–40 I.R.B.288September 30, 2013

crediting such amounts, then the amounts
credited may not exceed those credited for
2012 and may not be credited at a faster
rate than the rate that applied during 2012.
3. Prior Guidance on the Application of
the Market Reforms to Health FSAs
Under the interim final rules imple-
menting the annual dollar limit prohibi-
tion, a health FSA, as defined in Code
§ 106(c)(2), is not subject to the annual
dollar limit prohibition. See 26 C.F.R.
§ 54.9815–2711T(a)(2)(ii), 29 C.F.R.
§ 2590.715–2711(a)(2)(ii), and 45 C.F.R.
§ 147.126(a)(2)(ii). See Q&A 8 of this
notice limiting the exemption from the
annual dollar limit prohibition to a health
FSA that is offered through a Code § 125
plan.
4. Prior Guidance on the Application of
Code §§ 36B and 5000A
Section 36B of the Code allows a pre-
mium tax credit to certain taxpayers who
enroll (or whose family members enroll) in
a qualified health plan (QHP) through an
Affordable Insurance Exchange (referred
to in this notice as an Exchange, and also
referred to in other published guidance as a
Marketplace). The credit subsidizes a por-
tion of the premiums for the QHP. In gen-
eral, the premium tax credit may not sub-
sidize coverage for an individual who is
eligible for other minimum essential cov-
erage. If the minimum essential coverage
is eligible employer-sponsored coverage,
however, an individual is treated as eligi-
ble for that coverage only if the coverage
is affordable and provides minimum value
or if the individual enrolls in the coverage.
Coverage provided through Code
§ 125 plans, employer payment plans,
health FSAs, and HRAs are eligible em-
ployer-sponsored plansand, therefore, are
minimum essential coverage, unless the
coverage consists solely of excepted ben-
efits. See Code § 5000A(f)(2) and Treas.
Reg. § 1.5000A–2, 78 Fed. Reg. 53646,
53658 (August 30, 2013).
Amounts newly made available for the
current plan year under an HRA that is
integrated with an eligible employer-spon-
sored plan and that an employee may use
to pay premiums are counted for purposes
of determining affordability of an eligi-
ble employer-sponsored plan under Code
§ 36B. See Minimum Value of Eligible
Employer-Sponsored Plans and Other
Rules Regarding the Health Insurance
Premium Tax Credit, 78 Fed. Reg. 25909,
25914 (May 3, 2013) (proposed regula-
tions; to be codified, in part, once final,
at 26 C.F.R. § 1.36B–2(c)(3)(v)(A)(5)).
Amounts newly made available for the
current plan year under an HRA that is
integrated with an eligible employer-spon-
sored plan are counted toward the plan’s
minimum value percentage for that plan
year if the amounts may be used only
to reduce cost-sharing for covered medi-
cal expenses and the amount counted for
this purpose is the amount of expected
spending for health care costs in a benefit
year. See Minimum Value of Eligible Em-
ployer-Sponsored Plans and Other Rules
Regarding the Health Insurance Premium
Tax Credit, 78 Fed. Reg. 25909, 25916
(May 3, 2013) (proposed regulations; to be
codified, in part, once final, at 26 C.F.R.
§ 1.36B–6(c)(4), (c)(5)). See Q&A 11 of
this notice for more explanation of the ap-
plication of these rules to HRAs and other
arrangements.
III. GUIDANCE
A.Guidance on HRAs and Certain other
Employer Healthcare Arrangements,
Health FSAs, and Employee Assistance
Programs or EAPs Under the Joint
Jurisdiction of the Departments
1. Application of the Market Reform
Provisions to HRAs and Certain other
Employer Healthcare Arrangements
Question 1:The HRA FAQs provide that
an employer-sponsored HRA cannot be in-
tegrated with individual market coverage,
and, therefore, an HRA used to purchase
coverage on the individual market will fail
to comply with the annual dollar limit pro-
hibition. May other types of group health
plans used to purchase coverage on the in-
dividual market be integrated with that in-
dividual market coverage for purposes of
the annual dollar limit prohibition?
Answer 1:No. A group health plan, in-
cluding an HRA, used to purchase cover-
age on the individual market is not inte-
grated with that individual market cover-
age for purposes of the annual dollar limit
prohibition.
For example, a group health plan, such
as an employer payment plan, that reim-
burses employees for an employee’s sub-
stantiated individual insurance policy pre-
miums must satisfy the market reforms for
group health plans. However the employer
payment plan will fail to comply with the
annual dollar limit prohibition because (1)
an employer payment plan is considered to
impose an annual limit up to the cost of
the individual market coverage purchased
through the arrangement, and (2) an em-
ployer payment plan cannot be integrated
with any individual health insurance pol-
icy purchased under the arrangement.
Question 2:How do the preventive ser-
vices requirements apply to an HRA that
is integrated with a group health plan?
Answer 2:Similar to the analysis of the
annual dollar limit prohibition, an HRA
that is integrated with a group health plan
will comply with the preventive services
requirements if the group health plan with
which the HRA is integrated complies with
the preventive services requirements.
Question 3:The HRA FAQs provide that
an employer-sponsored HRA cannot be in-
tegrated with individual market coverage,
and, therefore, an HRA used to purchase
coverage on the individual market will fail
to comply with the annual dollar limit pro-
hibition. May a group health plan, includ-
ing an HRA, used to purchase coverage on
the individual market be integrated with
that individual market coverage for pur-
poses of the preventive services require-
ments?
Answer 3:No. A group health plan, in-
cluding an HRA, used to purchase cover-
age on the individual market is not inte-
grated with that individual market cover-
age for purposes of the preventive services
requirements.
For example, a group health plan, such
as an employer payment plan, that re-
imburses employeesfor an employee’s
substantiated individual insurance pol-
icy premiums must satisfy the market
reforms for group health plans. How-
ever, the employer payment plan will fail
to comply with the preventive services
requirements because (1) an employer
payment plan does not provide preventive
services without cost-sharing in all in-
stances, and (2) an employer payment plan
cannot be integrated with any individual
health insurance policy purchased under
the arrangement.
Question 4:Under what circumstances
will an HRA be integrated with another
September 30, 20132892013–40 I.R.B.

group health plan for purposes of the an-
nual dollar limit prohibition and the pre-
ventive services requirements?
Answer 4:An HRA will be integrated with
a group health plan for purposes of the an-
nual dollar limit prohibition and the pre-
ventive services requirements if it meets
the requirements under either of the in-
tegration methods described below. Pur-
suant to this notice, under both methods,
integration does not require that the HRA
and the coverage with which it is inte-
grated share the same plan sponsor, the
same plan document or governing instru-
ments, or file a single Form 5500, if appli-
cable.
Integration Method: Minimum Value
Not Required
An HRA is integrated with another
group health plan for purposes of the
annual dollar limit prohibition and the
preventive services requirements if (1) the
employer offers a group health plan (other
than the HRA) to the employee that does
not consist solely of excepted benefits;
(2) the employee receiving the HRA is
actuallyenrolledinagrouphealthplan
(other than the HRA) that does not consist
solely of excepted benefits, regardless of
whether the employer sponsors the plan
(non-HRA group coverage); (3) the HRA
is available only to employees who are
enrolled in non-HRA group coverage,
regardless of whether the employer spon-
sors the non-HRA group coverage (for
example, the HRA may be offered only
to employees who do not enroll in the
employer’s group health plan but are en-
rolled in other non-HRA group coverage,
such as a plan maintained by the em-
ployer of the employee’s spouse); (4) the
HRA is limited to reimbursement of one
or more of the following—co-payments,
co-insurance, deductibles, and premiums
under the non-HRA group coverage, as
well as medical care (as defined under
Code § 213(d)) that does not constitute
essential health benefits; and (5) under the
terms of the HRA, an employee (or former
employee) is permitted to permanently
opt out of and waive future reimburse-
ments from the HRA at least annually
and, upon termination of employment,
either the remaining amounts in the HRA
are forfeited or the employee is permitted
to permanently opt out of and waive fu-
ture reimbursements from the HRA. This
opt-out feature is required because the
benefits provided by the HRA generally
will constitute minimum essential cover-
age under Code § 5000A (see Q&A 10 of
this notice) and will therefore preclude the
individual from claiming a Code § 36B
premium tax credit.
Integration Method: Minimum Value
Required
Alternatively, an HRA that is not lim-
ited with respect to reimbursements as re-
quired under the integration method ex-
pressed above is integrated with a group
health plan for purposes of the annual dol-
lar limit prohibition and the preventive ser-
vices requirements if (1) the employer of-
fers a group health plan to the employee
that provides minimum value pursuant to
Code § 36B(c)(2)(C)(ii); (2) the employee
receiving the HRA is actually enrolled in a
group health plan thatprovides minimum
value pursuant to Code § 36B(c)(2)(C)(ii),
regardless of whether the employer spon-
sors the plan (non-HRA MV group cov-
erage); (3) the HRA is available only to
employees who are actually enrolled in
non-HRA MV group coverage, regardless
of whether the employer sponsors the non-
HRA MV group coverage (for example,
the HRA may be offered only to employ-
ees who do not enroll in the employer’s
group health plan but are enrolled in other
non-HRA MV group coverage, such as a
plan maintained by an employer of the em-
ployee’s spouse); and (4) under the terms
of the HRA, an employee (or former em-
ployee) is permitted to permanently opt out
of and waive future reimbursements from
the HRA at least annually, and, upon termi-
nation of employment,either the remain-
ing amounts in the HRA are forfeited or the
employee is permitted to permanently opt
out of and waive future reimbursements
from the HRA.
Example (Integration Method:
Minimum Value Not Required)
Facts. Employer A sponsors a group
health plan and an HRA for its employ-
ees. Employer A’s HRA is available only
to employees who are either enrolled in its
group health plan or in non-HRA group
coverage through a family member. Em-
ployer A’s HRA is limited to reimburse-
ment of co-payments, co-insurance, de-
ductibles, and premiums under Employer
A’s group health plan or other non-HRA
group coverage (as applicable), as well
as medical care (as defined under Code
§ 213(d)) that does not constitute essential
health benefits. Under the terms of Em-
ployer A’s HRA, an employee is permitted
to permanently opt out of and waive future
reimbursements from the HRA both upon
termination of employment and at least an-
nually.
Employer A employs Employee X. Em-
ployee X chooses to enroll in non-HRA
group coverage sponsored by Employer B,
the employer of Employee X’s spouse, in-
stead of enrolling in Employer A’s group
health plan. Employer A and Employer B
are not treated as a single employer under
Code § 414(b), (c), (m), or (o). Employee
X attests to Employer A that he is covered
by Employer B’s non-HRA group cover-
age. When seeking reimbursement under
Employer A’s HRA, Employee X attests
that the expense for which he seeks reim-
bursement is a co-payment, co-insurance,
deductible, or premium under Employer
B’s non-HRA group coverage or medical
care (as defined under Code § 213(d)) that
is not an essential health benefit.
Conclusion. Employer A’s HRA is inte-
grated with Employer B’s non-HRA group
coverage for purposes of the annual dol-
lar limit prohibition and the preventive ser-
vices requirements.
Example (Integration Method:
Minimum Value Required)
Facts. Employer A sponsors a group
health plan that provides minimum value
and an HRA for its employees. Employer
A’s HRA is available only to employees
who are either enrolledinitsgrouphealth
plan or in non-HRA MV group coverage
through a family member. Under the terms
of Employer A’s HRA, an employee is per-
mitted to permanently opt out of and waive
future reimbursements from the HRA both
upon termination of employment and at
least annually.
Employer A employs Employee X. Em-
ployee X chooses to enroll in non-HRA
MVgroupcoveragesponsoredbyEm-
ployer B, the employer of Employee X’s
spouse, instead of enrolling in Employer
A’s group health plan. Employer A and
Employer B are not treated as a single em-
ployer under Code § 414(b), (c), (m), or
2013–40 I.R.B.290September 30, 2013

(o). Employee X attests to Employer A
that he is covered by Employer B’s non-
HRA MV group coverage and that the cov-
erage provides minimum value.
Conclusion. Employer A’s HRA is in-
tegrated with Employer B’s non-HRA MV
group coverage for purposes of the annual
dollar limit prohibition and the preventive
services requirements.
Question 5:May an employee who is cov-
ered by both an HRA and a group health
plan with which the HRA is integrated, and
who then ceases to be covered under the
group health plan that is integrated with the
HRA, be permitted to use the amounts re-
maining in the HRA?
Answer 5:WhetherornotanHRAisin-
tegrated with other group health plan cov-
erage, unused amounts that were credited
to an HRA while the HRA was integrated
with other group health plan coverage may
be used to reimburse medical expenses in
accordance with the terms of the HRA af-
ter an employee ceases to be covered by
other integrated group health plan cover-
age without causing the HRA to fail to
comply with the market reforms. Note
that coverage provided through an HRA,
other than coverage consisting solely of
excepted benefits, is an eligible employer-
sponsored plan and, therefore, minimum
essential coverage under Code § 5000A.
Question 6:Does an HRA impose an an-
nual limit in violation of the annual dollar
limit prohibition if the group health plan
with which an HRA is integrated does not
cover a category of essential health bene-
fits and the HRA is available to cover that
category of essential health benefits (but
limits the coverage to the HRA’s maximum
benefit)?
Answer 6:In general, an HRA integrated
with a group health plan imposes an an-
nual limit in violation of the annual dollar
limit prohibition if the group health plan
with which the HRA is integrated does not
cover a category of essential health bene-
fits and the HRA is available to cover that
category of essential health benefits and
limits the coverage to the HRA’s maximum
benefit. This situation should not arise for
a group health plan funded through non-
grandfathered health insurance coverage
in the small group market, as small group
market plans must cover all categories of
essential health benefits, with the excep-
tion of pediatric dental benefits, if pedi-
atric dental benefits are available through
a stand-alone dental plan offered in accor-
dance with 45 C.F.R. § 155.1065.
7
However, under the integration method
available for plans that provide minimum
value described under Q&A 4 of this no-
tice, if a group healthplan provides mini-
mum value under Code § 36B(c)(2)(C)(ii),
an HRA integrated with that group health
plan will not be treated as imposing an an-
nual limit in violation of the annual dollar
limit prohibition, even if that group health
plan does not cover a category of essential
health benefits and the HRA is available
to cover that category of essential health
benefits and limits the coverage to the
HRA’s maximum benefit.
2. Application of the Market Reforms
to Certain Health FSAs
Question 7:How do the market reforms
apply to a health FSA that does not qualify
as excepted benefits?
Answer 7:The market reforms do not
apply to a group health plan in relation to
its provision of benefits that are excepted
benefits. Health FSAs are group health
plans but will be considered to provide
only excepted benefits if the employer
also makes available group health plan
coverage that is not limited to excepted
benefits and the health FSA is structured so
that the maximum benefit payable to any
participant cannot exceed two times the
participant’s salary reduction election for
the health FSA for the year (or, if greater,
cannot exceed $500 plus the amount of the
participant’s salary reduction election).
8
See 26 C.F.R. § 54.9831–1(c)(3)(v), 29
C.F.R. § 2590.732(c)(3)(v), and 45 C.F.R.
§ 146.145(c)(3)(v). Therefore, a health
FSA that is considered to provide only ex-
cepted benefits is not subject to the market
reforms.
If an employer provides a health FSA that
does not qualify as excepted benefits, the
health FSA generally is subject to the mar-
ket reforms, including the preventive ser-
vices requirements. Because a health FSA
that is not excepted benefits is not inte-
grated with a group health plan, it will fail
to meet the preventive services require-
ments.
9
The Departments understand that ques-
tions have arisen as to whether HRAs that
are not integrated with a group health plan
may be treated as a health FSA as defined
in Code § 106(c)(2). Notice 2002–45,
2002–02 C.B. 93, states that, assuming
that the maximum amount of reimburse-
ment which is reasonably available to a
participant under an HRA is not substan-
tially in excess of the value of coverage
under the HRA, an HRA is a health FSA
as defined in Code § 106(c)(2). This
statement was intendedto clarify the rules
limiting the payment of long-term care
expenses by health FSAs. The Depart-
ments are also considering whether an
HRA may be treated as a health FSA for
purposes of the exclusion from the annual
dollar limit prohibition. In any event, the
treatment of an HRA as a health FSA
that is not excepted benefits would not
exempt the HRA from compliance with
the other market reforms, including the
preventive servicesrequirements, which
the HRA would fail to meet because the
HRA would not be integrated with a group
health plan. This analysis applies even if
an HRA reimburses only premiums.
Question 8: The interim final regulations
regarding the annual dollar limit prohibi-
tion contain an exemption for health FSAs
(as defined in Code § 106(c)(2)). See
26 C.F.R. § 54.9815–2711T(a)(2)(ii), 29
C.F.R. § 2590.715–2711(a)(2)(ii), and 45
C.F.R. § 147.126(a)(2)(ii). Does this ex-
emption apply to a health FSA that is not
offered through a Code § 125 plan?
Answer 8:No. The Departments intended
for this exemption from the annual dollar
limit prohibition to apply only to a health
FSA that is offered through a Code § 125
plan and thus subject to a separate annual
7
Small group market plans will not be considered to fail to meet qualified health plan certification standards based solely on the fact that they exclude coverage of pediatric dental benefits that
are otherwise required under ACA § 1302(b)(1)(J) where a stand-alone dental plan is also available. See ACA § 1302(b)(4)(F) and Question 5, CMS QHP Dental Frequently Asked Questions,
May 31, 2013,https://www.regtap.info/uploads/library/PM_QHP_DentalFAQsV2_5cr_060313.pdf.
8
An HRA is paid for solely by the employer and not provided pursuant to salary reduction election or otherwise under a Code § 125 plan. IRS Notice 2002–45,2002–02 C.B. 93.
9
Under the interim final rules implementing the annual dollar limit prohibition, a health FSA is not subject to the annual dollar limit prohibition, regardless of whether the health FSA is
considered to provide only excepted benefits. See 26 C.F.R. § 54.9815–2711T(a)(2)(ii), 29 C.F.R. § 2590.715–2711(a)(2)(ii), and 45 C.F.R. § 147.126(a)(2)(ii). See Q&A 8 of this notice
regarding the restriction of the exemption from the annual dollar limit prohibition to a health FSA that is offered through a Code § 125 plan.
September 30, 20132912013–40 I.R.B.

limitation under Code § 125(i). There is
no similar limitation on a health FSA that
is not part of a Code § 125 plan, and thus
no basis to imply that it is not subject to the
annual dollar limit prohibition.
To clarify this issue, the Departments
intend to amend the annual dollar limit
prohibition regulations to conform to this
Q&A 8 retroactively applicable as of
September 13, 2013. As a result, a health
FSA that is not offered through a Code
§ 125 plan is subject to the annual dollar
limit prohibition and will fail to comply
with the annual dollar limit prohibition.
3. Guidance on Employee Assistance
Programs
Question 9:Are benefits under an em-
ployee assistance program or EAP consid-
ered to be excepted benefits?
Answer 9:The Departments intend to
amend 26 C.F.R. § 54.9831–1(c), 29
C.F.R. § 2590.732(c), and 45 C.F.R.
§ 146.145(c) to provide that benefits under
an employee assistance program or EAP
are considered to be excepted benefits,
but only if the program does not pro-
vide significant benefits in the nature of
medical care or treatment. Excepted ben-
efits are not subject to the market reforms
and are not minimum essential coverage
under Code § 5000A. Until rulemaking
is finalized, through at least 2014, the
Departments will consider an employee
assistance program or EAP to constitute
excepted benefits only if the employee
assistance program or EAP does not pro-
vide significant benefits in the nature of
medical care or treatment. For this pur-
pose, employers may use a reasonable,
good faith interpretation of whether an
employee assistance program or EAP pro-
vides significant benefits in the nature of
medical care or treatment.
B.Guidance Under the Sole Jurisdiction
of the Treasury Department and the IRS
on HRAs and Code § 125 Plans
Question 10:Is an HRA that has fewer
than two participants who are current em-
ployees on the first day of the plan year
(for example, a retiree-only HRA) mini-
mum essential coverage for purposes of
Code §§ 5000A and 36B?
Answer 10:Yes. The Treasury De-
partment and the IRS understand that
some employers are considering mak-
ing amounts available under standalone
retiree-only HRAs to retired employees
so that the employer would be able to
reimburse medical expenses, including
the purchase of an individual health in-
surance policy. For this purpose, the
standalone HRA would constitute an eligi-
ble employer-sponsored plan under Code
§ 5000A(f)(2), and therefore the coverage
would constitute minimum essential cov-
erage under Code § 5000A, for a month
in which funds are retained in the HRA
(including amounts retained in the HRA
during periods of time after the employer
has ceased making contributions). As a
result, a retiree covered by a standalone
HRA for any month will not be eligible
for a Code § 36B premium tax credit for
that month. Note that unlike other HRAs,
the market reforms generally do not apply
to a retiree-only HRA and therefore would
not impact an employer’s choice to offer a
retiree-only HRA.
10
Question 11:How are amounts newly
made available under an HRA treated for
purposes of Code § 36B?
Answer 11:An individual is not eligible
for individual coverage subsidized by the
Code § 36B premium tax credit if the indi-
vidual is eligible for employer-sponsored
coverage that is affordable (premiums
for self-only coverage do not exceed 9.5
percent of household income) and that
provides minimum value (the plan’s share
of costs is at least 60 percent). If an em-
ployer offers an employee both a primary
eligible employer-sponsored plan and an
HRA that would be integrated with the
primary plan if the employee enrolled in
the plan, amounts newly made available
for the current plan year under the HRA
may be considered in determining whether
the arrangement satisfies either the af-
fordability requirement or the minimum
value requirement, but not both. Amounts
newly made available for the current plan
year under the HRA that an employee
may use only to reduce cost-sharing for
covered medical expenses under the pri-
mary employer-sponsored plan count only
toward the minimum value requirement.
See Minimum Value of Eligible Em-
ployer-Sponsored Plans and Other Rules
Regarding the Health Insurance Premium
Tax Credit, 78 Fed. Reg. 25909, 25916
(May 3, 2013) (proposed regulations, to be
codified, in part, once final, at 26 C.F.R.
§ 1.36B–6(c)(4), (c)(5)). Amounts newly
made available for the current plan year
under the HRA that an employee may use
to pay premiums or to pay both premiums
and cost-sharing under the primary em-
ployer-sponsored plan count only toward
the affordability requirement. See Mini-
mum Value of Eligible Employer-Spon-
sored Plans and Other Rules Regarding
the Health Insurance Premium Tax Credit,
78 Fed. Reg. 25909, 25914 (May 3,
2013) (proposed regulations; to be cod-
ified, in part, once final, at 26 C.F.R.
§ 1.36B–2(c)(3)(v)(A)(5)).
Even if an HRA is integrated with a plan
offered by another employer for purposes
of the annual dollar limit prohibition and
the preventive services requirements (see
Q&A 4 of this notice), the HRA does not
count toward the affordability or minimum
value requirement of the plan offered by
the other employer. Additionally, if an
employer offers an HRA on the condition
that the employee does not enroll in non-
HRA coverage offered by the employer
and instead enrolls in non-HRA coverage
from a different source, the HRA does
not count in determining whether the em-
ployer’s non-HRA coverage satisfies ei-
ther the affordability or minimum value re-
quirement.
For purposes of the Code § 36B premium
tax credit, the requirements of affordabil-
ity and minimum value do not apply if an
employee enrolls in any employer-spon-
sored minimum essential coverage, in-
cluding coverage provided through a Code
§ 125 plan, an employer payment plan,
ahealthFSA,oranHRA,butonlyif
the coverage offered does not consist
solely of excepted benefits. See 26 C.F.R.
§ 1.36B–2(c)(3)(vii). If an employee en-
rolls in any employer-sponsored minimum
essential coverage, the employee is inel-
igible for individual coverage subsidized
by the Code § 36B premium tax credit.
Question 12:Section 125(f)(3) of the
Code, effective for taxable years begin-
ning after December 31, 2013, provides
that the term “qualified benefit” does not
10
See the preamble to the Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and
Affordable Care Act, 75 Fed. Reg. 34538, 34539 (June 17, 2010).
2013–40 I.R.B.292September 30, 2013

include any QHP (as defined in ACA
§ 1301(a)) offered through an Exchange.
11
This prohibits an employer from provid-
ing a QHP offered through an Exchange
as a benefit under the employer’s Code
§ 125 plan. Some states have already
established Exchanges and employers in
those states may have Code § 125 plan
provisions that allow employees to enroll
in health coverage through the Exchange
as a benefit under a Code § 125 plan. If
the employer’s Code § 125 plan operates
on a plan year other than a calendar year,
may the employer continue to provide the
Exchange coverage through a Code § 125
plan after December 31, 2013?
Answer 12:For Code § 125 plans that as
of September 13, 2013 operate on a plan
year other than a calendar year, the restric-
tion under Code § 125(f)(3) will not ap-
ply before the first plan year of the Code
§ 125 plan that begins after December 31,
2013. Thus, for the remainder of a plan
year beginning in 2013, a QHP provided
through an Exchange as a benefit under a
Code § 125 plan will not result in all ben-
efits provided under the Code § 125 plan
being taxable. However, individuals may
not claim a Code § 36B premium tax credit
for any month in which the individual was
covered by a QHP provided through an Ex-
change as a benefit under a Code § 125
plan.
IV. APPLICABILITY DATE AND
RELIANCE PERIOD
This notice applies for plan years be-
ginning on and after January 1, 2014, but
taxpayers may apply the guidance pro-
vided in this notice for all prior periods.
If legislative action by any State, local, or
Indian tribal government entity is neces-
sary to modify the terms of a pre-existing
HRA, a health FSA that does not qualify
as excepted benefits, an employer pay-
ment plan, or other similar arrangement,
sponsored by any State, local, or Indian
tribal government entity, as an employer,
to avoid a failure to comply with the mar-
ket reforms (including action to terminate
such arrangement) and such action may
only be taken by a State, local, or Indian
tribal government entity legislative body,
the applicability date of the portions of
this notice under which such arrangement
would otherwise fail to comply with the
market reforms is extended to the later of
(1) January 1, 2014, or (2) the first day of
the first plan year following the first close
of a regular legislative session of the ap-
plicable legislative body after September
13, 2013.
V. FOR FURTHER INFORMATION
The Departments have coordinated on
the guidance and other information con-
tained in this notice. The guidance in this
notice is being issued in substantially iden-
tical form by DOL, and guidance is being
issued by HHS to reflect that HHS con-
curs in the application of the laws under
its jurisdiction as set forth in this notice.
Questions concerning the information con-
tained in this notice may be directed to
the IRS at 202–927–9639, the DOL’s Of-
fice of Health Plan Standards and Compli-
ance Assistance at 202–693–8335, or HHS
at 410–786–1565. Additional informa-
tion for employers regarding the Afford-
able Care Act is available atwww.health-
care.gov,www.dol.gov/ebsa/healthreform,
and atwww.business.usa.gov.
Preventive Health Services
Required under Public Health
Service Act Section 2713 and
Preventive Care for Purposes
of Health Savings Accounts
Notice 2013–57
PURPOSE
This notice clarifies that a health plan
will not fail to qualify as a high de-
ductible health plan (HDHP) under section
223(c)(2) of the Internal Revenue Code
(Code) merely because it provides without
a deductible the preventive health services
required under section 2713 of the Public
Health Service Act (PHS Act) to be pro-
vided by a group health plan or a health
insurance issuer offering group or individ-
ual health insurance coverage.
BACKGROUND
Section 223 of the Code permits eligi-
ble individuals to establish Health Savings
Accounts (HSAs). Among the require-
ments for an individual to qualify as an
eligible individual under section 223(c)(1)
(and thus to be eligible to make, or for the
individual’s employer to make on their be-
half, tax-favored contributions to a HSA)
is that the individual be covered under a
HDHP and have no disqualifying health
coverage. A HDHP is a health plan that
satisfies certain requirements with respect
to minimum deductibles and maximum
out-of-pocket expenses.
Generally, under section 223(c)(2)(A),
a HDHP may not provide benefits for any
year until the minimum deductible for
that year is satisfied. However, section
223(c)(2)(C) provides a safe harbor for
the absence of a deductible for preventive
care. Section 223(c)(2)(C) states that “[a]
plan shall not fail to be treated as a high
deductible health plan by reason of failing
to have a deductible for preventive care
(within the meaning of section 1871 of the
Social Security Act, except as otherwise
provided by the Secretary).” A HDHP may
therefore provide preventive care benefits
without a deductible or, subject to any
applicable constraints under section 2713
of the PHS Act, with a deductible below
the minimum annual deductible otherwise
required by section 223(c)(2)(A).
Notice 2004–23 (2004–15 I.R.B. 725),
and Q&A 26 and 27 of Notice 2004–50
(2005–33 I.R.B. 196) provide guidance on
preventive care benefits allowed to be pro-
vided by a HDHP without satisfying the
minimum deductible requirement of sec-
tion 223(c)(2)(A).
Section 1001 of the Affordable Care
Act added section 2713 to the PHS Act, re-
quiring group health plans and health in-
surance issuers offering group and indi-
vidual health insurance coverage to pro-
vide benefits for certain preventive health
services without imposing cost-sharing re-
quirements. (42 U.S.C. 300gg–13). The
Affordable Care Act also added section
715(a)(1) to the Employee Retirement In-
come Security Act of 1974 (ERISA) and
section 9815(a)(1) to the Code to incorpo-
rate the provisions of part A of title XXVII
of the PHS Act, including section 2713,
into ERISA and the Code. Guidance un-
der section 2713 of the PHS Act is pub-
lished jointly by the Treasury Department
11
This rule does not apply with respect to any employee if the employee’s employer is a qualified employer (as defined in ACA § 1312(f)(2)) offering the employee the opportunity to enroll
through an Exchange in a qualified health plan in a group market. See Code § 125(f)(3)(B).
September 30, 20132932013–40 I.R.B.

