n-09-87.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Obtaining Permission for a Trustee to Make the Income Tax Return of an Eligible
Individual

[26 CFR 601.602]: Forms and Instructions
(Also: Part I, Section 6012, 6012-1)

Notice 2009-87

# PURPOSE

This notice invites public comments on possible modifications to the conditions
established in Rev. Proc. 80-59, 1980-2 C.B. 855, under which a trustee of a blind trust
that meets the requirements of section 102(f)(3) of the Appendix to Title 5 of the United
States Code (or any successor provision of the United States Code) may execute and
file an income tax return on behalf of any individual described in section 101(f) of the
Appendix to Title 5 of the United States Code (or any successor provision of the United
States Code) ("eligible individual").

# BACKGROUND

Section 102(f)(4)(B) of the Appendix to Title 5 of the United States Code provides
that, in the case of a trust created for the benefit of an eligible individual, an asset
placed in trust will not be considered a financial interest of the individual for purposes of
section 208 of Title 18 of the United States Code, and any other conflict of interest
statutes or regulations, if certain requirements are met, including giving the trustee the
power to prepare on behalf of the individual the personal income tax return and similar

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returns which may contain information relating to the trust.

Section 1.6012-1(a)(5) of the Income Tax Regulations, concerning returns made
by agents, permits a return to be made by an agent if the taxpayer requests permission,
in writing, and the appropriate IRS official determines that good cause exists for
permitting an agent to make the return. That section provides that whenever a return is
made by an agent it must be accompanied by a power of attorney (or copy thereof)
authorizing the agent to represent the principal in making the return.

Section 601.504(a) of the Conference and Practice Requirements, Statement of
Procedural Rules, provides that a power of attorney is required when the taxpayer
wishes to authorize a recognized representative to represent the taxpayer before the
Internal Revenue Service or perform the following acts on behalf of the taxpayer: (1)
offer or execute either a waiver of restriction on assessment or collection of a deficiency
in tax or a waiver of notice of disallowance of a claim for credit or refund on behalf of the
taxpayer, (2) execute a consent to extend the statutory period for assessment or
collection of a tax on behalf of the taxpayer, (3) execute a closing agreement on behalf
of the taxpayer, (4) receive (but not endorse or collect) a check in payment of any
refund of taxes, penalties or interest on behalf of the taxpayer, or (5) sign a tax return
under a certain conditions.

Section 601.506(a) of the Conference and Practice Requirements, Statement of
Procedural Rules, provides that any notice or communication (or a copy thereof)
required or permitted to be given to a taxpayer in any matter before the Internal
Revenue Service shall be given to the taxpayer and, unless restricted by the taxpayer,

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to the taxpayer's recognized representative.

Revenue Procedure 80-59, 1980-2 C.B. 855, requires an eligible individual to
receive advance written permission from the appropriate IRS official for the trustee to
make the income tax return on behalf of the eligible individual prior to filing of the eligible
individual's income tax return. The trustee must submit the letter granting the trustee
permission to file the eligible individual's return when the trustee files the return. In
addition, the return and letter must be accompanied by a power of attorney (or copy
thereof) that grants the trustee authority to sign the return, to receive (but not endorse
or collect) a refund check, to execute a waiver of restriction on assessment or collection,
to execute a waiver of notice of disallowance, to execute a consent to extend the period
for assessment or collection, and to execute a closing agreement. Finally,
notwithstanding the provisions of section 601.506(a) of the Conference and Practice
Requirements, Statement of Procedural Rules, all notices or other written
communication required or permitted to be given to the eligible individual are given only
to the trustee.

POSSIBLE CHANGES

The Internal Revenue Service is considering modifying the requirement that an
eligible individual receive advance permission from the Internal Revenue Service for the
trustee to make the income tax return on behalf of the eligible individual prior to filing the
eligible individual's income tax return. Under the possible modifications being
considered by the Internal Revenue Service:

. An eligible individual who has an interest in a blind trust that meets the

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requirements of section 102(f)(3) of the Appendix to Title 5 of the United States
Code (or any successor provision of the United States Code) would request
permission, in writing, for the trustee of the blind trust to execute and file the
Federal income tax return of the eligible individual.

· Both the letter requesting permission and a power of attorney (or copy thereof)
that grants the trustee authority to sign the return, to receive (but not endorse or
collect) a refund check, to execute a waiver of restriction on assessment or
collection, to execute a waiver of notice of disallowance, to execute a consent to
extend the period for assessment or collection, and to execute a closing
agreement would be submitted to the Internal Revenue Service with the eligible
individual's Federal income tax return when the tax return is filed.

· The eligible individual who has an interest in a blind trust that meets the
requirements of section 102(f)(3) of the Appendix to Title 5 of the United States
Code (or any successor provision of the United States Code) and who submits
the written request for permission and power of attorney consistent with these
procedures, would be considered to have shown good cause for having the
return filed by the trustee, and would be deemed to have been granted such
permission.

· The eligible individual would submit a separate request for permission for the
trustee to execute and file the Federal income tax return each taxable year.

REQUESTS FOR PUBLIC COMMENT

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The Internal Revenue Service requests comments on whether the existing
procedures for an eligible individual to receive permission from the Internal Revenue
Service for a trustee to make the eligible individual's income tax return should be
modified. The Internal Revenue Service is particularly interested in receiving comments
on whether taxpayer burden will be reduced if the requirement that an eligible individual
receive advance permission from the Internal Revenue Service for the trustee to make
the income tax return on behalf of the eligible individual is eliminated and any other
ways that the Internal Revenue Service can reduce taxpayer burden or simply these
procedures.

Written comments should be sent to: CC:PA:LPD:PR (Notice 2009-87), Room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington,
D.C. 20044. Alternatively, comments may be hand delivered between the hours of 8:00
a.m. and 4:00 p.m. Monday to Friday to CC:PA:LPD:PR (Notice 2009-87), Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, D.C.
Comments may also be transmitted electronically via the following e-mail address:
Notice.Comments@irscounsel.treas.gov. Please include "Notice 2009-87" in the
subject line of any electronic communications.

Comments, if any, must be received by November 30, 2009. All comments will be
available for public inspection and copying.

DRAFTING INFORMATION

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The principal author of this notice is Richard S. Goldstein of the Office of
Associate Chief Counsel (Procedure & Administration). For further information
regarding this notice contact Richard S. Goldstein at (202) 622-3400 (not a toll-free
call).