and IRS and the Departments of Labor and
Health and Human Services.
Temporary regulations issued by the
Treasury Department and IRS implement-
ing the requirements of section 2713 of the
PHS Act under § 54.9815–2713T (and par-
allel regulations issued by the Departments
of Labor and HHS) were published in the
Federal Register on July 19, 2010 (75 FR
41726), later supplemented by regulations
published in the Federal Register on Au-
gust 3, 2011 (76 FR 46621), February 15,
2012 (77 FR 8725), March 21, 2012 (77
FR 16501) and February 6, 2013 (78 FR
8456). See also Q&A–8 of FAQ Part II
(October 8, 2010) and Q&A–1 of FAQ Part
V (December 22, 2010), both available at
http://www.dol.gov/ebsa/healthreform/.
GUIDANCE
Under this notice, preventive care for
purposes of section 223(c)(2)(C) of the
Code is anything thatis preventive care un-
der Notice 2004–23 and Notice 2004–50
without regard to whether it would consti-
tute preventive care for purposes of sec-
tion 2713 of the PHS Act. Preventive care
for purposes of section 223(c)(2)(C) also
includes services required to be provided
as preventive health services by a group
health plan or a health insurance issuer of-
fering group or individual health insurance
coverage under section 2713 of the PHS
Act and regulations and other administra-
tive guidance issuedthereunder. Accord-
ingly, a health plan will not fail to qual-
ify as an HDHP under section 223(c)(2) of
the Code merely because it provides with-
out a deductible the preventive care health
services required under section 2713 of the
PHS Act to be provided by a group health
plan or a health insurance issuer offering
group or individual health insurance cov-
erage.
EFFECT ON OTHER DOCUMENTS
This notice generally provides that any
goods or services thatconstitute preven-
tive care under the guidance in Notice
2004–23 and Notice 2004–50 will con-
tinue to be treated as preventive care for
purposes of section 223 and clarifies that
any preventive services under section
2713 of the PHS Act will also be treated
as preventive care under section 223.
DRAFTING INFORMATION
The principal author of this notice is
Karen Levin of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Governmental Entities),
though other Treasury Department
and IRS officials participated in its
development. For further information
on the provisions of this notice, contact
Karen Levin at (202) 927–9639 (not a
toll-free number.)
Update for Weighted Average
Interest Rates, Yield Curves,
and Segment Rates
Notice 2013–58
This notice provides guidance on the
corporate bond monthly yield curve (and
the corresponding spot segment rates), and
the 24-month average segment rates under
§ 430(h)(2) of the Internal Revenue Code.
In addition, this notice provides guidance
as to the interest rate on 30-year Trea-
sury securities under § 417(e)(3)(A)(ii)(II)
as in effect for plan years beginning be-
fore 2008, the 30-year Treasury weighted
average rate under § 431(c)(6)(E)(ii)(I),
and the minimum present value segment
rates under § 417(e)(3)(D) as in effect for
plan years beginning after 2007. These
rates reflect certain changes implemented
by the Moving Ahead for Progress in the
21st Century Act, Public Law 112–141
(MAP–21). MAP–21 provides that for
purposes of § 430(h)(2), the segment rates
are limited by the applicable maximum
percentage or the applicable minimum per-
centage based on the average of segment
rates over a 25 year period.
YIELD CURVE AND SEGMENT
RATES
Generally, except for certain plans
under sections 104 and 105 of the Pen-
sion Protection Act of 2006, § 430 of
the Code specifies the minimum funding
requirements that apply to single em-
ployer plans pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates are
adjusted by the applicable percentage of
the 25-year average segment rates for the
period ending September 30 of the year
preceding the calendar year in which the
plan year begins. However, an election
may be made under § 430(h)(2)(D)(ii) to
use the monthly yield curve in place of the
segment rates.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond
segment rates used to compute the tar-
get normal cost and the funding target.
Pursuant to Notice 2007–81, the monthly
corporate bond yield curve derived from
August 2013 data is in Table I at the end
of this notice. The spot first, second, and
third segment rates for the month of Au-
gust 2013 are, respectively, 1.36, 4.60,
and 5.58. For plan years beginning on
or after January 1, 2012, the 24-month
average segment rates determined under
§ 430(h)(2)(C)(iv) must be adjusted by
the applicable percentage of the corre-
sponding 25-year average segment rates.
The 25-year average segment rates for
plan years beginning in 2012 and for plan
years beginning in 2013 were published
in Notice 2012–55, 2012–36 I.R.B. 332
and Notice 2013–11, 2013–11 I.R.B. 610,
respectively. For plan years beginning in
2014, based on the segment rates applica-
ble for October 1988 to September 2013,
the 25-year averages for the period ending
September 30, 2013, of the first, second,
and third segment rates are 5.54, 7.02,
and 7.77 percent, respectively. For plan
years beginning in 2014, the applicable
minimum and maximum percentages are
80 percent and 120 percent.
The 24-month average corporate bond
segment rates applicable for September
2013 without adjustment, and the adjusted
24-month average segment rates taking
into account the applicable percentages of
the corresponding 25-year average seg-
ment rates, are as follows:
2013–40 I.R.B.294September 30, 2013

24-Month Average Segment Rates
Not Adjusted
Adjusted 24-Month Average Segment
Rates, Based on Applicable Percentage
of 25-Year Average Rates
For Plan
Years
Beginning
In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
First
Segment
Second
Segment
Third
Segment
2012September20131.37
4.055.065.546.857.52
2013September20131.37
4.055.06
4.94
6.15
6.76
2014September20131.37
4.055.06
4.43
5.62
6.22
30-YEAR TREASURY SECURITIES
INTEREST RATES
Generally for plan years beginning
after 2007, § 431 specifies the mini-
mum funding requirements that apply to
multiemployer plans pursuant to § 412.
Section 431(c)(6)(B)specifies a minimum
amount for the full-funding limitation
described in section 431(c)(6)(A), based
on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the inter-
est rate used to calculate current liability
for this purpose must be no more than 5
percent above and no more than 10 percent
below the weighted average of the rates
of interest on 30-year Treasury securities
during the four-year period ending on the
last day before the beginning of the plan
year. Notice 88–73, 1988–2 C.B. 383,
provides guidelines for determining the
weighted average interest rate. The rate of
interest on 30-year Treasury securities for
August 2013 is 3.76 percent. The Service
has determined this rate as the average of
the daily determinations of yield on the
30-year Treasury bond maturing in May
2043 determined each day through Au-
gust 7, 2013, and the yield on the 30-year
Treasury bond maturing in August 2043
determined each day for the balance of
the month. The following rates were de-
termined for plan years beginning in the
month shown below.
For Plan Years
Beginning inPermissible Range
MonthYear
30-Year
Treasury
Weighted
Average90%to105%
September20133.433.093.61
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007–81 provides guide-
lines for determining the minimum present
value segment rates. Pursuant to that no-
tice, the minimum present value segment
rates determined for August 2013 are as
follows:
First
Segment
Second
Segment
Third
Segment
1.364.60
5.58
DRAFTING I
NFORMATION
The princi
pal author of this notice is
Tony Monta
naro of the Employee Plans,
Tax Exempt
and Government Entities
Division.
Mr. Montanaro may be e-mailed
atRetire
mentPlanQuestions@irs.gov.
September 30, 20132952013–40 I.R.B.

Table I
Monthly Yield Curve for August 2013
Derived from August 2013 Data
Maturity YieldMaturity YieldMaturity YieldMaturity YieldMaturity Yield
0.5
0.31
20.55.3940.55.6060.55.6880.55.72
1.0
0.52
21.0
5.40
41.0
5.60
61.0
5.68
81.0
5.72
1.50.7521.55.4041.55.6061.55.6881.55.72
2.00.9822.0
5.41
42.0
5.61
62.0
5.69
82.0
5.73
2.5
1.22
22.55.4242.55.6162.55.6982.55.73
3.01.4623.05.4243.05.6163.05.6983.05.73
3.5
1.71
23.55.4343.55.6263.55.6983.55.73
4.01.9624.0
5.44
44.0
5.62
64.0
5.69
84.0
5.73
4.5
2.20
24.55.4444.55.6264.55.6984.55.73
5.02.4525.05.4545.05.6265.05.6985.05.73
5.5
2.68
25.55.4645.55.6365.55.6985.55.73
6.02.9226.05.4646.05.6366.05.7086.05.73
6.5
3.14
26.55.4746.55.6366.55.7086.55.73
7.0
3.35
27.0
5.48
47.0
5.63
67.0
5.70
87.0
5.73
7.53.5627.55.4847.55.6467.55.7087.55.73
8.0
3.75
28.0
5.49
48.0
5.64
68.0
5.70
88.0
5.73
8.5
3.92
28.55.4948.55.6468.55.7088.55.73
9.04.0929.05.5049.05.6469.05.7089.05.74
9.5
4.24
29.55.5149.55.6469.55.7089.55.74
10.04.3830.0
5.5150.05.65
70.0
5.70
90.0
5.74
10.54.5130.55.5250.55.6570.55.7190.55.74
11.04.6231.0
5.5251.05.65
71.0
5.71
91.0
5.74
11.5
4.72
31.55.5351.55.6571.55.7191.55.74
12.04.8232.05.5352.05.6572.05.7192.05.74
12.5
4.90
32.55.5452.55.6672.55.7192.55.74
13.04.9733.0
5.5453.05.66
73.0
5.71
93.0
5.74
13.55.0333.55.5553.55.6673.55.7193.55.74
14.0
5.09
34.0
5.5554.05.66
74.0
5.71
94.0
5.74
14.55.1334.55.5654.55.6674.55.7194.55.74
15.05.1735.05.5655.05.6675.05.7195.05.74
15.55.2135.55.5655.55.6775.55.7295.55.74
16.0
5.24
36.0
5.5756.05.67
76.0
5.72
96.0
5.74
16.55.2736.55.5756.55.6776.55.7296.55.74
17.0
5.29
37.0
5.5857.05.67
77.0
5.72
97.0
5.74
17.55.3137.55.5857.55.6777.55.7297.55.75
18.05.3338.05.5858.05.6778.05.7298.05.75
18.55.3438.55.5958.55.6878.55.7298.55.75
19.0
5.35
39.0
5.5959.05.68
79.0
5.72
99.0
5.75
19.55.3739.55.5959.55.6879.55.7299.55.75
20.0
5.38
40.0
5.60
60.0
5.68
80.0
5.72
100.0
5.75
2013–40 I.R.B.296September 30, 2013

Application of Section 179(f)
for Qualified Real Property
Notice 2013–59
I. PURPOSE
This notice provides guidance with re-
spect to issues related to the enactment of
§ 315(d) of the American Taxpayer Re-
lief Act of 2012, Pub. L. No. 112–240,
126 Stat. 2313 (January 2, 2013) (ATRA),
which extended the application of § 179(f)
of the Internal Revenue Code from any
taxable year beginning in 2010 or 2011 to
any taxable year beginning in 2010, 2011,
2012, or 2013. For these years, § 179(f)
expands the definition of property quali-
fying for § 179 to include qualified real
property (as defined in § 179(f)(1) and
(2)). Thisnoticealsoprovidesallocation
methodologies for determining the portion
of the gain that is attributable to § 1245
property upon the sale or other disposition
of qualified real property.
II. BACKGROUND
(1)In general. Section 179(a) allows
a taxpayer to elect to treat the cost (or a
portionofthecost)ofany§179property
as an expense for the taxable year in which
the taxpayer places the property in service.
Section 179(b)(1) and section 179(b)(2)
prescribe a dollar limitation on the ag-
gregate cost of § 179 property that can
be treated as an expense under § 179(a).
The dollar limitation is the amount un-
der § 179(b)(1) (the § 179(b)(1) limita-
tion), reduced (but not below zero) by the
amount by which the cost of § 179 prop-
erty placed in service during the taxable
year exceeds the amount under § 179(b)(2)
(the § 179(b)(2) limitation). Prior to the
enactment of ATRA, the § 179(b)(1) lim-
itation was $500,000 for taxable years
beginning in 2010 and 2011, $125,000
for taxable years beginning in 2012, and
$25,000 for taxable years beginning af-
ter 2012. The § 179(b)(2) limitation was
$2,000,000 for taxable years beginning
in 2010 and 2011, $500,000 for taxable
years beginning in 2012, and $200,000 for
taxable years beginning after 2012. ATRA
changed the limitations for taxable years
beginning in 2012 or 2013 to $500,000
under § 179(b)(1) and $2,000,000 under
§ 179(b)(2).
Section 179(b)(3)(A) provides that a
taxpayer’s § 179 deduction for any taxable
year, after application of the § 179(b)(1)
and (2) limitations, is limited to the tax-
payer’s taxable income for that taxable
year that is derived from the taxpayer’s
active conduct of any trade or business
during that taxable year (“taxable in-
come limitation”). Section 179(b)(3)(B)
provides that the amount of any cost of
§ 179 property elected to be expensed
in a taxable year that is disallowed as a
§ 179 deduction under the taxable income
limitation may be carried forward for an
unlimited number of years (“carryover of
disallowed deduction”) and may be de-
ducted under § 179(a) in a future taxable
year subject to the same limitations.
Section 179(d)(1) defines § 179 prop-
erty as meaning § 1245 property (as de-
fined in § 1245(a)(3)) that is: (1) tangi-
ble property to which § 168 applies and
that is acquired by purchase (as defined in
§ 179(d)(2) and § 1.179–4(c) of the Income
Tax Regulations) for use in the active con-
duct of a trade or business; or (2) computer
software described in § 179(d)(1)(A)(ii)
and that is acquired by purchase for use in
the active conduct of a trade or business.
Section 179 property does not include any
property described in § 50(b) or air condi-
tioning or heating units.
(2)Qualified real property.Ifatax-
payer elects to apply § 179(f), § 179
property also includes qualified real prop-
erty. Prior to the enactment of ATRA,
§179(f)appliedtoqualifiedrealproperty
placed in service in any taxable year be-
ginning in 2010 or 2011. ATRA extended
the application of § 179(f) to qualified
real property placed in service in any
taxable year beginning in 2010, 2011,
2012, or 2013. Qualified real property
means property that is: (1) of a character
subject to an allowance for depreciation;
(2) acquired by purchase (as defined in
§§ 179(d)(2) and 1.179–4(c)) for use in
the taxpayer’s active conduct of a trade
or business; (3) not described in § 50(b);
and (4) not air conditioning or heating
units. In addition, qualified real property
must be § 1250 property that is: (1) qual-
ified leasehold improvement property as
defined in §§ 168(e)(6), 168(k)(3), and
1.168(k)–1(c); (2) certain qualified restau-
rant property as defined in § 168(e)(7); or
(3) qualified retail improvement property
as defined in § 168(e)(8).
For purposes of applying the
§ 179(b)(1) limitation ($500,000) for any
taxable year beginning in 2010, 2011,
2012, or 2013, § 179(f)(3) provides that
not more than $250,000 of the aggre-
gate cost (as defined in §§ 179(d)(3)
and 1.179–4(d)) of § 179 property that
is treated as an expense under § 179(a)
for the taxable year can be attributable to
qualified real property. Thus, the max-
imum amount of qualified real property
that may be expensed under § 179(a) for
any taxable year beginning in 2010, 2011,
2012, or 2013 is $250,000.
Prior to the enactment of ATRA,
§ 179(f)(4) provided that, notwithstanding
§ 179(b)(3)(B), a taxpayer that elected
to apply § 179(f) and elected to expense
under § 179(a) the cost (or a portion of
the cost) of qualified real property placed
in service during any taxable year begin-
ning in 2010 or 2011 could not carryover
to any taxable year beginning after 2011
the amount of any cost of such property
that was disallowed as a § 179 deduc-
tion under the taxable income limitation
of § 179(b)(3)(A). To the extent any dis-
allowed § 179 deduction attributable to
qualified real property for any taxable
year beginning in 2010 (the 2010 disal-
lowed § 179 deduction) was not used in
any taxable year beginning in 2011, that
amount was treated as not being subject to
a § 179 election and instead was treated as
property placed in service on the first day
of the taxpayer’s last taxable year begin-
ning in 2011 for purposes of computing
depreciation. Similarly, to the extent any
disallowed § 179 deduction attributable
to qualified real property for any taxable
year beginning in 2011 (the 2011 disal-
lowed § 179 deduction) was not used in
the taxpayer’s last taxable year beginning
in 2011, that amount was treated as not be-
ing subject to a § 179 election and instead
was treated as property placed in service
on the first day of the taxpayer’s last tax-
able year beginning in 2011 for purposes
of computing depreciation.
ATRA amended § 179(f)(4) to provide
that, notwithstanding § 179(b)(3)(B), the
amount of any cost of qualified real prop-
erty elected to be expensed under § 179(a)
for any taxable year beginning in 2010,
2011, 2012, or 2013 that is disallowed as
a § 179 deduction under the taxable in-
come limitation of § 179(b)(3)(A) cannot
be carried over to a taxable year begin-
September 30, 20132972013–40 I.R.B.

ning after 2013. To the extent that any
§ 179 deduction attributable to qualified
real property is not allowed to be carried
over to a taxable year beginning after 2013,
that amount is to be treated as an amount
for which an election under § 179 was not
made and that amount is treated as prop-
erty placed in service on the first day of
the taxpayer’s last taxable year beginning
in 2013 for purposes of computing depre-
ciation.
The amendments made by the ATRA
are effective retroactively to taxable years
beginning after December 31, 2011.
A deduction under § 179 is treated as
an amortization deduction for purposes
of the recapture rules that apply to dis-
positions of certain depreciable property.
In general, § 1245(a)(1) provides that
upon a disposition of § 1245 property,
the amount by which the lower of (1) the
recomputed basis of the property (as de-
fined in § 1245(a)(2)), or (2) the amount
realized on a sale, exchange, or involun-
tary conversion of the property (or the
fair market value of the property on any
other disposition), exceeds the adjusted
basis of the property is treated as ordinary
income. This gain must be recognized
notwithstanding any other provision of
the Code. For purposes of this notice, the
term “total amount realized” refers to the
amount realized on a sale, exchange, or
involuntary conversion of the property, or
the fair market value of the property on
any other disposition, as applicable.
Pursuant to § 1245(a)(3)(C), the term
“§ 1245 property” includes property that is
or has been property of a character subject
to the allowance for depreciation provided
in § 167 and that is so much of any real
property (other thanproperty described in
§ 1245(a)(3)(B)) that has an adjusted basis
in which there are reflected adjustments
for amortization under § 179.
III. ELECTION TO APPLY § 179(f) TO
QUALIFIED REAL PROPERTY
A taxpayer may elect to apply § 179(f)
and elect to expense under § 179(a) the
cost (or a portion of the cost) of qualified
real property placed in service by the tax-
payer during any taxable year beginning
in 2010, 2011, 2012, or 2013 by filing an
original or amended Federal tax return for
that taxable year in accordance with pro-
cedures similar to those in § 1.179–5(c)(2)
and section 7 of Rev. Proc. 2008–54,
2008–2 C.B. 722, 725. If a taxpayer elects
or elected to apply § 179(f) and elects or
elected to expense under § 179(a) a portion
of the cost of qualified real property placed
in service by the taxpayer during any tax-
able year beginning in 2010, 2011, 2012,
or 2013, the taxpayer is permitted to in-
crease the portion of the cost of such prop-
erty expensed under § 179(a) by filing an
amended Federal tax return for that taxable
year. Any such increase in the amount ex-
pensed under § 179 is not deemed to be a
revocation of the prior election for that tax-
able year.
IV. CARROVER OF 2010 OR 2011
DISALLOWED § 179 DEDUCTION
FOR QUALIFIED REAL PROPERTY
The Treasury Department and the Inter-
nal Revenue Service (Service) recognize
that a taxpayer that treated the amount of a
2010 disallowed § 179 deduction or a 2011
disallowed § 179 deduction as property
placed in service on the first day of the tax-
payer’s last taxable year beginning in 2011
maywanttocarryoverthatamounttoany
taxable year beginning in 2012 or 2013 in
accordance with § 179(f)(4) (as amended
by ATRA). Accordingly, a taxpayer that
treated the amount of a 2010 disallowed
§ 179 deduction or a 2011 disallowed § 179
deduction as property placed in service on
the first day of the taxpayer’s last taxable
year beginning in 2011 may either (1) con-
tinue that treatment, or (2) if the period of
limitations for assessment under § 6501(a)
is open, amend its Federal tax return for
the last taxable year beginning in 2011 to
carryover the 2010 disallowed § 179 de-
duction or the 2011 disallowed § 179 de-
duction to any taxable year beginning in
2012 or 2013. However, if the taxpayer’s
last taxable year beginning in 2011 is open
under the period oflimitations for assess-
ment under § 6501(a) and an affected suc-
ceeding taxable year is closed under the
period of limitations for assessment un-
der § 6501(a), the taxpayer must continue
to treat the amount of a 2010 disallowed
§ 179 deduction or a 2011 disallowed § 179
deduction as property placed in service on
the first day of the taxpayer’s last taxable
year beginning in 2011.
The amended Federal tax return for the
taxpayer’s last taxable year beginning in
2011 must include anycollateral adjust-
ments to taxable income or the tax liabil-
ity (for example, the amount of deprecia-
tion allowed or allowable in the last tax-
able year beginning in 2011 for the amount
of the 2010 disallowed § 179 deduction
or the 2011 disallowed § 179 deduction).
Such collateral adjustments also must be
made on amended Federal tax returns for
any affected succeeding taxable years. The
amended returns for the taxpayer’s last tax-
able year beginning in 2011 and for any
affected succeeding taxable years must be
filed within the time prescribed by law for
filing an amended return for such taxable
years.
V. ALLOCATION OF CARRYOVER
DISALLOWED AMOUNT
(1)Section 179 property is only quali-
fied real property. If a taxpayer elects to
expense under § 179(a) only qualified real
property for any taxable year beginning in
2010, 2011, 2012, or 2013 and some or all
of the cost of that qualified real property is
disallowed as a § 179 deduction under the
taxable income limitation for that taxable
year, the aggregate amount of the carry-
over of disallowed deduction for that tax-
able year is attributed entirely to the qual-
ified real property.
(2)Section 179 property includes quali-
fied real property and other properties.Ifa
taxpayer elects to expense under § 179(a)
qualified real property and other types of
§ 179 property for any taxable year be-
ginning in 2010, 2011, 2012, or 2013 and
some or all of the cost of the § 179 property
(including the qualified real property) is
disallowed as a § 179 deduction under the
taxable income limitation for that taxable
year, the aggregate amount of the carry-
over of disallowed deduction for that tax-
able year must be allocatedpro ratabe-
tween the qualified real property and the
other types of § 179 property. Pursuant
to § 179(f)(4)(D), the aggregate amount
of the carryover of disallowed deduction
for the taxable year that is allocated to the
qualified real property is determined by
multiplying the aggregate amount of the
carryover of disallowed deduction for the
taxable year by a percentage that equals:
(a) the aggregateamount attributable
to qualified real property placed in ser-
vice during such taxable year, increased by
the portion of any amount carried over to
such taxable year from a prior taxable year
2013–40 I.R.B.298September 30, 2013

which is attributable to qualified real prop-
erty, divided by
(b) the total amount of § 179 property
placed in service during such taxable year,
increased by the aggregate amount carried
over to such taxable year from any prior
taxable year.
(3)Examples.
(a)Example 1 — Disallowed § 179 deduction and
allocation of the carryover of disallowed deduction to
qualified real property
. During 2012, Company Y, a
calendar year taxpayer, purchased and placed in ser-
vice equipment that costs $100,000 and is § 179 prop-
erty, and qualified real property that costs $200,000.
For 2012, Company Y did not have any other asset
purchases and did not have any carryover of disal-
lowed deduction from prior taxable years, and has
a taxable income limitation of $180,000. For 2012,
Company Y elected to apply § 179(f) and elected un-
der § 179(a) to expense the entire cost of the equip-
ment and the entire cost of the qualified real prop-
erty. Because of the taxable income limitation, the
maximum § 179 deduction Company Y can claim for
2012 is $180,000. As a result, Company Y has a
$120,000 carryover of disallowed deduction to 2013.
This $120,000 carryover amount is allocated
pro rata
between the qualified real property and equipment
placed in service by Company Y during 2012. Thus,
$80,000 of the carryover amount is allocated to the
qualified real property and $40,000 of the carryover
amount is allocated to the equipment.
2012 § 179 Carryover Amount
$120,000
Allocation Ratio ($200,000 QRP / $300,000 Total § 179 Property)
6
6.67%
Carryover Amount Allocated to Qualified Real Property
$80,000
2012 § 179 Carryover Amount
$120,000
Allocation Ratio ($100,000 Equipment / $300,000 Total § 179 Property)
3
3.33%
Carryover Amount Allocated to Equipment
$40,000
(b)
Example 2 — Treatment of the carryover of
disallowed deduction attributable to qualified real
prope
rty in a taxable year beginning after 2013
.The
factsarethesameasin
Example 1. In 2013, Com-
pany Y did not have any asset purchases and did not
have
any taxable income. As aresult, no portion of
the $80,000 carryover of disallowed deduction from
2012 that is attributable to the qualified real prop-
erty
can be used by Company Y in its 2013 taxable
year. Because disallowed § 179 deductions relating
to qualified real property cannot be carried over to
tax
able years beginning after December 31, 2013, no
portion of the $80,000 carryover of disallowed de-
duction from 2012 that is attributable to the qualified
rea
l property can be carried over to 2014 pursuant to
§ 179(f)(4)(A). Accordingly, Company Y is treated as
ifthe§179electionmadein2012toexpense$80,000
of
the cost of the qualified real property placed in ser-
vice in 2012 had not been made. The $80,000 cost of
the qualified real property is treated as placed in ser-
vi
ce by Company Y on January 1, 2013 (the first day
of Company Y’s last taxable year beginning in 2013)
for purposes of computing depreciation. The $40,000
c
arryover of disallowed deduction from 2012 that is
allocated to the equipment is carried over to 2014 un-
der § 179(b)(3)(B).
VI. DISPOSITION AND OTHER
TRANSFERS OF QUALIFIED REAL
PROPERTY
(1)In general. Upon a sale or other
disposition of qualified real property in
a taxable year beginning in 2010, 2011,
2012, or 2013, or a transfer of qualified
real property in a taxable year beginning
in 2010, 2011, 2012, or 2013 in a trans-
action in which gain or loss is not recog-
nized in whole or in part (including trans-
fers at death), immediately before the dis-
position or transfer, the adjusted basis of
the qualified real property is increased by
the amount of any outstanding carryover
of disallowed deduction attributable to that
property. Thus, the carryover of the dis-
allowed deduction cannot be deducted by
the transferor or the transferee of the quali-
fied real property.See§ 1.179–3(f). How-
ever, the preceding two sentences of this
paragraph VI(1) do not apply to a sale or
other disposition of qualified real property,
or a transfer of qualified real property in
a transaction in which gain or loss is not
recognized in whole or in part (including
transfers at death), in the taxpayer’s last
taxable year beginning in 2013 or any sub-
sequent taxable year.
(2)Applicability of § 1245 and § 1250.
(a)Amounts treated as §§ 1245 and
1250 property. To the extent the unad-
justed basis of the qualified real property
is reduced by the § 179 deduction (af-
ter the application of paragraph VI(1) of
this notice), the amount of that reduc-
tion is treated as § 1245 property.See
§ 1245(a)(3)(C). The remaining unad-
justed basis of the qualified real property
is treated as § 1250 property.
(b)Allocation methodologies for deter-
mining § 1245 recapture. A taxpayer may
use any reasonable allocation methodol-
ogy for determining the portion of the gain
that is attributable to § 1245 property upon
the sale or other disposition of qualified
real property. Below are two examples of
reasonable allocation methodologies. The
Service will not challenge any other rea-
sonable methodology used by a taxpayer
for determining the portion of gain that is
attributable to the § 1245 property upon the
sale or other disposition of qualified real
property. The two reasonable allocation
methodologies operate as follows:
(i)Pro rata allocation methodology.
Under thepro rataallocation methodol-
ogy, the taxpayer allocatespro ratathe
total amount realized (e.g., sales price)
upon a sale or other disposition of qual-
ified real property between the § 1245
property and the § 1250 property. The
total amount realized that is allocated to
the§1245propertyisdeterminedbymul-
tiplying the total amount realized by the
percentage that equals the amount that is
treated as § 1245 property (as determined
under paragraph VI(2)(a) of this notice),
divided by the total unadjusted basis of
the qualified real property. The remaining
amount of the total amount realized is
allocated to the § 1250 property.
Next, the taxpayer will determine the
portion of the gain that is attributable to
the § 1245 property. The gain attribut-
able to the § 1245 property equals the to-
tal amount realized that is allocated to the
§ 1245 property (as determined under the
preceding paragraph) less the adjusted ba-
sis of the amount that is treated as § 1245
property (as determined under paragraph
VI(2)(a) of this notice). The remaining
amount of the gain or loss is attributable
to the § 1250 property.
Finally, the taxpayer will determine
whether all or a portion of the gain that
is attributable to the § 1245 property (as
determined under the preceding para-
graph) is treated as ordinary income un-
der § 1245(a). Except as provided in
§ 1245(b), the amount treated as ordi-
nary income under § 1245(a) is equal
to the lower of (1) the recomputed basis
of the § 1245 property, or (2) the total
amount realized that is allocated to the
September 30, 20132992013–40 I.R.B.

§ 1245 property (as determined under the
first paragraph of thepro rataallocation
methodology), less the adjusted basis of
the § 1245 property.
(ii)Gain allocation methodology.Un-
der the gain allocation methodology, the
taxpayer allocates the gain from the sale
or other disposition of qualified real prop-
erty between the § 1245 property and the
§ 1250 property. The gain that is allo-
cated to the § 1245 property is equal to
the lower of (A) the amount of the gain,
or (B) the amount of the unadjusted basis
of the qualified real property that is treated
as § 1245 property (as determined under
paragraph VI(2)(a) of this notice). All of
the gain that is allocated to the § 1245
property is treated as ordinary income un-
der § 1245(a). The remaining amount of
the gain is allocated to the § 1250 property.
(3)Examples.
(a)Example 1 — Sale of qualified real property
in 2014 that had a 2012 unused carryover of disal-
lowed deduction
. During April 2012, Company Y
purchased for $20,000 and placed in service quali-
fied leasehold improvement property that is qualified
real property (“2012 qualified real property”). For
2012, Company Y did not have any other asset pur-
chases and did not have any carryover of disallowed
deduction from prior taxable years, and has a tax-
able income limitation of $12,000. For 2012, Com-
pany Y elected to apply § 179(f) and elected under
§ 179(a) to expense the entire cost of the 2012 quali-
fied real property. Because of the taxable income lim-
itation, the maximum § 179 deduction Company Y
claimed for 2012 is $12,000. As a result, Company
Y has an $8,000 carryover of disallowed deduction to
2013. Pursuant to § 179(f)(4)(D), this $8,000 carry-
over amount is allocated entirely to the 2012 qualified
real property. As a result of the § 179 election to ex-
pense the entire cost of the 2012 qualified real prop-
erty, Company Y’s adjusted basis in the 2012 quali-
fied real property on December 31, 2012, was zero.
In 2013, Company Y did not have any asset pur-
chases and did not have any taxable income. As a
result, the $8,000 carryover of disallowed deduction
from 2012 that is attributable to the 2012 qualified
real property cannot be used by Company Y in its
2013 taxable year. Because disallowed § 179 deduc-
tions relating to qualified real property cannot be car-
ried over to taxable years beginning after December
31, 2013, the $8,000 cannot be carried over to 2014.
Accordingly, Company Y is treated as if it did not
make the § 179 election in 2012 to expense $8,000 of
the $20,000 cost of the 2012 qualified real property.
The $8,000 of the $20,000 cost of the 2012 qualified
real property is treated as placed in service by Com-
pany Y on January 1, 2013, for purposes of comput-
ing depreciation (the first day of Company Y’s last
taxable year beginning in 2013).
See§ 179(f)(4)(C).
Under § 168 Company Y depreciated its qualified
leasehold improvement property placed in service
in 2013 using the optional depreciation table that
corresponds with the general depreciation system,
the straight-line method of depreciation, a 15-year
recovery period, and the half-year convention. Com-
pany Y also elected not to deduct the 50 percent
additional first-year depreciation deduction provided
by § 168(k) for any property placed in service during
2013. In December 2014, Company Y sells the
2012 qualified real property to an unrelated party
for $15,000. The adjusted basis of this property
for purposes of determining gain or loss is $7,467
(unadjusted basis of $20,000, less § 179 deduction
of $12,000, less depreciation allowed and allowable
of $533 for 2013 and 2014. The gain from the sale
of the 2012 qualified real property is $7,533 (sales
price of $15,000 less adjusted basis of $7,467).
(i)
Pro rata allocation methodology. Company
Yusesthe
pro rataallocation methodology provided
in paragraph VI(2)(b)(i) of this notice. Pursuant to
§ 1245(a)(3)(C) and paragraph VI(2)(a) of this notice,
$12,000 of the unadjusted basis of the 2012 qualified
real property is treated as § 1245 property (the § 179
deduction of $12,000 claimed on the unadjusted ba-
sis of $20,000). This § 1245 property has an adjusted
basis of zero as of the date of the sale and, pursuant
to § 1245(a)(2), a recomputed basis of $12,000 (ad-
justedbasisof$0plus§179deductionof$12,000).
The remaining unadjusted basis of $8,000 is treated
as § 1250 property, which has an adjusted basis of
$7,467, as of the date of the sale.
Under the
pro rataallocation methodology, Com-
pany Y allocates
pro ratathe sales price of $15,000
between the § 1245 property and § 1250 property.
Thus, $9,000 of the $15,000 sales price is allocated to
the § 1245 property ($15,000 sales price multiplied by
($12,000 that is treated as § 1245 property divided by
the $20,000 total unadjusted basis of the 2012 qual-
ified real property)) and $6,000 of the $15,000 sales
priceisallocatedtothe§1250property.
As a result, of the total gain of $7,533, a gain of
$9,000 is attributable to the § 1245 property ($9,000
sales price attributable to the § 1245 property less a
zero adjusted basis for this § 1245 property) and a
loss of $1,467 is attributable to the § 1250 property
($6,000 sales price attributable to the § 1250 property
less the $7,467 adjusted basis for this § 1250 prop-
erty). All of the $9,000 gain attributable to the § 1245
property is treated as ordinary income under § 1245.
The loss of $1,467 attributable to the § 1250 property
is subject to § 1231.
(ii)
Gain allocation methodology. Company Y
uses the gain allocation methodology provided in
paragraph VI(2)(b)(ii) of this notice. Under the gain
allocation methodology, Company Y allocates the
gain of $7,533 from the sale of the 2012 qualified
real property between § 1245 property and § 1250
property. The gain that is allocated to the § 1245
property is equal to the lower of (A) the amount of the
gain of $7,533, or (B) $12,000, which is the amount
of the unadjusted basis of the 2012 qualified real
property that is treated as § 1245 property (the § 179
deduction of $12,000 claimed on the unadjusted
basis of $20,000). Thus, all of the gain of $7,533
is allocated to the § 1245 property and is treated as
ordinary income under § 1245(a). None of the gain
is allocated to the § 1250 property.
(b)
Example 2 — Sale of qualified real property
in 2014 that had a 2012 unused carryover of disal-
lowed deduction
. The facts are the same as inEx-
ample 1
, except that in December 2014, Company Y
sells the 2012 qualified real property to an unrelated
party for $25,000. The adjusted basis of this prop-
erty for purposes of determining gain or loss is $7,467
(unadjusted basis of $20,000, less § 179 deduction
of $12,000, less depreciation allowed and allowable
of $533 for 2013 and 2014). The gain from the sale
of the 2012 qualified real property is $17,533 (sales
price of $25,000 less adjusted basis of $7,467).
(i)
Pro rata allocation methodology. Company
Yusesthe
pro rataallocation methodology provided
in paragraph VI(2)(b)(i) of this notice. Pursuant to
§ 1245(a)(3)(C) and paragraph VI(2)(a) of this notice,
$12,000 of the unadjusted basis of the 2012 qualified
real property is treated as § 1245 property (the § 179
deduction of $12,000 claimed on the unadjusted ba-
sis of $20,000). This § 1245 property has an adjusted
basis of zero as of the date of the sale and, pursuant
to § 1245(a)(2), a recomputed basis of $12,000 (ad-
justed basis of $0 plus § 179 deduction of $12,000).
The remaining unadjusted basis of $8,000 is treated
as § 1250 property, which has an adjusted basis of
$7,467, as of the date of the sale.
Under the
pro rataallocation methodology, Com-
pany Y allocates
pro ratathe sales price of $25,000
between the § 1245 property and § 1250 property.
Thus, $15,000 of the $25,000 sales price is allocated
to the § 1245 property ($25,000 sales price multiplied
by ($12,000 that is treated as § 1245 property divided
by the $20,000 total unadjusted basis of the 2012
qualified real property)) and $10,000 of the $25,000
sales price is allocated to the § 1250 property.
As a result, of the total gain of $17,533, a gain
of $15,000 is attributable to the § 1245 property
($15,000 sales price attributable to the § 1245
property less a zero adjusted basis for this § 1245
property) and a gain of $2,533 is attributable to the
§ 1250 property ($10,000 sales price attributable to
the § 1250 property less the $7,467 adjusted basis
for this § 1250 property). Of the $15,000 gain attrib-
utable to the § 1245 property, $12,000 is treated as
ordinary income under § 1245 and $3,000 is subject
to § 1231. Because Company Y depreciated the
amount that is treated as § 1250 property ($8,000)
using the straight-line method of depreciation, § 1250
recapture does not apply and all of the $2,533 gain at-
tributable to the § 1250 property is subject to § 1231.
(ii)
Gain allocation methodology. Company Y
uses the gain allocation methodology provided in
paragraph VI(2)(b)(ii) of this notice. Under the gain
allocation methodology, Company Y allocates the
gain of $17,533 from the sale of the 2012 qualified
real property between § 1245 property and § 1250
property. The gain that is allocated to the § 1245
property is equal to the lower of (A) the amount of
the gain of $17,533, or (B) $12,000, which is the
amount of the unadjusted basis of the 2012 qualified
real property that is treated as § 1245 property (the
§ 179 deduction of $12,000 claimed on the unad-
justed basis of $20,000). Thus, of the total gain of
$17,533, a gain of $12,000 is allocated to the § 1245
property and a gain of $5,533 is allocated to the
§ 1250 property.
All of the $12,000 gain attributable to the § 1245
property is treated as ordinary income under § 1245.
Because Company Y depreciated the amount that is
treated as § 1250 property ($8,000) using the straight-
line method of depreciation, § 1250 recapture does
not apply and all of the $5,533 gain attributable to
the § 1250 property is subject to § 1231.
2013–40 I.R.B.300September 30, 2013

VII. DRAFTING INFORMATION
The principal author of this notice
is Winston H. Douglas of the Office of
Associate Chief Counsel (Income Tax
& Accounting). For further information
regarding this revenue procedure, contact
Mr. Douglas on (202) 622–4930 (not a
toll free call).
September 30, 20133012013–40 I.R.B.

Part IV. Items o
fGeneralInterest
Notice of Prop
osed
Rulemaking an
dNoticeof
Public Hearin
g
Debt That Is a P
osition in
Personal Pro
perty That Is Part
of a Straddle
REG–111753
–12
AGENCY: Inte
rnal Revenue Service
(IRS), Trea
sury.
ACTION: Not
ice of proposed rulemaking
by cross-re
ference to temporary regula-
tions and no
tice of public hearings.
SUMMARY: Th
is document contains pro-
posed regul
ations relating to the applica-
tion of the
straddle rules to a debt instru-
ment. The p
roposed regulations clarify
that a taxp
ayer’s obligation under a debt
instrumen
t can be a position in personal
property
that is part of a straddle. The pro-
posed reg
ulations primarily affect taxpay-
ers that i
ssue debt instruments that provide
for one or
more payments that reference
the value
of personal property or a posi-
tion in p
ersonal property. This document
also pro
vides notice of a public hearing on
these pr
oposed regulations.
DATES: W
ritten or electronic comments
must be r
eceived by November 4, 2013.
Request
s to speak and outlines of topics to
be disc
ussed at the public hearing sched-
uled fo
r January 15, 2014, at 10 a.m. must
be rece
ived by November 4, 2013.
ADDRES
SES: Send submissions to:
CC:PA:
LPD:PR (REG–111753–12), room
5203, I
nternal Revenue Service, PO Box
7604,
Ben Franklin Station, Washing-
ton, D
C 20044. Submissions may be
hand-
delivered Monday through Friday
betwe
en the hours of 8 a.m. and 4 p.m.
to CC:
PA:LPD:PR (REG–111753–12),
Cour
ier’s Desk, Internal Revenue
Serv
ice, 1111 Constitution Avenue, NW.,
Wash
ington, DC, or sent electronically
viat
heFederaleRulemaking
Port
al atwww.regulations.gov(IRS
REG–
111753–12).
FOR F
URTHER INFORMATION
CON
TACT: Concerning the proposed reg-
ulations, Mar
y Brewer, (202) 622–4695;
concerning su
bmissions of comments,
the hearing an
d/or to be placed on the
building acce
ss list to attend the hearing,
Oluwafunmila
yo Taylor, (202) 622–7180
(not toll-fr
ee numbers).
SUPPLEMENTARY INFORMATION:
BACKGROUND AND
EXPLANATION OF PROVISIONS
Temporary regulations in this issue of
the Bulletin amend the Income Tax Regu-
lations (26 CFR part 1) relating to section
1092(d). The temporary regulations pro-
vide that if a taxpayer is the obligor under a
debt instrument one or more payments on
whicharelinkedtothevalueofpersonal
property or a position with respect to per-
sonal property, then the taxpayer’s obliga-
tion under the debt instrument is a position
with respect to personal property and may
be part of a straddle. The temporary regu-
lations apply to straddles established on or
after January 17, 2001. The text of the tem-
porary regulations also serves as the text
of these proposed regulations and is identi-
cal to the text of regulations originally pro-
posed under REG–105801–00.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866, as supplemented by Execu-
tive Order 13563. Therefore, a regulatory
assessment is not required. It also has been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations,
and because the regulation does not im-
pose a collection of information on small
entities, the Regulatory Flexibility Act (5
U.S.C. chapter 6) does not apply. Pursuant
to section 7805(f) of the Internal Revenue
Code, this notice of proposed rulemaking
has been submitted to the Chief Counsel
for Advocacy of the Small Business Ad-
ministration for comment on its impact on
small business.
Comments and Public Hearing
Bef
ore these proposed regulations are
ad
opted as final regulations, consideration
will be given t
o any comments that are sub-
mitted timely
to the IRS as prescribed in
thepreambleu
nder the “Addresses” head-
ing. The Treas
ury Department and the IRS
welcome comme
nts on this proposed reg-
ulation. All
comments will be available at
www.regulat
ions.govfor public inspection
and copying.
A public hear
ing has been scheduled for
January 15, 2
014,beginning at 10 a.m. in
the IRS Audit
orium, Internal Revenue Ser-
vice Buildi
ng, 1111 Constitution Avenue,
NW., Washin
gton, DC. Due to building se-
curity proc
edures, visitors must enter at the
Constituti
on Avenue entrance. In addition,
all visito
rs must present photo identifica-
tion to ent
er the building. Because of ac-
cess restr
ictions, visitors will not be ad-
mitted bey
ond the immediate entrance area
more than 3
0 minutes before the hearing
starts. F
or information about having your
name plac
ed on the building access list to
attend th
e hearing, see the “FOR FUR-
THER INFO
RMATION CONTACT” sec-
tion of t
his preamble.
The rules
of 26 CFR 601.601(a)(3) ap-
plytoth
ehearing. Personswhowishto
present
oral comments at the hearing must
submit w
ritten comments and an outline
of the to
pics to be discussed and the time
to be dev
oted to each topic by Novem-
ber 4, 2
013. Submit a signed paper orig-
inal an
d eight (8) copies or an electronic
copy. A
period of 10 minutes will be
allott
ed to each person for making com-
ments.
An agenda showing the scheduling
of the
speakers will be prepared after the
deadl
ine for receiving outlines has passed.
Copie
s of the agenda will be available free
of cha
rge at the hearing.
Drafting Information
The principal author of these regula-
tions is Mary Brewer, Office of Associate
Chief Counsel (Financial Institutions and
Products). However, other personnel from
the IRS and the Treasury Department
participated in their development.
*****
Proposed Amendments to the
Regulations
Acco
rdingly, 26 CFR part 1 is proposed
to be
amended as follows:
2013–40 I.R.B.302September 30, 2013

PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.1092(d)–1 also issued under
26 U.S.C. 1092(b)(1). * * *
Par. 2. Section 1.1092(d)–1 is amended
by revising paragraphs (d) and (e) to read
as follows:
§1.1092(d)–1 Definitions and special
rules.
*****
(d) [The text of the proposed amend-
ment to §1.1092(d)–1(d) is the same as the
text for §1.1092(d)–1T(d) published else-
where in this issue of the Bulletin.
(e) [The text of the proposed amend-
ment to §1.1092(d)–1(e) is the same as the
text for §1.1092(d)–1T(e) published else-
where in this issue of the Bulletin.
Beth Tucker,
Deputy Commissioner for
Operations Support.
(Filed by the Office of the Federal Register on September
4, 2013, 8:45 a.m., and published in the issue of the Federal
Register for September 5, 2013, 2013, 78 F.R. 54598)
Notice of Proposed
Rulemaking and Notice of
Public Hearing
Information Reporting by
Applicable Large Employers
on Health Insurance
Coverage Offered Under
Employer-Sponsored Plans
REG–136630–12
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains pro-
posed regulations providing guidance to
employers that are subject to the informa-
tion reporting requirements under section
6056 of the Internal Revenue Code (Code),
enacted by the Affordable Care Act. Sec-
tion 6056 requires those employers to re-
port to the IRS information about their
compliance with the employer shared re-
sponsibility provisions of section 4980H
of the Code and about the health care cov-
erage they have offered employees. Sec-
tion 6056 also requires those employers to
furnish related statements to employees so
that employees may use the statements to
help determine whether, for each month
of the calendar year, they can claim on
their tax returns a premium tax credit un-
der section 36B of the Code (premium tax
credit). In addition, that information will
be used to administer and ensure compli-
ance with the eligibility requirements for
the employer shared responsibility provi-
sions and the premium tax credit. The pro-
posed regulations affect applicable large
employers (generally meaning employers
with 50 or more full-time employees, in-
cluding full-time equivalent employees, in
the prior year), employees and other indi-
viduals.
This document also provides notice of
a public hearing on these proposed rules.
DATES: Written or electronic comments
must be received by November 8, 2013.
Requests to speak and outlines of topics to
be discussed at the public hearing sched-
uled for November 18, 2013, at 10 a.m.,
must be received by November 8, 2013.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR(REG–136630–12),
room 5205, Internal Revenue Ser-
vice, PO Box 7604, Ben Franklin Sta-
tion, Washington, DC 20044. Submis-
sions may be hand-delivered Monday
through Friday between the hours of 8
a.m. and 4 p.m. to CC:PA:LPD:PR
(REG–136630–12), Courier’s Desk, In-
ternal Revenue Service, 1111 Constitution
Avenue, NW, Washington, DC, or sent
electronically, via the Federal eRulemak-
ing Portal atwww.regulations.gov(IRS
REG–136630–12). The public hearing
will be held in the Auditorium, Internal
Revenue Building, 1111 Constitution
Avenue, NW, Washington, DC.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed reg-
ulations, Ligeia Donis (202) 927–9639;
concerning submission of comments, the
hearing, and/or to beplaced on the building
access list to attend the hearing, please
contact Oluwafunmilayo (Funmi) Taylor
at (202) 622–7180 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained
in this notice of proposed rulemaking has
been submitted to the Office of Manage-
ment and Budget for review in accordance
with the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)). Comments on the
collection of information should be sent to
theOffice of Management and Budget,
Attn: Desk Officer for the Department
of the Treasury, Office of Information
and Regulatory Affairs, Washington, DC
20503, with copies to theInternal Rev-
enue Service, Attn: IRS Reports Clear-
ance Officer, SE:W:CAR:MP:T:T:SP,
Washington, DC 20224. Comments on
the collection of information should be re-
ceived by November 8, 2013. Comments
are specifically requested concerning:
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 have
practical utility;
How the quality, utility, and clarity of
the information to be collected may be en-
hanced;
How the burden of complying with the
proposed collection of information may be
minimized, including through the appli-
cation of automated collection techniques
or other forms of information technology;
and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of services to provide informa-
tion.
The collection of information in these
proposed regulations is in proposed reg-
ulation §§301.6011–9, 301.6056–1, and
301.6056–2. This information will be
used by the IRS to verify compliance
with the return andemployee statement
requirements under section 6056 for pur-
poses of section 4980H, and with the
eligibility requirements for the premium
tax credit. This information will be used
to determine whether the information has
been reported and calculated correctly for
purposes of section 4980H and section
6056, and whether claims for the premium
September 30, 20133032013–40 I.R.B.

tax credit are correct. The likely respon-
dents are employers that are applicable
large employers, as defined under section
4980H(c)(2).
An agency may not conduct or sponsor,
and a person is not required to respond to, a
collection of information unless it displays
a valid control number assigned by the Of-
fice of Management and Budget.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
Background
Sections I through V of the preamble
(“Background”) describe the statutory pro-
visions governing the information report-
ing requirements, as well as related statu-
tory provisions. Sections VI through XIII
of the preamble (“Explanation of Provi-
sions and Summary of Comments”) de-
scribe and explain how these regulations
propose to implement the statutory provi-
sions of section 6056 and include a discus-
sion of a variety of potential simplified re-
porting methods that are under considera-
tion. As is typical with regulations on in-
formation reporting, these proposed regu-
lations refer generally to additional infor-
mation that may be required under the ap-
plicable forms and instructions. Sections
IX.B and C of this preamble set forth the
specific data elements that Treasury and
the IRS anticipate will be included with
the reporting, including the data elements
that Treasury and the IRS anticipate will
be provided through the use of an indica-
tor code.
Section 6056
1
requires applicable
large employers, as defined in section
4980H(c)(2), to file returns at the time
prescribed by the Secretary with respect
to each full-time employee and furnish a
statement to each full-time employee by
January 31 of the calendar year following
the calendar year for which the return must
be filed. Section 6056 specifies certain
information that must be reported on the
section 6056 return and related statement,
and authorizes the Secretary to require
additional information and determine the
form of the return. Section 6056 is effec-
tive for periods beginning after Decem-
ber 31, 2013; however, Notice 2013–45
(2013–31 I.R.B. 116) provides transition
relief for 2014 from the section 6056 in-
formation reporting requirements (as well
as the section 6055 information reporting
requirements relating to the section 5000A
individual shared responsibility provisions
and the section 4980H employer shared
responsibility provisions).
I.Shared Responsibility for Employers
(Section 4980H)
One of the purposes of section 6056
reporting is to assist with the administra-
tion of the employer shared responsibility
provisions added by the Affordable Care
Act as section 4980H ofthe Code. Section
4980H imposes anassessable payment
on applicable large employers if certain
requirements relating to the provision of
health care coverage to full-time employ-
ees are not met and one or more full-time
employees claim a premium tax credit.
On December 28, 2012, Treasury and the
IRS released proposed regulations under
section 4980H. The proposed regulations
under section 4980H were published in
theFederal Registeron January 2, 2013
(REG–138006–12 [78 FR 218]). Sec-
tion 4980H is effective for months after
December 31, 2013; however, Notice
2013–45, issued on July 9, 2013, provides
transition relief for2014 from the section
4980H employer shared responsibility
provisions.
The reporting requirements under sec-
tion 6056 apply only to employers that
are subject to section 4980H (which the
statute refers to as “applicable large em-
ployers”). Section 4980H(c)(2) defines
the term “applicable large employer” as,
with respect to a calendar year, an em-
ployer that employed an average of at
least 50 full-time employees on business
days during the preceding calendar year.
Generally, for purposes of determining ap-
plicable large employer status, a full-time
employee includes any employee who was
employed on average at least 30 hours
of service per week and any full-time
equivalents determined pursuant to section
4980H(c)(2)(E). All employers treated as
a single employer under section 414(b),
(c), (m), or (o) are treated as one employer
for purposes of determining applicable
large employer status. Section 4980H
contains rules for determining whether an
employer qualifies as an applicable large
employer, including special rules address-
ing an employer’s first year of existence
and predecessor and successor employers.
See section 4980H(c)(2)(C) and proposed
§54.4980H–2. Proposed regulations under
section 4980H provide guidance on deter-
mining applicable large employer status
and determining full-time employee status,
including defining and providing rules for
calculating hours ofservice. See proposed
§§54.4980H–1(a)(21) (definition of hours
of service), 54.4980H–2 (determination
of applicable large employer status), and
54.4980H–3 (determination of full-time
employee status).
II.Premium Tax Credit (Section 36B)
Section 6056 reporting will also be
used for the administration of the premium
taxcredit,whichwasaddedbytheAf-
fordable Care Act as section 36B of the
Code. Section 36B allows an advance-
able and refundable premium tax credit to
help individuals and families afford health
insurance coverage purchased through
an Affordable Insurance Exchange (Ex-
change). An employee is not eligible for
a premium tax credit to subsidize the cost
of Exchange coverage if the employee
is offered affordable coverage under an
employer-sponsored plan that provides
minimum value, or if the employee en-
rolls in an employer-sponsored plan. For
this purpose, an employer-sponsored plan
is affordable if the employee’s required
contribution for the lowest-cost self-only
minimum value coverage offered does not
exceed 9.5% of the employee’s household
income. Thus, an employee (and in the
case of an employer-sponsored plan that
offers coverage to an employee’s spouse
or dependents, the employee’s spouse and
dependents) who does not accept an offer
of affordable minimum value coverage
under an employer-sponsored plan and
who purchase coverage on an Exchange
may not be eligible for a premium tax
1
Section 6056 was enacted by section 1514(a) of the Patient Protection and Affordable Care Act, Public Law 111–148 (124 Stat. 119 (2010)), amended by the Health Care and Education
Reconciliation Act of 2010, Public Law 111–152 (124 Stat. 1029 (2010)), and further amended by the Department of Defense and Full-Year Continuing Appropriations Act of 2011, Public
Law 112–10 (125 Stat. 38 (2011)) (collectively, the Affordable Care Act).
2013–40 I.R.B.304September 30, 2013

credit. Individuals and the IRS will use the
information on the cost of the lowest-cost
employer-sponsored self-only coverage
that provides minimum value to verify the
individual’s eligibility for the premium tax
credit.
2
III.Individual Shared Responsibility
(Section 5000A)
In addition, the Affordable Care Act
added section 5000A to the Code. Section
5000A provides nonexempt individuals
with a choice: maintain minimum es-
sential coverage for themselves and any
nonexempt family members, or include an
additional payment with their Federal in-
come tax return. Section 5000A(f)(1)(B)
provides that minimum essential cover-
age includes coverage under an eligible
employer-sponsored plan. Under section
5000A(f)(2), an eligible employer-spon-
sored plan is, with respect to an employee,
a group health plan or group health in-
surance coverage offered by an employer
to the employee that is (1) a governmen-
tal plan, within the meaning of section
2791(d)(8) of the Public Health Service
Act (42 U.S.C. 300gg–91(d)(8)), or (2)
any other plan or coverage offered in the
small or large group market within a State.
An eligible employer-sponsored plan also
includes a grandfathered health plan, as
defined in section 5000A(f)(1)(D), offered
in a group market. Group health plans
within the meaning of section 1301(b)(3)
of the Affordable Care Act (42 U.S.C.
18021(b)(3)) include both insured health
plans and self-insured health plans. Ac-
cordingly, a self-insured group health
plan is an eligible employer-sponsored
plan. See the Questions and Answers
on the Individual Shared Responsibility
Provision available on the IRS website at
www.irs.gov.
IV.Information Reporting By Providers
of Coverage (Issuers, Self-Insuring
Employers, and Sponsors of Certain
Government-Sponsored Programs)
(Section 6055)
The Affordable Care Act also added
section 6055 to the Code, providing for in-
formation reporting for the administration
of section 5000A. The section 6055 report-
ing requirements are effective for years be-
ginning after December 31, 2013; how-
ever, Notice 2013–45 provides transition
relief for 2014 from the section 6055 re-
porting requirements. Section 6055 re-
quires information reporting by any person
that provides minimum essential coverage
to an individual during a calendar year, in-
cluding coverage provided under an eligi-
ble employer-sponsored plan, and the fur-
nishing to taxpayers of a related statement
covering each individual listed on the sec-
tion 6055 return. The information reported
under section 6055 can be used by individ-
uals and the IRS to verify the months (if
any) in which they were covered by mini-
mum essential coverage. Treasury and the
IRS are issuing proposed regulations un-
der section 6055 (REG–132455–11) con-
currently with these proposed regulations.
V.Reporting Requirements for Applicable
Large Employers (Section 6056)
Section 6056 directs an applicable large
employer (within the meaning of section
4980H(c)(2)) to file a return with the IRS
that reports for each employee who was a
full-time employee for one or more months
during the calendar year certain informa-
tion described in section 6056(b) about the
health care coverage the employer offered
to that employee (or, if applicable, that the
employer did not offer health care cover-
age to that employee). Section 6056 also
requires such employers to furnish by Jan-
uary 31 of the calendar year following the
calendar year for which the return must be
filed a related statement described in sec-
tion 6056(c) to each full-time employee
for whom information is required to be in-
cluded on the return.
Section 6056(b) describes the return re-
quired to be filed with the IRS under sec-
tion 6056. It states that a return meets the
requirements of section 6056 if the return
is in such form as the Secretary may pre-
scribe and contains (1) the name, date, and
employer’s employer identification num-
ber (EIN), (2) a certification as to whether
the employer offers to its full-time employ-
ees (and their dependents) the opportunity
to enroll in minimum essential coverage
under an eligible employer-sponsored plan
(as defined in section 5000A(f)(2)), (3) the
number of full-time employees for each
month during the calendar year, and (4)
the name, address, and taxpayer identifi-
cation number of each full-time employee
during the calendar year and the months, if
any, during which that employee (and any
dependents) were covered under any such
health benefits plans.
If the applicable large employer certi-
fies that it offered to its full-time employ-
ees (and their dependents) the opportunity
to enroll in minimum essential coverage
under an eligible employer-sponsored plan
(as defined in section 5000A(f)(2)), sec-
tion 6056 specifies that the return must
also include (1) the length of any waiting
period (as defined in section 2701(b)(4)
of the Public Health Service Act (42 USC
300gg(b)(4)) with respect to that cover-
age,
3
(2) the months during the calendar
year for which coverage under the plan
was available, (3) the monthly premium
for the lowest cost option in each of the
enrollment categories under the plan, and
(4) the employer’s share of the total al-
lowed costs of benefits provided under the
plan. Section 6056(b)(2)(F) provides that
the return must include such other infor-
mation as the Secretary may require. See
section IX of this preamble for a discussion
of the information proposed to be included
in these proposed regulations as part of the
reporting requirements, as well as addi-
tional information that may be required un-
der the applicable forms and instructions,
as is typical with regulations on informa-
tion reporting.
Section 6056(c) requires that every per-
son required to make a return under section
2
In connection with providing advance payment of the premium tax credit, the Exchanges will employ a verification process. Because the information concerning household income and other
relevant factors that are known to the individual andthe Exchanges at that time may differ from the information used to file the tax return after the close of the coverage year, an individual
who receives an advance payment of the premium tax credit will also need to calculate the appropriate amount of the credit when filing his or her tax return, and the credit may be more or
less than the advance payment.
3
While section 6056(b)(2)(C)(i) refers to the term “waiting period” as defined in section 2701(b)(4) of the PHS Act, amendments made by section 1201 oftheAffordableCareActmoved
this definition from section 2701(b)(4) of the PHS Act to section 2704(b)(4). Separately, section 2708 of the PHS Act prohibits a group health plan anda health insurance issuer offering group
health insurance coverage from applying any waiting period that exceeds 90 days. The Affordable Care Act adds section 715(a)(1) to the Employee Retirement Income Security Act (ERISA)
and section 9815(a)(1) to the Code to incorporate the provisions of part A of title XXVII of the PHS Act (specifically, PHS Act sections 2701 through 2728) into ERISA and the Code, and to
make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans.
September 30, 20133052013–40 I.R.B.

6056(a) furnish to eachfull-time employee
whose name is required to be set forth in
the return a written statement showing (1)
the name and address of the person re-
quired to make that return and the phone
number of the information contact for that
person, and (2) the information required to
be shown on the return with respect to that
individual. The written statement must be
furnished on or before January 31 of the
year following the calendar year for which
the return under section 6056(a) was re-
quired to be made.
As discussed in section IX.B of this pre-
amble, the approach contemplated by these
proposed regulations would give effect to
these statutory provisions by limiting the
information elements listed and other in-
formation that would be provided annually
to those that are needed by individual tax-
payers to accurately complete their tax re-
turnsorbytheIRStoeffectivelyadminis-
ter other provisions of the Affordable Care
Act. Treasury and the IRS seek comments
on ways to achieve these goals efficiently
and effectively.
Section 6056(d) provides that to the
maximum extent feasible, the Secretary
may permit combined reporting under sec-
tion 6056, section 6051 (employers filing
and furnishing Forms W–2,Wage and Tax
Statement, with respect to employees) or
section 6055, and in the case of an ap-
plicable large employer offering health
insurance coverage of a health insurance
issuer, the employer may enter into an
agreement with the issuer to include infor-
mation required under section 6056 with
the return and statement required to be
provided by the issuer under section 6055.
Section 6056(e) generally permits gov-
ernmental units, or any agency or instru-
mentality thereof, to designate a person
to comply with the section 6056 require-
ments on behalf of the governmental unit,
agency or instrumentality.
Under section 6724(d), as amended by
the Affordable Care Act, an applicable
large employer that fails to comply with
the filing and statement furnishing require-
ments of section 6056 may be subject to
penalties for failure to file a correct infor-
mation return (section 6721) and failure to
furnish correct payee statements (section
6722). However, these penalties may be
waived if the failure is due to reasonable
cause and not to willful neglect (section
6724).
Notice 2012–32 (2012–20 I.R.B. 910)
requested public comments on issues to
be addressed in regulations under section
6055. Notice 2012–33 (2012–20 I.R.B.
912) requested public comments on issues
to be addressed in regulations under sec-
tion 6056. In developing these proposed
regulations and the proposed regulations
under section 6055, including the poten-
tial further simplified reporting methods
described in section XI of this preamble,
Treasury and the IRS have considered the
written comments submitted in response to
these notices and other written comments
received.
In addition, consistent with Notice
2013–45, Treasury and the IRS have en-
gaged in further dialogue with stakehold-
ers in an effort to simplify section 6056
and section 6055 reporting consistent with
effective implementation of the law. This
process has included discussions with
stakeholders representing a wide range of
interests to assist in the consideration of
effective information reporting rules that
will be as streamlined, simple, and work-
able as possible. The effort to develop
these proposed information reporting rules
has reflected a considered balancing of
the importance of (1) providing individu-
als the information to complete their tax
returns accurately, including with respect
to the individual responsibility provi-
sions and eligibility for the premium tax
credit, (2) minimizing cost and admin-
istrative tasks for the reporting entities
and individuals, and (3) providing the
IRS with information to use for effective
and efficient tax administration. As noted
elsewhere in this preamble, the proposed
regulations will be the subject of public
comments, including comments that are
specifically invited regarding particular
issues identified in the preamble.
Explanation of Provisions and
Summary of Comments
VI.Introduction
The Explanation of Provisions that fol-
lows (Sections VII through XIII of the pre-
amble) describes the regulatory provisions
proposed to implement the statutory re-
porting provisions described in the Back-
ground portion of thepreamble. Specifi-
cally, this section includes the following:
Section VII.............Key Terms
Section VIII............ALE Member
Subject to Section 6056 Requirements
With Respect to Full-Time Employees
Section IX.............General Method
— Content, Manner, and Timing of
Information Required to be Reported
to the IRS and Furnished to Full-Time
Employees
Section X..............Combined
Reporting Under Section 6056 and
Section 6051 or 6055
Section XI.............Potential
Simplified Methods for Section
6056 Information Reporting
Section XII............Person
Responsible for Section 6056
Reporting
Section XIII............Applicability of
Information Return Requirements
VII.Key Terms
These proposed regulations under sec-
tion 6056 use a number of terms that are
defined in other Code provisions or regu-
lations. For example, section 6056(f) pro-
vides that any term used in section 6056
that is also used in section 4980H shall
have the same meaning given to the term
by section 4980H. Relevant terms include
the following:
A.Applicable Large Employer
The proposed regulations provide that
the termapplicable large employerhas the
same meaning as in section 4980H(c)(2)
and any applicableguidance. See pro-
posed §54.4980H–1(a)(4).
B.ALE Member
All persons treated as a single employer
under section 414(b), (c), (m), or (o) are
treated as one employer for purposes of de-
termining applicable large employer sta-
tus.
4
Under the proposed regulations, the
4
As explained in section 1.A.2 of the preamble to the proposed regulations under section 4980H (REG–138006–12 [78 FR 218]), until further guidance is issued, government entities, churches,
and a convention or association of churches may apply a reasonable, good faith interpretation of section 414(b), (c), (m), and (o) in determining whether a person or group of persons is an
applicable large employer and whether a particular entity is an applicable large employer member. See proposed §54.4980H–1(a)(5).
2013–40 I.R.B.306September 30, 2013

section 6056 filing and furnishing require-
ments are applied separately to each per-
son comprising the applicable large em-
ployer consistent with the approach taken
in the section 4980H proposed regulations
(REG–138006–12 [78 FR 218]) with re-
spect to the determination of any assess-
able payment undersection 4980H. The
person or persons that comprise the ap-
plicable large employer are referred to as
ALE members. The proposed regulations
define the termALE memberas a person
that, together with one or more other per-
sons, is treated as a single employer that is
an applicable large employer. For this pur-
pose, if a person, together with one or more
other persons, is treated as a single em-
ployer that is an applicable large employer
on any day of a calendar month, that person
is an ALE member for that calendar month.
This definition is the same as the definition
provided in the proposed regulations under
section 4980H. See §54.4980H–1(a)(5).
C.Dependent
The proposed regulations provide that
the termdependenthas the same mean-
ing as in section 4980H(a) and (b) and
any applicable guidance. See proposed
§54.4980H–1(a)(11).
D.Eligible Employer-Sponsored Plan
The proposed regulations provide that
the termeligible employer-sponsored
planhas the same meaning as in section
5000A(f)(2) and any applicable guidance.
E.Full-time Employee
The proposed regulations provide that
the termfull-time employeehas the same
meaning as in section 4980H(c)(4) and any
applicable guidanceas applied to the de-
termination and calculation of liability un-
der section 4980H(a) and (b) with respect
to any individual employee. See proposed
§54.4980H–1(a)(18).
F.Governmental Unit and Agency or
Instrumentality of a Governmental Unit
The proposed regulations define the
termgovernmental unitas the government
of the United States, any State or polit-
ical subdivision thereof, or any Indian
tribal government (asdefined in section
7701(a)(40)) or subdivision of an Indian
tribal government (asdefined in section
7871(d)). The proposed regulations do not
define the termagency or instrumentality
of a governmental unit, but rather reserve
on the issue.
G.Minimum Essential Coverage
The proposed regulations provide
that the termminimum essential cover-
agehas the same meaning as in section
5000A(f)(1) and any applicable guidance.
H.Minimum Value
The proposed regulations provide that
the termminimum valuehas the same
meaning as in section 36B and any appli-
cable guidance. See proposed §1.36B–6.
I.Person
The proposed regulations provide that
the termpersonhas the same meaning as
provided in section 7701(a)(1) and the reg-
ulations thereunder.
VIII.ALE Member Subject to Section
6056 Requirements with Respect to
Full-Time Employees
As discussed earlier in section VII.B
of this preamble, an ALE member is any
person that is an applicable large employer
or a member of an aggregated group (de-
termined under section 414(b), 414(c),
414(m) or 414(o)) that is determined to be
an applicable large employer. Under the
proposed regulations, the section 6056 fil-
ing and statement furnishing requirements
apply on a member-by-member basis to
each ALE member, even though the de-
termination of whether an entity is an
applicable large employer is made at the
aggregated group level. For example, if an
applicable large employer is comprised of
a parent corporation and 10 wholly-owned
subsidiary corporations, there are 11 ALE
members (the parent corporation and each
of the 10 subsidiary corporations). Un-
der the proposed regulations, each ALE
member with full-time employees, rather
than the group of entities that comprise
the applicable large employer, is the entity
responsible for filing and furnishing state-
ments with respect to its full-time employ-
ees under section 6056. This is consistent
with the manner in which any potential
assessable paymentsunder section 4980H
will be calculated and administered.
Treasury and the IRS understand that
ALE members may benefit from the as-
sistance of a third party in preparing these
returns, for example a third-party plan
administrator or a related ALE member
tasked with preparing the returns for all
the members of that applicable large em-
ployer. For a discussion of how these third
parties may help an ALE member fulfill
its reporting obligations, see section XII.C
of this preamble.
Whether an employee is a full-time
employee is determined under section
4980H(c)(4) and any applicable guidance.
See proposed §§54.4980H–1(a)(18) and
54.4980H–3. This includes any full-time
employees who may perform services for
multiple ALE members within the appli-
cable large employer.
5
Under the proposed
regulations, only ALE members with
full-time employees are subject to the fil-
ing and statement furnishing requirements
of section 6056 (and only with respect to
their full-time employees).
Generally, the ALE member providing
the section 6056 reporting is the common
law employer. Disregarded entities are
treated for section 4980H purposes, and
therefore for section 6056 purposes, sim-
ilarly to the way they are treated for em-
ployment tax purposes, so that the report-
ing requirements under section 6056 are
imposed on a disregarded entity that is an
applicable large employer, and not on its
owner.
6
IX.General Method — Content, Manner,
and Timing of Information Required to
be Reported to the IRS and Furnished to
Full-Time Employees
This section describes the general
method for reporting to the IRS and fur-
nishing statements to employees pursuant
5
For example, if an employee performs services for two applicable large employer members within an applicable large employer and the combined hours ofserviceforthetwoapplicable
large employer members are sufficient to trigger a reporting obligation under section 6056, each applicable large employer member is required to file and furnish a section 6056 return with
respect to services performed by the employee for that applicable large employer member. See proposed §54.4980H–5(d).
6
Specifically, the proposed regulations under section 7701 (REG–138006–12[78 FR 218]) treat the disregarded entity (as defined in §301.7701–2) as acorporation with respect to the reporting
requirements under section 6056. See proposed §301.7701–2(c)(2)(v)(A)(5). These rules would also apply to a qualified subchapter S subsidiary. See proposed §1.1361–4(a)(8)(i)(E).
September 30, 20133072013–40 I.R.B.

to section 6056 that is set forth in the pro-
posed regulations. This general method
would be available for all employers
and with respect to reporting for all em-
ployees. Treasury and the IRS are also
considering certainsimplified reporting
methods, such as using codes on Form
W–2 to report whether full-time employ-
ees, spouses, and their dependents have
been offered coverage, which in some
cases may be available only with respect
to certain groups of employees. In those
cases, with respect to those employees
for whom the simplified reporting method
was not available, the employer would use
the general method. In any case, however,
the simplified reporting methods under
consideration would be optional so that
an employer could choose to report for all
of its full-time employees using the gen-
eral method described in these proposed
regulations even if a simplified reporting
method is available. For a further descrip-
tion of the simplified reporting methods
under consideration, see section XI of this
preamble.
A.Information Reporting to the IRS
In accordance with section 6056, the
proposed regulations provide for every
ALE member to file a section 6056 return
with respect to its full-time employees.
Similar to the separate Form W–2,Wage
and Tax Statement, filed by an employer
for each employee and the Form W–3,
Transmittal of Wage and Tax Statements,
filedasatransmittalformfortheForms
W–2, the proposed regulations provide
that a separate return is required for each
full-time employee, accompanied by a sin-
gle transmittal form for all of the returns
filed for a given calendar year.
As a general method, the proposed reg-
ulations further provide that the section
6056 return may be made by filing Form
1094–C (a transmittal) and Form 1095–C
(an employee statement), or other forms
the IRS designates. Alternatively, the sec-
tion 6056 return may be made by filing
other form(s) designated by the IRS or a
substitute form. Under the proposed reg-
ulations, a substitute form must include
all of the information required to be re-
ported on Forms 1094–C and 1095–C or
other forms the IRS designates and com-
ply with applicable revenue procedures or
other published guidance relating to sub-
stitute returns. See §601.601(d)(2). In
accordance with usual procedures, these
forms will be made available in draft form
at a later date.
B.Information Required to Be Reported
and Furnished
The proposed regulations provide that
every ALE member will report on the sec-
tion 6056 information return the following
information: (1) the name, address, and
employer identification number of the
ALE member, the name and telephone
number of the applicable large employer’s
contact person, and the calendar year for
which the information is reported; (2) a
certification as to whether the ALE mem-
ber offered to its full-time employees (and
their dependents) the opportunity to en-
roll in minimum essential coverage under
an eligible employer-sponsored plan (as
defined in section 5000A(f)(2)), by cal-
endar month; (3) the number of full-time
employees for each month during the
calendar year; (4) for each full-time em-
ployee, the months during the calendar
year for which coverage under the plan
was available; (5) for each full-time em-
ployee, the employee’s share of the lowest
cost monthly premium (self-only) for cov-
erage providing minimum value offered
to that full-time employee under an eligi-
ble employer-sponsored plan, by calendar
month; and (6) the name, address, and
taxpayer identification number of each
full-time employee during the calendar
year and the months, if any, during which
the employee was covered under an eligi-
ble employer-sponsored plan. In addition,
the proposed regulations provide, as with
other information reporting, that the sec-
tion 6056 information return may request
such other information as the Secretary
may prescribe or as may be required by
the form or instructions.
As part of the effort to minimize the cost
and administrative steps associated with
the reporting requirements, Treasury and
the IRS have sought to identify any infor-
mation that would not be relevant to indi-
vidual taxpayers or the IRS for purposes of
administering the premium tax credit and
employer shared responsibility provisions
or that is already provided at the same time
through other means. Specifically, the pro-
posed regulations do not require the report-
ing of the following four data elements (a
more detailed description of the data ele-
ments that Treasury and the IRS anticipate
will be included is provided later in this
section of the preamble).
First, the proposed regulations do not
require the reporting of the length of any
waiting period, because the length of the
waiting period is not relevant for admin-
istration of the premium tax credit or em-
ployer shared responsibility provisions or
for an individual in preparing his or her tax
return. However, Treasury and the IRS an-
ticipate that information will be requested,
using an indicator code, regarding whether
an employee’s coverage was not effective
during certain monthsbecause of a waiting
period since this information is relevant to
the administration of the employer shared
responsibility provisions.
Second, the proposed regulations do not
require reporting of the employer’s share
of the total allowed costs of benefits pro-
vided under the plan because this infor-
mation also is not relevant to the admin-
istration of the premium tax credit and the
employer shared responsibility provisions.
In contrast, whether the employer-spon-
sored plan provides minimum value cov-
erage is relevant information; accordingly,
Treasury and the IRS anticipate that infor-
mation will be requested, also using an in-
dicator code.
Third, the proposed regulations do not
require the reporting of the monthly pre-
mium for the lowest-cost option in each
of the enrollment categories (such as self-
only coverage or family coverage) under
the plan. Rather, because only the lowest-
cost option of self-only coverage offered
under any of the enrollment categories for
which the employee is eligible is relevant
to the determination of whether coverage
is affordable (and thus to the administra-
tion of the premium tax credit and em-
ployer shared responsibility provisions),
that is the only cost information proposed
to be requested.
Fourth, the proposed regulations do not
require the reporting of the months, if any,
during which any of the employee’s de-
pendents were covered under the plan. In-
stead, the proposed regulations require re-
porting only regarding whether the em-
ployee was covered under a plan. This is
because information relating to the months
during which any of the employee’s de-
pendents were covered under the plan will
be reported on the section 6055 informa-
2013–40 I.R.B.308September 30, 2013

tion return associated with that employee’s
coverage.
Under the proposed regulations, each
ALE member must file and furnish the
section 6056 return and employee state-
ment using its EIN. Any ALE member that
does not have an EIN may easily apply
for one online, by telephone, fax, or mail.
See Publication 1635, Employer Identifi-
cation Number, for further information at
www.irs.gov.
Having considered the information re-
quired by section 6056 and the informa-
tion needed to verify employer-sponsored
coverage and to administer the employer
shared responsibility provisions under sec-
tion 4980H and the premium tax credit,
Treasury and the IRS anticipate that as part
of the general method for section 6056
reporting, the IRS will need certain in-
formation not specifically set forth under
section 6056 but authorized under section
6056(b)(2)(F). Accordingly, the proposed
regulations provide, in a manner similar to
other information reporting guidance, that
additional information may be prescribed
by guidance, forms, or instructions. Trea-
sury and the IRS are also considering po-
tential simplified reporting methods that in
certain situations may permit an employer
to provide less information than all data el-
ements required under the general method
for reporting. See section XI of this pre-
amble.
Under the general method of section
6056 reporting, the following information
is expected to be requested, through the use
of indicator codes for some information, as
part of the section 6056 return (as well as
an indication of how many individual em-
ployee statements are being submitted):
(1) information as to whether the cover-
age offered to employees and their depen-
dents under an employer-sponsored plan
meets minimum value and whether the em-
ployee had the opportunity to enroll his or
her spouse in the coverage;
(2) the total number of employees, by
calendar month;
(3) whether an employee’s effective
date of coverage was affected by a waiting
period;
(4)iftheALEmemberwasnotcon-
ducting business during any particular
month, by month;
(5) if the ALE member expects that it
will not be an ALE member the following
year;
(6) information regarding whether the
ALE member is a person that is a member
of an aggregated group, determined under
section 414(b), 414(c),414(m), or 414(o),
and, if applicable, the name and EIN of
each employer member of the aggregated
group constituting the applicable large em-
ployer on any day of the calendar year for
which the information is reported;
(7) if an appropriately designated entity
is reporting on behalf of an ALE member
that is a governmental unit or any agency
or instrumentality thereof for purposes of
section 6056, the name, address, and iden-
tification number of the appropriately des-
ignated person;
(8) if an ALE member is a contribut-
ing employer to a multiemployer plan,
whether a full-time employee is treated as
eligible to participate in a multiemployer
plan due to the employer’s contributions
to the multiemployer plan; and
(9)iftheadministratorofamultiem-
ployer plan is reporting on behalf of the
ALE member with respect to the ALE
member’s full-time employees who are
eligible for coverage under the multi-
employer plan, the name, address, and
identification number of the administrator
of the multiemployer plan (in addition to
the name, address, and EIN of the ALE
member already required under the pro-
posed regulations).
C.Use of Indicator Codes to Provide
Information With Respect to a Particular
Full-Time Employee
In an effort to simplify and streamline
the section 6056 reporting process even
under the general section 6056 reporting
rules, Treasury and the IRS anticipate that
certain of the information described above
as applied to a particular full-time em-
ployee will be reported to the IRS, and fur-
nished to the full-time employee, through
the use of a code rather than by providing
specific or detailed information. Specifi-
cally, it is contemplated that the following
information will be reported with respect
to each full-time employee for each calen-
dar month using a code:
7
(1) minimum essential coverage meet-
ing minimum value was offered to:
a. the employee only;
b. the employee and the employee’s
dependents only;
c. the employee and the employee’s
spouse only; or
d. the employee, the employee’s spouse
and dependents;
(2) coverage was not offered to the em-
ployee and:
a. the employee was in a waiting pe-
riod that complies with the requirements of
PHS Act section 2708 and its implement-
ing regulations;
b. the employee was not a full-time
employee;
c. the employee was not employed by
the ALE member during that month; or
d. no other code or exception applies;
(3) coverage was offered to the em-
ployee for the month although the em-
ployee was not a full-time employee dur-
ing that month; and
(4) the ALE member met one of the
affordability safe harbors under proposed
§54.4980H–5(e)(2) with respect to the em-
ployee.
It is anticipated that if multiple codes
apply with respect to a full-time employee
for a particular calendar month, the report-
ing format will accommodate the neces-
sary codes.
D.Section 6056 Statements to Full-time
Employees
Under the general section 6056 report-
ing rules set forth in the proposed regu-
lations, every ALE member required to
file a section 6056 return must furnish a
section 6056 employee statement to each
of its full-time employees that includes
the name, address and EIN of the ALE
member and the informationrequiredtobe
shown on the section 6056 return with re-
spect to the full-time employee. The sec-
tion 6056 employee statement is not re-
quired to include a copy of the transmittal
form that accompanies the returns. As part
7
Treasury and the IRS have received comments regarding whether transition relief previously provided in the section 4980H proposed regulations (REG–138006–12 [78 FR 218]) with respect
to the transition from 2013 to 2014 will be extended to the transition from 2014 to 2015. The issue is currently under consideration and will be addressed in future guidance under section
4980H. If further transition relief is provided under section 4980H, it is expected that additional indicator codes will be available on the section 6056returntoindicatethatanemployeris
using the transition relief.
September 30, 20133092013–40 I.R.B.

of the potential simplified reporting meth-
ods Treasury and the IRS are also con-
sidering whether, incertain circumstances,
other methods of furnishing information to
an employee may be sufficient (for exam-
ple, through the use of a code on the Form
W–2). For a detailed description of these
potential simplified reporting methods, see
section XI of this preamble.
Some employers may wish to have the
flexibility to use a substitute type of state-
ment to provide the necessary information
to full-time employees. The proposed reg-
ulations provide that the section 6056 em-
ployee statement may be made by furnish-
ing a copy of the section 6056 return on
Form 1095–C (or another form the IRS
designates) or a substitute employee state-
ment for that full-time employee. Un-
der the proposed regulations, a substitute
statement must include the information re-
quired to be shown on the section 6056 re-
turn filed with the IRS with respect to that
employee and must comply with applica-
ble revenue procedures or other published
guidance relating to substitute statements.
See §601.601(d)(2). These proposed regu-
lations provide that section 6056 employee
statements filed using Form 1095–C or
another form the IRS designates will be
included in the proposed IRS truncated
TIN program. Under this proposed pro-
gram, an IRS truncatedtaxpayer identify-
ing number may be used as the identify-
ing number for an individual in lieu of the
identifying number appearing on the corre-
sponding information return filed with the
IRS. See the proposed regulations on IRS
Truncated Taxpayer Identification Num-
bers (REG–148873–09 [78 FR 913]).
E.TimeforFilingSection6056Returns
and Furnishing Employee Statements
The proposed regulations provide that
section 6056 returns must be filed with the
IRS annually, no later than February 28
(March 31 if filed electronically) of the
year immediately following the calendar
year to which the return relates. This is the
same filing schedule applicable to other
information returns with which employ-
ers are familiar such as Forms W–2 and
1099. Because Notice2013–45 provided
transition relief for section 6056 reporting
for 2014, the first section 6056 returns re-
quired to be filed are for the 2015 calendar
year and must be filed no later than March
1, 2016 (February 28, 2016, being a Sun-
day), or March 31, 2016, if filed electron-
ically. In addition, the regulations propose
that the section 6056 employee statements
be furnished annually to full-time employ-
ees on or before January 31 of the year
immediately following the calendar year
to which the employee statements relate.
This means that the first section 6056 em-
ployee statements (meaning the statements
for 2015) must be furnished no later than
February 1, 2016 (January 31, 2016, being
a Sunday).
In preparation forthe application of
the section 4980H provisions beginning in
2015, employers are encouraged to volun-
tarily comply for 2014 (that is, for section
6056 returns and statements filed and
furnished in 2015) with the information
reporting provisions (once the information
reporting rules have been issued) and to
maintain or expand health coverage in
2014. Real-world testing of reporting sys-
tems and plan designs through voluntary
compliance for 2014 will contribute to a
smoother transition to full implementation
for 2015.
Some commenters asked for use of an
alternate filing date for employers whose
health plan is not a calendar year plan.
While Treasury and the IRS understand
that employers may collect information
on a plan year basis, employees generally
will need to receive their section 6056
employee statements early in the calendar
year in order to have the requisite informa-
tion to correctly and completely file their
income tax returns reflecting any available
premium tax credit. For this reason, the
proposed regulations do not adopt this
suggestion. However, Treasury and the
IRS are considering a simplified reporting
method, described in section XI of this
preamble, that in certain circumstances
could permit the employer to report the
required information on the Form W–2
whichisalreadybeingfurnishedtoan
employee on the same schedule.
These proposed regulations do not in-
clude rules regarding extensions of the
time to file section 6056 returns but this
topic is addressed elsewhere. Specifically,
the notice of proposed rulemaking under
section 6055 (REG–132455–11) includes
proposed amendments to the regulations
under section 6081 relating to general
rulesonextensionsoftimetofiletoin-
clude returns under both sections 6055 and
6056. The final section 6056 regulations
are expected to cross-reference the amend-
ments to the regulations under section
6081. These proposedregulations reserve
a paragraph for this cross-reference.
F.Manner of Filing of Section 6056
Information Returns and Furnishing of
Section 6056 Employee Statements.
Treasury and the IRS understand that
electronic filing is often easier and more
efficient for taxpayers, and several com-
menters requested that employers be per-
mitted to file section 6056 returns elec-
tronically. The proposed regulations re-
quire electronic filing of section 6056 in-
formation returns except for an ALE mem-
ber filing fewer than 250 returns during
the calendar year. Each section 6056 re-
turn for a full-time employee is a separate
return. Although an ALE member filing
fewer than 250 returns during the calendar
year may always choose to make the sec-
tion 6056 returns on the prescribed paper
form, that member is permitted (and en-
couraged) to file section 6056 returns elec-
tronically. This proposed requirement for
electronic filing is the same as the current
requirements for other information returns.
The proposed regulations provide that
all returns are aggregated for the purpose
of applying the 250-return threshold so
that, for example, an ALE member re-
quired to file 150 section 6056 returns and
200FormsW–2willberequiredtoelec-
tronically file section 6056 returns. A re-
porting entity must submit the prescribed
form(s) to request authorization and obtain
a Transmitter Control Code from the IRS
to be able to file an information return elec-
tronically.
In addition to electronic filing, Trea-
sury and the IRS understand that electronic
methods are often a simpler and more
efficient method to supply employees
with the required information, and several
commenters requested that employers be
permitted to electronically furnish section
6056 employee statements to full-time
employees. In response, the proposed
regulations permit electronic furnishing
of section 6056 employee statements if
certain notice, consent, and hardware or
software requirements are met. To pro-
vide rules for electronic furnishing with
which employers are already familiar, the
proposed regulations adopt by analogy
2013–40 I.R.B.310September 30, 2013

the process currently in place for the elec-
tronic furnishing of employee statements
(that is, Forms W–2) pursuant to section
6051 and applicable regulations.
X.Combined Reporting Under Section
6056 and Section 6051 or 6055
In addition to the reporting under sec-
tion 6056, two other reporting provisions
provide for annual reporting with respect
to certain individuals and the furnishing of
statements to those individuals. Specifi-
cally, section 6051 requires employers to
provide Forms W–2 reporting wages paid
and taxes withheld. Section 6055 requires
information reporting by any person that
provides minimum essential coverage to
an individual. ALE members that provide
minimum essential coverage on a self-in-
sured basis are subject to the reporting
requirements of all three sections (6051,
6055 and 6056). Notices 2012–32 and
2012–33 requested comments on how to
minimize duplication in reporting under
these provisions.
Several commenters recommended that
the regulations allow combined informa-
tion reporting under sections 6055 and
6056 for applicable large employers that
sponsor self-insured plans and must report
under both sections. Other commenters
recommended that employers be permit-
ted to use a single information return to
report under sections 6051 (Form W–2)
and 6055. Some commenters suggested
adding section 6055 or section 6056 re-
portingtoFormW–2.
Because not all employers are subject
to each of these three reporting require-
ments, independent reporting methods
under each section need to be available;
otherwise, employers subject to only one
reporting requirement may have to expend
additional effort to use a combined report-
ing method. Optional combined reporting
therefore would require development of
multiple forms for each reporting require-
ment (some forms for combined reporting,
other forms for separate reporting), which
could create administrative complexity
and create confusion for employees.
In addition, any consideration of com-
bined reporting must take into account that
sections 6051, 6055and 6056 apply to
different types of entities (subject to the
various reporting requirements, which dif-
fer among the Code provisions), and re-
quire reporting of different types of in-
formation. Section 6051 requires report-
ing of certain wage and wage-related in-
formation on an annual basis by all em-
ployers for all employees (and only em-
ployees). Section 6055 requires reporting
of certain health coverage information by
various entities (issuers, employers spon-
soring self-insured group health plans, and
governmental units) only for individuals
who are actually covered (and not for in-
dividuals who are offered coverage but do
not enroll), and multiple covered individ-
uals may be included on one return. Sec-
tion 6056 requires reporting of information
by applicable large employers on offers of
coverage that have or have not been made
only to full-time employees (whether or
not the offer has been accepted). Further,
unlike Form W–2 reporting under section
6051, which provides annual information,
both sections 6055 and 6056 require re-
porting some information on a monthly ba-
sis. Accordingly, the general section 6056
reporting method under the proposed regu-
lations does not assume overall combined
reporting under sections 6051, 6055, and
6056.
However, as described more fully be-
low in section XI of this preamble, Trea-
sury and the IRS are considering whether
it may be possible to permit a type of
combined reportingunder sections 6051
and 6056 by providing an option to use a
code on the Form W–2 in certain circum-
stances to provide information needed by
both the employee and the IRS rather than
through the use of the section 6056 em-
ployee statement (withemployer-level in-
formation being provided separately). In
addition, in other limited circumstances in-
volving no-cost or very low-cost coverage
provided under a self-insured group health
plan, Treasury and theIRS are considering
whether the employee and the IRS could
rely solely on the information provided by
the employer on a section 6055 return and
the Form W–2 without any further infor-
mation reporting under section 6056. For
further discussion of these potential ap-
proaches, see section XI of this preamble.
In response to comments, Treasury
and the IRS also have considered sugges-
tions to use, for section 6055 and 6056
reporting purposes, information that em-
ployers communicate to employees about
employer-sponsored coverage prior to
employees’ potential enrollment in Ex-
change coverage. These comments have
observed that, under the Affordable Care
Act, employers are required to provide
pre-enrollment information to employees
by various means, including informa-
tion in the Notice of Coverage Options
provided to employees pursuant to the re-
quirements under section 18B of the Fair
Labor Standards Act
8
in the Exchanges
and potentially via the Employer Cover-
age Tool developed by the Department of
Health and Human Services (HHS) that
supports the application for enrollment
in a qualified health plan and insurance
affordability programs.
9
Treasury and the IRS have considered
and coordinated with the Departments of
HHS and Labor regarding the various re-
porting provisions with a view to identi-
fying ways to make the entire process as
effective and efficient as possible for all
parties. That said, the various reports are
designed for different purposes, and pre-
enrollment reporting regarding anticipated
employer coverage in an upcoming cover-
age year is unlikely to be helpful to indi-
vidual taxpayers in accurately completing
their tax returns more than a year later, af-
ter the coverage year. Among other issues,
the pre-enrollment information may not be
readily available to individuals at the time
they are filing their tax returns, could be
confused with the more recently received
pre-enrollment information that applies to
the subsequent year (not the year for which
the tax return is being filed), and is in a
format that does not facilitate easy transfer
to the appropriate location on the Federal
income tax return. Notwithstanding these
challenges, Treasuryand the IRS continue
to work with the other Departments and
stakeholders to consider approaches that
might help minimize cost and administra-
tive complexity and realize efficiencies in
the reporting process.
8
On May 8, 2013, the Department of Labor issued Technical Release 2013–02 providing temporary guidance under Fair Labor Standards Act section 18B, as well as model notices.See
Technical Release 2013–02, model notice for employers who offer a health plan to some or all employees, and model notice for employers who do not offer ahealth plan, available at
http://www.dol.gov/ebsa/healthreform/. Guidance on the Notice to Employees of Coverage
9
Available athttps://www.healthcare.gov/downloads/ECT_Application_508_130615.pdf
September 30, 20133112013–40 I.R.B.

Both sections 6055 and 6056 require
employers to furnish to employees infor-
mation about health care coverage. Solely
for the purpose of furnishing information
to employees (as opposed to filing with the
IRS), Treasury and the IRS are consider-
ing whether employers sponsoring self-in-
sured group health plans could fulfill their
obligation to furnish an employee state-
ment under both sections 6055 and 6056
through the use of a single substitute state-
ment, within the parameters of the rules
provided in revenue procedures or other
published guidance relating to substitute
returns. See §601.601(d)(2) of this chap-
ter.
XI.Potential Simplified Methods for
Section 6056 Information Reporting
In developing these regulations, Trea-
sury and the IRS have sought to develop
simplified reporting methods that will
minimize the cost and administrative tasks
for employers, consistent with the statu-
tory requirements to file an information
return and furnish an employee statement
to each full-time employee. Comments
have suggested that, at least for some em-
ployers, the collection, assembling and
processing of the necessary data into an
appropriate format for filing may not be
necessary if the employer offers sufficient
coverage to make it unlikely that the em-
ployer will be subject to an assessable
payment under section 4980H because the
employee will be ineligible for a premium
tax credit. Treasury and the IRS have con-
sidered these comments in formulating the
potential simplified reporting methods de-
scribed in this section. If Treasury and the
IRS adopt one or more of these simplified
reporting methods, they would be op-
tional alternatives tothe general reporting
method set forth in the proposed regula-
tions, which could substantially reduce the
data elements reported using the general
method. It is anticipated that, if an em-
ployer uses one or more of the simplified
reporting methods, the employer would
indicate on its section 6056 transmittal
which simplified reporting method(s) was
used and the number of employees for
which the particular method was used.
Comments are invited on these potential
simplified reporting methods and on other
possible simplified approaches that would
benefit employers while providing suffi-
cient and timely information to individual
taxpayers and the IRS.
The information provided to the IRS
and the employee pursuant to section 6056
is important for administering the section
4980H shared employer responsibility
provisions and thepremium tax credit.
However, in looking at the potential flow
of information, Treasury and the IRS have
determined that in some circumstances
only some of the information required
under the general method is necessary.
Treasury and the IRS have attempted to
identify the specific groups of employees
for whom simplified reporting would pro-
vide sufficient information, and simplified
reporting approaches for these groups are
outlined below. In many situations, not
every full-time employee of an employer
would fit into the groups of employees
for which simplified reporting would be
available. In that case, the employer
would continue to use the general report-
ing method in the proposed regulations
for those full-time employees for whom
the employers could not use a simplified
method. However, it is anticipated that
a significant number of employers will
have a sufficient number of employees
that fit into one or more of the categories
described below to make use of the sim-
plified reporting method preferable to the
general reporting method.
Subsections A through F of this sec-
tion XI of the preamble describe, and com-
ments are invited on, possible simplified
methods of reporting under section 6056.
Each of these possible methods would be
optional for the reporting employer, and,
except where specifically noted, would not
affect any reporting obligations under sec-
tion 6055.
Subsection A...........Eliminating
Section 6056 Employee Statements
in Favor of Form W–2 Reporting for
Certain Groups of Employees Offered
Coverage
Subsection B........... No Need to
Determine Full-Time Employees
If Minimum Value Coverage Is
Offered to All Potentially Full-Time
Employees
Subsection C...........Self-Insured
Employers Offering Employees,
Their Spouses and Dependents
Mandatory No-Cost Minimum Value
Coverage
Subsection D............Voluntarily
Reporting Section 6056 Elements
During or Prior to the Year of
Coverage
Subsection E............Reporting for
Employees Potentially Ineligible for
the Premium Tax Credit
Subsection F............Combinations of
Simplified Reporting Methods
A.Eliminating Section 6056 Employee
Statements in Favor of Form W–2
Reporting for Certain Groups of
Employees Offered Coverage
In response to stakeholder comments,
Treasury and the IRS are considering al-
lowing employers in certain circumstances
to report offers of minimum value cover-
age on an employee’s Form W–2, instead
of reporting the offers to the IRS on a sec-
tion 6056 employee statement or furnish-
ing a section 6056 employee statement to
the employee. The reporting is envisioned
as using an existing box on the Form W–2
to provide the monthly dollar amount of
the required employee contribution for the
lowest cost minimum value self-only cov-
erage offered to the employee and using
a letter code to describe the offer of cov-
erage. Specifically, Treasury and the IRS
anticipate that thisapproach could be used
for any employee employed by the em-
ployer for the entire calendar year when
the offer, the individuals to whom the offer
is made, and the employee contribution for
the lowest-cost option for self-only cover-
age all remained the same for all twelve
months of the calendar year. The letter
code could be used to indicate that mini-
mum value coverage was offered to: (1)
the employee, the employee’s spouse and
the employee’s dependents, (2) the em-
ployee and the employee’s dependents but
not the employee’s spouse; (3) the em-
ployee and the employee’s spouse but not
the employee’s dependents; (4) the em-
ployee, but not the employee’s spouse or
the employee’s dependents; or that the em-
ployee was (5) only offered coverage that
was not minimum value coverage; or (6)
2013–40 I.R.B.312September 30, 2013

not offered coverage. For this purpose, an
employer is treated as offering coverage to
the employee’s spouse or dependents even
if the employee does not have a spouse
or dependent, if the employee could elect
such coverage if the employee did have a
spouse or dependent. If an employee was
not offered coverage, it is anticipated that
the dollar amount of the employee share
of the lowest-cost employee-only cover-
age option would be shown as zero.
Example: Employer has 100 full-time employees,
all of whom are employed for the entire year. Em-
ployer offers all of its full-time employees, spouses
and dependents the opportunity to enroll in health
care coverage that provides minimum value. Under
the potential simplified reporting method, it is con-
templated that, for all employees, Employer would be
permitted to avoid filing or furnishing section 6056
employee statements if it used a letter code on the
Form W–2 to report that an offer of coverage had
been made to the employee, the employee’s spouse
(if any), and the employee’s dependents (if any), and
a dollar amount indicating the required monthly em-
ployee contribution to purchase the lowest cost option
offered to the employee for self-only coverage.
Treasury and the IRS are also consid-
ering whether this or a similar simplified
reportingmethodcouldbeextendedto
cases in which the required monthly em-
ployee contribution is below a specified
threshold. For example, if the annual em-
ployee cost of self-only coverage is $800
or less, the employer would be permitted
to report zero as the employee cost. The
$800 amount is lessthan 9.5 percent of
the federal poverty line for a single in-
dividual. Thus, regardless of the size of
the employee’s household or the level of
other income or loss of any member of
the employee’s household, either the em-
ployer’s coverage will be affordable for
purposes of section 36B(c)(2)(C)(i) or the
employee’s household income will be less
than 100 percent of the federal poverty
line and the employee will not be an ap-
plicable taxpayer under section 36B(c)(2)
who is eligible for the credit. In addition,
even if other income increases the em-
ployee’s household income, the employee
would not be entitled to the affordability
exemption to the shared responsibility
payment under section 5000A(e)(1) be-
cause the $800 amount would not exceed
8 percent of the employee’s household
income. Alternatively, if other losses re-
duce the employee’s household income
below the income tax filing threshold, the
employee will qualify for the exemption
under section 5000A(e)(2), and the infor-
mation otherwise reported under section
6056 would not be required to determine
whether the employee satisfied section
5000A. Comments are also requested on
the extent to which this approach could
reasonably be combined with the other
simplified reporting methods described in
this section XI of the preamble.
An employer that decides to use this
simplified reporting method would not be
required to file or furnish a section 6056
employee statement with respect to the
employees for whom this method was
used. Instead, the employer would sim-
ply indicate on a section 6056 transmittal
that it had chosen to use this method. If
the Form W–2 for an employee used an
EIN other than the employer’s EIN (for
example, a third-party payor treated as
an employer under section 3401(d)(1) of
the Code filed the Form W–2), the em-
ployer (that is, the ALE member) may be
required as part of the 6056 transmittal to
identify those employees for whom a third
party reported on Form W–2 without the
employer’s EIN and to list the employees’
social security numbers.
Stakeholders have inquired whether
a similar optional Form W–2 reporting
method could be used for employees of-
fered coverage under their employer’s
plan for less than a full calendar year (for
example for a new employee hired during
the year), but offered no coverage for the
remainder of the year. Treasury and the
IRS note that this type of reporting would
leavegapsininformationthatwouldoth-
erwise be used for tax administration pur-
poses. For example, the reporting would
not provide any information regarding the
particular calendar months during which
coverage was offered (or not offered).
Even if the employer represented that the
coverage was offered during all periods of
employment, the reporting would not be
able to be reconciled, for example, with
another Form W–2 received by the em-
ployee from another employer using the
same reporting method. That is because
while both employers would report the
number of months coverage was offered,
that information would not be sufficient
to determine whether offers of coverage
were overlapping (because the employee
was employed simultaneously at both em-
ployers).
Additionally, for months for which cov-
erage was not offered, information as to
whether the employee was employed and
also the reason coverage was not offered
during certain months of the calendar year
would not be captured (for example, the
employee was in a waiting period or em-
ployed but not as a full-time employee).
The specific reason coverage was not of-
fered is relevant to the administration of
the employer shared responsibility provi-
sions since the failure to offer coverage for
certain reasons does not result in an assess-
able payment under the employer shared
responsibility provisions for a calendar
month, even if the full-time employee re-
ceives a premium tax credit for that month.
Comments are requested on whether this
approach to reporting would be useful for
employers and, if so, on possible ways to
address issues concerning the information
gaps that would exist in reporting on em-
ployees offered coverage for less than a
full calendar year.
B.No Need to Determine Full-Time
Employees If Minimum Value Coverage
Is Offered to All Potentially Full-Time
Employees
Treasury and the IRS understand that
some employers offer coverage to all or
nearly all of their employees, and are
able to accurately represent that the only
employees not offered coverage are not
full-time employees. In that case, the em-
ployer will have determined that it would
not owe an assessable payment under sec-
tion 4980H(a) because it would have made
an offer of coverage to all of its full-time
employees. However, the employer might
not have determined whether every em-
ployee to whom coverage is offered is
or is not a full-time employee. Treasury
and the IRS are considering whether these
employers may provide section 6056 re-
porting that does not identify the number
of full-time employees and that does not
specify whether a particular employee
offered coverage is a full-time employee,
provided that the employer certifies that
all of its employees to whom it did not of-
fer coverage during the calendar year were
not full-time employees (or were other-
wise ineligible for coverage, for example
because they were in the initial permitted
waiting period following the date of hire).
This method would permit the employer
to forgo identifying the full-time status
of its employees prior to filing a section
September 30, 20133132013–40 I.R.B.

6056 return. However, if an employee
who was offered coverage claimed a pre-
mium tax credit, the employer could be
asked to confirm at a later date (after the
filing of the section 6056 return and the
relevant Form 1040 return) whether that
employee was a full-time employee during
that calendar year (in the same manner that
an employer reporting only on behalf of
full-time employees might later be asked
about the status of an employee claiming
the premium tax credit if the employee
was not listed on that employer’s section
6056 return). Treasury and the IRS rec-
ognize that this method often would result
in over-reporting of certain elements in
the sense that reporting would occur with
respect to one or more employees who
may not be full-time employees during the
calendar year. But some employers have
indicated that they anticipate relatively
few of their employees will claim the
premium tax credit, and that determining
those few employees’ status as full-time
employees later would be administratively
easier than determining the full-time em-
ployee status of all employees at the time
of the initial filing.
Example: Employer has 100 employees. Em-
ployer makes an offer of minimum value coverage to
90 of the employees. Employer has determined that
the ten employees to whom coverage is not offered
are not full-time employees for any calendar month
during the year. Employer has not determined which
of the remaining 90 employees were full-time em-
ployees for one or more calendar months during the
year. Employer certifies as part of its section 6056
transmittal return that the only employees to whom
it did not offer coverage were not full-time employ-
ees or were otherwise not required to be offered cov-
erage for all months of employment (for example, a
full-time employee was hired in November and, un-
der the terms of the plan, which comply with the Af-
fordable Care Act, would not be initially offered cov-
erage until the following calendar year). Employer
would file a section 6056 return and furnish an em-
ployee statement for each of the 90 employees, but
would not be required to report either the total num-
ber of full-time employees for the year or whether any
particular employee was a full-time employee for any
calendar month during the year. If one of the em-
ployees included as part of the return declined the of-
fer of coverage and properly claimed a premium tax
credit with respect to coverage provided through an
Exchange, and the employer were contacted by the
IRS to determine whether the employer did or did not
owe an assessable payment under section 4980H(b),
the employer could determine at that point whether
the employee was a full-time employee for one or
more months during that calendar year and supply
that information to the IRS.
C.Self-Insured Employers Offering
Employees, Their Spouses, and
Dependents Mandatory No-Cost
Minimum Value Coverage
Some employers may provide manda-
tory minimum value coverage under a
self-insured group health plan to an em-
ployee, an employee’s spouse, and an
employee’s dependents, with no employee
contribution. In that case, none of those
individuals would be eligible for a pre-
mium tax credit for any month during
which the coverage was provided, and
the employer would indicate on the return
requiredundersection6055fortheem-
ployee all months for which that coverage
was provided with respect to each indi-
vidual in the employee’s family. Because
the section 6055 return would provide the
individual taxpayers the necessary infor-
mation to accurately file the taxpayers’
income tax returns, and would provide
the IRS the information concerning those
employees to administer the premium tax
credit and employer shared responsibil-
ity provisions, Treasury and the IRS are
considering whether for those employees
the employer could file and furnish only
the return required under section 6055,
acodeontheFormW–2,thesummary
information provided in the section 6056
transmittal form, and no further informa-
tion reporting under section 6056.
D.Voluntarily Reporting Section 6056
Elements During or Prior to the Year of
Coverage
Some employers have expressed an in-
terest in voluntarily reporting information
about the coverage they offer their employ-
ees prior to the end of a coverage year, for
example at their open enrollment or before
the open enrollment at the Exchanges, on
the theory that earlier section 6056 report-
ing to the IRS could lead to greater effi-
ciency in the employer verification system
employed by Exchanges to determine el-
igibility for premium tax credits. Under
such an arrangement, they believe that if
some employers chose to provide part of
their section 6056 reporting to the IRS ear-
lier in the process, the IRS, in turn, would
be able to transmit any pertinent data to the
Exchanges.
A proposal of this kind would need to
address a number of issues. First, the regu-
lations under section 6103 do not authorize
the IRS to share taxpayer information in
this manner. Even if this information shar-
ing were permitted, information reporting
plays a role in enabling individuals to file
complete and accurate tax returns. Under
the proposal, individuals would not receive
the information for their tax return prepa-
rationproximatetowhentheyarecom-
pleting their tax returns. Employees may
bear less burden and prepare more accu-
rate tax returns when their employer fur-
nishes a statement at the start of the rele-
vant tax season reflecting all the informa-
tiontheemployeeneedstofileacorrect
tax return for the prior year. Gaps in com-
plete and timely information increase the
need for additional follow-up communica-
tion among employers, employees, and the
IRS.
Also, offering two sets of reporting al-
ternatives with filing occurring at different
time periods would present challenges.
Because the reporting options would be
voluntary, different reporting protocols
and regimes would need to be established
and would need to accommodate employer
choices to change the method of reporting
from year to year. The multiple forms,
procedures, and protocols could create
complexity and be difficult to administer.
In addition, the information about the
offer of coverage made before the year
starts may change during the calendar year.
For example, during the year, an employee
may be hired or may terminate employ-
ment, a part-time employee may become
full-time and be eligible for different cov-
erage options, or an employee may change
positions during the year and no longer
be offered coverage. Accordingly, disclo-
sure before the coverage year does not ad-
equately substitute for disclosure to em-
ployees and reporting to the IRS after the
coverage year.
Employers, employees, and the IRS
share the goal of aligning eligibility for
advance payments of premium tax credits
as closely as possible with eligibility for
the premium tax credit on the employee’s
annual tax return filed after the coverage
year. This would reduce confusion and
minimize the risk of employees owing ad-
vance payments back as liabilities on their
tax returns. Regardless of the final rules
on section 6056 information reporting,
employers are encouraged to make their
pre-enrollment disclosures to employees
2013–40 I.R.B.314September 30, 2013

and Exchanges as effective and helpful to
individuals as possible.
Comments are invited on whether there
could be a way to design such a volun-
tary partial early reporting arrangement
that would reduce complexity and avoid
confusion for employers and employees,
be administrable for the IRS, and provide
timely information to individuals so that
they can meet their income tax filing obli-
gation without undue burden or undue risk
of inaccuracy.
E.Reporting for Employees Potentially
Ineligible for the Premium Tax Credit
Some employers have indicated that,
because many of their employees are
relatively highly paid, they are unlikely
to be eligible for a premium tax credit.
The assumption is that the employee’s
household income is likely to exceed
400 percent of the Federal poverty line,
and therefore the employee would not
benefit from receiving the information
otherwise included with a section 6056
employee statement. Further, because the
employee is unlikely to qualify for a pre-
mium tax credit, employers have stated
that the information will not be useful to
the IRS in administering the employer
shared responsibility provisions because
the precondition of a section 4980H(b)
assessable payment—that the employee
receive a premium tax credit—isunlikely
to be satisfied.
Treasury and the IRS have considered
this request and welcome comments both
on its potential usefulness to employ-
ers and its administrability. Employers
would still need to report to the IRS the
months during which the employee was a
full-time employee, at least to the extent
the employee was included in a full-time
employee count. Additionally, employers
will not be in a position to know the corre-
lation between an employee’s Form W–2
wages and household income with suffi-
cient accuracy to determine whether an
employee may be eligible for the premium
tax credit. The only pertinent information
the employer retains is the employee’s
annual wages, yet the poverty level from
which the premium tax credit income
threshold is determined varies consider-
ably based on family size (which employ-
ers will not necessarily know). In addition,
employees for whom an employer may
use an affordability safe harbor based on
wages for purposes of compliance with
the employer shared responsibility provi-
sions under section 4980H might still be
eligible for a premium tax credit based on
their household income. Employers gen-
erally do not know employees’ household
income, and will not have information
as to whether the employee (or another
member of the employee’s household)
has incurred losses or expenses (such as
alimony, casualty losses, Schedule C busi-
ness deductions, and the like) that reduce
the employee’s household modified ad-
justed gross income below 400 percent of
the Federal poverty line. Accordingly, it is
unclear whether Form W–2 wages alone
would provide sufficient information to
determine eligibility for the premium tax
credit because the employee’s household
income may be well below the employee’s
Form W–2 wages. Comments are re-
quested as to whether there is a level of
Form W–2 wages at which such a deter-
mination might be made with sufficient
confidence, and whether that level of
wagesissohighasnottobeofpractical
use to employers.
F.Combinations of Simplified Reporting
Methods
The potential simplified reporting
methods described above would apply
to particular groups of employees that in
many cases would not overlap. In such
cases, two different potential simplified
reporting methods could not be applied to
the same employee. Treasury and the IRS
anticipate that, to the extent any of these
potential reporting methods are adopted
in final regulations or other administrative
guidance, including forms and instruc-
tions, an employer would be permitted to
use different simplified methods for differ-
ent employees at the employer’s election.
XII.Person Responsible For Section 6056
Reporting
Under the proposed regulations, in gen-
eral, each ALE member must file a section
6056 return with respect to its full-time
employees for a calendar year.
A.Special Rules for Governmental Units:
Designation
In accordance with section 6056(e), the
proposed regulations provide that in the
case of any ALE member that is a gov-
ernmental unit or any agency or instru-
mentality thereof (together referred to in
this preamble as a governmental unit), that
governmental unit may report under sec-
tion 6056 on its own behalf or may appro-
priately designate another person or per-
sons to report on its behalf.
10
For pur-
poses of designation, another person is ap-
propriately designated for purposes of the
filing and furnishing requirements of sec-
tion 6056 if that other person is part of or
related to the same governmental unit as
the ALE member. For example, a polit-
ical subdivision of astate may designate
the state, another political subdivision of
the state, or an agency or instrumental-
ity of the foregoing as the designated per-
son for purposes of section 6056 reporting.
The person designated might be the gov-
ernmental unit that operates the relevant
health plan or the governmental unit that
does other information reporting on behalf
of the designating governmental unit. Fur-
ther, the governmental unit may designate
more than one governmental unit to file
and furnish under section 6056 on its be-
half, such as, for example, if different cat-
egories of employees are offered coverage
under different health plans operated by
different governmental units. In addition,
a governmental unit may designate another
person to file and furnish with respect to
all or some of its full-time employees. If
the designation is accepted by the designee
and is made before the filing deadline, the
designated governmental unit is the desig-
nated entity responsible for section 6056
reporting.
The person (or persons) appropriately
designated for this purpose would report
under section 6056 on behalf of the ALE
member. Accordingly, the person (or per-
sons) appropriately designated is (are) the
person(s) responsible for section 6056 re-
porting on behalf of the ALE member and
subject to the penalties for failure to com-
ply with information return requirements
under sections 6721 and 6722. However,
the ALE member remains subject to the re-
quirements of section 4980H.
10
Until further guidance is issued, government entities, churches, and a convention or association of churchesmay apply a reasonable, good faith interpretation of section 414(b), (c), (m),
and (o) in determining whether a person or group of persons is an applicable large employer.
September 30, 20133152013–40 I.R.B.

Under the proposed regulations, a sep-
arate section 6056 return and transmittal
must be filed for each ALE member for
which the appropriately designated person
is reporting. The designated entity must
report its name, address, and EIN on the
section 6056 return to indicate it is the ap-
propriately designated person.
The proposed regulations further pro-
vide that the designation under section
6056(e) must be in writing and must con-
tain certain language. Specifically, under
the proposed regulations, the designation
must be signed by both the ALE member
and the designatedperson, and must be
effective under all applicable laws. The
proposed regulations also require that the
designation set forth the name and EIN
of the designated person, and appoint
that person as the person responsible for
reporting under section 6056 on behalf
of the ALE member. The designation
must contain information identifying the
category of full-time employees (which
may be full-time employees eligible for
a specified health plan, or in a particular
job category, provided that the specific
employees covered by the designation can
be identified) for which the designated
person is responsible for reporting under
section 6056 on behalf of the ALE mem-
ber. If the designated person is responsible
for reporting under section 6056 for all
full-time employees of an ALE member,
the designation should so indicate.
The designation must also contain lan-
guage that the designated person agrees
that it is the appropriately designated
person under section 6056(e), and an ac-
knowledgement that the designated person
is responsible for reporting under sec-
tion 6056 on behalf of the ALE member
and subject to the requirements of sec-
tion 6056, and the information reporting
penalty provisions of sections 6721 and
6722. The designation must also set forth
the name and EIN of the ALE member,
identifying the ALE member as the per-
son subject to the requirements of section
4980H. The proposed regulations provide
that an equivalent applicable statutory or
regulatory designation containing similar
language will be treated as a written des-
ignation for purposes of section 6056(e).
B.ALE Members Participating in
Multiemployer Plans
Several commenters suggested that ad-
ministrators of multiemployer plans may
be willing to file section 6056 returns re-
porting information for coverage offered
to full-time employees under the multi-
employer plan and recommended in such
cases that an ALE member not be required
to report coverage information for those
employees.
Treasury and the IRS understand that
the plan administrator of a multiemployer
plan may have better access than a par-
ticipating employer to certain information
on participating employees required to be
included as part of section 6056 report-
ing. For this reason, Treasury and the IRS
anticipate that the section 6056 reporting
with respect to full-time employees eligi-
ble to participate in a multiemployer plan
will be permitted to be provided in a bi-
furcated manner. Under the bifurcated ap-
proach, one return would pertain to the
full-time employees eligible to participate
in the multiemployer plan (or, if the em-
ployer participatesin more than one multi-
employer plan, one return for each relevant
multiemployer plan in which full-time em-
ployees are eligible to participate), and an-
other return would pertain to the remain-
ing full-time employees (those who are not
eligible to participate in a multiemployer
plan). As in the case of other third parties,
as discussed in section XII.C of this pream-
ble, the administrator (or administrators, in
the case of an employer contributing to two
or more multiemployer plans) of a multi-
employer plan is permitted to report on be-
half of an ALE member that is a contribut-
ing employer, and is permitted to report
with respect to the ALE member’s full-
time employees who areeligible for cov-
erage under the multiemployer plan (but
not with respect to any other full-time em-
ployees of the ALE member). The admin-
istrator of the multiemployer plan would
file a separate section 6056 return for any
ALE member that is a contributing em-
ployer on behalf of whom it files using the
ALE member’s EIN. The administrator of
the multiemployer plan would also provide
its own name, address, and identification
number (in addition to the name, address,
and EIN of the ALE member already re-
quired). The ALE member would remain
the responsible person under section 6056
with respect to all of its full-time employ-
ees and accordingly would be required to
sign the section 6056 return filed on its be-
half and be subject to any potential liability
for failure to properly file returns or fur-
nish statements. To the extent the plan ad-
ministrator that prepares returns or state-
ments required under section 6056 is a tax
return preparer, it will be subject to the re-
quirements generally applicable to return
preparers.
C.Section 6056 Reporting Facilitated by
Third Parties
Treasury and the IRS understand that
third party administrators or other third
party service providers are integral to
the operation of many employers’ health
plans, including with respect to compli-
ance with any reporting requirements. As
requested by several commenters, ALE
members are permitted to contract with
and use third parties to facilitate filing re-
turns and furnishingemployee statements
to comply with section 6056. The pro-
posed regulations make clear, however,
that ALE members are responsible for
reporting under section 6056, with the
exception of certaingovernmental unit
applicable large employers that properly
designate under section 6056(e). While
the proposed regulations do not provide
guidance on contractual or other report-
ing arrangements between private ALE
members and other parties, they do not
prohibit these arrangements. Such con-
tractual arrangements would not transfer
the potential liability of the ALE member
for failure to report and furnish under sec-
tion 6056 and the regulations, or the ALE
member’s potential liability under section
4980H.
As one example, an applicable large
employer that is a member of an aggre-
gated group of related entities (determined
under section 414(b), 414(c), 414(m) or
414(o)), may file returns and furnish em-
ployee statements on behalf of one or more
of the other ALE members of the aggre-
gated group. Each other ALE member
of the group, for example, could have the
ALE member that operates the employer-
sponsored plan file section 6056 returns
and furnish section 6056 employee state-
ments on its behalf. However, a sepa-
rate section 6056 return must be filed for
each ALE member, providing that ALE
2013–40 I.R.B.316September 30, 2013

member’s EIN. Each ALE member in the
aggregated group would continue to be
the responsible personunder section 6056,
wouldberequiredtosignthereturnfiled
on its behalf, and would be subject to any
potential liability for failure to properly
file returns or furnish statements. To the
extent the other party that prepares returns
or statements required under section 6056
is a tax return preparer, it will be subject
to the requirements generally applicable to
return preparers.
XIII.Applicability of Information Return
Requirements
The proposed regulations provide that
an ALE member that fails to comply with
the section 6056 information return and
employee statement requirements may be
subject to the generalreporting penalty
provisions under sections 6721 (failure
to file correct information returns), and
6722 (failure to furnish correct payee
statement). The proposed regulations
also provide, however, that the waiver
of penalty and special rules under sec-
tion 6724 and the applicable regulations,
including abatement of information re-
turn penalties for reasonable cause, apply.
The proposed regulations under section
6055 (REG–132455–11) include proposed
amendments to the regulations under sec-
tions 6721 and 6722 to include returns
under both sections 6055 and 6056 in
the definitions of information return and
payee statement. Treasury and the IRS
anticipate that the final regulations under
section 6056 will cross-reference those
amendments to the regulations under sec-
tions 6721 and 6722.
Proposed Effective/Applicability Dates
These regulations are proposed to be ef-
fective the date the final regulations are
published in theFederal Register. These
regulations are proposed to apply for cal-
endar years beginning after December 31,
2014. Consistent with Notice 2013–45,
reporting entities will not be subject to
penalties for failure to comply with the
section 6506 information reporting provi-
sions for 2014 (including the furnishing of
employee statementsin 2015). Accord-
ingly, a reporting entity will not be sub-
ject to penalties if it first reports beginning
in 2016 for 2015 (including the furnishing
of employee statements). Taxpayers are
encouraged, however, to voluntarily com-
ply with section 6056 information report-
ing for 2014 by using the general reporting
method set forth in these regulations once
finalized.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant
regulatory action as defined in Executive
Order 12866, as supplemented by Execu-
tive Order 13563. Therefore, a regulatory
assessment is not required. It has also been
determined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C. chap-
ter 5) does not apply to these regulations.
It is hereby certified that these regula-
tions will not have a significant economic
impact on a substantial number of small
entities. This certification is based on the
fact that the regulations are consistent with
the requirements imposed by section 6056.
Consistent with the statute, the regulations
require applicable large employers, as de-
fined in section 4980H(c)(2), to file a re-
turn with the IRS, using either the pre-
scribed form or a substitute form, for each
full-time employee reporting certain infor-
mation regarding the health care coverage
offered and provided to the employee for
the year. Consistent with the statute, the
proposed regulations further require appli-
cable large employers to furnish to each
full-time employee a copy of the return, or
a substitute statement, required to be filed
by the applicable large employer with re-
spect to the employee.Accordingly, these
regulations merely prescribe the method
of filing and furnishing returns and em-
ployee statements as required under sec-
tion 6056. Moreover, the proposed regu-
lations attempt to minimize the burden as-
sociated with this collection of informa-
tion by requiring that applicable large em-
ployers file and furnish only information
that the IRS will utilize to administer the
shared employer responsibility provisions
under section 4980H and administer the
premium tax credit under section 36B, and
information employees will need in order
to complete their tax returns.
Based on these facts, a Regulatory Flex-
ibility Analysis under the Regulatory Flex-
ibility Act (5 U.S.C. chapter 6) is not re-
quired.
Pursuant to section 7805(f) of the Code,
this notice of proposed rulemaking has
been submitted to the Chief Counsel for
Advocacy of the Small Business Adminis-
tration for comment on its impact on small
business.
Comments and a Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any written comments
(a signed original and eight (8) copies)
or electronic comments that are submit-
ted timely to the IRS as prescribed in this
preamble under the “Addresses” heading.
Treasury and the IRS specifically request
comments on the clarity of the proposed
rules and how they can be made easier to
understand. All comments will be avail-
able for public inspection atwww.regula-
tions.govor upon request. A public hear-
ing has been scheduled for November 18,
2013, in the Auditorium, Internal Revenue
Building, 1111 Constitution Avenue, NW,
Washington, DC. Due to building security
procedures, visitors must enter at the Con-
stitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediateentrance area more
than 30 minutes beforethe hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER IN-
FORMATION CONTACT” section of this
preamble.
The rules of 26 CFR 601.601(a)(3) ap-
ply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written or electronic comments by
November 8, 2013 and an outline of the
topics to be discussed and the time to be
devoted to each topic (signed original and
eight (8) copies) by November 8, 2013.
A period of 10 minutes will be allot-
ted to each person for making comments.
An agenda showing the scheduling of
the speakers will be prepared after the
deadline for receivingoutlines has passed.
Copies of the agenda will be available free
of charge at the hearing.
Drafting Information
The principal author of these proposed
regulations is Ligeia M. Donis of the Of-
fice of the Division Counsel/Associate
Chief Counsel (Tax Exempt and Govern-
ment Entities). However, other personnel
September 30, 20133172013–40 I.R.B.

from the IRS and Treasury participated in
their development.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 301 is pro-
posed to be amended as follows:
PART 301—PROCEDURE AND
ADMINISTRATION
Paragraph 1. The authority citation for
part 301 continues to read in part as fol-
lows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 301.6011–9 is added to
read as follows:
§301.6011–9 Electronic filing of section
6056 returns.
(a)Returns required under section
6056.An applicable large employer mem-
ber, as defined in §301.6056–1(b)(2), is
required to file electronically an infor-
mation return under section 6056 and
§301.6056–1, except as otherwise pro-
vided in paragraph (b) of this section.
(b)Exceptions—(1)Low-volume fil-
ers/250-return threshold—(i)In general.
An applicable largeemployer member will
not be required to file electronically the
section 6056 information return described
in paragraph (a) of this section unless it is
required to file 250 or more returns during
the calendar year. Each section 6056 infor-
mation return for a full-time employee is a
separate return. For purposes of this sec-
tion, an applicable large employer member
is required to file at least 250 returns if,
during the calendar year, the applicable
large employer member is required to file
at least 250 returns of any type, including
information returns (for example, Forms
W–2, Forms 1099), income tax returns,
employment tax returns, and excise tax
returns. An applicable large employer
member filing fewer than 250 returns dur-
ing the calendar year may make the returns
on the prescribed paper form.
(ii)Examples. The following exam-
ples illustrate the provisions of paragraph
(b)(1) of this section:
Example 1.Company X is an applicable large em-
ployer member. For the calendar year ending Decem-
ber 31, 2015, Company X is required to file 275 sec-
tion 6056 returns. Company X is required to file sec-
tion 6056 returns electronically for that calendar year
because 275 section 6056 information returns exceed
the 250-return threshold.
Example 2. Company Y is an applicable large
employer member. For the calendar year ending De-
cember 31, 2015, Company Y is required to file 200
returns on Form W–2 and 150 section 6056 returns.
Company Y is required to file the section 6056 re-
turns electronically for that calendar year because it
is required to file more than 250 returns (that is, the
200 Forms W–2 plus the 150 section 6056 returns).
(2)Waiver—(i)In general.TheCom-
missioner may waive the requirements of
this section if hardship is shown in a re-
quest for waiver filed in accordance with
this paragraph (b)(2)(i). The principal fac-
tor in determining hardship will be the
amount, if any, by which the cost of fil-
ing the section 6056 returns in accordance
with this section exceeds the costs of fil-
ing the returns on other media. A re-
quest for waiver must be made in accor-
dance with applicable revenue procedures
or publications (see§601.601(d)(2)(ii)(b)
of this chapter). Pursuant to these proce-
dures, a request for waiver should be filed
at least 45 days before the due date of the
section 6056 return in order for the IRS to
have adequate time to respond to the re-
quest for waiver. The waiver will specify
the type of information return (that is, sec-
tion 6056 information return) and the pe-
riod to which it applies and will be subject
to such terms and conditions regarding the
method of reporting as may be prescribed
by the Commissioner.
(ii)Supplemental rules.TheCommis-
sioner may prescribe rules that supplement
the provisions of paragraph (b)(2)(i) of this
section.
(c)Effective/applicability date.The
rules of this section are effective as of the
date of publication of the Treasury deci-
sion adopting these rules as final regula-
tions in theFederal Register. This section
applies to returns on“Form 1095–C”or
another form the IRS designates required
to be filed after December 31, 2014. How-
ever, reporting entities will not be subject
to penalties under sections 6721 or 6722
with respect to the reporting requirements
for 2014 (for information returns filed and
for statements furnished to employees in
2015).
Par. 3. Section 301.6056–1 is added to
read as follows:
§301.6056–1 Rules relating to reporting
by applicable large employers on
health insurance coverage offered under
employer-sponsored plans.
(a)In general. Section 6056 requires
an applicable large employer subject to the
requirements of section 4980H to report
certain health insurance coverage informa-
tion to the Internal Revenue Service, and
to furnish certain related employee state-
ments to its full-time employees. Para-
graph (b) of this section contains defini-
tions for purposes of this section. Para-
graph (c) of this section prescribes general
rules for filing the required information
with the IRS and furnishing the required
employee statements to employees. Para-
graphs (d) and (e) of this section describe
the information required to be reported on
a section 6056 information return and the
time and place for filing. Paragraph (f) of
this section sets forth the mandatory elec-
tronic filing requirements for applicable
large employer members. Paragraph (g)
of this section provides information about
the statement required to be furnished to a
full-time employee. Paragraph (h) of this
section prescribes the time and manner of
furnishing the statement, including exten-
sions of time to furnish. Paragraph (i) of
this section prescribes the method for cor-
recting informationincluded in a statement
required by section 6056(d) that has been
furnished to an employee. Paragraph (j)
of this section describes the information
return requirements applicable to section
6056 returns. Paragraph (k) of this section
describes special rules for certain applica-
ble large employers.
(b)Definitions—(1)Applicable large
employer.Thetermapplicable large em-
ployerhas the same meaning as in sec-
tion 4980H(c)(2) and any applicable reg-
ulations.
(2)Applicable large employer member.
The termapplicable large employer mem-
bermeans a person that, together with one
or more other persons, is treated as a single
employer that is an applicable large em-
ployer. For this purpose, if a person, to-
gether with one or more other persons, is
treated as a single employer that is an ap-
plicable large employer on any day of a
calendar month, that person is an applica-
ble large employer member for that cal-
endar month. If the applicable large em-
ployer comprises one person, that one per-
son is the applicable large employer mem-
ber. An applicable large employer member
2013–40 I.R.B.318September 30, 2013

does not include a person that is not an em-
ployer or only an employer of employees
with no hours of service for the calendar
year.
(3)Dependent.Thetermdependenthas
the same meaning as in section 4980H(a)
and (b) and any applicable regulations.
(4)Eligible employer-sponsored plan.
The termeligible employer-sponsored
planhas the same meaning as in section
5000A(f)(2) and any applicable regula-
tions.
(5)Full-time employee.Thetermfull-
time employeehas the same meaning as
in section 4980H and any applicable reg-
ulations, as applied to the determination
and calculation of liability under section
4980H(a) and (b) with respect to any in-
dividual employee, and not as applied to
the determination of status as an applica-
ble large employer, if different.
(6)Governmental unit.The termgov-
ernmental unitrefers to the government
of the United States, any State or polit-
ical subdivision thereof, or any Indian
tribal government (as defined in section
7701(a)(40)) or subdivision of an Indian
tribal government (as defined in section
7871(d)).
(7)Agency or instrumentality of a gov-
ernmental unit. [Reserved]
(8)Minimum essential coverage.The
termminimum essential coveragehas the
same meaning as in section 5000A(f)(1)
and any applicable regulations.
(9)Minimum value.Thetermminimum
valuehas the same meaning as in section
36B and any applicable regulations.
(10)Person.Thetermpersonhas the
same meaning as in section 7701(a)(1) and
applicable regulations.
(c)Content and timing of reporting by
applicable large employers. Each appli-
cable large employer member required to
make a return and furnish a related state-
ment to its full-time employees under sec-
tion 6056 for a calendar year must make a
return and furnish the related statement us-
ing such form(s) as may be prescribed by
the Internal Revenue Service. An applica-
ble large employer member will satisfy its
reporting requirements under section 6056
if it files with the Internal Revenue Service
a return for each full-time employee us-
ing Form 1095–C or another form the IRS
designates, and a transmittal form using
Form 1094–C or another form the IRS des-
ignates, as prescribed in this section and in
the instructions to the forms.
(d)Information required to be reported
to the Internal Revenue Service—(1)In
general. Every applicable large employer
member must make a section 6056 infor-
mation return with respect to each full-
time employee. Each section 6056 infor-
mation return must show—
(i) The name, address, and employer
identification number of the applicable
large employer member,
(ii) The name and telephone number
of the applicable large employer’s contact
person,
(iii) The calendar year for which the
information is reported,
(iv) A certification as to whether the
applicable large employer member of-
fered to its full-time employees (and their
dependents) the opportunity to enroll in
minimum essential coverage under an
eligible employer-sponsored plan (as de-
fined in section 5000A(f)(2)), by calendar
month,
(v) The months during the calendar year
for which coverage under the plan was
available,
(vi) Each full-time employee’s share
of the lowest cost monthly premium
(self-only) for coverage providing mini-
mum value offered to that full-time em-
ployee under an eligible employer-spon-
sored plan, by calendar month;
(vii) The number of full-time employ-
ees for each month during the calendar
year,
(viii) The name, address, and taxpayer
identification number of each full-time
employee during the calendar year and the
months, if any, during which the employee
was covered under the plan, and
(ix) Such other information as the Sec-
retary may prescribe or as may be required
by the form or instructions.
(2)Form of the return. A return re-
quired under this paragraph (d) may be
made on Forms 1094–C and 1095–C or
other form(s) designated by the Internal
Revenue Service, or a substitute form. A
substitute form must include the infor-
mation required to be reported on Forms
1094–C and 1095–C and must comply
with applicable revenue procedures or
other published guidance relating to sub-
stitute statements. See §601.601(d)(2) of
this chapter.
(e)Time and place for filing return—(1)
In general. An applicable large employer
member must file each return and transmit-
tal form required under paragraph (d)(2)
of this section on or before February 28
(March 31 if filed electronically) of the
year succeeding the calendar year to which
it relates in accordance with any applica-
ble guidance and the instructions to the
form. An applicable large employer mem-
ber must file the return and transmittal
form at the address specified on the return
form or its instructions.
(2)Extensions of time for filing.[Re-
served]
(f)Electronic filing of returns. The sec-
tion 6056 return is required to be filed elec-
tronically, except as otherwise provided in
§301.6011–9.
(g)Statements required to be furnished
to full-time employees—(1)In general.
Every applicable large employer member
required to file a return under section 6056
must furnish to each of its full-time em-
ployees identified on the return a written
statement showing—
(i) The name, address and employer
identification number of the applicable
large employer member, and
(ii) The information required to be
shown on the section 6056 return with
respect to the full-time employee.
(2)Form of the statement. A state-
ment required under this paragraph (g)
may be made either by furnishing to
the full-time employee a copy of Form
1095–C or another form the IRS desig-
nates as prescribed in this section and in
the instructions to such forms, or a sub-
stitute statement. Asubstitute statement
must include the information required to
be shown on Form 1095–C or another form
the IRS designates and must comply with
applicable revenue procedures or other
published guidance relating to substitute
statements. See §601.601(d)(2). An In-
ternal Revenue Service truncated taxpayer
identification number may be used as the
identifying number for an individual in
lieu of the identifying number appearing
on the corresponding information return
filed with the Internal Revenue Service.
(h)Time and manner for furnishing
statements—(1) Each statement required
by this section for a calendar year must
be furnished to a full-time employee on
or before January 31 of the year succeed-
ing that calendar year in accordance with
September 30, 20133192013–40 I.R.B.

applicable InternalRevenue Service pro-
cedures and instructions or as provided in
§301.6056–2.
(2)Extensions of time—(i)In general.
For good cause upon written application of
the person required to furnish statements
under this section, the Internal Revenue
Service may grant an extension of time not
exceeding 30 days in which to furnish such
statements. The application must be ad-
dressed to the Internal Revenue Service,
and must contain a full recital of the rea-
sons for requesting the extension to aid the
Internal Revenue Service in determining
the period of the extension, if any, that will
be granted. Such a request in the form of
a letter to the Internal Revenue Service,
signed by the applicant, will suffice as an
application. The application must be filed
on or before the date prescribed in para-
graph (h)(1) of this section.
(ii)Automatic extension of time.The
Commissioner may, in appropriate cases,
prescribe additional guidance or proce-
dures, published in the Internal Revenue
Bulletin (see §601.601(d)(2)(ii)(b)), for
automatic extensions of time to furnish
to one or more full-time employees the
statement required under section 6056.
(i)Correction of information return.If
the information reported on a return re-
quired pursuant to section 6056 for a full-
time employee for a prior year was in-
complete or incorrect, a corrected return
accompanied by a transmittal form must
be filed with the Internal Revenue Service
as soon as possible after the correction is
made. The return must be identified as
corrected. A copy of the corrected return
for the prior year reflecting the correct data
must be furnished to the employee as soon
as possible after the correction is made.
(j)Information reporting penal-
ties. Section 6724(d)(1)(B)(xxv) and
(d)(2)(HH) provides that for purposes
of Subtitle F, Chapter 68, Subchapter B,
Part II (sections 6721 et seq.), the terms
information returnandpayee statement
include the return required under section
6056 and the statement required to be
furnished under section 6056(c). An ap-
plicable large employer member who fails
to comply with the filing and statement
requirements under section 6056 is sub-
ject to the penalties under sections 6721
(failure to file correct information returns)
and 6722 (failure to furnish correct payee
statement), and the waiver and special
rules provisions under section 6724, and
the applicable regulations.
(k)Special rules for governmental
units—(1)Person appropriately desig-
nated. In the case of any applicable large
employer member thatis a governmen-
tal unit or any agency or instrumentality
thereof, the person or persons appropri-
ately designated undersection 6056(e) for
purposes of the filing and furnishing re-
quirements of section 6056 must be part of
or related to the same governmental unit
as the applicable large employer member.
The applicable large employer member
must make (or revoke) the designation
before the earlier of the deadline for filing
the returns or furnishing the statements
required by this section. A person that
has been appropriately designated under
section 6056(e) must file a separate sec-
tion 6056 return and transmittal for each
applicable large employer member for
which the person is reporting. The person
appropriately designated under section
6056(e) assumes responsibility for the
section 6056 requirements on behalf of
the applicable large employer member for
which the person is designated.
(2)Written designation. The designa-
tion under section 6056(e) must be made
in writing, must be signed by both the ap-
plicable large employer member and the
designated person, and must be effective
under all applicable laws. The designation
must set forth the name and employer iden-
tification number of the designated person,
and appoint such person as the person re-
sponsible for reporting under section 6056
on behalf of the applicable large employer
member. The designation must contain in-
formation identifying the category of full-
time employees (which may be full-time
employees eligible for a specified health
plan, or in a particular job category, as
long as the specificemployees covered
by the designation canbe identified) for
which the designated person is responsi-
ble for reporting under section 6056 on be-
half of the applicable large employer mem-
ber. If the designated person is responsi-
ble for reporting under section 6056 for all
full-time employees of an applicable large
employer member, the designation must
so indicate. The designation must contain
language that the designated person agrees
and certifies that it is the appropriately
designated person under section 6056(e),
and an acknowledgement that the desig-
nated person is responsible for reporting
under section 6056 on behalf of the ap-
plicable large employer member and sub-
ject to the requirements of section 6056,
including for purposes of information re-
porting requirementsunder sections 6721,
6722, and 6724. The designation must also
set forth the name and employer identifi-
cation number of the applicable large em-
ployer member, identifying the applicable
large employer member as the person sub-
ject to the requirements of section 4980H.
An equivalent applicable statutory or regu-
latory designation containing the language
described in this paragraph (k)(2) will be
treated as a written designation for pur-
poses of section 6056(e) and this section.
(l)Additional guidance.TheCom-
missioner may prescribe additional guid-
ance of general applicability, published
in the Internal Revenue Bulletin (see
§601.601(d)(2)(ii)(b)) to provide addi-
tional rules under section 6056, including
rules permitting use of alternate optional
methods to meet reporting requirements.
(m)Effective/applicability date.The
rules of this section are effective as of the
date of publication of the Treasury deci-
sion adopting these rules as final regula-
tions in theFederal Register. This sec-
tion applies for calendar years beginning
after December 31, 2014. Reporting enti-
ties will not be subject to penalties under
sections 6721 or 6722 with respect to the
reporting requirements for 2014 (for infor-
mation returns filed and for statements fur-
nished to employees in 2015).
Par 4. Section 301.6056–2 is added to
read as follows:
§301.6056–2 Electronic furnishing of
statements
(a)Electronic furnishing of state-
ments—(1)In general. An applicable
large employer member required by
§301.6056–1 to furnish a statement (fur-
nisher) to a full-time employee (a re-
cipient) may furnish the statement in an
electronic format in lieu of a paper format,
provided that the employer meets the re-
quirements of paragraphs (a)(2) through
(a)(6) of this section. An applicable large
employer member who meets the require-
ments of paragraphs (a)(2) through (6) of
this section is treated as furnishing the
statement in a timely manner.
2013–40 I.R.B.320September 30, 2013

(2)Consent—(i)In general.There-
cipient must have affirmatively consented
to receive the statement in an electronic
format. The consent may be made elec-
tronically in any manner that reasonably
demonstrates that the recipient can access
the statement in the electronic format in
which it will be furnished to the recipient.
Alternatively, the consent may be made in
a paper document if it is confirmed elec-
tronically.
(ii)Withdrawal of consent. The consent
requirement of this paragraph (a)(2) is not
satisfied if the recipient withdraws the con-
sent and the withdrawal takes effect before
the statement is furnished. The furnisher
may provide that a withdrawal of consent
takes effect either on the date it is received
by the furnisher or on a subsequent date.
The furnisher may also provide that a re-
quest for a paper statement will be treated
as a withdrawal of consent.
(iii)Change in hardware or software re-
quirements.Ifachangeinthehardware
or software required to access the state-
ment creates a material risk that the recipi-
ent will not be able to access the statement,
the furnisher must, prior to changing the
hardware or software, provide the recipient
with a notice. The notice must describe the
revised hardware and software required to
access the statement and inform the recipi-
ent that a new consent to receive the state-
ment in the revised electronic format must
be provided to the furnisher. After im-
plementing the revised hardware and soft-
ware, the furnisher must obtain from the
recipient, in the manner described in para-
graph (a)(2)(i) of this section, a new con-
sent or confirmation of consent to receive
the statement electronically.
(iv) Examples. The following examples
illustrate the rules of this paragraph (a)(2):
Example 1.Furnisher F sends Recipient R a let-
ter stating that R may consent to receive section 6056
statements electronically on a Web site instead of in
a paper format. The letter contains instructions ex-
plaining how to consent to receive section 6056 state-
ments electronically by accessing the Web site, down-
loading the consent document, completing the con-
sent document and e-mailing the completed consent
back to F. The consent document posted on the Web
site uses the same electronic format that F will use for
the electronically furnished section 6056 statements.
R reads the instructions and submits the consent to re-
ceive the statements electronically in the manner de-
scribed in paragraph (a)(2)(i) of this section. R has
consented to receive the statements electronically in
the manner described in paragraph (a)(2)(i) of this
section.
Example 2. Furnisher F sends Recipient R an
e-mail stating that R may consent to receive section
6056 statements electronically instead of in a paper
format. The e-mail containsan attachment instruct-
ing R how to consent to receive section 6056 state-
ments electronically. The e-mail attachment uses the
same electronic format that F will use for the elec-
tronically furnished section 6056 statements. R opens
the attachment, reads the instructions, and submits the
consent in the manner provided in the instructions.
R has consented to receive section 6056 statements
electronically in the manner described in paragraph
(a)(2)(i) of this section.
Example 3. Furnisher F posts a notice on its Web
site stating that Recipient R may receive section 6056
statements electronically instead of in a paper for-
mat. The Web site contains instructions on how R
may access a secure Web page and consent to receive
the statements electronically. By accessing the se-
cure Web page and giving consent, R has consented
to receive section 6056 statements electronically in
the manner described inparagraph (a)(2)(i).
(3)Required disclosures—(i)In gen-
eral. Prior to, or at the time of, a recipient’s
consent, the furnisher must provide to the
recipient a clear and conspicuous disclo-
sure statement containing each of the dis-
closures described in paragraphs (a)(3)(ii)
through (viii) of this section.
(ii)Paper statement. The recipient must
be informed that the statement will be fur-
nished on paper if the recipient does not
consent to receive it electronically.
(iii)Scope and duration of consent.The
recipient must be informed of the scope
and duration of the consent. For example,
the recipient must be informed whether the
consent applies to each statement required
to be furnished after the consent is given
until it is withdrawn in the manner de-
scribed in paragraph (a)(3)(v)(A) of this
section or only to the first statement re-
quired to be furnished following the date
on which the consent is given.
(iv)Post-consent request for a paper
statement. The recipient must be informed
of any procedure for obtaining a paper
copy of the recipient’s statement after
giving the consent described in paragraph
(a)(2)(i) of this section and whether a re-
quest for a paper statement will be treated
as a withdrawal of consent.
(v)Withdrawal of consent. The recipi-
ent must be informed that—
(A) The recipient may withdraw a con-
sent by writing (electronically or on pa-
per) to the person or department whose
name, mailing address, telephone number,
and e-mail address is provided in the dis-
closure statement,
(B) The furnisher will confirm the with-
drawal and the date on which it takes effect
in writing (either electronically or on pa-
per), and
(C) A withdrawal of consent does not
apply to a statement that was furnished
electronically in the manner described in
this paragraph (a) before the date on which
the withdrawal of consent takes effect.
(vi)Notice of termination. The recipi-
ent must be informed of the conditions un-
der which a furnisher will cease furnishing
statements electronically to the recipient
(for example, termination of the recipient’s
employment with furnisher-employer).
(vii)Updating information. The recip-
ient must be informed of the procedures
for updating the information needed by the
furnisher to contact the recipient. The fur-
nisher must inform the recipient of any
change in the furnisher’s contact informa-
tion.
(viii)Hardware and software require-
ments. The recipient must be provided
with a description of the hardware and
software required to access, print, and re-
tain the statement, and the date when the
statement will no longer be available on
the Web site. The recipient must be in-
formed that the statement may be required
to be printed and attached to a Federal,
State, or local income tax return.
(4)Format. The electronic version of
the statement must contain all required
information and comply with applicable
revenue procedures relating to substitute
statements to recipients.
(5)Notice—(i)In general. If the state-
ment is furnished on a Web site, the fur-
nisher must notify the recipient that the
statement is posted on a Web site. The no-
tice may be delivered by mail, electronic
mail, or in person. The notice must provide
instructionson how to access and print the
statement. The notice must include the fol-
lowing statement in capital letters, “IM-
PORTANT TAX RETURN DOCUMENT
AVAILABLE.” If the notice is provided
by electronic mail, the foregoing statement
must be on the subjectline of the electronic
mail.
(ii)Undeliverable electronic address.
If an electronic notice described in para-
graph (a)(5)(i) of this section is returned
as undeliverable, and the correct electronic
address cannot be obtained from the fur-
nisher’s records or from the recipient, then
the furnisher must furnish the notice by
September 30, 20133212013–40 I.R.B.

mail or in person within 30 days after the
electronic notice is returned.
(iii)Corrected statement.Ifthefur-
nisher has corrected a recipient’s statement
as directed in §301.6056–1(k) and the
statement was furnished electronically,
the furnisher must furnish the corrected
statement to the recipient electronically.
If the recipient’s statement was furnished
through a Web site posting and the fur-
nisher has corrected the statement, the
furnisher must notify the recipient that
it has posted the corrected statement on
the Web site within 30 days of such post-
ing in the manner described in paragraph
(a)(5)(i) of this section. The corrected
statement or the notice must be furnished
by mail or in person if—
(A) An electronic notice of the Web site
posting of an original statement or the cor-
rected statement was returned as undeliv-
erable, and
(B) The recipient has not provided a
new e-mail address.
(6)Access period. Statements fur-
nished on a Web site must be retained on
the Web site through October 15 of the
year following the calendar year to which
the statements relate (or the first business
day after October 15, if October 15 falls
on a Saturday, Sunday, or legal holiday).
The furnisher must maintain access to
corrected statements that are posted on the
Web site through October 15 of the year
following the calendar year to which the
statements relate (or the first business day
after such October 15, if October 15 falls
on a Saturday, Sunday, or legal holiday) or
the date 90 days after the corrected forms
are posted, whichever is later.
(7)Paper statements after withdrawal
of consent. If a recipient withdraws con-
sent to receive a statement electronically
and the withdrawal takes effect before the
statement is furnishedelectronically, a pa-
per statement must be furnished. A pa-
per statement furnished after the statement
due date under this paragraph (a)(7) will
be considered timely if furnished within 30
days after the date the withdrawal of con-
sent is received by the furnisher.
(b)Effective/applicability date.The
rules of this section are effective as of
the date of publication of the Treasury
decision adopting these rules as final reg-
ulations in theFederal Register.This
section applies for calendar years begin-
ning after December 31, 2014. Reporting
entities will not be subject to penalties
under sections 6721 or 6722 with respect
to the reporting requirements for 2014 (for
information returns filed and for state-
ments furnished toemployees in 2015).
Heather C. Maloy,
Acting Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on September 5,
2013, 4:15 p.m., and published in the issue of the Federal
Register for September 9, 2013, 78 F.R. 54996)
Regulations Relating to
Information Reporting by
Foreign Financial Institutions
and Withholding on Certain
Payments to Foreign Financial
Institutions and Other Foreign
Entities; Correction
Announcement 2013–41
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Correcting amendments.
SUMMARY: This document contains cor-
rections to final regulations (TD 9610),
which were published in theFederal Reg-
isteron Monday, January 28, 2013 (78 FR
5874). The regulations related to informa-
tion reporting by foreign financial institu-
tions (FFIs) with respect to U.S. accounts
and withholding on certain payments to
FFIs and other foreign entities.
DATES:Effective Date:These corrections
are effective September 10, 2013.
Applicability Date:These corrections
are applicable on January 28, 2013.
FOR FURTHER INFORMATION
CONTACT: John Sweeney, (202)
622–3840 (not a toll-free call).
SUPPLEMENTARY INFORMATION:
Background
The final regulations that are the sub-
ject of these corrections are §§ 1.1471–1
through 1.1474–7, promulgated under sec-
tions 1471 through 1474 of the Internal
Revenue Code. These regulations affect
persons making certain U.S.-related pay-
ments to FFIs and other foreign entities,
and affect payments by FFIs to other per-
sons. Sections 1471 through 1474 were
added to the Internal Revenue Code, as
Chapter 4 of Subtitle A, by the Hiring In-
centives to Restore Employment Act of
2010 (Public Law 111–147, 124 Stat. 71).
Need for Corre
ction
As published, the final regulations con-
tain a number of items that need to be cor-
rected or clarified. Several citations and
cross references are corrected. The cor-
recting amendments also include the ad-
dition, deletion, or modification of regula-
tory language to clarify the relevant provi-
sions to meet their intended purposes. Ad-
ditions, deletions, and modifications are
also made to ensure that the rules in the fi-
nal regulations are coordinated with other
rules contained in other relevant regula-
tions (e.g., under chapters 3 and 61). For
example in § 1.1471–3(c)(3)(iii)(B)(2), the
definition of an FFI withholding statement
was modified to add an applicable cross
reference to the reporting on the statement
that is required under chapter 61 (in addi-
tion to the reporting required under chap-
ters 3 and 4); to delete an incorrect refer-
ence to a pool of payees exempt from chap-
ter 4 withholding; and to add the modified
requirements of an FFI withholding state-
ment provided by a Qualified Intermedi-
ary that should have been referenced in this
paragraph.
*****
Correction of Publication
Accordingly, 26 CFR part 1 is cor-
rected by making the following correcting
amendments:
PART 1 — INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.1471–0 is amended
by:
1. Revising paragraph (a)(2)(i) under
§ 1.1471–2.
2. Revising paragraphs (b)(7) and
(c)(2)(v) under § 1.1471–4.
3. Revising paragraph (b)(2)(i)(E) un-
der § 1.1471–5.
4. Revising paragraph (a)(5)(vii) and
removing paragraph (b)(3)(iii) under
§ 1.1473–1.
2013–40 I.R.B.322September 30, 2013

The revisions read as follows:
§ 1.1471–0 Outline of regulation
provisions for sections 1471 through
1474.
*****
§ 1.1471–2 Requirement to deduct and
withhold tax on withholdable payments
to certain FFIs.
(a) * * *
(2) * * *
(i) Requirement to withhold on pay-
ments of U.S. source FDAP income to
participating FFIs and deemed-compliant
FFIs that are NQIs, NWPs, or NWTs.
*****
§ 1.1471–4 FFI agreement.
*****
(b) * * *
(7) Withholding requirements for U.S.
branches of participating FFIs (and report-
ing Model 1 FFIs) that are treated as U.S.
persons.
(c) * * *
(2) * * *
(v) Special rule for U.S. branches of
participating FFIs (and reporting Model 1
FFIs) that are treated as U.S. persons.
*****
§ 1.1471–5 Definitions applicable to
section 1471.
*****
(b) * * *
(2) * * *
(i) * * *
(E) Account that is tax-favored.
*****
§ 1.1473–1 Section 1473 definitions.
(a) * * *
(5) * * *
(vii) Special rules for determining when
gross proceeds are treated as paid to a
partner, owner, or beneficiary of a flow-
through entity.
*****
Par. 3. Section 1.1471–1 is amended
by revising paragraph (b)(23), the first sen-
tence of paragraph (b)(34), and paragraph
(b)(99) to read as follows:
§ 1.1471–1 Scope of chapter 4 and
definitions.
*****
(b) * * *
(23)Customer master file.Acustomer
master fileincludes the primary files of
a withholding agent, participating FFI, or
deemed-compliant FFI for maintaining ac-
count holder information, such as informa-
tion used for contacting account holders
and for satisfying AML due diligence.
*****
(34) * * * The termelectronically
searchable informationmeans information
that a withholding agent or FFI maintains
in its tax reporting files, customer master
files, or similar files, and that is stored in
the form of an electronic database against
which standard queries in programming
languages, such as Structured Query Lan-
guage, may be used. * * *
*****
(99)Pre-FATCA Form W–8.Theterm
pre-FATCA Form W–8means a version of
a Form W–8 that was issued by the IRS
prior to 2013 (including an acceptable sub-
stitute form based on such version) and
that does not contain chapter 4 statuses
but otherwise meets the requirements of
§ 1.1441–1(e)(1)(ii) applicable to such cer-
tificate (or substitute form) and has not ex-
pired.
*****
Par. 4. Section 1.1471–2 is amended
by:
1. Revising the heading and first two
sentences of paragraph (a)(2)(i),
2. Revising the first sentence of para-
graph (a)(2)(iii)(A),
3. Revising paragraphs (a)(2)(iii)(A)(2)
and (a)(2)(iv),
4. Revising the third and fifth sentences
of paragraph (a)(2)(v),
5. Revising the first sentence of para-
graph (a)(4)(i)(A), and
6. Revising paragraph (a)(4)(viii).
The revisions read as follows:
§ 1.1471–2 Requirement to deduct and
withhold tax on withholdable payments
to certain FFIs.
(a) * * *
(2) * * *
(i)Requirement to withhold on pay-
ments of U.S. source FDAP income to
participating FFIs and deemed-compliant
FFIs that are NQIs, NWPs, or NWTs.A
withholding agent that, after December
31, 2013, makes a payment of U.S. source
FDAP income to a participating FFI or
deemed-compliant FFI that is an NQI re-
ceiving the payment as an intermediary, or
a NWP or NWT, must withhold 30 percent
of the payment unless the withholding
is reduced under this paragraph (a)(2)(i).
A withholding agent is not required to
withhold on a payment, or portion of a
payment, that it can reliably associate, in
the manner describedin § 1.1471–3(c)(2),
with a valid intermediary or flow-through
withholding certificate that meets the re-
quirements of § 1.1471–3(d)(4) and a
withholding statement that meets the re-
quirements of § 1.1471–3(c)(3)(iii)(B) and
that allocates the payment or portion of
the payment to payees for which no with-
holding is required under chapter 4. * * *
*****
(iii) * * *
(A)***Awithholdingagentisre-
quired to withhold with respect to a pay-
ment, or portion of a payment, that is U.S.
source FDAP income subject to withhold-
ing that is made after December 31, 2013,
to a QI that has elected in accordance with
this paragraph to be withheld upon, un-
less such withholding agent also makes an
election to be withheld upon under this
paragraph (a)(2)(iii)(A) or is an FFI that
may not accept primary withholding re-
sponsibility for the payment. * * *
*****
(2) The person who receives the pay-
ment is a participating FFI or registered
deemed-compliant FFI that acts as a QI
with respect to the payment;
*****
(iv)Withholding obligation of a ter-
ritory financial institution. A territory
financial institution that is a flow-through
entity or that acts as an intermediary
with respect to a withholdable payment
hasanobligationtowithhold(tothe
extent required under this section and
§ 1.1472–1(b)) if it agrees to be treated
as a U.S. person with respect to the pay-
ment for purposes of both chapter 4 and
§ 1.1441–1(b)(2)(iv)(A). A territory finan-
cial institution that is a flow-through entity
or that acts as an intermediary with respect
to a withholdable payment is not required
September 30, 20133232013–40 I.R.B.

to withhold under paragraph (a)(1) of this
section or § 1.1472–1(b), however, if it
has provided the withholding agent that
is a U.S. withholding agent, participat-
ing FFI, reporting Model 1 FFI, or QI
with all of the documentation described
in § 1.1471–3(c)(3)(iii) (in which it has
not agreed to be treated as a U.S. person
with respect to the payment), and it does
not know, or have reason to know, that an-
other withholding agent failed to withhold
the correct amount or failed to report the
payment correctly under § 1.1474–1(d).
(v) * * * Accordingly, a QI branch
of a U.S. financial institution must with-
hold in accordance with this section and
§ 1.1472–1(b) in addition to meeting its
obligations under either § 1.1471–4(b) and
its FFI agreement or § 1.1471–5(f). * * *
Accordingly, a foreign branch of a U.S. fi-
nancial institution that is a reporting Model
1 FFI must withholdin accordance with
this section and § 1.1472–1(b). * * *
*****
(4) * * *
(i) * * *
(A) * * * A withholding agent that is
not related to the payee or beneficial owner
hasanobligationtowithholdunderchap-
ter 4 only to the extent that, at any time be-
tween the date that the obligation to with-
hold would arise (but for the provisions of
this paragraph (a)(4)(i)) and the due date
for filing the return on Form 1042 (includ-
ing extensions) for the year in which the
payment occurs, it has control over or cus-
tody of money or property owned by the
payee or beneficial owner from which to
withhold an amount and has knowledge of
thefactsthatgiverisetothepayment.***
*****
(viii)Payments to certain excepted ac-
counts.A withholding agent is not re-
quired to withhold under chapter 4 on a
withholdable payment made to an account
described in § 1.1471–5(b)(2).
*****
Par. 5. Section 1.1471–3 is amended
by:
1. Revising the fourth sentence of para-
graph (b)(2),
2. Adding a sentence to the end of para-
graph (c)(2)(i),
3. Revising paragraph (c)(3)(iii)(A)(5),
4. Revising the first two sentences of
paragraph (c)(3)(iii)(B)(2),
5. Revising the first sentence of para-
graph (c)(6),
6. Revising paragraphs (c)(6)(ii)(B)(2),
(c)(6)(ii)(B)(3), and (c)(6)(ii)(C)(2)(vi),
7. Revising the second sentence of
paragraph (c)(6)(v)(B),
8. Revising the second sentence of
paragraph (c)(9)(iv)(A),
9. Revising the first sentence of para-
graph (d)(1),
10. Revising the second sentence of
paragraph (d)(2)(i),
11. Revising paragraph (d)(2)(ii),
12. Revising the second sentence of
paragraph (d)(2)(iii),
13. Revising the second sentence of
paragraph (d)(4)(i),
14. Revising paragraph (d)(6)(i)(F),
15. Revising the third sentence of para-
graph (d)(6)(ii),
16. Revising the first sentence of para-
graph (d)(6)(iii), and
17. Revising the first sentence of para-
graph (d)(9)(i)(A).
The revisions and addition read as fol-
lows:
§ 1.1471–3 Identification of payee.
*****
(b) * * *
(2) * * * A withholding agent that
makes a payment with respect to an off-
shore obligation may also rely upon a
written notification provided by the person
who receives the payment, regardless of
whether such notification is signed, that
indicates the person’s entity classification
(other than as a QI, WP, or WT) unless
the withholding agent knows or has rea-
son to know that the entity classification
indicated by the person who receives the
payment is incorrect. * * *
*****
(c) * * *
(2) * * *
(i)***Withrespecttothedocumen-
tation provided for the owners of a for-
eign flow-through entity, the foreign flow-
through entity is permitted to provide the
documentary evidence described in para-
graph (d) of this section applicable to each
payee in lieu of a withholding certificate,
regardless of whether the payment is made
with respect to an offshore obligation.
*****
(3) * * *
(iii) * * *
(A) * * *
(5) A GIIN, in the case of a participating
FFI or a registered deemed-compliant FFI
(including a U.S. branch of such an entity),
and an EIN in the case of a QI, WP, or WT.
*****
(B) * * *
(2)***AnFFIwithholdingstate-
ment must include either pooled informa-
tion that indicates the portion of the pay-
ment attributable to a class of U.S. persons,
each class of recalcitrant account holders
identified in § 1.1471–5(g)(2), or a class
of nonparticipating FFIs; or payee-specific
information, if payee-specific information
is provided for purposes of chapter 3 or
61, which indicates both the portion of
the payment attributable to each payee and
each payee’s chapter 4 status. Regard-
less of whether the FFI withholding state-
ment provides information on a pooled or
payee-specific basis, a withholding state-
ment provided by an FFI other than an
FFI acting as a QI with respect to the ac-
count must identify each intermediary or
flow-through entity that receives the pay-
ment on behalf of a payee with such en-
tity’s chapter 4 status and GIIN, when ap-
plicable. * * *
*****
(6)***Theprovisionsinthispara-
graph (c)(6) describe standards generally
applicable to withholding certificates on
Forms W–8 (or substitute forms), written
statements, and documentary evidence fur-
nished to establish the payee’s chapter 4
status. * * *
*****
(ii) * * *
(B) * * *
(2) A beneficial owner withholding
certificate and documentary evidence sup-
porting the individual’s claim of foreign
status when both are provided together
by an individual claiming foreign status,
if the withholding agent does not have a
current U.S. residence or U.S. mailing ad-
dress for the payee and does not have one
or more current U.S. telephone numbers
that are the only telephone numbers the
withholding agent has for the payee;
(3) A beneficial owner withholding
certificate that is provided by an entity
described in paragraph (c)(6)(ii)(C)(2)of
2013–40 I.R.B.324September 30, 2013

this section and documentary evidence es-
tablishing the entity’s foreign status when
both are provided together;
*****
(C) * * *
(2)***
(vi) A territory financial institution;
*****
(v) * * *
(B)***However,inadditiontothe
name and address of the individual that is
the payee or beneficial owner, the form
must provide all countries for which the
individual is a resident for tax purposes,
the individual’s city and country of birth, a
tax identification number, if any, for each
country of residence (or the individual’s
date of birth if the individual does not have
a foreign tax identification number for the
country of residence claimed), and must
contain a signed and dated certification
made under penalties of perjury that the
information provided on the form is accu-
rate and will be updated by the individ-
ual within 30 days of a change in circum-
stances that causes the form to become in-
correct. * * *
*****
(9) * * *
(iv) * * *
(A) * * * However, an agent that makes
a payment pursuant to an agency arrange-
ment (paying agent) is also a withholding
agent with respect to the payment unless
an exception under § 1.1473–1(d) applies.
***
*****
(d) * * *
(1)***Toestablishapayee’sstatusas
a foreign individual, foreign government,
government of a U.S. territory, or inter-
national organization, a withholding agent
may rely upon a pre-FATCA Form W–8 in
lieu of obtaining an updated version of the
withholding certificate. * * *
(2) * * *
(i)***Consistentwiththepre-
sumption rules in paragraph (f)(3) of this
section, a withholding agent must treat a
payee that has provided a valid Form W–9
as a specified U.S. person unless the Form
W–9 certifies that the payee is other than
a specified U.S. person. * * *
(ii)Reliance on documentary evi-
dence. A withholding agent may also treat
the payee as a U.S. person that is other
than a specified U.S. person if the with-
holding agent has documentary evidence
described in paragraphs (c)(5)(i)(C) and
(D) of this section or general documen-
tary evidence (as described in paragraph
(c)(5)(ii)(A) of this section) that both
establishes that the payee is a U.S. per-
son and establishes (either through the
documentation or the application of the
rules in § 1.6049–4(c)(1)(ii) or paragraph
(f)(3) of this section) that the payee is
an exempt recipient. For purposes of
the previous sentence, an exempt recipi-
ent means with respect to a withholding
agent other than a participating FFI or
registered deemed-compliant FFI, an ex-
empt recipient under § 1.6049–4(c)(1)(ii)
or, with respect to a withholding agent
that is a participating FFI or registered
deemed-compliant FFI, a U.S. person
other than a specified U.S. person as de-
scribed under § 1.1473–1(c).
(iii) * * * A withholding agent, other
than a participating FFI or registered
deemed-compliant FFI, may also treat a
payee as a U.S. person if it has previously
reviewed a Form W–9 or documentary
evidence that established that the payee
is a U.S. person and established (through
the documentation or the application of
the rules in § 1.6049–4(c)(1)(ii)) that the
payee is an exempt recipient for purposes
of chapter 61.
*****
(4) * * *
(i) * * * For payments made prior to
January 1, 2016, a registered deemed-com-
pliant FFI that is a sponsored FFI must pro-
vide the GIIN of its sponsoring entity on
the withholding certificate if the sponsored
FFI has not obtained a GIIN.
*****
(6) * * *
(i) * * *
(F) The withholding agent does not
know or have reason to know that the
payee is a member of an expanded affili-
ated group with any other FFI other than
an FFI that is also treated as an owner-doc-
umented FFI by the withholding agent or
that the FFI has any specified U.S. persons
that own an equity interest in the FFI or a
debt interest (other than a debt interest that
is not a financial account or that has a bal-
ance or value not exceeding $50,000) in
the FFI other than those identified on the
FFI owner reporting statement described
in paragraph (d)(6)(iv) of this section.
(ii)***Awithholdingagentmayrely
upon the letter described in this paragraph
(d)(6)(ii) if it does not know or have reason
to know that any of the information con-
tained in the letter is unreliable or incor-
rect.
(iii) * * * Acceptable documentation
for an individual owning an equity interest
in the payee or a debt holder described
in paragraph (d)(6)(iv) of this section
means a valid withholding certificate,
valid Form W–9 (including any necessary
waiver), or documentary evidence estab-
lishing the foreign status of the individual
as set forth in paragraph (d)(3)(ii) of this
section (regardless of whether the pay-
ment is made with respect to an offshore
obligation). * * *
*****
(9) * * *
(i) * * *
(A)***Awithholdingagentmaytreat
a payee as a foreign government, govern-
ment of a U.S. territory, international or-
ganization, or foreign central bank of issue
if it has a withholding certificate that iden-
tifies the payee as such an entity, indicates
that the payee is the beneficial owner of the
payment, and indicatesthat the payee is not
engaged in commercial financial activities
with respect to the payments or accounts
identified on the form. * * *
*****
Par. 6. Section 1471–4 is amended by:
1. Revising the seventh sentence of
paragraph (b)(1),
2. Revising the first and third sentences
of paragraph (b)(2),
3. Revising the fifth sentence of para-
graph (b)(3),
4. Revising paragraph (b)(7),
5. Revising the first and third sentences
of paragraph (c)(2)(iii)(B),
6. Revising the second sentence of
paragraph (c)(2)(iii)(C),
7. Revising the heading and first sen-
tence of paragraph (c)(2)(v),
8. Removing the language “this para-
graph (c)(5)(iv)(D)” from paragraph
(c)(5)(iv)(D)(4) and adding “paragraph
(c)(5)(iv)(D)(3) of this section” in its
place,
9. Revising the second, fourth, and
eighth sentences of paragraph (c)(6)Ex-
ample 2,
September 30, 20133252013–40 I.R.B.

10. Revising the fourth sentence of
paragraph (c)(7),
11. Revising paragraphs (d)(2)(iii)(B)
introductory text, (d)(2)(iii)(B)(4),
(d)(3)(iv)(B), and (d)(3)(iv)(D),
12. Revising the third sentence of para-
graph (d)(4)(i),
13. Revising paragraph (d)(5)(iii)(B),
14. Revising the first sentence of para-
graph (d)(6)(i),
15.Revising paragraph
(d)(7)(ii)(A)(1),
16. Revising the first sentence of para-
graph (e)(2)(ii),
17. Removing the language “as of
February 15, 2012, and” from paragraph
(e)(2)(iii),
18. Revising paragraph (e)(2)(iv)(B),
19. Revising the second sentence of
paragraph (e)(3)(ii)(B),
20. Revising paragraph (e)(3)(iii)(B),
and
21. Revising the first sentence of para-
graph (i)(1).
The revisions read as follows:
§ 1.1471–4 FFI agreement.
*****
(b) * * *
(1) * * * See § 1.1471–2 for the excep-
tions to and special rules for withholding
and the exclusion from the definition
of withholdable payment and foreign
passthru payment that applies to any
payment made under a grandfathered obli-
gation or the gross proceeds from the
disposition of such an obligation. * * *
(2)***Exceptasotherwiseprovided
under § 1.1471–2 and, with respect to cer-
tain preexisting accounts, under paragraph
(c) of this section, a participating FFI is re-
quired to determine whether withholding
applies at the time a payment is made by
reliably associating the payment with valid
documentation described in paragraph (c)
of this section for the payee of the pay-
ment.***Forapaymentmadetoanac-
count held by an entity, except as otherwise
provided in § 1.1471–3(a)(3), the payee is
the account holder. * * *
(3)***SeetheQI,WP,orWTagree-
ment for the withholding requirements of
an FFI that is a QI, WP, or WT for purposes
of chapter 4.
*****
(7)Withholding requirements for U.S.
branches of participating FFIs (and re-
porting Model 1 FFIs) that are treated as
U.S. persons. A U.S. branch of a partic-
ipatingFFI(andreportingModel1FFI)
that is treated as a U.S. person and that sat-
isfies its backup withholding obligations
under section 3406(a) with respect to ac-
counts held at the U.S. branch by account
holders that are payees treated as other
than exempt recipients under chapter 61
will be treated as satisfying its withholding
obligation with respect to such accounts
under section 1471(b)(1) and this para-
graph (b). See paragraph (d)(2)(iii)(B)
of this section for the special reporting
requirements applicable to U.S. branches
of participating FFIs (and reporting Model
1 FFIs) that are treated as U.S. persons.
See paragraphs (c)(2) and (d)(4) of this
section for the reporting requirements of
U.S. branches of participating FFIs (and
reporting Model 1 FFIs) with respect to
payments that are chapter 4 reportable
amounts.
(c) * * *
(2) * * *
(iii) * * *
(B) * * * For purposes of this section,
a change in circumstances (as defined
in § 1.1471–3(c)(6)(ii)(E)) includes any
change or addition of information to the
account holder’s account (including the
addition, substitution, or other change
of an account holder) or any change or
addition of information to any account
associated with such account (applying
the account aggregation rules described
in § 1.1471–5(b)(4)(iii) or by treating the
accounts as consolidated obligations) if
such change or addition of information
affects the chapter 4 status of the account
holder. * * * With respect to a preexisting
account that meets a documentation ex-
ception described in paragraphs (c)(3)(iii)
and (c)(5)(iii) of this section, a change in
circumstances also includes a change in
account balance or value as of the end of
the first subsequent year that causes the
account no longer to meet the documenta-
tion exception.
(C) * * * With respect to an account
held by an entity other than a passive
NFFE described in the preceding sentence,
following a change in circumstances, the
participating FFI must retain a record of
the appropriate documentation described
in paragraph (c)(3) of this section by the
date that is 90 days after the change in
circumstances or, if unable to do so, must
treat such account as held by a nonpartici-
pating FFI.
*****
(v)Special rule for U.S. branches of
participating FFIs (and reporting Model
1 FFIs) that are treated as U.S. persons.
A U.S. branch of a participating FFI (and
reporting Model 1 FFI) that is treated as
a U.S. person shall apply, in lieu of the
due diligence requirements of this para-
graph (c), the due diligence requirements
of § 1.1471–3 to determine the chapter 4
status of account holders and payees that
are entities and shall apply the documen-
tation requirements of chapter 3 or 61 (as
applicable) with respect to individual ac-
count holders. * * *
*****
(6) * * *
Example 2. * * * The balance in U’s
depository account on the effective date
of CB’s FFI agreement is $20,000. * * *
The balance in Entity X’s account on
the effective date of CB’s FFI agreement
is $130,000, and the balance in Entity
Y’s account on the effective date of
CB’s FFI agreement is $110,000. * * *
U’s depository account qualifies for
the § 1.1471–5(a)(4)(i) exception to
U.S. account status because it does not
exceed the $50,000 threshold, taking into
account the aggregation rule described in
§ 1.1471–5(a)(4)(iii)(A). * * *
(7) * * * The responsible officer must
also certify that the participating FFI has
completed the account identification pro-
cedures and documentation requirements
of this paragraph (c) for all other preex-
isting accounts or, if it has not retained a
record of the documentation required un-
der this paragraph (c) with respect to an
account, treats such account in accordance
with the requirements of this section and
§ 1.1471–5(g) or § 1.1471–3(f) (as appli-
cable). * * *
(d) * * *
(2) * * *
(iii) * * *
(B)Special reporting rules for U.S.
branches treated as U.S. persons.AU.S.
branch of a participating FFI (and report-
ing Model 1 FFI) that is treated as a U.S.
person shall be treated as having satisfied
the reporting requirements described in
paragraphs (d)(2)(i) and (d)(2)(ii)(C) of
this section if it reports under—
*****
2013–40 I.R.B.326September 30, 2013

(4) Section 1.1474–1(i) with respect
to specified U.S. persons identified in
§ 1.1471–3(d)(6)(iv)(A)(1)and(2)of
owner-documented FFIs.
(3) * * *
(iv) * * *
(B) The name, address, and TIN of
each specified U.S. person identified in
§ 1.1471–3(d)(6)(iv)(A)(1)and(2);
*****
(D) The account balance or value of
the account held by the owner-documented
FFI;
*****
(4) * * *
(i)***Inthecase of an account
held by an owner-documented FFI, the
address to be reported is the address of
each specified U.S. person identified in
§ 1.1471–3(d)(6)(iv)(A)(1)and(2).
*****
(5) * * *
(iii) * * *
(B) The name, address, and TIN of
each specified U.S. person identified in
§ 1.1471–3(d)(6)(iv)(A)(1)and(2); and
*****
(6) * * *
(i)***Exceptasotherwiseprovided
in a Model 2 IGA, a participating FFI,
as part of its reporting responsibilities
under this paragraph (d), shall report to
the IRS for each calendar year the infor-
mation described for each of the classes
of account holders described in para-
graphs (d)(6)(i)(A) through (E) of this
section. * * *
*****
(7) * * *
(ii) * * *
(A) * * *
(1) The name, address, and TIN of each
specified U.S. person who is an account
holder and, in the case of any account
holder that is an NFFE that is a U.S. owned
foreign entity or that is an owner-docu-
mented FFI, the name of such entity and
the name, address, and TIN of each sub-
stantial U.S. owner of such NFFE or, in
the case of an owner-documented FFI, of
each specified U.S. person identified in
§ 1.1471–3(d)(6)(iv)(A)(1)and(2);
*****
(e) * * *
(2) * * *
*****
(ii) * * * For purposes of this section,
a branch is a unit, business, or office of
an FFI that is treated as a branch under
the regulatory regime of a country or is
otherwise regulated under the laws of such
country as separate from other offices,
units, or branches of the FFI. * * *
*****
(iv) * * *
(B) Agree that each such branch will
identify its account holders under the due
diligence requirements applicable to par-
ticipating FFIs under paragraph (c) of this
section, retain a record of account holder
and payee documentation pertaining to
those identification requirements for the
longer of six years from the effective date
of the FFI agreement or for as long as the
branch maintains the account or obliga-
tion, and report to the IRS with respect to
accounts that it is required to treat as U.S.
accounts to the extent permitted under the
relevant laws pertaining to the branch;
*****
(3) * * *
(ii) * * *
(B) * * * See paragraph (e)(2)(iii)(B) of
this section for when an account is consid-
ered blocked.
(iii) * * *
(B) Agree as part of such registration to
identify its account holders under the due
diligence requirements applicable to par-
ticipating FFIs under paragraph (c) of this
section, retain a record of account holder
and payee documentation pertaining to
those identification requirements for the
longer of six years from the effective date
of its registration as a limited FFI or for
as long as the FFI maintains the account
or obligation, and report with respect to
accounts that it is required to treat as U.S.
accounts to the extent permitted under the
relevant laws pertaining to the FFI;
*****
(i) * * *
(1)***Excepttotheextentotherwise
provided in a Model 2 IGA, a participat-
ing FFI (or branch thereof) that is prohib-
ited by foreign law from reporting the in-
formation required under paragraph (d) of
this section with respect to a U.S. account
must follow the procedures of paragraph
(i)(2) of this section to obtain a valid and
effective waiver of such law and, if such
waiver is not obtained within a reasonable
period of time, to close or transfer such ac-
count. ***
*****
Par. 7. Section 1.1471–5 is amended
by:
1. Removing the language “(e)(3)(iv)”
fromparagraphs(b)(1)(iii)(A),
(b)(1)(iii)(B), and (b)(1)(iii)(C) and
adding “(b)(3)(iv)” in its place,
2. Revising paragraphs (b)(2)(i)(C) and
(b)(2)(v),
3. Revising the first sentence of and
adding a new second sentence in paragraph
(b)(3)(iv),
4. Revising the third sentence of para-
graph (b)(4)(iv),
5. Revising the third, fourth, and fifth
sentences of paragraph (e)(4)(v)Exam-
ple1,
6. Revising the second sentence of
paragraph (e)(5),
7. Adding the language “and income
derived from transactions between mem-
bers of the expanded affiliated group” to
the end of the first parenthetical in para-
graph (e)(5)(i)(B)(1),
8. Revising paragraphs (e)(5)(iv)(D),
(f)(1)(i)(F)(3)(i), and (f)(1)(i)(F)(3)(iii),
9. Revising the first sentence of para-
graph (f)(2),
10. Revising paragraph (f)(2)(iii)(B),
11. Revising the first sentence of para-
graph (f)(3)(ii)(E),
12.Removing the language
“§1.1471–4(c)(8)”inpara-
graph (g)(3)(i)(B) and adding
“§ 1.1471–4(c)(5)(iv)(D)” in its place,
13. Revising the first sentence of para-
graph (g)(3)(ii), and
14. Revising the first sentence of para-
graph (g)(3)(iii).
The revisions read as follows:
§ 1.1471–5 Definitions applicable to
section 1471.
*****
(b) * * *
(2) * * *
(i) * * *
(C)Rollovers. An account that other-
wise satisfies the requirements of para-
graph (b)(2)(i)(A) or (B) of this section
will not fail to satisfy such requirements
solely because such account may receive
assets or funds transferred from one or
more accounts that meet the requirements
of paragraph (b)(2)(i)(A) or (B) of this
September 30, 20133272013–40 I.R.B.

section, one or more retirement or pen-
sion funds that meet the requirements
of § 1.1471–6(f), one or more accounts
described in paragraph (b)(2)(vi) of this
section, or one or more entities identified
as nonreporting financial institutions un-
der the terms of an applicable Model 1 or
Model 2 IGA because they are retirement
or pension funds.
*****
(v)Certain annuity contracts. A non-
investment linked, non-transferable, im-
mediate life annuity contract (including a
disability annuity) that monetizes a retire-
ment or pension account described in para-
graph (b)(2)(i)(A) or (b)(2)(vi) of this sec-
tion.
*****
(3) * * *
(iv) * * * To determine if debt or equity
interests described in paragraph (b)(1)(iii)
of this section are regularly traded, the
principles of § 1.1472–1(c)(1)(i)(A)(2)(i)
and (ii) shall apply with respect to
the interests, and the principles of
§ 1.1472–1(c)(1)(i)(B)(1)shallapply
for this purpose in the case of an initial
public offering of such interests. See
§ 1.1472–1(c)(1)(i)(C) for the definition
of an established securities market. * * *
*****
(4) * * *
*****
(iv) * * * In the case of an FFI de-
termining whether an account meets (or
continues to meet) a preexisting account
documentation exception described in
§ 1.1471–4(c)(3)(iii) or (c)(5)(iii), or
whether the account is an account de-
scribed in paragraph (a)(4)(i) of this sec-
tion, the spot rate must be determined on
the date for which the FFI is determin-
ing the threshold amount as prescribed in
those provisions.
*****
(e) * * *
(4) * * *
(v) * * *
Example 1. * * * Fund Manager hires
Investment Advisor, a foreign entity, to
provide advice and discretionary manage-
ment of a portion of the financial assets
held by Fund A. Investment Advisor
earned more than 50% of its gross income
for the last three years from providing sim-
ilar services. Because Investment Advisor
primarily conducts a business of managing
financial assets on behalf of clients, In-
vestment Advisor is an investment entity
under paragraph (e)(4)(i)(A) of this sec-
tion and an FFI under paragraph (e)(1)(iii)
of this section.
*****
(5) * * * For the treatment of foreign
entities described in this paragraph under
section 1472, see § 1.1472–1(c)(1)(v).
*****
(iv) * * *
(D) The entity has not agreed to report
under § 1.1471–4(d)(2)(ii)(C) or otherwise
act as an agent for chapter 4 purposes on
behalf of any financial institution, includ-
ing a member of its expanded affiliated
group.
*****
(f) * * *
(1) * * *
(i) * * *
(F) * * *
(3)***
(i) Is authorized to act on behalf of the
FFI (such as a fund manager, trustee, cor-
porate director, or managing partner) to
fulfill the requirements of the FFI agree-
ment;
*****
(iii) Has registered the FFI with the IRS
by the later of January 1, 2016, or the date
that the FFI identifies itself as qualifying
under this paragraph (f)(1)(i)(F);
*****
(2) * * * A certified deemed-compli-
ant FFI means an FFI described in any
of paragraphs (f)(2)(i) through (iv) of this
section that has certified as to its status
as a deemed-compliant FFI by providing
a withholding agent with the documenta-
tion described in § 1.1471–3(d)(5) applica-
ble to the relevant deemed-compliant cat-
egory. * * *
*****
(iii) * * *
(B) A participating FFI, reporting
Model 1 FFI, or U.S. financial institution
agrees to fulfill all due diligence, with-
holding, and reportingresponsibilities that
the FFI would have assumed if it were a
participating FFI.
*****
(3) * * *
(ii) * * *
(E) The designated withholding agent
agrees to report to the IRS (or, in the
case of a reporting Model 1 FFI, to the
relevant foreign government or agency
thereof) all of the information described
in § 1.1471–4(d) or § 1.1474–1(i) (as
appropriate) with respect to any speci-
fied U.S. persons that are identified in
§ 1.1471–3(d)(6)(iv)(A)(1)and(2).***
*****
(g) * * *
(3) * * *
(ii)***Anaccount holder of an ac-
count other than a preexisting account and
that is described in paragraph (g)(2) of this
section will be treated as a recalcitrant ac-
count holder beginning on the date that is
the earlier of 90 days after the account is
opened by the participating FFI or the date
that a withholdable payment that is sub-
ject to withholding under § 1.1441–2(a) is
made to the account. * * *
(iii) * * * An account holder holding
an account that is described in paragraph
(g)(2) of this section following a change
in circumstances (other than a change in
account balance or value in a subsequent
year that causes an individual account to
be identified as a high-value account) will
be treated as a recalcitrant account holder
beginning on the date that is 90 days after
the change in circumstances. * * *
*****
Par. 8. Section 1471–6 is amended
by revising paragraph (h)(2)(ii) to read as
follows:
§ 1.1471–6 Payments beneficially owned
by exempt beneficial owners.
*****
(h) * * *
(2) * * *
(ii) The entity has no outstanding debt
that would be a financial account under
§ 1.1471–5(b)(1)(iii)(C); and
*****
Par. 9. Section 1.1472–1 is amended
by revising the fourth sentence of and
adding a new fifth sentence to paragraph
(a), and revising paragraphs (b)(1) intro-
ductory text, (b)(2), and (c)(2)(i) to read
as follows:
2013–40 I.R.B.328September 30, 2013

§ 1.1472–1 Withholding on NFFEs.
(a) * * * See § 1.1473–1(a)(4)(vi), how-
ever, for rules excepting from the defini-
tion of withholdable payment certain pay-
ments of U.S. source FDAP income made
prior to January 1, 2017, with respect to an
offshore obligation and § 1.1471–2(b) for
rules excepting from the definition of with-
holdable payment a grandfathered obliga-
tion. See also § 1.1471–2(a)(2)(ii), (iv),
(v), and (vi) for special rules of withhold-
ing that apply for purposes of this section
and § 1.1471–2(a)(5) for withholding re-
quirements if the source or character of a
payment is unknown.
(b) * * *
(1)In general. Except as otherwise
provided in paragraph (b)(2) of this section
(providing transitional relief), paragraph
(c) of this section (providing exceptions
for payments to an excepted NFFE, a WP
or WT, or an exempt beneficial owner),
§ 1.1471–2(a)(4)(i) (providing an excep-
tion to withholding if the withholding
agent lacks control, custody, or knowl-
edge), § 1.1471–2(a)(4)(vii) (providing
an exception to withholding for payments
made to an account held with or equity
interests traded through a clearing organ-
ization with FATCA-compliant member-
ship), or § 1.1471–2(a)(4)(viii) (providing
an exception to withholding for payments
to certain excepted accounts), a withhold-
ing agent must withhold 30 percent of any
withholdable payment made after Decem-
ber 31, 2013, to a payee that is an NFFE
unless—
*****
(2)Transitional relief. For any with-
holdable payment made prior to January
1, 2016, with respect to a preexisting
obligation to a payee that is not a prima
facie FFI and for which a withholding
agent does not have documentation in-
dicating the payee’s status as a passive
NFFE when the NFFE has failed to pro-
vide the owner certification as required
under § 1.1471–3(d)(12)(iii), the with-
holding agent is not required to with-
hold under this section or report under
§ 1.1474–1(i)(2) (describing the reporting
obligations of withholding agents with
respect to NFFEs).
(c) * * *
(2) * * *
(i) Treat the payee as an NFFE
that is a WP or WT in accordance
with § 1.1441–5(c)(2) (for a WP) or
§ 1.1441–5(e)(5)(v) (for a WT); or
*****
Par. 10. Section 1.1473–1 is amended
by:
1. Removing the second sentence of
paragraph (a)(3)(iii)(A),
2. Revising the second sentence of
paragraph (a)(4)(iii),
3. Revising the first sentence of para-
graph (a)(4)(vi),
4. Revising the heading of paragraph
(a)(5)(vii),
5. Removing the language “benefi-
ciary” from paragraph (b)(3)(ii)(A) and
adding “person” in its place, and
6. Removing the language “trust; or”
from paragraph (b)(3)(ii)(B) and adding
“trust as of the end of the prior calendar
year; or” in its place.
The revisions read as follows:
§ 1.1473–1 Section 1473 definitions.
(a) * * *
(4) * * *
(iii) * * * Notwithstanding the pre-
ceding sentence, excluded nonfinancial
payments do not include: payments in
connection with a lending transaction (in-
cluding loans of securities), a forward,
futures, option, or notional principal con-
tract, or a similar financial instrument;
premiums for insurance contracts or an-
nuity contracts; amounts paid under cash
value insurance or annuity contracts; div-
idends; interest (including substitute in-
terest described in § 1.861–2(a)(7)) other
than interest described in the preceding
sentence; gross proceeds other than gross
proceeds described in paragraph (a)(4)(iv)
of this section; investment advisory fees;
custodial fees; and bank or brokerage fees.
*****
(vi)***ApaymentofU.S.source
FDAP income made prior to January 1,
2017, with respect toan offshore obliga-
tion if such payment is made by a per-
son that is not acting as an intermediary
or as a WP or WT with respect to the
payment. * * *
(5) * * *
(vii)Special rules for determining when
gross proceeds are treated as paid to a
partner, owner, or beneficiary of a flow-
through entity.***
*****
Par. 11. Section 1.1474–1 is amended
by:
1. Revising paragraph (a)(2),
2. Revising the first sentence of para-
graph (b)(1),
3. Removing the language “Except as
otherwise provided under an FFI agree-
ment, a” in the first sentence of paragraph
(c)(2) and adding “A” in its place,
4. Removing the language “(includ-
ing its U.S. branch that is not treated
as a U.S. person)” from paragraphs
(d)(1)(ii)(A)(1)(iii), (d)(1)(ii)(B)(1)(i),
and (d)(1)(ii)(B)(1)(iii) and adding “(in-
cluding a U.S. branch of a participating
FFI that is not treated as a U.S. person)”
in its place,
5. Revising the second and sixth sen-
tences of paragraph (d)(4)(i)(B),
6. Revising paragraph (d)(4)(i)(C)(1),
7. Removing the language “If the U.S.
branch is not treated” from paragraphs
(d)(4)(i)(C)(2) and (d)(4)(i)(C)(3)and
adding “If the U.S. branch of a participat-
ing FFI is not treated” in its place,
8. Removing the language “its re-
porting pools as described in para-
graph (d)(4)(i)(B)” from paragraph
(d)(4)(i)(C)(2) and adding “its re-
porting pools referenced in paragraph
(d)(4)(i)(B)” in its place,
9. Revising the first sentence of para-
graph (d)(4)(ii)(C),
10. Revising the first, second, and fifth
sentences of paragraph (d)(4)(iii)(A),
11. Revising the first sentence of para-
graph (d)(4)(iii)(B),
12. Revising paragraph (d)(4)(iii)(C),
13. Revising the first sentence of para-
graph (i)(1), and
14. Revising paragraphs (i)(1)(ii),
(i)(1)(iii), and (i)(2)(iii).
The revisions read as follows:
§ 1.1474–1 Liability for withheld tax and
withholding agent reporting.
(a) * * *
(2)Withholding agent liability.A
withholding agent that is required to with-
hold with respect to a payment under
§ 1.1471–2(a), 1.1471–4(b) (in the case
of a participating FFI), or 1.1472–1(b) but
fails either to withhold or to deposit any
tax withheld as required under paragraph
(b) of this section is liable for the amount
of tax not withheld and deposited.
*****
September 30, 20133292013–40 I.R.B.

(b) * * *
(1)***Exceptasotherwiseprovided
in this paragraph (b), every withholding
agent who withholds tax pursuant to chap-
ter 4 shall deposit such tax within the
time provided in § 1.6302–2(a) by elec-
tronic funds transfer as provided under
§ 31.6302–1(h) of this chapter. * * *
*****
(d) * * *
(4) * * *
(i) * * *
(B) * * * With respect to a payment of
U.S. source FDAP income made to a par-
ticipating FFI or registered deemed-com-
pliant FFI that is an NQI, NWP, or NWT
or QI that elects to be withheld upon un-
der section 1471(b)(3) and from whom
the withholding agent receives pooled
information regarding such FFI’s ac-
count holders and payees, a U.S. with-
holding agent must complete a separate
Form 1042–S issued to the participat-
ing FFI, registered deemed-compliant
FFI, or QI (as applicable) as the recipient
with respect to each pool provided in an
FFI withholding statement described in
§ 1.1471–3(c)(3)(iii)(B)(2). ***See
paragraph (d)(4)(ii)(A) of this section for
reporting rules applicable if participating
FFIs or deemed-compliant FFIs provide
specific payee information for reporting
to the recipient of the payment for Form
1042–S reporting purposes. * * *
(C) * * *
(1) If the U.S. branch is treated as a
U.S. person, if the withholding agent treats
amounts paid as effectively connected
with the conduct of the branch’s trade or
business in the United States, or if the
U.S. branch is the beneficial owner of the
payment, the withholding agent must file
Form 1042–S reporting the U.S. branch as
the recipient;
*****
(ii) * * *
(C)***IfaU.S.withholdingagent
makes a payment to a disregarded entity
and receives a valid withholding certifi-
cate or other documentary evidence from
the person that is the single owner of such
disregarded entity,the withholding agent
must file a Form 1042–S treating the sin-
gle owner as the recipient. * * *
(iii) * * *
(A) * * * Except as otherwise pro-
videdinparagraphs(d)(4)(iii)(B) (relat-
ing to NQIs, NWPs, NWTs, and FFIs
electing under section 1471(b)(3)) and
(d)(4)(iii)(C) of this section (relating to
transitional payee-specific reporting for
payments to nonparticipating FFIs), a par-
ticipating FFI or deemed-compliant FFI
(including a QI, WP, WT, or U.S. branch
of a participating FFI that is not treated
as a U.S. person) that makes a payment
that is a chapter 4 reportable amount to a
recalcitrant account holder or nonpartici-
pating FFI, must complete a Form 1042–S
to report such payments. A participating
FFI or registered deemed-compliant FFI
(including a QI, WP, WT, or U.S. branch
of a participating FFI that is not treated
as a U.S. person) may report in pools
consisting of its recalcitrant account hold-
ers and payees that are nonparticipating
FFIs. ***Alternatively,aparticipating
FFI or registered deemed-compliant FFI
(including a QI, WP, WT, or U.S. branch
of a participating FFI that is not treated
as a U.S. person) may (and a certified
deemed-compliant FFI is required to) per-
form payee-specific reporting to report
a chapter 4 reportable amount made to a
recalcitrant account holder or a nonpartic-
ipating FFI when withholding was applied
(or should have applied) to the payment.
(B)***Exceptasotherwiseprovided
in paragraph (d)(4)(iii)(C) of this section,
a participating FFI or deemed-compliant
FFI that is an NQI, NWP, NWT (including
a U.S. branch of a participating FFI that
is not treated as a U.S. person), or an FFI
that has made an election under section
1471(b)(3) and has provided sufficient in-
formation to its withholding agent to with-
hold and report the payment is not required
to report the payment on Form 1042–S
as described in paragraph (d)(4)(iii)(A)
of this section if the payment is made
to a nonparticipating FFI or recalcitrant
account holder and its withholding agent
has withheld the correct amount of tax on
such payment and correctly reported the
payment on a Form 1042–S. * * *
(C)Reporting by participating FFIs
and registered deemed-compliant FFIs
(including QIs, WPs, and WTs) for certain
payments made to nonparticipating FFIs
(transitional). Except as otherwise pro-
vided in the instructions to Form 1042–S
or under a Model 2 IGA, if a participating
FFI or registered deemed-compliant FFI
(including a QI, WP, WT, or U.S. branch
of a participating FFI that is not treated
as a U.S. person) makes a payment to
a nonparticipating FFI of a foreign re-
portable amount as defined in paragraph
(d)(2)(i)(D) of this section, the FFI must
report on Form 1042–S on a payee-spe-
cific basis the aggregate amount of all
foreign reportable amounts paid by the
FFI to the nonparticipating FFI for each of
the calendar years 2015 and 2016.
*****
(i) * * *
(1) * * * Beginning in calendar year
2014, if a withholding agent (other than an
FFI reporting accounts held by owner-doc-
umented FFIs under § 1.1471–4(d)) makes
during a calendar year a withholdable
payment to an entity account holder or
payee of an obligation and the withholding
agent treats the entity as an owner-docu-
mented FFI under § 1.1471–3(d)(6), the
withholding agent is required to report for
such calendar year with respect to each
specified U.S. person identified under
§ 1.1471–3(d)(6)(iv)(A)(1)or(2).***
*****
(ii) The name, address, and TIN of
each specified U.S. person identified in
§ 1.1471–3(d)(6)(iv)(A)(1)and(2);
(iii) The total of all withholdable pay-
ments made to the owner-documented FFI;
*****
(2) * * *
(iii) The total of all withholdable pay-
ments made to the NFFE; and
*****
Martin V. Franks,
Chief, Publications and
Regulations Branch
Legal Processing Division,
Associate Chief Counsel
(Procedure & Administration).
(Filed by the Office of the Federal Register on September
9, 2013, 8:45 a.m., and published in the issue of the Federal
Register for September 10, 2013, 78 F.R. 55202)
2013–40 I.R.B.330September 30, 2013

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ingextendedtoapplytoavariationofthe
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
beingstatedinanewruling.
Supersededdescribes a situation where
the 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 the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is self
contained. In this case, the previously pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names in
subsequent rulings. After the original rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of cases
in litigation, or the outcome of a Service
study.
Abbreviations
The fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
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—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
September 30, 2013i2013–40 I.R.B.

Numerical Finding List
1
Bulletins 2013–27 through 2013–40
Announcements:
2013-35, 2013-27 I.R.B.46
2013-36, 2013-33 I.R.B.142
2013-37, 2013-34 I.R.B.155
2013-38, 2013-36 I.R.B.185
2013-39, 2013-35 I.R.B.167
2013-40, 2013-38 I.R.B.226
2013-41, 2013-40 I.R.B.322
Notices:
2013-41, 2013-29 I.R.B.60
2013-42, 2013-29 I.R.B.61
2013-43, 2013-31 I.R.B.113
2013-44, 2013-29 I.R.B.62
2013-45, 2013-31 I.R.B.116
2013-46, 2013-31 I.R.B.117
2013-47, 2013-31 I.R.B.120
2013-48, 2013-31 I.R.B.120
2013-49, 2013-32 I.R.B.127
2013-50, 2013-32 I.R.B.133
2013-51, 2013-34 I.R.B.153
2013-52, 2013-35 I.R.B.159
2013-53, 2013-36 I.R.B.173
2013-54, 2013-40 I.R.B.287
2013-55, 2013-38 I.R.B.207
2013-56, 2013-39 I.R.B.262
2013-57, 2013-40 I.R.B.293
2013-58, 2013-40 I.R.B.294
2013-59, 2013-40 I.R.B.297
Proposed Regulations:
REG-132251-11, 2013-37 I.R.B.191
REG-111753-12, 2013-40 I.R.B.302
REG-112815-12, 2013-35 I.R.B.162
REG-114122-12, 2013-35 I.R.B.163
REG-136630-12, 2013-40 I.R.B.303
REG-140789-12, 2013-32 I.R.B.136
REG-144990-12, 2013-39 I.R.B.264
REG-111837-13, 2013-39 I.R.B.266
REG-113792-13, 2013-38 I.R.B.211
REG-115300-13, 2013-37 I.R.B.197
Revenue Procedures:
2013-28, 2013-27 I.R.B.28
2013-29, 2013-33 I.R.B.141
2013-30, 2013-36 I.R.B.173
2013-31, 2013-38 I.R.B.208
2013-32, 2013-28 I.R.B.55
2013-33, 2013-38 I.R.B.209
Revenue Rulings:
2013-13, 2013-32 I.R.B.124
Revenue Rulings— Continued:
2013-15, 2013-28 I.R.B.
47
2013-16, 2013-40 I.R.B.275
2013-17, 2013-38 I.R.B.201
2013-18, 2013-37 I.R.B.186
2013-19, 2013-39 I.R.B.240
2013-20, 2013-40 I.R.B.272
Treasury Decisions:
9620, 2013-27 I.R.B.1
9621, 2013-28 I.R.B.49
9622, 2013-30 I.R.B.64
9623, 2013-30 I.R.B.73
9624, 2013-31 I.R.B.86
9625, 2013-34 I.R.B.147
9626, 2013-34 I.R.B.149
9627, 2013-35 I.R.B.156
9628, 2013-36 I.R.B.169
9629, 2013-37 I.R.B.188
9630, 2013-38 I.R.B.199
9631, 2013-38 I.R.B.205
9632, 2013-39 I.R.B.241
9633, 2013-39 I.R.B.227
9634, 2013-40 I.R.B.272
9635, 2013-40 I.R.B.273
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2013–1 through 2013–26 is in Internal Revenue Bulletin
2013–26, dated June 24, 2013.
2013–40 I.R.B.iiSeptember 30, 2013

Finding List of Current Actions on
Previously Published Items
1
Bulletins 2013–27 through 2013–40
Notices:
2004-23
Clarified by
Notice 2013-57, 2013-40 I.R.B.
293
2004-50
Clarified by
Notice 2013-57, 2013-40 I.R.B.
293
2005-70
Obsoleted by
T.D. 9633, 2013-39 I.R.B.
227
2012-74
Obsoleted by
Notice 2013-51, 2013-34 I.R.B.
153
2013-16
Superseded by
Notice 2013-55, 2013-38 I.R.B.
207
2013-36
Appendix updated by
Notice 2013-55, 2013-38 I.R.B.
207
Superseded by
Notice 2013-55, 2013-38 I.R.B.
207
2013-39
Amplified by
Notice 2013-47, 2013-31 I.R.B.
120
2013-40
Amplified by
Notice 2013-47, 2013-31 I.R.B.
120
Revenue Procedures:
81-60
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
83-59
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
86-42
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
90-52
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
96-30
Modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
97-48
Situation 1 superseded, Situation 2 obsoleted by
Rev. Proc. 2013-30, 2013-36 I.R.B.
173
Revenue Procedures— Continued:
2003-43
Modified and superseded by
Rev. Proc. 2013-30, 2013-36 I.R.B.
173
2003-48
Obsoleted in part and superseded in part by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
2004-34
Modified and clarified by
Rev. Proc. 2013-29, 2013-33 I.R.B.
141
2004-48
Modified and superseded by
Rev. Proc. 2013-30, 2013-36 I.R.B.
173
2004-49
Sections 4.01 & 4.02 modified and superseded,
Section 4.03 obsoleted by
Rev. Proc. 2013-30, 2013-36 I.R.B.
173
2007-44
Modified by
Ann. 2013-37, 2013-34 I.R.B.
155
2007-62
Modified and superseded by
Rev. Proc. 2013-30, 2013-36 I.R.B.
173
2009-25
Pilot program discontinued by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
2011-18
Modified and clarified by
Rev. Proc. 2013-29, 2013-33 I.R.B.
141
2011-49
Modified by
Ann. 2013-37, 2013-34 I.R.B.
155
2012-25
Obsoleted in part by
Rev. Proc. 2013-28, 2013-27 I.R.B.
28
2013-1
Amplified and modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
2013-3
Amplified and modified by
Rev. Proc. 2013-32, 2013-28 I.R.B.
55
Revenue Rulings:
58-66
Amplified and clarified by
Rev. Rul. 2013-17, 2013-38 I.R.B.
201
Treasury Decisions:
9610
Corrected by by
Ann. 2013-41, 2013-40 I.R.B.
322
Treasury Decisions— Continued:
9612
Corrected by
Ann. 2013-35, 2013-27 I.R.B.
46
9622
Corrected by
Ann. 2013-39, 2013-35 I.R.B.
167
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2013–1 through 2013–26 is in Internal Revenue Bulletin 2013–26, dated June 24, 2013.
September 30, 2013iii2013–40 I.R.B.

INDEX
Internal Revenue Bulletins 27 through 40
The abbreviation and number in parenthesis following the index entry
refer to the specific item; numbers in roman and italic type following
the parentheses refer to the Internal Revenue Bulletin in which the item
may be found and the page number on which it appears.
Key to Abbreviations:
AnnAnnouncement
CDCourt Decision
DODelegation Order
EOExecutive Order
PLPublic Law
PTEProhibited Transaction Exemption
RPRevenue Procedure
RRRevenue Ruling
SPRStatement of Procedural Rules
TCTax Convention
TDTreasury Decision
TDOTreasury Department Order
EMPLOYEE PLANS
Accommodations for nonprofit organizations with religious ob-
jections to providing contraceptive services (TD 9624) 31,86
Credit for employee health insurance expenses of small employ-
ers (REG–113792–13) 38,211
Employee retirement benefit planreturns required on magnetic
media (REG–111837–13) 39,266
Exemption for religious employers from the requirement to pro-
vide coverage for contraceptive services (TD 9624) 31,86
Proposed Regulations:
26 CFR 1.45R–1 through 1.45R–5, added (tax credit for
employee health insurance expenses of small employers)
(REG–113792–13) 38,211
26 CFR 301.6057–3 added; 301.6058–2 added; 301.6059–2
added (employee retirement benefit plan returns required
on magnetic media) (REG–111837–13) 39,266
Qualified plans, determination letters (Ann 37) 34,155
Qualified plans, mortality tables (Notice 49) 32,127
Regulations:
26 CFR 54.9815–2713 added (certain preventive services un-
der the ACA) (TD 9624) 31,86
26 CFR 54.9815–2713A added (certain preventive services
under the ACA) (TD 9624) 31,86
26 CFR 301.6103 amended (disclosure of return information)
(TD 9628) 36,169
Update to Revenue Ruling 58–66 (RR 17) 38,201
Weighted average interest rates:
Segment rates for:
July 2013 (Notice 46) 31,117
August 2013 (Notice 52) 35,159
September 2013 (Notice 58) 40,294
Wellness regulations related to rewards, plan design, and alter-
natives to avoid prohibited discrimination (TD 9620) 27,1
EMPLOYMENT TAX
Disclosure of return information (TD 9628) 36,169
Disclosure of return informationreflected on returns to officers
and employees of the Department of Commerce for certain
statistical purposes and related activities (TD 9631) 38,205
Regulations:
26 CFR part 301 amended; section 301.6103(j)(1) amended;
section 301.6103(j)(1)1–T amended; revising paras.
(b)(3)(xxix), (b)(3)(xxx) and (e) (TD 9631) 38,205
Update to Revenue Ruling 58–66 (RR 17) 38,201
ESTATE TAX
Disclosure of return information (TD 9628) 36,169
Update to Revenue Ruling 58–66 (RR 17) 38,201
Valuation of certain farm, etc., real property (RR 19) 39,240
EXCISE TAX
Accommodations for nonprofit organizations with religious ob-
jections to providing contraceptive services (TD 9624) 31,86
Branded prescription drugs (Notice 51) 34,153
Disclosure of return information (TD 9628) 36,169
Disclosure of return informationreflected on returns to officers
and employees of the Department of Commerce for certain
statistical purposes and related activities (TD 9631) 38,205
Exemption for religiousemployers from the requirement to pro-
vide coverage for contraceptive services (TD 9624) 31,86
Indoor tanning services; excise taxes (TD 9621) 28,49
Information reporting by applicable large employers on health
insurance coverage (REG–136630–12) 40,303
Regulations:
26 CFR 40.0–1 amended; 40.6302(c)–1 amended (indoor tan-
ning services) (TD 9621) 28,49
26 CFR 54.9815–2713 added (certain preventive services un-
der the ACA) (TD 9624) 31,86
26 CFR 54.9815–2713A added (certain preventive services
under the ACA) (TD 9624) 31,86
26 CFR 301.6103 amended (disclosure of return information)
(TD 9628) 36,169
Transition relief for2014 under sections6055, 6056, and 4980H
(information reporting and employer shared responsibility pro-
visions) (Notice 45) 31,116
Wellness regulations related to rewards, plan design, and alter-
natives to avoid prohibited discrimination (TD 9620) 27,1
EXEMPT ORGANIZATIONS
Proposed Regulations:
53 CFR 6011–1 amended; 53.6011–1T added; 53.6071–1
amended; 53.6071–1T added; (requirement of a section
4959 excise tax return and time for filing the return)
(REG–115300–13) 37,197
Requirement of a section 4959 excise tax return and time for
filing the return (REG–115300–13) 37,197
2013–40 I.R.B.ivSeptember 30, 2013

EXEMPT ORGANIZATIONS—Cont.
Requirement of a section 4959 excise tax return and time for
filing the return (TD 9629) 37,188
GIFT TAX
Disclosure of return information (TD 9628) 36,169
Update to Revenue Ruling 58–66 (RR 17) 38,201
INCOME TAX
Action on Decision (AOD):
Media Space v. Commissioner 32,
Wilson v. Commissioner 32,
Advance payments, taxable year of inclusion (RP 29) 33,141
Application of market reforms to certain healthcare arrangements
and guidance on EAPs and section 125(f)(3) (Notice 54) 40,
287
Application of section 108(i) to partnerships and S corporations
(TD 9623) 30,73
Average area purchase price safe-harbor guidance for 2013 (RP
28) 27,28
Certain transfers of property to Regulated Investment Companies
(RICs) and Real Estate Investment Trusts (REITs) (TD 9626)
34,149
Credit for employee health insurance expenses of small employ-
ers (REG–113792–13) 38,211
Croatian per se entity (Notice 44) 29,62
Debt that is a position in personal property that is part of a strad-
dle (TD 9635) 40,273
Debt that is a position in personal property that is part of a strad-
dle (REG–111753–12) 40,302
Deduction for section 179 expense, qualified real property (No-
tice 59) 40,297
Deferred discharge of indebtedness income of corporations (TD
9622) 30,64
Deferred original issue discount deductions (TD 9622) 30,64
Determining the amount of taxes paid for purposes of the foreign
tax credit (TD 9634) 40,272
Disallowance of deductions, exception for reimbursed expenses
(TD 9625) 34,147
Disciplinary actions involving attorneys, certified public accoun-
tants, enrolled agents, and enrolled actuaries (Ann 36) 33,142
Disclosure of return information (TD 9628) 36,169
Gift cards (RP 29) 33,141
Guidance regarding deferred discharge of indebtedness income
of corporations and deferred original issue discount deduc-
tions; correcting TD 9622 (Ann 39) 35,167
Informationreportingbyforeignfinancial institutions and with-
holding on certain payments to foreign financial institutions
and other foreign entities; correctingTD9610(Ann41)40,
322
Installment agreements and offer in compromise user fees
(REG–144990–12) 39,264
Insurance, effectively connected income (RP 33) 38,209
Interest:
INCOME TAX—Cont.
Investment:
Federal short-term, mid-term, and long-term rates for:
July 2013 (RR 15) 28,47
August 2013 (RR 13) 32,124
September 2013 (RR 18) 37,186
Letter rulings that address issues presented in transactions de-
scribed in sections 332, 351, 355, 368, and 1036 (RP 32) 28,
55
Limitations on duplication of net built-in losses (TD 9633) 39,
227
Low-income housing taxcredit (Notice 47) 31,120
Low-income housing tax credit (RP 31) 38,208
Mixed straddles; straddle-by-straddle identification under sec-
tion 1092(b)(2)(A)(i)(I) (TD 9627) 35,156
Mixed straddles; straddle-by-straddle identification under sec-
tion 1092(b)(2)(A)(i)(I) (REG–112815–12) 35,162
Noncompensatory partnership options; correcting TD 9612 (Ann
35) 27,46
Per capita payments from proceeds of settlements of Indian tribal
trust cases (Notice 55) 38,207
Premium tax credit (REG–140789–12) 32,136
Premium tax credit, minimum essential coverage (Notice 41) 29,
60
Proposed Regulations:
26 CFR 1.36B–0 amended (premium tax credit)
(REG–140789–12) 32,136
26 CFR 1.36B–5 amended (premium tax credit)
(REG–140789–12) 32,136
26 CFR 1.45R–1 through 1.45R–5 added (tax credit for
employee health insurance expenses of small employers)
(REG–113792–13) 38,211
26 CFR 1.851–5 amended (Regulated Investment Company
controlled group regulation examples) (REG–114122–12)
35,163
26 CFR 1.1092–1 revised (debt that is a position in personal
property that is part of a straddle) (REG–111753–12) 40,
302
26 CFR 1.1092(b)–6 added (mixed straddles; straddle-by-
straddle identification undersection 1092(b)(2)(A)(i)(I))
(REG–112815–12) 35,162
26 CFR 1.6015–5 amended (relief from joint and several lia-
bility) (REG–132251–11) 37,191
26 CFR 300.1 amended; 26 CFR 300.2 amended; 26 CFR
300.3 amended (installment agreements and offer in com-
promise user fees (REG–144990–12) 39,264
Qualified exempt facility bonds (Notice 47) 31,120
Qualified residential rental projects (Notice 47) 31,120
Regulated Investment Company controlled group regulation ex-
amples (REG–114122–12) 35,163
Regulations:
26 CFR 1.108(i)–0, 26 CFR 1.108(i)–1, and 26 CFR
1.108(i)–3 added (deferred discharge of indebtedness in-
come of corporations and deferred original issue discount
deductions) (TD 9622) 30,64
September 30, 2013v2013–40 I.R.B.

INCOME TAX—Cont.
26 CFR 1.108(i)–2 added; 1.108(i)–2T removed (application
of section 108(i) to partnerships and S corporations) (TD
9623) 30,73
26 CFR 1.358–2 amended; 1.362–4 amended; 1.705–1
amended; 1.1367–1 amended; 602.101 amended (limita-
tions on duplication of net built-in losses) (TD 9633) 39,
227
26 CFR 1.482–7 amended; 1.482–7T removed (use of dif-
ferential income stream as anapplication of the income
method) (TD 9630) 38,199
26 CFR 1.901–2 amended; 1.901–2T removed (determining
the amount of taxes paid for purposes of the foreign tax
credit) (TD 9634) 40,272
26 CFR 1.1092–1 revised (debt that is a position in personal
property that is part of a straddle) (TD 9635) 40,272
26 CFR 1.1092(b)–6T added (mixed straddles; straddle-by-
straddle identification undersection 1092(b)(2)(A)(i)(I))
(TD 9627) 35,156
26 CFR 1.1471–1 (scope of chapter 4 and definitions) (Ann
41) 40,322
26 CFR 1.5000A–0, 1.5000A–1, 1.5000A–2, 1.5000A–3,
1.5000A–4 added; 26 CFR 602.101 amended (shared
responsibility payment for not maintaining minimum es-
sential coverage) (TD 9632) 39,241
26 CFR 301.6103 amended (disclosure of return information)
(TD 9628) 36,169
Relief from joint and several liability (REG–132251–11) 37,191
S corporation elections (RP 30) 36,173
Section 5000A transition relief for employees eligible to enroll
in non-calendar year health plans (Notice 42) 29,61
Shared responsibility payment for not maintaining minimum es-
sential coverage (TD 9632) 39,241
Standard Industry Fare Level (SIFL) (RR 20) 40,272
Timeline for implementation of the requirements under sections
1471–1474, commonly known as FATCA (Notice 43) 31,113
Transitional penalty relief andschedule for notices of incorrect
name/TIN combinations for information returns relating to
payment card and third party network transactions (Notice 56)
39,262
2013 marginal production rates (Notice 53) 36,173
2013 section 43 inflation adjustment (Notice 50) 32,134
Underpayments and overpayments,quarter beginning October 1,
2013 (RR 16) 40,275
Update to Revenue Ruling 58–66 (RR 17) 38,201
Use of differential income streamas an application of the income
method and as a consideration in assessing the best method
(TD 9630) 38,199
Wash sales, money market fund shares (Notice 48) 31,120
SELF-EMPLOYMENT TAX
Update to Revenue Ruling 58–66 (RR 17) 38,201
TAX CONVENTION
U.S.-Belgium agreement regarding OECD report on the attribu-
tion of profits to permanentestablishments (Ann 38) 36,185
2013–40 I.R.B.viSeptember 30, 2013

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